MATERIAL REQUIREMENTS PLANNING (MRP)

I
Presented by Muhammad Imran Basseri &
Muhammad Syafiq Mazlan
April 10th, 2017

UiTM Permatang
Pauh
Introduction
About MRP

It is a production planning process that starts from the demand for finished products and plans the
production step by step of subassemblies and parts.

MRP is a set of techniques that takes the Master Production Schedule (MPS) and other information
from inventory records and product structure records as inputs to determine the requirements and
schedule of timing for each item.

MostMRP systems are software-based, but it is possible to conductMRPby hand as well

Necessity of MRP
Why it is important

To avoid over ordering on To reduce unwanted To reduce capital locked up

under-ordering of materials. expenses due to last in excess.
minute ordering.
Dependant and Independent Demand
The difference
Dependant
demand
Demand for final products.

Independent demand

Demand fort items that are sub assemblies or

component parts to be used in production of
finished goods..
Purpose and Application
MRP application area and Purpose

Application area Purpose

This inventory management
Control inventory levels
system is appropriate for items
that have a dependent demand .

Industries that offer a variety of Assign operating priorities

finished products where the
customer is allowed to choose
among many different options. Plan capacity to load the production
system

Manufacturing environment is
complex and uncertain.
MRP Inputs
Input data files

0 Master Production
Schedule (MPS)
Lead time 0 1
4
0 Bills of
materials (BOM)
2
Inventory 0
status file
3
MRP Inputs
BOM & MPS

BOM MPS

A listing of all of the raw materials, parts, Based on actual customer orders and
subassemblies, and assemblies needed to predicted demand.
produce one unit of a product
Indicates when each ordered item will be
BOM Shows way a finished product or parent produced in coming weeks, and in how
item is put together from individual much quantity.
components.
MPS inputs come from sales and marketing

MPS covers about 1-3 months into the

future.

.
MRP Inputs
Inventory status file
Detailed information regarding the quantity of each item, available in hand, on order to be released,
for use in various time periods.

MRP system using inventory master file is used to determine the quantity of material available for use
in a given period.

If sufficient items not available , the system includes the item on the planned order release report .

Also known as Inventory Master File

MRP Outputs
Output reports

Primary reports Secondary reports

Work orders - schedule indicating the amount Exception reports - evaluate system
and timing of future orders. operations . They aid in measuring deviations
from plans, and also provide information to
Purchase orders - Authorization for the assess cost performance.
execution of planned orders.
Planning reports - are useful to forecast future
Action notices or rescheduling notices - which
inventory requirements.
orders are to be released, revised and
canceled during the current time period. Performance Control reports - these help to
find the major discrepancies such as late and
overdue orders
MRP Process I
Exploding and offsetting
Lead time it is the time needed to perform the process . It includes order preparation, queuing,

processing moving receiving and inspecting time as well as any expected delays.

Exploding the requirements it is the process of multiplying the requirements by usage quantity of

each item and recording the appropriate requirements throughout the product tree.

Offsetting it is a process of placing the exploded requirements in their proper periods based on lead

time.
MRP Process II
Gross and net requirements
Gross Requirement - Total expected demand of the product.

Net Requirements - Actual amount needed in each time period.

Net Requirements = Gross Requirement available inventory

Planned on hand - Expected inventory on hand at the beginning of each time period.

Planned-order receipts - Quantity expected to received at the beginning of the period

Planned-order releases - Planned amount to order in each time period

MRP Process III
Releasing orders
Releasing an order means authorization is given to buy the necessary material or to
manufacturing of required component.

Scheduled Receipts are orders placed on manufacturing or on a vendor and represent a

commitment to make or buy.

Now, considering Scheduled Receipts,

Net Requirement = Gross Requirement Scheduled Receipts available inventory

MRP Process IV
Low level coding and netting
Netting is a process in which any stock on hand is subtracted from the gross requirement
determined through explosion, giving the quantity of each item needed to manufacture the required
finished products.

Low Level Code is the lowest level on which a part resides in all bills of material.

Time buckets - The column in an inventory record that represents a unit of time. It may be in days or
weeks.

Action bucket - The current time period.

Action notices - Output from the MRP system identifying the need for an action, to avoid future
problem.

Planning Horizon is the total number of periods in a record.

Problems in Implementing MRP
Its setbacks
Integrity of the
data
Any errors in the inventory data, BOM data, or the master production
schedule, then the outputted data will also be incorrect.

Dependant on product processing

duration that the user specify how long it will take a factory to
requirement
make a product from its component part. the system design also
assumes that this "lead time" in manufacturing will be the same each
time the item is made

Takes no account of capacity in its

calculations
it will give results that are impossible to implement due to manpower
or machine or supplier capacity constraints

Factories in various nations andstates

It is no good for an MRP system to say that we do not need to order
some material because we have plenty thousands of miles away
Benefits of MRP
Its contribution

Keep inventory levels to a

Keeps track of inventory Set safety stock levels for
cost-effective minimum.
that is used. emergencies.

Tracks the amount of

material that is required
Disadvantages of MRP
Its drawbacks
Inaccurate information can
result in miss-planning , MRP systems can be costly
overstock, under-stock, or and time-consuming to set
lack of appropriate up.
resources.

The inaccurate master

schedule will provide
wrong lengths of time for
production . Hence
affecting planning.
 The End
The are no secrets to success, it is the result of
preparation, The are no secrets to success, it is the
result of preparation, hard work and learning
from failure. work and learning
from failure