MRP is a computerized inventory control and production planning system that schedules component items as needed. It tracks inventory levels and helps improve many aspects of business operations like reducing costs and shortages, improving schedules and customer service. The key steps in MRP are identifying material requirements based on a bill of materials, product structure and master production schedule, running MRP to create production and purchasing suggestions, and firming those suggestions into orders.
The Master Production Schedule (MPS) is a plan for the production of individual final items. The MPS breaks down the production plan to show, in each period, the quantity to produce of each final article.
#masterproduction #mps #mrp #erp #manufacturing #manufacturingsoftware #erpsoftware #mrpeasy
This topic is related to Material requirement planning, MRP.
Types of material requirement planning
Benefits of MRP. Limitation of MRP, Objective of MRP, MRP Input, MRP Output, Steps of MRP
MRP System Structure (Input and Output)
Master Production Schedule (MPS)
Bill of Material (BOM)
Inventory Records File
MRP Terminology
MRP Explosion Process
MRP Management
MRP and JIT
Material requirement planning - Production and Operation ManagementSuryakumar Thangarasu
A production planning, scheduling and inventory control system, manages manufacturing process.
Ensures availability of materials for production and delivery to customers.
Maintains lowest possible material in the store.
Plans manufacturing activities and delivery schedule.
MRP, MRP2 and ERP system in supply chainSaad Munami
Material Requirement Planning (MRP),
Manufacturing Resource Planning (MRP 2),
Enterprise resource planning (ERP)
Systems in SCM
Definations with explaination
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. ... Plan manufacturing activities, delivery schedules and purchasing activities.
The Master Production Schedule (MPS) is a plan for the production of individual final items. The MPS breaks down the production plan to show, in each period, the quantity to produce of each final article.
#masterproduction #mps #mrp #erp #manufacturing #manufacturingsoftware #erpsoftware #mrpeasy
This topic is related to Material requirement planning, MRP.
Types of material requirement planning
Benefits of MRP. Limitation of MRP, Objective of MRP, MRP Input, MRP Output, Steps of MRP
MRP System Structure (Input and Output)
Master Production Schedule (MPS)
Bill of Material (BOM)
Inventory Records File
MRP Terminology
MRP Explosion Process
MRP Management
MRP and JIT
Material requirement planning - Production and Operation ManagementSuryakumar Thangarasu
A production planning, scheduling and inventory control system, manages manufacturing process.
Ensures availability of materials for production and delivery to customers.
Maintains lowest possible material in the store.
Plans manufacturing activities and delivery schedule.
MRP, MRP2 and ERP system in supply chainSaad Munami
Material Requirement Planning (MRP),
Manufacturing Resource Planning (MRP 2),
Enterprise resource planning (ERP)
Systems in SCM
Definations with explaination
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. ... Plan manufacturing activities, delivery schedules and purchasing activities.
I am realtime lead consultant having 16 yrs of domain and 8 yrs of sap offering online trainings for any one intrested reach ;skype:himbuj call 9885766653
Know about Just-In-Time and Lean manufacturing system. Find benefits and difference between JIT and Lean Manufacturing by Nilesh Arora, a founder of AddValue Consulting Inc.
Chapter 20 Production and Inventory ControlTran Thang
The Fundamentals of Production Planning
Modern Production Planning Systems
Aggregate Planning and Master Scheduling
Material Requirements Planning
Capacity Requirements Planning
Evolution of MRP and MRP II Systems
Impact on Purchasing and Supply
Just-In-Time Production Planning
The Functions of Inventories
Definition of Inventories
Inventory Analysis
Costs Associated with Inventories
Carrying Costs
Acquisition Costs
Economic Order Quantity
Types of Inventory Control Systems
Cyclical or Fixed Order Interval System
The Just-In-Time (JIT) Approach
Material Requirements Planning (MRP) System
Order Point or Fixed Order Quantity System
SCM 304 Supply Chain Management Material Requirements .docxbagotjesusa
SCM 304
Supply Chain Management
Material Requirements
Planning (MRP)
12-2
MRP
•Material requirements planning (MRP):
– A computer-based information system that
translates master schedule requirements for
end items into time-phased requirements for
subassemblies, components, and raw
materials.
