M AT E R I A L R E Q U I R E M E N T P L A N N I N G ( M R P )

M AT E R I A L S R E Q U I R E M E N T P L A N N I N G ( M R P )

A computerized information system developed specifically to aid in

managing dependent demand inventory and scheduling replenishment
orders

“Dependent demand” means the demand for one item is related to the demand
for another item
PURPOSE OF MRP
The main purposes of a basic MRP system are to control inventory levels, assign
operation priorities for items, and plan capacity to load the production system
• Inventory
• Order the right part
• Order the right quantity
• Order at right time

• Priorities
• Order with the right due date
• Keep the due date valid

• Capacity
• Plan for a complete load
• Plan for an adequate time to view future load

Getting the right material to the right place at the right time
INPUTS TO MRP SYSTEM

A dependent demand technique that uses a bill-of-material, inventory record data

and a master production schedule to determine material requirements.

▪ Bill of material (BOM)

▪ Master production schedule (MPS)
▪ Inventory record database
 B I L L O F M AT E R I A L ( B O M )
A listing of the components (raw materials, parts, subassemblies and assemblies), their description, and the
quantity of each required to make one unit of a product

A Record of all the components of an item, the parent-component relationships, and usage quantities derived
from engineering and process designs
For the following Figure:
a. Determine the quantities of B, C, D, E, and F needed to assemble one X.
 DEVELOPING A PRODUCT STRUCTURE AND GROSS
REQUIREMENTS

Speaker Kits, Inc., packages high-fidelity components For a new order of 50 Awesome speaker kits,
for mail order. Components for the top-of-the line Gross Requirements
speaker kit, “Awesome” (A), include 2 Bs and 3 Cs.
Each B consists of 2 Ds and 2 Es. Each of the Cs has 2 Level Item Quantity For 50
units
Fs and 2 Es. Each F includes 2 Ds and 1 G.
0 A 1 50
1 B 2 100
1 C 3 150
2 E 4+6=10 500
2 F 6 300
3 D 4+12=16 800
3 G 6 300
INVENTORY RECORD

One of the three primary inputs in MRP; includes information on the status of each item by
time period, quantities on hand, quantities ordered

A record that shows an item’s lot-size policy, lead time and various time-phased data
For the following Figure:
a. Determine the quantities of B, C, D, E, and F needed to assemble one X.
b. Determine the quantities of these components that will be required to assemble 10 Xs, taking into account the quantities o
hand (i.e., in inventory) of various components:
MASTER PRODUCTION SCHEDULE (MPS)

• A timetable that specifies what is to be made (usually finished goods) and when.
• Details of how many end items will be produced within specified periods of time
A firm that produces wood shutters and bookcases has received two orders for shutters: one for
100 shutters and one for 150 shutters. The 100-unit order is due for delivery at the start of week 4
of the current schedule, and the 150-unit order is due for delivery at the start of week 8. Each
shutter consists of two frames and four slatted wood sections. The wood sections are made by the
firm, and fabrication takes one week. The frames are ordered, and lead time is two weeks.
Assembly of the shutters requires one week. There is a scheduled receipt of 70 wood sections in
(i.e., at the beginning of) week 1. Determine the size and timing of planned-order releases
necessary to meet delivery requirements under each of these conditions:
a. Develop a master production schedule (MPS):

b. Develop a product structure tree:

A firm that produces wood shutters and bookcases has received two orders for shutters: one for 100 shutters and one for 150
shutters. The 100-unit order is due for delivery at the start of week 4 of the current schedule, and the 150-unit order is due for
delivery at the start of week 8. Each shutter consists of two frames and four slatted wood sections. The wood sections are made by
the firm, and fabrication takes one week. The frames are ordered, and lead time is two weeks. Assembly of the shutters requires
one week. There is a scheduled receipt of 70 wood sections in (i.e., at the beginning of) week 1. Determine the size and timing of
planned-order releases necessary to meet delivery requirements under each of these conditions:

c. Develop MRP schedule: Shutter (LT=1 week)

Week No. 1 2 3 4 5 6 7 8
Gross requirements 100 150
Scheduled receipt

Projected on-hand
inventory
Planned receipt 150
100
Planned order release
100 150
Shutter (1) MRP schedule with lot-for-lot ordering
LT: 1 Week
Week No. 1 2 3 4 5 6 7 8
Gross requirements 100 150
Scheduled receipt
Projected on-hand
inventory
Planned receipt
Planned order release 100 150
100 150
Frame (2)
LT: 2 Weeks
Week No. 1 2 3 4 5 6 7 8
Gross requirements 200 300
Scheduled receipt
Projected on-hand
inventory
Planned receipt 200 300
Planned order release
200 300
 Shutter (1) MRP schedule with lot-for-lot ordering
LT: 1 Week
Week No. 1 2 3 4 5 6 7 8
Gross requirements 100 150
Scheduled receipt
Projected on-hand
inventory
Planned receipt
100 150
Planned order release
100 150
Wooden Section (4)
LT: 1 Week

Week No. 1 2 3 4 5 6 7 8
Gross requirements 400 600
Scheduled receipt 70
Projected on-hand 70 70 70
inventory
Planned receipt 330 600
Planned order release 330 600
 Shutter (1) MRP schedule with lot size ordering
LT: 1 Week
Week No. 1 2 3 4 5 6 7 8
Gross requirements 100 150
Scheduled receipt
Projected on-hand
inventory
Planned receipt
Planned order release 100 150
100 150
Wooden Section (4)
LT: 1 Week; Lot Size = 70

Week No. 1 2 3 4 5 6 7 8
Gross requirements 400 600
Scheduled receipt 70
Projected on-hand
inventory 70 70 70 20 20 20 20 50
Net Requirement 330
580
Planned receipt 630
350
Planned order release
350 630
Material Requirement Planning (MRP)

Customer Order Forecast

Master Production Schedule

(MPS)

Inventory MRP Bill of

Records Explosion Material

Material Requirement Planning

(MRP)
 Manufacturing Resource Planning (MRPII)

Customer Order Forecast

Master Production Schedule

(MPS)

Inventory MRP Bill of

Records Explosion Material

Material Requirement Planning (MRP)

Cost and Financial Information

Manufacturing Resource Planning (MRPII)

Purchasing Finance Marketing HRM Manufacturing

Dept. Dept Dept Dept Dept
 Enterprise Resource Planning (ERP)

Advances in MRP II systems that tie customers and suppliers

to MRP II have led to the development of enterprise resource
planning (ERP) systems.
Enterprise resource planning (ERP) is software that allows
companies to
(1) automate and integrate many of their business processes,
(2) share a common database and business practices
throughout the enterprise, and
(3) produce information in real time