2. Material Requirement Planning (MRP)
MRP determines the number of components and raw
material required and their build dates to complete a
given number of finished goods by a specific date.
3. Firm orders
from known
customers
Forecast
of demand
from random
customers
Aggregate
Product Plan
Master
Production
Schedule
(MPS)
Material
Requirements
Planning
(MRP)
Engineering
design changes
Bill of
Materials
(BOM) file
Inventory
transactions
Inventory
records
file
Reports
Production Planning Hierarchy
4. Materials Requirements Planning (MRP)
Computer based system
Explodes Master Schedule (MPS) into
required amounts of raw materials and
subassemblies to support MPS
5. Material Requirements Planning
How much of an item is needed?
When is an item needed to complete
◦ a specified number of units...
◦ in a specified period of time?
Dependent demand drives MRP
6. Objectives of MRP
Improve customer service
Reduce inventory investment
Improve plant operating efficiency
7. Lot-Sizing in MRP
Lot-size is the quantity ordered/produced
at one time
Large lots are preferred because:
◦ Changeovers cost less and capacity greater
◦ Annual cost of purchase orders less
◦ Price breaks and transportation breaks can be
utilized
Small lots are preferred because:
◦ Lower inventory carrying cost
◦ Reduced risk of obsolescence
◦ Shorter cycle time to produce customer order
8. Bill Of Material (BOM)
A list of components and raw material and
their respective quantities required to
produce specific end items.
9. Manufacturing Resource Planning (MRP II)
Advanced MRP system that takes into
consideration the equipment capacities and
other resources that are associated with a
manufacturing facility.
Fundamental manufacturing equation of MRP
II is
What are we going to make?
What does it take to make it?
What do we have?
What do we have to get?
10. MRP I to MRP II
MRP I simply exploded demand (MPS) into required
materials
MRP II became Manufacturing Resource Planning
which provides a closed-loop business
management system
◦ Financial management
◦ Shop floor control
◦ Operations management
◦ Simulation capability
