Material Requirement Planning (MRP) is a computer-based production planning and inventory control system used to manage manufacturing processes. The key objectives of MRP are to improve customer service, reduce inventory costs, and improve plant efficiency. MRP takes the master production schedule, bill of materials, and inventory records as inputs to determine net material requirements and generate a schedule for ordering materials. It performs important functions like order planning, priority planning, and capacity planning. MRP is primarily used by companies that manufacture standard products in batches.

1. Materials Requirement PlanningEnterprise Resource Planning
N.K.Agarwal

2. Material Requirement Planning (MRP)
• Objectives of MRP in Operations Management are
– To improve customer service by meeting delivery schedules
promised and shortening delivery lead times
– To reduce inventory costs by reduction in inventory levels
– To improve plant operating efficiency by better use of
productive resources
• A computer based programme
– Most helpful to the organisation
• With finished goods or end products
– Which are made from a number of components, and
also
– Which are subject to uneven or lumpy demand

3. MRP - Functions
• MRP performs three important functions in
Operations Management
– Order planning and control i.e. when to release
orders and what quantity
– Priority planning and control i.e.comparison of
expected date of availability with the need date of
each item
– Provisions of a basis for planning capacity
requirements and development of broad business
plans
• MRP primarily applicable to companies that
carry out the fabrication of parts and
assembly of standard products in batch
quantity

4. Material Requirement Planning (MRP)
• Main inputs for preparing MRP
– Master Production Schedule
• Shows the number of units to be produced in each period
– Bill of Material
• Shows the materials, parts and components needed for
the product
– Inventory Records
• Shows what is available in stock, on order etc useful for
working out the net requirement of material to be ordered

5. MASTER
PRODUCTION
SCHEDULE
BILL OF
MATERIALS
GROSS
REQUIREMENTS
CURRENT
STOCKS
INVENTORY
RECORDS
NET
REQUIREMENTS
SCHEDULED
RECEIPTS
MATERIALS
TO ORDER
STANDARD
ORDER
INFORMATION
TIME AND
QUANTITIES
TO ORDER
MRP PROCEDURE

6. MRP – Application in service industry
• Hospitals
– Hospitals use MRP for scheduling surgical
operations and ensure that supplies and
equipment are ready when needed
– Schedule of
• Surgery gives the planned operations in any period,
• The bill of materials contains information about the
equipment and resources needed for each type of
surgery, and
• Inventory file contains information about surgical
instruments, disposable materials, reusable instruments,
sterilized materials etc

7. MRP – Application in service industry
• Restaurants
– Restaurants use MRP to schedule food and
equipment. Menus give the meals planned for the
restaurants, and the recipes for each meal provide
the bill of materials
• Universities
– Universities’ MPS show the number of students
who will be graduating from each programme in
each term. The bill of material describes the
courses the students take in each term. MRP can
find the number of teachers, classrooms,
laboratories etc

8. Material Requirement Planning (MRP)
• Benefits
–
–
–
–
–
–
–
–
–
–
Material supply is directly linked to known demand
Stock levels are lower, with savings in capital, space, etc
There is higher stock turnover
Customer service is better with no delays due to shortages
of materials
Delivery times are more reliable and faster
Higher utilization of facilities as materials are always
available
Less time spent on expediting and emergency orders
Better planning
MRP schedules can be used for short-term planning
MRP shows the priority of jobs supplying materials

9. Manufacturing Resource Planning
(MRP II)
• Financial and marketing functions are tied to
operation function in MRP II
• Production and finance work together to
ensure availability of desired resources to
meet the production requirement
• Marketing and plant people update sales
forecast and update master schedules
• MRP II provides a convenient vehicle for cocoordinating the efforts of manufacturing ,
finance, marketing, engineering and
personnel departments towards the common
business plan

10. Enterprise Resource Planning
(ERP)
• A software package developed for optimum use of
resources of an enterprise in a planned manner
• Integrates the entire enterprise starting
– From the supplier to the customer
• Covering logistics, financial and human resources
• A package for cost saving
• A single solution addressing the information needs of
the whole organisation

11. ERP- Features
• A central data base
• Accommodating Variety
– Provides multi-lingual and multi-currency, multi mode
manufacturing and multi- facility capabilities to compete and
succeed globally
• Integrated Management Information
– Used for Flexible reporting tools to extract information as
and when needed without depending on MIS department
– For Electronic data interchange to accepting information like
Purchase Orders, Schedule amendments, cash payments,
order acknowledgements, raising invoices etc.

12. ERP- Features
– For Imaging to provide the ability to display drawings ,
specifications, store original sale orders, Purchase Orders,
quotation etc.
– For Database creation starting with attendance reporting,
monitoring and control of machines and post sale statistics
• Seamless Integration
– Integration of new product introductions or changes to
existing products fully into the enterprise system of
Engineering Change Management, to include electronic
approval, routing, change order process routing, revisionlevel control etc.