– The MRP is designed to answer three
questions:
1. What is needed?
2. How much is needed?
3. When is it needed?
MRP Objectives
• Improve customer service
• Reduce inventory
investment
• Improve coordinating
production and thus, plant
operating efficiency
3
MRP Inputs MRP Processing MRP Output
Master
Production
Schedule
Bill-of-
Materials
File
Inventory
Records
File
MRP
Computer
Programs
Changes
Order Release
Planned-Order
Schedules
Exception
Reports
Planning Reports
Performance
Control Reports
Inventory
Transactions
Order
Forecast
Design
Changes
Receipts
Withdrawal
P
ri
m
a
ry
R
e
p
o
rt
S
e
c
o
n
d
a
ry
R
e
p
o
rt
Overview of MRP
Master Production Scheduling
• The master schedule deals with end items and is a
major input to the MRP process.
• All production systems have limited capacity and
limited resources.
– The aggregate plan provides the general range of operation;
the master scheduler must specify exactly what is to be
produced.
• To determine an acceptable feasible schedule to be
released to the shop, trial master production
schedules are tested using the MRP program.
5
Electronic Industry (10,000 Items)
Product Group
TV (19”, 32”, …, 72”) 1000
Computer 5000
Cell Phone 2000
Others 2000
Total 10,000
6
This is an example of an electronic
industry produces 10000 items. We can
break them into 4 group of products in
creating aggregate plan.
12-7
Master Schedule
TV WK1 WK2 WK3 WK4 WK5 WK6 WK7 WK8
19” 10 30 80 0 10 10 0 20
32” 30 10 0 50 5 0 80 40
72” … …. … … … … … …
Other
Sizes
… … … … … … … …
Total = 1000
This slide displays one of the groups in our agregate plan (TV) in demand for
individual items during 8 weeks and it is called Master Schedule. It showes what
to produce, when to make them, and how much.
12-8
Disaggregating the Aggregate
Plan
• Master schedule:
– The result of disaggregating an aggregate
plan
– Shows quantity and timing of specific end
items for a scheduled horizon
From Aggregate plan to
MPS
• MPS: Time-phased plan specifying how
many and when the firm plans to build
each end item
Aggregate Plan
(Product Groups)
MPS
(Specific End Items)
9
From Aggregate plan to MPS
10
Week
Aggregate plan shows
overall quantities to
produce – without
specifying type.
MPS shows quantities of
each type, with
information about the
production time frame.
12-11
MRP: Development
• The MRP is based on the product structure tree diagram
• Requirements are determined level by level, beginning
with the end item and w.
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2. Contributors to MRP
• Joseph Orlicky
• George Plossl
• Oliver Wight
• American Production and Inventory
Control Society
3. What is MRP?
• Computerized Inventory Control
• Production Planning System
• Management Information System
• Manufacturing Control System
4. When to use MRP
• Job Shop Production
• Complex Products
• Assemble-to-Order Environments
• Discrete and Dependent Demand Items
5. What can MRP do?
• Reduce Inventory Levels • Reduce Purchasing Cost
• Reduce Component • Improve Production
Shortages Schedules
• Improve Shipping • Reduce Manufacturing
Performance Cost
• Improve Customer • Reduce Lead Times
Service • Less Scrap and Rework
• Improve Productivity • Higher Production
• Simplified and Accurate Quality
Scheduling
6. What can MRP do?
• Improve • Reduce Overtime
Communication • Improve Supply
• Improve Plant Schedules
Efficiency • Improve Calculation of
• Reduce Freight Cost Material Requirements
• Reduction in Excess • Improve Competitive
Inventory Position
7. Three Basic Steps of MRP
• Identifying Requirements
• Running MRP – Creating the
Suggestions
• Firming the Suggestions
8. Step 1: Identifying the
Requirements
• Quantity on Hand
• Quantity on Open Purchase Order
• Quantity in/or Planned for
Manufacturing
• Quantity Committed to Existing Orders
• Quantity Forecasted
9. Step 1: Important Information
MRP is…..
