Q. Explain the concept of M.R.P & discuss the steps Involved in M.R.

P
Implementation.

MATERIALS REQUIREMENTS PLANNING (M.R.P)

Materials Requirements planning is a computer bases information designed
into handle ordering and scheduling of dependent –demand inventories (raw materials
sub assemblies, parts, components) .A production plan for a specified number of
limited products (usually over a quantity as monthly time period) in the from of a
“Master production schedule” is translated into requirements of component parts and
raw materials working backward from the due date (need date in the production
process) using lead times and other information (regarding have the product is built)
to determine when to order and how much to order. Hence requirements of end times
generate the requirements for lower level component, which are broken down by
planning periods (e.g. weeks) so that ordering fabrication and assembly can be
scheduled low time completion of end items while inventory levels are kept reasonably
low.

Materials requirements planning is a philosophy as well as technique and also

an approach to production scheduling, procurement scheduling and inventory control.

Objective of MRP
The objective of material requirements planning in operations
Management one:
1 To improve customer service by meeting delivery schedules promised and
shortening delivery lead times
2 To reduce inventory costs by reducing inventory levels

3 To improve plants operating efficiency by better use of productive resource.

These Facts of MRP technique are:-
1 The MRP teaching as a requirements calculator
2 The MRP –A manufacturing, planning and control system.
3 The MRP – A manufacturing, resource planning system.
The MRP technique as a requirement calculator was originally used as
an inventory control tool providing reports that specify how many components
should be ordered, when they should be ordered and when they should be
procured or produced in-house since MRP is a computer based system, it was
possible to expand the system into a manufacturing, planning or control system by
providing information for planning and controlling both the material and the
capacity required to manufacture the product, Hence MRP serves as a key
component in a information system and procurement of materials. It is the basic
foundation for production activity control or shape floor control, for vendor follow up
systems and for detailed capacity requirements planning. When both the MRP and
CRR are integrated within one system, the system is know as “ Materials
Requirements planning” abbreviated as’ MRP’.

MANUFACTURING RESOURCE PLANNING OR MRP –II

When the capabilities of closed-loop MRP are extended to integrate
financial accounting, personnel, engineering and marketing information along with
the production planning & control activities of basic MRP system, the resulting
hard-based resource planning or MRP-II, MRP-II is it heart of corporate
management information system many companies as it provides information about
inventory investment levels, plant expansion needs and work force requirements,
that is useful for co-coordinating marketing, financial, engineering and
manufacturing efforts to achieve the company’s overall business plans.
The projections of what materials and components will be purchased
and when, can be used to develop purchase commitments and a projected
purchasing budget.
GENERAL OVERVIEW OF MRP (MATERIAL REQUIREMENT PLANNING)
Basically, MRP consist of a set of computer programs that are
periodically (once a week or once a month) to in corporate the latest schedule of
production requirements MRP performs three important functions viz

1. Order planning and control; i.e., when to release orders and for what quantity?

2. Priority planning and control i.e. comparison of expected date of availability with
the need date of each item.

3. Provision of a basic for planning capacity requirements and development of

broad business plans.

Exhibit 1.1 shows a flow chart that provides general overview of MRP as
a means of co ordinating purchasing activities to support manufacturing as well as
materials requirement and capacity requirements.
 Exhibit 1.1 :- Information flow for planning & Controlling with MRP

Exhibit 1.2 illustrates the operation of MRP system.

Operation of the MRP system.

Inputs Processing Outputs

 Inventory
status file
Inventory
transaction data

MPS life MRP Planned order

Systems schedule

BOM file
Exception
reports

The entire MRP system is driven by the mps The bill of materials file and inventory
status file are fed to the MRP computer program to generate the outputs.

MRP SYSTEM INPUTS:

1.Master production schedule (mps) : The MPS specifies what end products are to be produced
and when The planning horizon should be long enough to the cumulative lead times of
components that must be purchased or manufacharing to must the end product requirement

2. Bill of materials file or product structure

this file provides the information regarding the materials ,parts and sub-assemblies that
go into the end product. The bill of Material can will as having a series of levels, each of
which represents a stage in the manufacture of the product. The highest level (or zero level)
of the BOM represents the final assembly or and product. The BOM file identifies each
component by a unique part number and facilitates processing exploding the end product
requirement into component requirements.

