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Presented by: Sameer D Amale
MATERIAL REQUIREMENTS PLANNING
Definition: Material requirements planning (MRP) is a production planning and inventory control system used to manage manufacturing processes.
MRP is the common tool used for tracking dependent demand items
Determines quantity & timing of dependent demand items.
Determines how much and when to buy, how much to make and when to make
Objective:
Ensure materials are available for production and products are available for delivery to customers.
Maintain the lowest possible material and product levels in store
Plan manufacturing activities, delivery schedules and purchasing activities.
Goal is to accomplish the MPS – Master Production Schedule
Dependent Demand The demand for one item is related to the demand for
another item Component part to be used in the production of finished
goods.
Independent Demand When demand for one item is not related to the demand for
another item Independent demand is fairly stable once allowances are
made for seasonal variations.
LLA
B C
D E GF
Independent vs. Dependent Demand
Dependent Demand
Independent Demand
L (0)
L (1)
L (2)
MRP INPUTS1)The master production schedule:
States which end items to be produced, when they are needed, and in what quantities
The quantities are determined through customers order ,forecast & orders from warehouse.
For Eg: Master Production Schedule for end item X Week Number
ITEM X 1 2 3 4 5 6 7 8
Quantity 400 150
2) Bill of material
Contains list of all the assemblies , subassemblies ,parts raw materials needed to produce one unit of a finished Product.
Listing in the bill of materials is hierarchical.
It is represented through a product tree structure.
X (1)
A(1) C(1)
D(2)
B(1)
E(2) F(1)
J(2) K(1)
G(1) H(3) F(1)
J(2)
For Eg : Suppose we want to manufacture 100 units of X then What quantities of A B C D E F G H J K are required?
Product Structure for item X
100 100 100
100
400
100200200
200
100
200
300100
3) Inventory Records:
Gives complete and up to date information of on hand inventory, Gross requirement , Scheduled receipts and planned order release for the item
It also includes details such as lot sizes ,lead times, safety stocks.
Basically its job is to keep data about the projected use and receipts of each item and to determine amount of inventory available
10
©The McGraw-Hill Companies, Inc., 2004
Firm orders from knowncustomers
Forecastsof demand
from randomcustomers
Aggregateproduct
plan
Bill ofmaterial
file
Engineeringdesign
changes
Inventoryrecord file
Inventorytransactions
Master productionSchedule (MPS)
Primary reportsSecondary reports
Planned order schedule for inventory and production control
Exception reportsPlanning reportsReports for performance control
Materialplanning
(MRP computer program)
Useful Formulae :
Net Requirement = (Gross Requirement) – (Inventory on hand) + ( Inventory on order )
On Hand Inventory over period ( t ) = on hand inventory over period (t-1) + (Scheduled receipt –Projected requirement )
MRP Lot-Sizing: Using Lot-for-Lot
MRP Lot-Sizing Problem: Using the EOQ
A(1)
B(2) C(1)
D(1)
E(2)F(3)E(2)
80 120
50
130
130
200 200
D(1) G(2)
390 195
Eg :Use MRP format to determine the order size for all item and when each order should be released.
Net Requirements Plan
Net Requirements Plan (cont.)
• Increased customer satisfaction due to meeting delivery schedules
• Faster response to market changes• Improved Labour & equipment utilization• Better inventory planning & scheduling• Reduced inventory levels without reduced
customer service
MRP Benefits
THANK YOU