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Presented By :
K.V.S.PHANI
Assistant Professor
DEPARTMENT OF MECHANICAL
KOMMURI PRATAP REDDY INSTITUTE OF TCHNOLOGY

LIST OFCONTENT
Definition
Objectives of MRP
Benefits of MRP
Requirements for MRP
MRP Terminology
The scope of MRP
The function of MRP
When can do MRP
MRP system
MRP Inputs/Outputs
Advantages of MRP
Disadvantages of MRP
Conclusion

MATERIAL REQUIRMENTS PLANNING(MRP)
DEFINITION :
Material Requirements Planning was introduced in 1970’s.
Material requirements planning (MRP) refers to production planning and
inventory control software systems that are used to manage the manufacturing
process.
A materials requirement planning (MRP) information system is a sales
forecast- based system used to schedule raw material deliveries and
quantities, given assumptions of machine and labor units required to fulfill a
sales forecast.
MASTER SCHEDULE
FOR
END ITEMS
DETAILED
SCHEDULE FOR
RAW MATERIALS
AND COMPONENTS
USED IN THE END
COMPONENTS
DEPEDENT
DEMAND
LUMPY
WHAT MRP DOES

OBJECTIVES OF MRP
To ensure that material and components are available for production, and
final products are ready for dispatch.
To maintain minimum inventory but also ensure right quantity
of material is available at the right time to produce right
quantity of final products.
To ensure planning of all manufacturing processes , this scheduling of
different job work as to minimize or remove any kind of idle time for
machine and worker
CONTINIOUS
DEMAND
ASSUMING
EOQ FORMULA
TIME
INV
LEVEL
AVG RATE
DEMAND
TIME
LUMPY DEMAND
INV LEVEL
LUMPY DEMAND
RAW MATERIALS , COMPONENTS ,
SUB ASSEMBLES CONSUMED LARGE
INCREMENTS
CORRESPONDING TO A CERTAIN
BATCH OF FINAL PRODUCT

BENEFITS OF MRP
Some specifically important benefits found by many industries are:
 Improved customer service(late orders reduced by 90%)
 Faster response to market changes,
 Greater Productivity
 Improved utilization of facilities and labor .
 Reduction in Inventory( 30 % -50 % in WIP)
 Better Machine Utilization
 Increased sales and reductions in sales price…
Better response to customer order and to the market wins orders and market
share. Better utilization of facilities and labor yield higher productivity and
return on investment. Less inventory allows capital and floor to be used for other
uses.

REQUIRMENTS FOR MRP
Effective use of MRP requires that the operations manager
should know the :
Master production schedule (what is to be made and when)
Specifications or bill of material (material and parts
required to make the product)
Inventory availability (what is in stock )
Purchase orders outstanding (what is in order),and
Lead time (job is the time that must be allowed to complete
the job from start o finish ).
ordering lead time (an item is the time required from
initiation of the PR to receipt of the item from the vendor)
Manufacturing lead time (is the time needed to process the part
through the sequence of m/c’s specified on the route sheet)

MRPTERMINOLOGY
MRP : A technique for determining the quality and timing of dependent
demand items
Dependent Demand : The demand for the item is related directly
to the demand for some other product.
Independent Demand : the demand for a product is unrelated
to demand for other items ( End products and spare parts). .
Lot Size : The quantity of items required for and order.
Time Phasing : Scheduling to produce or receive an appropriate amount
of material so that it will be available in the periods when required.
Time Bucket : The time period used for planning process in MRP.
Gross Requirements : The over all quantity of an items needed at
the end of the period to meet the planned output levels .

Net Requirements : The net quality of an item that must be acquired to
meet the scheduled output for the period. It is calculated as, Gross
requirements minus scheduled receipts for the period minus amounts
available from the previous period.
Scheduled Receipts : The quantity of an item that will be received from
suppliers as a result of orders that have placed.
Planned Order Receipts : The quality of an items that is planned to be
ordered so that will be received at the beginning of the period to meet net
requirements for the period . The order has not yet been placed.
Planned Order Release : The quantity of an item that planned to be
ordered of it is a plan received on schedule after the lead time.
Lead Time Offset : The supply time or number of time buckets
between releasing an order and receiving the materials.

