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Amity Global Business School MUMBAI Sem II

Santosh Pathak

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 availablefor 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:

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Amity Global Business School MUMBAI Sem II

Santosh Pathak

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) > 0set 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)

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Amity Global Business School MUMBAI Sem II

Santosh Pathak

MRP at Plant Level

The system adds together stocks from all of the individual storagelocations, with the exception of individual customer stock, to determine

total plant stock.

Individual storage locations can be planned separately or be excluded fromplanning.

MRP at Area Level

Only the stocks from the storage locations or subcontractor assigned to therespective MRP area are taken into account.

This enables you to plan material requirements specifically for certainareas.

MRP Planning

MRP Outputs

Planned orders - schedule indicating the amount and timing of future

orders.

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Amity Global Business School MUMBAI Sem II

Santosh Pathak

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 reportsException reports

The Benefits of MRP

Inventory reduction,Reduction in production & delivery time Increased efficiency.Faster response to market changes Improved labor & equipment utilizationBetter inventory planning & schedulingReduced inventory levels without reduced customer service

SALES & OPERATIONS PLANNING OBJECTIVES

SUPPORT THE PROFIT PLANSUPPORT THE CUSTOMER INSURE REALISTIC PLANSLEAD CHANGEMANAGE INVENTORYMAKE DECISIONS -RESOLVE ISSUESMEASURE PERFORMANCEBUILD TEAM WORK!

Manufacturing Resource Planning (MRP II)Expanded MRP with and emphasis placed on integration

Financial planning

Marketing

Engineering

Purchasing