• Company Sensitive
• Location Sensitive
• Date Sensitive
11. Step 3: Firming the
Suggestions
• Manufacturing Orders
• Purchasing Orders
• Various Reports
12. Overview of the MRP System
Product Master
Inventory
Structure Production
Master File
File Schedule
Material
Requirements
Planning
Manufacturing Purchase Various
Orders Orders Reports
15. Master Production Schedule
• Schedule of Finished Products
• Represents Production, not Demand
• Combination of Customer Orders and
Demand Forecasts
• What Needs to be Produced
16. Inventory Master File
• On-Hand Quantities
• On-Order Quantities
• Lot Sizes
• Safety Stock
• Lead Time
• Past-Usage Figures
17. MRP Process
• Schedules the Production of all items using
an MRP Matrix
MRP Matrix
Item: Low-Level Code:
Lot Size: Lead Time: PD 1 2 3 4 5
Gross Requirements
Scheduled Receipts
Projected on Hand
Net Requirements
Planned Order Receipts
Planned Order Releases
18. Terms Defined
• Item – name or number for the item being
scheduled
• Low-Level Code – the lowest level of the item on
the product structure file
• Lot Size – order multiples of quantity
• Lead Time – the time from when an order is
placed to when it is received
• PD – Past Due Time Bucket, orders behind
schedule
19. Terms Defined
• Gross Requirements – demand for an item by
time period
• Scheduled Receipts – material already ordered
• Projected on Hand – expected ending inventory
• Net Requirements – number of items to be
provided and when
• Planned Order Receipts – net requirements
adjusted for lot size
• Planned Order Releases – planned order receipts
offset for lead times
20. Example of the MRP Process
Item: A Low-Level Code: 1
Lot Size: 25 Lead Time: 1
PD 1 2 3 4 5
Gross Requirements 10 15 25 25 30
Scheduled Receipts 25
Projected on Hand 20
Net Requirements
Planned Order Receipts
Planned Order Releases
21. Example of the MRP Process
Item: A Low-Level Code: 1
Lot Size: 25 min Lead Time: 1
PD 1 2 3 4 5
Gross Requirements 10 15 25 25 30
Scheduled Receipts 25
Projected on Hand 20 10 2 20 20 15
Net Requirements 5 5 10
P 25 25 25
23. Hubbell Lighting Case
• Manufactures Industrial Lighting Products
• Good-Quality Products
• Poor at Meeting Due Dates
• Work is Specialized for Each Customer
• Job Shop Environment
• Complex Products
24. Hubbell Lighting Case
Before MRP Implementation After MRP Implementation
• Less than 75% of orders • 97% of orders completed
completed on time on time
• 2% of orders completed
with 1 to 2 days after due
date
25. Summary of MRP
MRP is a…..
• Computerized Inventory Control
• Production Planning System
that…..
• Schedules Component Items as Needed
which will…..
• Track Inventory and…..
• Help you in many other aspects of business
26. References
Russell, Roberta S., and Bernard W. Taylor III. Operations Management. 3rd
Edition: Prentice Hall, 2000
Grubbstrom, Robert W. Material Requirements Planning and Manufacturing
Resource Planning. 03/12/2002.
http://www.itbp.com/opsmanagement/iebm/material_requirements.htm.
Vormittag Associates, Inc. System 2000 MRP. 03/12/2002.
http://www.vaihome.com/s2000mrp.htm.
Inventory Solutions. What is MRP?. 03/12/2002.
http://www.inventorysolutions.org/def_mrp.htm.
Editor's Notes
Today we will discuss what Material Requirements Planning is and how we can use it in our organization.
Material Requirements Planning was introduced in the 1970’s. Much of the credit goes to three individuals by the names of Joseph Orlicky, George Plossl, and Oliver Wight. The American Production and Inventory Control Society (APICS), which was endorsed by Orlicky, Plossl, and Wight, was also credited with the introduction of MRP.
MRP is a system that controls inventory levels, plans production, helps supply management with important information, and helps with the manufacturing control system with respect to the production of assembled parts.
There are certain environments or situations in which it is better and more efficient to use MRP. These environments and situations are as follows.
MRP can do many things to help your company succeed. Probably the most important quality of MRP is the fact that it will help your company with inventory. It plans production so that the right materials are at the right place at the right time.
Here are some qualities of MRP. MRP determines the latest possible time to product goods, buy materials, and add manufacturing value. Proper MRP can keep cash in the firm and still fulfill all production demands.
The three basic steps of MRP are 1) Identifying requirements for items to be included in an MRP run, 2) Running the MRP and creating suggestions for action, and 3) firming the suggestions to release manufacturing orders and purchase orders.
The MRP system looks at several components of demand in order to create its suggestions. The requirements include the above items. Many of these requirements are included in the master production schedules and inventory master files that will be discussed later in this presentation.
