Amity Global Business School MUMBAI

Sem II

Material Resource Planning (MRP I) Material Requirements Planning (MRP) is a software based production planning and inventory control system used to manage manufacturing processes. Although it is not common now-a-days, it is possible to conduct MRP by hand as well. An MRP system is intended to simultaneously meet three objectives: Ensure materials and products are available for production and delivery to customers. Maintain the lowest possible level of inventory. Plan manufacturing activities, delivery schedules and purchasing activities. When to Use MRP I systems are usually employed when 1 or more of following conditions exist:

Santosh Pathak

Amity Global Business School MUMBAI

Sem II

When usage (demand) of materials is discontinuous or highly unstable during a firms normal operating cycle (intermittent manufacturing or job shop operation as opposed to a continuous-processing or mass-production operation)

MRP Processing Gross requirements: (Forecasted)Demand period by period Net requirements(t) =Gross requirements(t)-Projected inventory(t-1) -Scheduled receipt(t) If Net requirement(t) > 0 set Planned order receipts(t)>=Net requirement(t) Planned-order receipts is the production planned Projected inventory(t) =Projected inventory(t-1)+Scheduled receipt(t) +Planned order receipts(t)-Gross requirements(t) Planned order release(t-LT)=Planned-order receipts(t)

Santosh Pathak

Amity Global Business School MUMBAI

Sem II

MRP at Plant Level The system adds together stocks from all of the individual storage locations, with the exception of individual customer stock, to determine total plant stock. Individual storage locations can be planned separately or be excluded from planning. MRP at Area Level Only the stocks from the storage locations or subcontractor assigned to the respective MRP area are taken into account. This enables you to plan material requirements specifically for certain areas.

MRP Planning

MRP Outputs Planned orders - schedule indicating the amount and timing of future orders.

Santosh Pathak

Amity Global Business School MUMBAI

Sem II

Order releases - Authorization for the execution of planned orders. Changes - revisions of due dates or order quantities, or cancellations of orders. Performance-control reports Planning reports Exception reports The Benefits of MRP Inventory reduction, Reduction in production & delivery time Increased efficiency. Faster response to market changes Improved labor & equipment utilization Better inventory planning & scheduling Reduced inventory levels without reduced customer service

SALES & OPERATIONS PLANNING OBJECTIVES SUPPORT THE PROFIT PLAN SUPPORT THE CUSTOMER INSURE REALISTIC PLANS LEAD CHANGE MANAGE INVENTORY MAKE DECISIONS -RESOLVE ISSUES MEASURE PERFORMANCE BUILD TEAM WORK!

Manufacturing Resource Planning (MRP II) Expanded MRP with and emphasis placed on integration Financial planning Marketing Engineering Purchasing

Santosh Pathak