Material Requirements Planning (MRP) is a system aimed at optimizing inventory and production management for manufacturers by answering what, how much, and when materials are needed. Key benefits include improved customer service and productivity, while limitations involve the need for expensive systems and accurate data. After MRP implementation, a significant increase in on-time order completion from less than 75% to 97% was observed.

2. SHOAIB ZAHEER

3. MRP(Material requirements planning) is
designed to assist manufacturers in
inventory and production management.

4. “Material requirements planning (MRP) is
a production planning, scheduling,
and inventory control system used
to manage manufacturing processes”.

5. MRP is designed to answer three Questions.
 What is needed
 How much is needed
 When is it needed.

6. Following are some of its benefits:
 Improved customer services
 Improved productivity
 Reduced purchasing cost
 Reduced inventory levels
 Reduce manufacturing cost
 Higher quality products
 Increased efficiency.

7. Following are some of its limitations:
 Need to have an expensive computer
system
 Need accurate and up-to-date inputs
 The reporting requirements are excessive
 Resistance from inside company.

8. The main theme of MRP is
“getting the right materials to the right place at the
right time”.
 Ensure materials are available for production
 Maintain the lowest possible material and
product levels in store
 Plan manufacturing activities, delivery
schedules and purchasing activities.

9. Following are its inputs:
 Product Structure File
 Master Production Schedule
 Inventory Master File

10. Bill of Materials:
List of parts & components that are
required to build a product.

11.  Schedule of Finished Products
 Represents Production, not Demand
 Combination of Customer Orders and
 Demand Forecasts
 What Needs to be Produced

12.  On-Hand Quantities
 On-Order Quantities
 Lot Sizes (orders multiples of quantity)
 Safety Stock
 Lead Time
 Past-Usage Figures

13.  Manufacturing Orders
 Purchasing Orders
 Various Reports

14.  Identifying Requirements
 Running MRP – Creating the Suggestions
 Firming the Suggestions

15.  Quantity on Hand
 Quantity on Open Purchase Order
 Quantity in/or Planned for Manufacturing
 Quantity Committed to Existing Orders
 Quantity Forecasted

16.  Company Sensitive
 Location Sensitive
 Date Sensitive

17.  Critical Items:
Items of immediate importance
 Expedite Items:
Items that need to be sped up
 Delay Items:
Items that are not of vital importance and
can be delayed.

18.  Manufacturing Orders
 Purchasing Orders
 Various Reports

19.  Manufactures Industrial Lighting Products
 Good-Quality Products
 Poor at Meeting Due Dates
 Work is Specialized for Each Customer
 Job Shop Environment
 Complex Products

20. Before MRP
Implementation
 Less than 75% of
orders completed on
time.
After MRP
Implementation
 97% of orders
completed on time.
 2% of orders
completed with 1 to 2
days after due date.