The MRP system is company, location, and date sensitive. It is important that all data that is entered into the MRP system is accurate. Elements such as outdated bills of material, and lead times can negatively impact the results or MRP.
At the end of each day, the MRP system will be run to identify items as critical, expedite, or delay. The MRP system will suggest if you need to order more of a certain material by classifying into the three categories. Critical items are items of immediate importance that should be taken care of right away. Expedite items are items that need to be sped up so that it is completed in less than the normal lead time. Delay items are item that are not of vital importance and can be delayed for the benefit of other items. If you wish, the MRP system can also give greater details such as expected receipt dates, and customer orders making up the demand.
Once it has been run, the MRP system will suggest that the user send out a purchase order or manufacturing order. The user can then choose on whether to accept the suggestions of the system or change them. For example the MRP system will suggest that a purchase order be sent to order 100 units of material X. The user may accept this suggestion or change the information to fit what he thinks should be ordered. The MRP system keeps track of a vendor master file to ease of sending faxes, emails, or printouts of orders.
The is an overview of how the MRP system works. The Orange boxes indicate the inputs into the MRP system. The MRP system then processes the information and delivers outputs as indicated by the yellow boxes.
The three main inputs into the MRP system are product structure files, master production schedules, and inventory master files. These three main inputs summarize the input requirements described earlier.
The product structure file contains a bill of material for every item produced. In other words, this file contains all the component parts for a larger item. For example if you are producing a car, the component parts for the car would be the screws, steel, rubber, and so on. Not only does the product structure contain all the component parts, it also supplies information for in which order the product is to be assembled. The MRP system accesses the product structure file to determine which component items need to be scheduled.
The master production schedule specifies which end items or finished products the company is to produce, how many are needed, and when they are needed. The numbers that are on the master production schedule represent production, not demand, may be a combination of customer orders and demand forecasts, and gives what needs to be produced.
This file includes all the numbers from inventory. The MRP system keeps track of your inventory and when more items need to be ordered. It is important that you inventory numbers are accurate from the beginning in order for the MRP system to work properly.
During the process, the the system uses an MRP matrix to record the calculations that are made. From the inputs discussed earlier in the presentation, the system calculates the gross requirements, scheduled receipts, projected on hand, net requirements, planned order receipts, and planned order releases.
Some of the terms that are used with the MRP matrix are defined above. This should help the user understand how the MRP calculates everything.
More terms defined.
Here’s an example of how the MRP process works. This is a preliminary schedule that the MRP system gathered from the master production schedule, inventory master file, and product structure file. The question now is in what period should orders be released and what should be the size of those orders?
For period 1 we first want to calculate the projected on hand. This is done by subtracting the gross requirements in period one from the sum of the scheduled receipts in period 1, projected on hand from the previous period, and the planned order releases from the (t-l) period where t is the current period and l is the lead time. So the projected on hand for period 1 is 20 minus 10. The planned order releases are in sizes of 25 so we have planned order release of 25 for period one. Period two we repeat the same process. Now in period 3 we need to calculate the net requirements along with the projected on hand. The projected on hand = ((20+25)-25) = 20. The net requirements is calculated by subtracting the scheduled receipts (0) in the period plus the projected on hand in the previous period (20) from gross requirements (25) which equals 5. You want to repeat this process for all the periods. In the end the answer should be that orders should be released in periods 1,2,3,4, and 5 for quantities of 25,25,25,30, and 25 respectively.
The MRP system delivers two main outputs along with various other reports. The two main outputs are manufacturing orders which can be released to shop floors for in-house production and purchasing orders which are sent to outside suppliers. The various reports offer suggested changes in previous plans or existing schedules.
Hubbell light manufactures industrial lighting products for schools, malls, NASA, and other companies. They have a strong reputation of making good-quality products but also have a reputation of not meeting due dates. Their work is very specialized, in a job shop environment, and they make complex products. They have 3,200 end items. Some of which consist of 15,000 component parts that can be configured into over 5 million different final products. This situation would involve complex bills of material, production schedules and inventory files. This is an ideal situation to implement MRP.
Hubbell lighting decided to implement an MRP system to improve its overall capabilities and completion times. Before the MRP implementation, Hubbell Lighting completed less the 75% of its orders on time. After the MRP implementation, on time orders rose to 97% with 2% of orders completed with 1 to 2 days of the promised completion time.
Read the Summary above.
All information on this slide show was gathered from the above resources.