The document outlines the differences between Material Requirements Planning (MRP I) and Manufacturing Resource Planning (MRP II). MRP I focuses on managing material inventories to meet production demands, while MRP II expands this concept to include operational and financial planning across various business functions. MRP II offers enhanced capabilities, such as resource scheduling and production simulations, making it essential for modern manufacturing processes.

1. MATERIAL REQUIREMENTS
PLANNING AND MANUFACTURING
RESOURCE PLANNING DIFFERENCE

2. The MRP is a planning system that allows you to manage the productive
resources of an organization. Here is an overview of Material Requirements
Planning (MRP I) and Manufacturing Resource Planning (MRP II) differences.
This concept has evolved over time. Today MRP systems are associated with
software, with the ability to plan and control.

3. Its main objective is to determine the amount of resources that the organization
requires, to meet the required demand. Strictly speaking:
• Ensure that materials are delivered in a timely manner to customers.
• Ensure optimal inventory levels
• Ensure the use of optimal resources within the organization (personnel, cash,
machinery, energy, etc.)
Let’s see next how the MRP I evolved in MRP II, their main characteristics and
differences between themselves.

4. The use of MRP systems dates back to World War II when the United States government
used programs to organize the logistics of its military resources. Subsequently, they were
transferred to the industry and in the 60s and 70s, the first MRPs systems were created. This
is how the MRP I or Material Requirements Planning systems were born. Its main objective
was to determine the amount of materials to reach the production levels using the
minimum inventory cost.
However, businesses needed to manage a greater number of organizational processes. Thus,
it was necessary to expand towards a broader planning model and that is why the MRP II
system was born.
History of MRP

5. This new system contemplates and integrates other areas of the business, such as:
• Factory
• Administration
• Sales
It is important to note that the evolution of computers allowed these systems to improve.
Today they became a vital component for the management of manufacturing business
processes.
History of MRP

6. MRP I stands for “Material Requirements Planning”. It is basically a material planning and
management system through the use of software. MRP I solves some issues within any
manufacturing process, such as:
• What materials to buy
• How much material to buy
• When to buy the materials
What is MRP I

7. To answer all of these questions, the MRP I use:
1. The Production Master Plan or MPS, which provides independent product demand.
2. The Material Inventory, which means the amount of raw materials, semi-finished goods
and finished products available.
3. The Bill of Materials or BOM, combining the components to produce a unit of product,
the standardized quantities to use and their parent-child relationship.
What is MRP I

8. And the outputs obtained will be:
• A Recommended Production Schedule
• A Recommended Purchasing Schedule.
The Schedule is valid for both: the items to buy and the sub-assemblies and components to
be produced.
What is MRP I

9. Note that MRP I systems manage inventories of dependent demand. The dependent
demand is for component parts or subassemblies. The independent demand is the demand
for a finished product. As an example, a company that manufactures bicycles determines the
amount of tires to buy for the bicycles demand forecast. The bicycles are independent
demand, while tires are dependent demand.
A Master Production Schedule (MPS) is a plan for individual products to be manufactured in
each individual time period. You can download the Master Production Schedule template
here.
What is MRP I

10. The advantages of using an MRP System are shown below:
• Reduction of the cost of inventories
• Control of inventory levels
• Reduction of waiting times in supply and production
• Better manufacturing and purchasing planning
• Knowledge about input needs
• Help in making supply decisions
• Control and documentation
Advantages of MRP I

11. MRP II is defined as “Manufacturing Resource Planning” and was born in the 80s. The
purpose was to offer a broader planning and control tool to its predecessor, the MRP 1.
MRP 2 is a computer-based system that creates production schedules including the arrival
of materials, machine and labor. MRP II defines what resources, what quantities, and at what
time they will be necessary to carry out all business production processes.
What is MRP II

12. MRP II constitutes the heart of manufacturing companies. It is an integrated method of
operational and financial planning for manufacturing companies. In addition to answering
questions about what, how many and when to purchase materials from MRP I, MRP II
answers the following questions:
• What resources are necessary?
• What amount of resources?
• When will these resources be necessary?
MRP II identifies the capacity problems of the production plan. It resolves the divergences
between the availability of resources and planned consumption.
What is MRP II

13. In addition to the MRP I tools, the MRP II calculates and solves:
• The planning of the manufacturing resources of the organization
• Ability to simulate production processes
• Optimized calculation of routes and work centers
• It is based on the study of demand and the market.
• It covers more departments, not only production but also purchasing, quality, financial,
etc.
What is MRP II

14. The inputs are:
• Work Progress Feedback, showing how the work has progressed, to all levels of the
schedule so that the next run can be updated on a regular basis.
• Resource Scheduling, which is the calculation of resources to convert the raw materials
into finished goods.
• Batching Rules takes into account the logic which batches are produced (i.e. EBQ, Lot for
Lot, etc.)
• Rough Cut Capacity Planning (RCCP), to match the workload to the capacity available.
• Software extension programs, such as including sale orders processing, cost accounting,
etc.
What is MRP II

15. The advantages of using an MRP II System are shown below:
• All the advantages coming from MRP I
• Optimization of machinery usage and productivity improvement
• Coordination and control of production and inventories
• Ease of adaptation to order changes.
• Reduction of outsourcing and idle times
• Financial knowledge of planned and real production.
Advantages of MRP II

16. In summary, MRP I (Material Requirements Planning) is a material management system. It
calculates when purchasing orders must be made to suppliers and the work orders released.
It will provide the amount of material needed, according to the scheduled production.
In contrast, MRP 2 (Manufacturing Resource Planning) is a manufacturing system. It not only
deals with the purchasing and production scheduling but also with the capabilities of the
factory in aspects such as labor or machinery.
The next chart summarizes the main differences between the two systems:
Differences between MRP I vs. MRP II

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requirements-planning-and-manufacturing-resource-planning-difference/
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