This document provides an overview of materials requirement planning (MRP). It discusses that MRP has three phases - planning, action, and control. MRP determines the quantity and timing for acquiring dependent demand items to satisfy production schedules. MRP is a production planning and inventory control system used to manage manufacturing processes. The document then discusses the history, objectives, inputs/outputs, types of MRP users, and advantages and disadvantages of MRP.

1. INDUSTRIAL ECONOMICS AND
MANGEMENT
MUHAMMAD ASIM
14ME127
SECTION-A

2. INTRODUCTION
Production Planning and Control(PPC)
has three phases namely
• Planning Phase
• Action Phase
• Control Phase

3. “Getting the right materials to the right place at the right time”.

4. WHAT IS MATERIAL REQUIREMENT
PLANNING??
“Materials Requirement Planning (MRP) is a technique for determining
the quantity and timing for the acquisition of dependent demand items
needed to satisfy master production schedule requirements.”

5. MATERIAL REQUIREMENT PLANNING(MRP)
• Material Requirements Planning (MRP) is a production
planning, scheduling, and inventory control system used to manage
manufacturing processes. Most MRP systems are Software-based, but it
is possible to conduct MRP by hand as well.
• It is a planning and scheduling technique with fixed lead time.
• It is a technique used to plan and control manufacturing inventories
(these manufacturing inventories support the production process).
• It is computerized inventory system.
• Material Requirement Planning (MRP) is a system of planning and
scheduling the time phased material requirements for releasing
materials and receiving materials that enable the master production
schedule to be implemented.

6. HISTORY
• In 1964, as a response to the Toyota Manufacturing
Program(TMP), Joseph Orlicky developed Material Requirements
Planning (MRP). The first company to use MRP was Black & Decker in
1964, with Dick Alban as project leader.

7. WHEN IT IS REQUIRED
• Manufacturing industries generally face the problems that demand is
high than production. This requires some level of planning.
• Information Technology plays a major role in designing and
implementing. Material Requirements Planning systems and processes
provides information about manufacturing needs and also about
inventory

8. OBJECTIVES
The MRP system should have at least these objectives.
• To assure that the materials and components are available for planned production.
• Maintain the lowest possible level of inventory.
• Plan manufacturing activities, delivery schedules and purchasing activities
• Reduction in the manufacturing and delivery lead times
• Realistic delivery commitments
• Increased efficiency

9. • Specifically organizational objectives of MRP are identified among three main dimensions, as
follows.

10. MRP SYSTEM
The inputs to the MRP system are
• A master production schedule
• An inventory status file
• Bill of materials (BOM).
The output of MRP system are
• Orders to be placed.
• Order rescheduling.
• Planned orders for future.

11. CLASSES OF MRP USER/COMPANIES
MRP systems fall into four categories, in terms of use and organizational implementation.
• Class A represents full implementation of MRP. System is tied up with company’s
financial system as well as capacity planning etc.
• Class B represents a less than full implementation. MRP system is confined in the
manufacturing area.
• Class C represents a classical MRP approach in which the system is confined to
management of inventories.
• Class D represents a data processing application of MRP. System is used for keeping
track of data rather than as decision-making tool.

12. ADVANTAGES OF MRP
• Improved Business Results
• Improved Manufacturing Results
• More Accurate And Timely Information
• Less Inventory
• Material wastage is less
• Higher Reliability
• More Responsiveness To Market Demand

13. DISADVANTAGES OF MRP
• Increase In Material Acquisition Cost
• Higher Transportation Costs And Higher Unit Cost
• Potential Hazard Of A Production Slowdown Or Shutdown
• Use Of Standardized Software Packages

14. Don’t become a follower, be a leader, and
become a Entrepreneur