MATERIALS REQUIREMENT PLANNING

What MRP does?• MASTER SCHEDULE FOR END ITEMS

• DETAILED SCHEDULE FOR RAW MATERIALS AND COMPONENTS USED IN THE END PRODUCT

Dependent demandLumpy demand

MRP

Independent Vs dependent demandIndependentdemandDemand unrelated to demand of other

products.(end products and spare parts)Usually forecastConventional inventory control system (EOQ,

WAGNOR WHITIN) applicable.

Independent Vs dependent demandDependent demand Demand directly related to demand of some other

product.(components, raw materials or sub assemblies)

Requirements derived from delivery schedule of other items.

MRP is the appropriate tool for planning and control for manufacturing inventoriesRaw materialsWIPComponentsSub assemblies

Lead timesOrdering lead times (for purchased parts)

Initiation of receipt of item purchase requisition from vendor(off shelf/ fabricate)

Lead timesManufacturing lead time

Process part through sequence of machines as given on route sheet (operation + non productive

times)

Place order item delivered

In MRP lead times are used to determine starting dates for assembling final products and sub assemblies, for producing component parts and for ordering raw materials.

Inputs to MRPThe master production schedule and other

data.The bill of materials file( the product

structure)The inventory record file.

Master Production ScheduleWeek no: 6 7 8 9 10

Product P1

50 100

Product p2

70 80 25

Etc

TYPICAL INFORMATION IN MPS(a)What end products are to be produced?(b)How many of each product to be produced?(c) When the products are to be ready for shipment? Firms customer ordersDEMAND forecasted demand

demand for individual components or parts (for repair and service- often excluded form MPS since it does not include end product demand)

Inventory record fileAccurate current data on inventory statusGenerally computerized (item master file)Lead times must be established in inventory

record file.Ordering lead time purchasing recordsManufacturing lead time process route

sheets

INVENTORY TRANSACTIONS:- (issue, arrivals, order placement/realization) MUST BE KEPT CURRENT

Week no:678910Product P1

50

100Product p2

708025

Etc

TYPICAL INFORMATION IN MPSWhat end products are to be produced?How many of each product to be produced?When the products are to be ready for shipment? Firms customer ordersDEMAND forecasted demand

demand for individual components or parts (for repair and service- often excluded form MPS since it does not include end product demand)

Master Production ScheduleWeek no: 6 7 8 9 10

Product P1

50 100

Product p2

70 80 25

Etc

INPUTS FOR MRP EXAMPLE p1 p2

S1(1) S2(2) S3(1) S4(1)

C1(1) C2(4) C3(1) C4(2) C5(1) C6(1) C4(1)

M4

PRODUCT STRUCTURE FOR P1 AND P2WEEK

6 7 8 9 10

P1 50 100

P2 70 80 25

INITIAL INVENTORY STATUS FOR M4PERIOD 1 2 3 4 5 6

ITEM MATERIAL, M4

GROSS REQUIREMENTS

SCHEDULED RECEIPTS

40

ON HAND

50 90

NET REQUIREMENTS

PLANNED ORDER RELEASES

LEAD TIMES (IN WEEKS)ASSEMBLY MANUFACTURING ORDERING

P1= 1 C4= 2 M4-3

P2= 1

S2= 1

S3= 1

BASIC MRP LOGICInput MPS, BOM, inventory status, lead timesDo parts explosionOffset requirements by lead timesNetting of requirements from gross by

considering availabilities.Lot sizing of net requirements for

procurement or production

PERIOD 1 2 3 4 5 6 7 8 9 10

ITEM MATERIAL, P1

50 100

GROSS REQUIREMENTS

SCHEDULED RECEIPTS

ON HAND

0

NET REQUIREMENTS

50 100

PLANNED ORDER RELEASES

50 100

PERIOD 1 2 3 4 5 6 7 8 9 10

ITEM MATERIAL, P2

70 80 25

GROSS REQUIREMENTS

SCHEDULED RECEIPTS

ON HAND

0

NET REQUIREMENTS

70 80 25

PLANNED ORDER RELEASES

70

80 25

PERIOD 1 2 3 4 5 6 7 8 9 10

ITEM SUB MATERIAL, S2

100

200

GROSS REQUIREMENTS

SCHEDULED RECEIPTS

ON HAND

0

NET REQUIREMENTS

100

200

PLANNED ORDER RELEASES

100

200

PERIOD 1 2 3 4 5 6 7 8 9 10

ITEM SUB MATERIAL, S3

70 80 25

GROSS REQUIREMENTS

SCHEDULED RECEIPTS

ON HAND

0

NET REQUIREMENTS

70 80 25

PLANNED ORDER RELEASES

70

80 25

PERIOD 1 2 3 4 5 6 7 8 9 10

ITEM COMPONENT, C4

70

280

25 400

GROSS REQUIREMENTS

SCHEDULED RECEIPTS

ON HAND

0

NET REQUIREMENTS

70

280

25 400

PLANNED ORDER RELEASES

70

280 25

400

PERIOD 1 2 3 4 5 6 7 8 9 10

ITEM COMPONENT, M4

GROSS REQUIREMENTS

70 280

25

400

SCHEDULED RECEIPTS

40

ON HAND

50 90 20

NET REQUIREMENTS

-20 260

25

400

PLANNED ORDER RELEASES

260

25

400