The document defines material requirements planning (MRP) as a production planning and inventory control system used to manage manufacturing processes. MRP determines the quantity and timing of dependent demand items needed based on a master production schedule, bill of materials, and inventory records. The objective of MRP is to ensure materials are available for production and products are available for delivery to customers while maintaining the lowest possible inventory levels. MRP plans manufacturing activities, delivery schedules, and purchasing to accomplish the master production schedule.

1. Presented by: Sameer D Amale

2. Definition:
 Material requirements planning (MRP) is a production planning
and inventory control system used to manage
manufacturing processes.
MRP is the common tool used for tracking dependent demand
items
Determines quantity & timing of dependent demand items.
Determines how much and when to buy, how much to make and
when to make

3. Objective:
Ensure materials are available for production and products are
available for delivery to customers.
Maintain the lowest possible material and product levels in store
Plan manufacturing activities, delivery schedules and purchasing
activities.
Goal is to accomplish the MPS – Master Production Schedule

4. Dependent Demand
 The demand for one item is related to the demand for
another item
 Component part to be used in the production of finished
goods.
Independent Demand
 When demand for one item is not related to the demand for
another item
 Independent demand is fairly stable once allowances are
made for seasonal variations.

5. LLA
B C
D E GF
Independent vs. Dependent Demand
Dependent Demand
Independent Demand
L (0)
L (1)
L (2)

6. MRP INPUTS
1)The master production schedule:
States which end items to be produced, when they are needed,
and in what quantities
The quantities are determined through customers order ,forecast
& orders from warehouse.
For Eg: Master Production Schedule for end item X
Week Number
ITEM X 1 2 3 4 5 6 7 8
Quantity 400 150

7. 2) Bill of material
 Contains list of all the assemblies , subassemblies ,parts raw
materials needed to produce one unit of a finished Product.
Listing in the bill of materials is hierarchical.
It is represented through a product tree structure.

8. X (1)
A(1) C(1)
D(2)
B(1)
E(2) F(1)
J(2) K(1)
G(1) H(3) F(1)
J(2)
For Eg : Suppose we want to manufacture 100 units of X then
What quantities of A B C D E F G H J K are required?
Product Structure for item X
100 100 100
100
400
100200200
200
100
200
300
100

9. 3) Inventory Records:
Gives complete and up to date information of on hand
inventory, Gross requirement , Scheduled receipts and planned
order release for the item
It also includes details such as lot sizes ,lead times, safety
stocks.
Basically its job is to keep data about the projected use and
receipts of each item and to determine amount of inventory
available

10. 10
©The McGraw-Hill Companies, Inc., 2004
Firm orders
from known
customers
Forecasts
of demand
from random
customers
Aggregate
product
plan
Bill of
material
file
Engineering
design
changes
Inventory
record file
Inventory
transactions
Master production
Schedule (MPS)
Primary reports
Secondary reports
Planned order schedule for
inventory and production
control
Exception reports
Planning reports
Reports for performance
control
Material
planning
(MRP
computer
program)

11. Useful Formulae :
Net Requirement
= (Gross Requirement) – (Inventory on hand)
+ ( Inventory on order )
On Hand Inventory over period ( t )
= on hand inventory over period (t-1) + (Scheduled receipt –
Projected requirement )

12. MRP Lot-Sizing: Using Lot-for-Lot

13. MRP Lot-Sizing Problem:
Using the EOQ

14. A(1)
B(2) C(1)
D(1)
E(2)
F(3)E(2)
80 120
50
130
130
200 200
D(1) G(2)
390 195
Eg :Use MRP format to determine the order size for all
item and when each order should be released.

15. Net Requirements Plan

16. Net Requirements Plan (cont.)

17. • Increased customer satisfaction due to
meeting delivery schedules
• Faster response to market changes
• Improved Labour & equipment utilization
• Better inventory planning & scheduling
• Reduced inventory levels without reduced
customer service
MRP Benefits