13. ERP- Features
• Supply Chain Management
• Resource Management
– Effective management of human as well as equipment
resources
• Integrated data model
– Heart of any ERP system providing for data for employees,
suppliers and customers

14. Work flow Automation
Electronic Mail
•Strategic & Business Planning- Matls
•New product introduction
•Bill of Materials
•Long range forecasting and cap. Plng
•Engg Change Management
•Order Management,
•Distribution
Management
Imaging
•Strategic & Business Planning- Resources
•Intelligent resource Planning,
•Human resource Planning,
•Quality Management
•Organisation, payroll/employee
•Cost accounting, Receivables,
•General Ledger, PM,Fixed Asset,
•Payables,Budgeting,Inventory,
•Logistics, Data Model
•Operational Plng and execution- Materials
•Routing, -Order Processing,
•Supplier Management,
•Inventory Management,Forecasting,
•Distribution management,
•Scheduling and WIP Management
Multi- Platform
Database Creation / E Data Interchanging
Multi- Facility
•Facilities maintenance,
•Planning &
implementation
•Operational Plng and materials-Resources
•Payroll, -Recruitment, -Costing & budgeting,
•Job evaluation and performance Appraisal,
•Quality control & Planning,
•Maint Engg and scheduling, -Fixed asset Mngmt,
•Resource MIS
Multi- Mode Manufacturing
General Model of ERP
Multi- Currency
Multi- Lingual

15. ERP- Scope
• Financial
– Financial accounting, treasury management, asset
management and enterprise control
• Logistics
– Production Planning, Material management, Plant
maintenance, Quality management, Project management &
Distribution management

16. ERP- Scope
• Human resources
– Personnel management, Training & Development and Skills
inventory
• Work flow
– Flexible assignment of tasks and responsibilities to
locations, positions, jobs, groups or individuals

17. ERP- Benefits
• Some of the Tangible benefits
–
–
–
–
–
–
Reduction of lead time (up to 60%)
99% on- time shipments
Doubled business
Increase in inventory turn over to over 30%
Reduction of cycle time to 80%
Reduction of W-I-P inventory to 70%

18. ERP- Benefits
• Some Intangible benefits
–
–
–
–
–
–
Better customer satisfaction
Improved vendor performance
Reduced quality costs
Improved resource utilisation
Improved information accuracy
Improved decision- making capacity

19. ERP
• Application
– Large number of organisation nationally and internationally
have implemented already/ in the process of implementing
– Sales of ERP group of Industries increased from $13 billion
in 1977 to over $25 billion
• Selection of ERP package
– Cost of package from few lakhs to a few crores
– Needs of the company to be fully understood before ordering
a package
– Implementation period varies from 12-24 months
– Building of right platform, right software vendor selection and
right consultant for implementation essential to get the right
ERP package

20. ERP
• Major vendors are SAP, Oracle applications and
Baan
• Others in the field include JD Edwards, People Soft,
Scala, Ramco Marshal, QAD etc
• A very high commitment absolutely essential for a
successful implementation of ERP

21. ERP with SAP R/3
• Production planning (or Production Logistics) is the
SAP solution for PPC
• Provides quick response by reducing planning cycle
and improving the productivity of work process
• SAP R/3 has highly integrated Production
Planning(PP) system

24. ERP
• Enterprise Resource Planning is used world
wide by companies to integrate business
resources and thereby reduce costs and
increase productivity
• ERP provides a total solution on an integrated
system providing information needs of the
entire enterprise
• Careful selection of the ERP package is
extremely important to suit the specific
business needs of the enterprise as it
involves huge expenditure

25. References
• Production And Operations
management : K. Aswathappa /
K. Shridhara Bhat
• Production Planning And Control :
S.K.Mukhopadhyay

26. Thank You

28. STRUCTURE OF MRP COMPUTER PROGRAMME
ORDERS &
FORECASTS
MASTER
SCHEDULE
PRODUCT
STRUCTURES &
BILL OF
MATERIAL
MRP
PROGRAMME
REPORTS: OPEN ORDERS
PLANNED ORDERS
NET REQUIREMENTS
LOAD & CAPACITY
INVENTORY
SPECIAL
INVENTORY
STATUS

29. INPUTS & OUTPUTS FROM MRP SYSTEM
INPUTS
OUTPUTS
TIMETABLE
FOR ORDERS
MASTER
PRODUCTION
SCHEDULE
CHANGES TO
ORDERS
TIMES FOR
OPERATIONS
BILL OF
MATERIALS
MRP
PROGRAMS
LEAD TIMES
OTHER
ORDER
INFORMATION
INVENTORY
LEVELS
EXCEPTION
REPORTS
PERFORMANCER
EPORTS
LONG TERM
PLANS
INVENTORY
TRANSACTIONS