MRP is a system used in manufacturing to plan production schedules and material requirements. It takes inputs like the master production schedule and bill of materials to calculate net requirements through a process of exploding, netting, and offsetting. This helps control inventory levels and supports forecasted demand. MRP evolved into MRPII, which further integrates capacity planning, production scheduling, and other functions. While MRP improved efficiency, it also has disadvantages like reliance on accurate information and limited capacity planning.

1. MATERIALS
REQUIREMENTS
PLANNING
MRP

2.  What is MRP?
 MRP Input:
 Master Production Schedule (MPS)
 Bill of Materials (BOM)
 MRP Processing & Output
 Exploding
 Netting
 Offsetting
 Advantages & Disadvantages of MRP
 Manufacturing Resource Planning (MRPII)

3. Controls inventory levels, plans
production & helps with
manufacturing control system of
production of assembled parts to
support forecasted demand
What is Material Requirements
Planning?

4. What is MRP?
 Developed in 1960s
 Used in manufacturing
 Achieve low per unit costs
Objectives
 Improve customer service
 Reduce inventory investment
 Improve plant operating efficiency
 Quantity
 Schedule

5. What is MRP?
Demand
Management
Production
Plan
Master
Production
Schedule
Inventory
Record File
Material
Requirements
Planning
Bill of
Materials
Components of
MRP

6. MRP Inputs: MPS & BOM
http://www.resoco.co.uk/rstores.
htm

7. MRP Input: Master Production
Schedule
 Inputs
 Forecasts
 Aggregate Plan
 Company policies
 Inventory File
 Take capacity from
aggregate plan & allocate
 Short-range
 Cost-driven
Description
Item Canopy
Item No. 8479
Item Type Manuf.
Product/sales class Ass’y
Value class B
Buyer/planner RB
Vendor/drawing 07142
Phantom code G
Unit price/cost 15
Pegging Y
LLC 3
Physical Inventory
On hand 20
Location Y352
On order 50
Allocated 75
Cycle 5
Difference 4
Inventory
File

8. MRP Input: MPS
 Computerized MPS
 Inputs: forecast, safety stock,
inventory status & lot sizes
 Calculates: temporary MPS
 Compares: against load & capacity
 Outputs
 Rough Cut Capacity Plan

9. MRP Input: Bill of Materials
 Raw materials, assemblies,
components, and the
quantities of each needed
to manufacture an end item
 4 Different Contexts:
 Engineering
 Manufacturing
 Sales
 Service
 3 Different Formats
 Single-Level
 Indented
 Modular

10. MRP Input: BOM Contexts
 Engineering BOM
 Used as products are designed
 Manufacturing BOM
 Used as products are built
 Sales BOM
 As products are ordered
 Service BOM
 As products are maintained

11. MRP Input: BOM Formats
 Single Level BOM
 Indented BOM
 Modular BOM
XYZ Umbrella Company
Bill of Material, Part PH01
Part
Number
Description Qty for Each
Assembly
Unit of
Measure
B100 Base 1 Each
1100 Panel 4 Each
1200 Panel 4 Each
1300 Cross Piece 2 Each
1400 Base Support Bars 4 Each
P100 Receiving Pole 1 Each
1500 Pole 1 Each
1600 Washer 1 Each
1700 Bolt 1 Each
1800 Netting 1 Each
1900 Sand Bag 1 Each
2000 Cover Board 1 Each
C100 Canopy 1 Each
2100 Pole Assembly 1 Each
2200 Button 1 Each
XYZ Umbrella Company
Bill of Material, Part PH01-Umbrella
Part
Number
Description Qty for Each
Assembly
Unit of
Measure
B100 Base 1 Each
P100 Receiving Pole 1 Each
C100 Canopy 1 Each

12. MRP Processing & Output
 MRP Matrix 4 basic steps
 Exploding Bill of Materials
 Netting out Inventory
 Determining how many
units are required
 Time-phasing for future
demand & supply
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

13. MRP Processing
 Explodes MPS into
amount of
 Raw materials
 Parts
 Subassemblies
 Assemblies
 Netting
 Order quantity needed
 Offsetting
 Sufficient time to build
goods
Needed in each week
of the planning
horizons

