Materials Requirements Planning (MRP)

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.

Production Planning Hierarchy

Firm orders from known customers Aggregate Product Plan Forecast of demand from random customers

Engineering design changes

Master Production Schedule (MPS) Material Requirements Planning (MRP)

Inventory transactions

Bill of Materials (BOM) file

Inventory records file

Reports

Materials Requirements Planning (MRP) Computer based system Explodes Master Schedule (MPS) into required amounts of raw materials and subassemblies to support MPS

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

Objectives of MRP Improve customer service Reduce inventory investment Improve plant operating efficiency

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 Lower inventory carrying cost Reduced risk of obsolescence Shorter cycle time to produce customer order

Small lots are preferred because:

Bill Of Material (BOM) A list of components and raw material and their respective quantities required to produce specific end items.

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 What What What are we going to make? does it take to make it? do we have? do we have to get?

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