3. Inventory status file :- The inventory status file gives complete and up-to-date information
one on hand quantities, gross requirements,scheduled receipts and planned order releases
for the item. It also includes other information such as lot sizes lead times, safety stock
levels and scrap allowances ect. The gross requirement are total needs from all resources
whereas the net requirements are “net” after allowing for available inventory and scheduled
receipt scheduled receipts are quantities already an order from a vendor or in-house shop
planed receipts are quantities that will be ordered on a vendor or in-house shop planned
receipt are quantities that will be ordered on vendor or in house shop planed order release
indicates the quantity and date to initiate the purchase or manufacture of materials after the
lead time offset.
Net requirement Gross requirement Scheduled receipt for the period + On hand
Fro a period  for the period  period + on inventory at the end of the period

MRP SYSTEM OUTPUTS

Two primary outputs are
1. Planned order schedule which is a plan of the quantity of each material to be ordered in each
time period. The order may be a purchase order on the suppliers or production orders for parts and
sub-assemblies on production of previous

2. Changes in planned orders i.e. modification of previous planned orders.

1. Exception reports which list items requiring management attention to control
2. Performance report regarding how well the system is operating e.g. inventory turnovers
percentage of delivery promises kept and stock out incidences.
4. Planning reports such as inventory forecasts, purchase commitment reports etc,

Steps involved in MRP Implementation:

(a) Determine the Aggregate Requirements of finished products: - The Aggregate

Requirement of finished Products: - The aggregate quality represent the gross
requirements of a product over a given period The gross requirement are
obtained from the following sources:
1 Time, period wise actual quantities taken from sales order on hand.
2 Time period wise quantities forecasted from time series analysis.
3 Time period wise quantities based on feedback received from sales force.

MRP concept is based on independent and dependent demand. Since the

requirement of products are not related to each other is terms of customer and
quantity, it forms independent part of the equation However, once the total sales
requirements have been either forecasted for know, the quantities of sub-
assemblies, parts and raw materials which go to make up the products can be
calculated and they form dependent part of the equation.

(b) Determine the net Requirements of finished products:-

The gross requirement obtained as above are adjusted by available inventory of the
product to obtain net requirements = Gross Requirements (-) Inventory Available.
(C) Developing a Master Production schedule: - From the net requirements for each item
Period, a master production Schedule is prepared. A Master Production schedule
Express the over all plan of the production. It spells out the different products to be
Manufactured over the given span of time.

(D) Exploding the Bill of materials and determine the Gross requirement: - for each
Assembly, a structured bill of material is available and it contains the information to
Identify each item of the assembly and the quantity required per assembly of which it is
a part .
The gross requirement of each part is ascertained by multiplying the net assembly
requirement on the master schedule by the quantity required of the part per assembly as given in
the bill-of-material. The computer software is available which does the computation of requirement
of parts on a level-by-level basis.
If the part is purchased the item, the order would be placed and would conclude the
procedure. The purchased quantity is adjusted for expected loses in scrap.

(E) Screen Out ‘B’ and ‘c’ category of items

(F) Determine the Net Requirements if Item :-

The gross requirements of an items obtained in step(d) above is
adjusted for “stock on hand “, and “stock on order “ At times it may be found that
the item is overstocked and does not require to be replenished. At times, it need to
be ordered/ manufactured.

(G) Adjust Requirement for scrap Allowance:-

There may be source rejections during the manufacturing, which needs to be
accounted so that accurate numbers will be available for assembly. This is usually
estimating the percentages. This is usually estimating the percentages of loss and
adding it to the net requirements when the item is ordered

(I) Scheduled Planned orders:-Once the quantity of an item is determined, the

next ,step is to its scheduling which scheduling manufacturing cycle time is taken
into account and to that extent the item is off-set for delivery.
(i) Aggregate Requirements and Determine order Quantities sense of the items
may be concern to a number of assemblies and at various levels It will be,
therefore, wrong to place on order each time when on item appears to be
replenished but wait until the final demand is development.

(i) Write and place the planned orders:- After the requirement of each item has
been determined, their purchase orders/work orders can be printed in the form of
computer printout.

(K) Maintained the schedules: Writing the orders does not mean that the product
will be delivered in time. Regular follow up is necessary expediting may require to
be done in scene cases until the product is ready to be delivered to the customer.