14. MRP Processing: Explosion
Offset
Umbrella
Base (1)
Receiving
Pole (1)
Canopy
(1)
Panel A (4)
Panel B (4)
Cross Pieces (2)
Base Support Bars (4)
Pole (1)
Washer (1)
Bolt (1)
Water/Sand Bag (1)
Cover Board (1)
Pole Assembled (1)
Canopy Button (1)
Flat (2)
Round (2)

15. MRP Output
 Primary Outputs
 Recommended Production
Schedule
 Recommended Purchasing
Schedule
 Secondary
Reports
 Purchase Orders
 Action Notices

16. Advantages & Disadvantages of
MRP

17. Advantages of MRP
 Minimize Inventory
 Accurate Information
 Greater
Responsiveness to
Market
 Future Capacity
Planning
 Production
Planners/Managers
 Plant Foremen
 Customer Service
Representative
 Purchasing Manager
 Inventory Manager
Company Advantages Individual Advantages

18. Disadvantages of MRP
 Reliance on Information
 Increased Material Costs
 Hazard of Production Slowdown or Shutdown
 Hazard of Stock Out
 Doesn’t account for Plant & Distribution Capacity
 Implementation Difficulties

19. Evolution of MRP: MRPII
http://sapplanning.wordpress.com/2008/01/31/material-master-mrp-
tabs/

20. MRPII: Manufacturing Resource
Planning
 Developed 1980s
 Extended to include Materials, Finance, HR & Plant Capacity
 MPS develops MRP
 Integrates machine & labour capacity
 Provides schedule of production
 Runs according to when materials arrive
 Data on cost of production
 Machine time, labour time & materials provided to finance

21. MRPII: Advantages &
Disadvantages
 Includes shop floor
feedback & adjusts
accordingly
 Capacity taken into
consideration
 Integrates information
throughout company
 Integration problems
 Often limited to one
location
 No supply chain
capabilities
Advantages Disadvantages

22. In Conclusion
 Backward scheduling process for materials
 Drastically increased efficiency & decreased
inventory upon implementation
 Morphed into MRPII
 Replaced by more integrated ERP system

23. Questions

24. References
Alexander, Dusty. "Integrating Engineering And Manufacturing Bill Of Material (BOM) Through ERP Software
Solutions." Ezine Articles. 2007. Global Shop Solutions. 21 Mar 2009
<http://ezinearticles.com/?Integrating-Engineering-And-Manufacturing-Bill-Of-Material-(BOM)-Through-
ERP-Software-Solutions&id=487112>.
Bicheno, John & Elliot, Brian B.R. ‘Managing Demand and Supply of Materials: MRP.’ Operations Management: An
Active Approach to Learning. Malden, MA: Blackwell, 1997.
Clancy, Jon. "Engineering Bill of Materials." CIRAS News Vol 32. No 1.1997 21 Mar 2009
<http://www.ciras.iastate.edu/publications/CIRASNews/fall97/bom.html>.
Gaither, Norman. ‘Resource Requirements Planning Systems.’ Production and Operations Management. 6th ed.
Orlando, FL: Dryden Press, 1994.
Greasley, Andrew. ‘MPR, JIT and OPT.’ Operations Management in Business. London: Stanley Thornes, 1999.
"Master Scheduling: An Overview." MCTS . March 2009. 21 Mar 2009 <http://www.mcts.com/Master-
Scheduling.html>.
Mazzola, Joseph et al. ‘Multistage Manfacturing System: Material Requirements Planning.’ Operations Management:
Production of Goods and Services. 3rd ed. Englewood Cliff, NJ: Prentice-Hall, 1992.

25. References
Mbaya, Martin. "The Constraints and Limitations of Manufacturing Resource Planningas
A Tool For Shop Control." Jun 2000 19 Mar 2009
<http://dspace.mit.edu/bitstream/handle/1721.1/28226/47981810.pdf?sequence=1>.
Pandey, P.C.. "MRP II Should its Simplicity Remain Unchanged." Industrial Management
01 05 1996 19 Mar 2009 <http://www.allbusiness.com/specialty-business/579473-
1.html>
"Product Structure and Bill of Materials." Conflow Project. March 2009. DRM Associates.
23 Mar 2009 <http://www.npd-solutions.com/bom.html>.
"Sales BOM Implementation." SAP . March 2009. SAP Basis, ABAP Programming . 23
Mar 2009 <http://www.sap-img.com/sap-sd/sales-bom-implementation.htm>.
Sirapobthada, Pantit. IT for Productions & Manufacturing. <http://www.slideshare.net/>
12 March 2009.