THE SCOPE OF MRP
Dependent demand – Demand for items that are sub-assemblies, parts or
raw materials to be used in the production of finished goods .
Independent demand –Finished product.
THE FUNCTION OF MRP
Inventory control
Bill of material processing
Elementary Scheduling
WHEN TO USE MRP
Job shop production
Complex product
Assemble to Order Environment
Discrete and Dependent demand items.

Customer
orders
Bill of
materials file
Sales Forecasts
Master
Production
Schedule
MRP
Processor
Output
Reports
Service Parts
Requirements
Inventory
Transactions
Inventory
Record File
Engineering
changes
Structure of material requirements planning (MRP) System

MRP INPUTS
• Inventory status file( MRP to have accurate current data on
inventory data)
• Master Production Schedule ( it is a list of what end products
are to be produced , how many each product produced , and
when the product are to be ready for shipment.)
• Bill of Material File( which is a listing of component parts and
sub assembles that make up each product)
INVENTORY STATUS FILE
One –Hand quantities
One –Order quantities
Lot Size
Safety Stock
Lead Time

SAFTEY STOCKS IN INVENTORYFILE
Need for safety stocks:
Variations in demand due to end-item forecast errors
and inventory errors
Variations in supply – both lead-times and quantities
Options to provide safety factors:
Fixed quantity buffer stocks
Safety lead-time
Increase gross requirements

Overall View of the inputs to astandard MRPprogram andthe
reports Generatedby theprogram.

MASTER PRODUCTION SCHEDULE(MPS)
Master Production Schedule is a list of
what end products are to be produced ,
how many of each product is to be
produced , when the Products are to be
ready for shipment.
Represents Production, not Demand
Combination of Customer Orders and
demand Forecasts
What Needs to be Production.
Master schedule uses weeks as the time
periods.

BILL OF MATERIALFILE (BOM)
This file provides the information regarding all the materials,
parts and sub- assemblies that so into the end product.
The bill of materials can be viewed as having a series of levels
, each of which represent a stage in the manufacturing of the
end product.
P1 (level 0)
S1(Sub Assemblies) S2(Sub Assembles)
C2(4) C3(1)C1(1) C5(2) C6(1)C4(2)

ADVANTAGES OF MRP
• It helps in maintain minimum inventory levels
• With minimum inventory levels , material planning also reduces
associated costs.
• Material tracking becomes easy and ensures that economic order quantity is
achieved for all lot orders.
• Material planning smoothens capacity utilizations and
• allocates correct time to products as per demand forecast.

DISADVANTAGES OF MRP
Material planning is highly dependent on inputs it receives from
systems or department .It in out information is not correct than
output for material planning will also be incorrect.
Material planning system requires proper training for end
users, as to get maximum out of the system.
Material resource planning system requires substantial
investment of time and capital.


MRP OUTPUT
PRIMARY OUTPUTS
 Inventory Transaction Data
 Report showing Planned Order to be
released in future periods
 Rescheduling notices , indicating
changes the due dates for open orders
 Reports on inventory Status
 Order release notice , to place orders that have been
planned by the MRP system
SECONDARY OUT PUTS
--- performance reports of various types –costs , item
usage , actual vs planned lead times and other
measure of performance.
--Exception reports Showing – deviations from
schedule, overdue orders , scrap and so on…

EVALUTION OF MRP
AN IMPROVED ORDERIONG METHOD ( improved computational efficiency of computers)
PRIORITY PLANNING (unrealistic machine ignoring plant capacities)
CLOSED LOOP MRP (not only plans priorities but provides feedback to executing the priority plan)
MRP II (manufacturing resource planning ) ( links functions
CAPACITY PLANNING , IM ,
MRP,SHOP FLOOR CONTROL)
LINKS UP THE CLOSED LOOP MRP SYSTEMWITH TE FINANCIAL SYSTEM OF THE COMPANY)
IT IS AN OPERATIONAL AND FINANCIAL SYSTEM
COMPANY WIDE SALES , SALES , PRODUCTION , ENGINEERING , INVENTORIES , CASH FLOWS .
IT IS A SIMULATOR
WHAT IF QUESTIONS

CONCLUSION
 We conclude that MRP is a computer- based production
planning and inventory control system .That schedules
component items as needed which will track inventory
and helps you in many other aspects of business.
 MRP is very much essential for manufacturing company.

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