MRP stands for materials requirements planning. It is a system used to plan for and schedule the manufacturing and purchasing of materials and components. MRP takes the master production schedule for end items and generates detailed schedules for all raw materials, components, and sub-assemblies required. It offsets requirements by lead times and nets requirements against inventory and scheduled receipts to determine precise ordering needs. MRP provides a systematic approach to ensure the right materials are available at the right time to efficiently manufacture products to meet demand.

2. What MRP does?
• MASTER SCHEDULE FOR END ITEMS
• DETAILED SCHEDULE FOR RAW MATERIALS
AND COMPONENTS USED IN THE END PRODUCT
 Dependent demand
 Lumpy demand
MRP

3. Independent Vs dependent
demand
 Independentdemand
Demand unrelated to demand of other products.(end
products and spare parts)
Usually forecast
Conventional inventory control system (EOQ,
WAGNOR WHITIN) applicable.

4. Independent Vs dependent
demand
 Dependent demand
 Demand directly related to demand of some other
product.(components, raw materials or sub assemblies)
Requirements derived from delivery schedule of other
items.
MRP is the appropriate tool for planning and control for
manufacturing inventories
Raw materials
WIP
Components
Sub assemblies

6. Lead times
 Ordering lead times (for purchased parts)
 Initiation of receipt of item
purchase requisition from vendor(off
shelf/ fabricate)

7. Lead times
 Manufacturing lead time
 Process part through sequence of machines
as given on route sheet (operation + non productive times)
 Place order item delivered
 In MRP lead times are used to determine starting dates
for assembling final products and sub assemblies, for
producing component parts and for ordering raw
materials.

8. Inputs to MRP
 The master production schedule and other data.
 The bill of materials file( the product structure)
 The inventory record file.

11. Master Production Schedule
Week no: 6 7 8 9 10
Product P1 50 100
Product p2 70 80 25
Etc
TYPICAL INFORMATION IN MPS
(a) What end products are to be produced?
(b) How many of each product to be produced?
(c) When the products are to be ready for shipment?
Firms customer orders
DEMAND forecasted demand
demand for individual components or parts (for repair and
service- often excluded form MPS since it does not include end product
demand)

13. Inventory record file
 Accurate current data on inventory status
 Generally computerized (item master file)
 Lead times must be established in inventory record
file.
 Ordering lead time purchasing records
 Manufacturing lead time process route sheets
 INVENTORY TRANSACTIONS:- (issue, arrivals, order
placement/realization) MUST BE KEPT CURRENT

15. Master Production Schedule
Week no: 6 7 8 9 10
Product P1 50 100
Product p2 70 80 25
Etc

16. INPUTS FOR MRP EXAMPLE
 p1 p2

S1(1) S2(2) S3(1) S4(1)
C1(1) C2(4) C3(1) C4(2) C5(1) C6(1) C4(1)
M4

17. PRODUCT STRUCTURE FOR P1 AND
P2
WEEK 6 7 8 9 10
P1 50 100
P2 70 80 25

18. INITIAL INVENTORY STATUS FOR
M4
PERIOD 1 2 3 4 5 6
ITEM MATERIAL, M4
GROSS
REQUIREMENTS
SCHEDULED RECEIPTS 40
ON HAND 50 90
NET REQUIREMENTS
PLANNED ORDER
RELEASES

19. LEAD TIMES (IN WEEKS)
ASSEMBLY MANUFACTURING ORDERING
P1= 1 C4= 2 M4-3
P2= 1
S2= 1
S3= 1

20. BASIC MRP LOGIC
 Input MPS, BOM, inventory status, lead times
 Do parts explosion
 Offset requirements by lead times
 Netting of requirements from gross by considering
availabilities.
 Lot sizing of net requirements for procurement or
production

21. PERIOD 1 2 3 4 5 6 7 8 9 10
ITEM MATERIAL,
P1
50 100
GROSS
REQUIREMENTS
SCHEDULED
RECEIPTS
ON
HAND
0
NET
REQUIREMENTS
50 100
PLANNED ORDER
RELEASES
50 100

22. PERIOD 1 2 3 4 5 6 7 8 9 10
ITEM MATERIAL,
P2
70 80 25
GROSS
REQUIREMENTS
SCHEDULED
RECEIPTS
ON
HAND
0
NET
REQUIREMENTS
70 80 25
PLANNED ORDER
RELEASES
70 80 25

23. PERIOD 1 2 3 4 5 6 7 8 9 10
ITEM SUB
MATERIAL, S2
100 200
GROSS
REQUIREMENTS
SCHEDULED
RECEIPTS
ON
HAND
0
NET
REQUIREMENTS
100 200
PLANNED ORDER
RELEASES
100 200

24. PERIOD 1 2 3 4 5 6 7 8 9 10
ITEM SUB
MATERIAL, S3
70 80 25
GROSS
REQUIREMENTS
SCHEDULED
RECEIPTS
ON
HAND
0
NET
REQUIREMENTS
70 80 25
PLANNED ORDER
RELEASES
70 80 25

25. PERIOD 1 2 3 4 5 6 7 8 9 10
ITEM
COMPONENT, C4
70 280 25 400
GROSS
REQUIREMENTS
SCHEDULED
RECEIPTS
ON
HAND
0
NET
REQUIREMENTS
70 280 25 400
PLANNED ORDER
RELEASES
70 280 25 400

26. PERIOD 1 2 3 4 5 6 7 8 9 10
ITEM
COMPONENT, M4
GROSS
REQUIREMENTS
70 280 25 400
SCHEDULED
RECEIPTS
40
ON
HAND
50 90 20
NET
REQUIREMENTS
-20 260 25 400
PLANNED ORDER
RELEASES
260 25 400