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Material Requirements
Planning
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Materials requirements planning (MRP) is a
means for determining the number of parts,
components, and materials needed to produce
a product
MRP provides time scheduling information
specifying when each of the materials, parts,and components should be ordered or produced
Material Requirements PlanningDefined
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Dependent Demand
The demand for one item is relatedto the demand for another item
Given a quantity for the end item,the demand for all parts andcomponents can be calculated
In general, used whenever aschedule can be established for anitem
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Benefits of MRP
1. Better response to customerorders
2. Faster response to marketchanges
3. Improved utilization of facilities
and labor4. Reduced inventory levels
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Based on a master production schedule, a materialrequirements planning system:
Creates schedules identifying the specific parts
and materials required to produce end items
Determines exact unit numbers needed
Determines the dates when orders for thosematerials should be released, based on lead
times
Material Requirements Planning
System
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Elemen MRP
1. Master production schedule
2. Specifications or bill of material
3. Inventory availability4. Purchase orders outstanding
5. Lead times
Effective use of dependent demandinventory models requires thefollowing
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Master Production Schedule (MPS)
Show quantity each item must beproduced each periode
Specifies what is to be made and when
Must be in accordance with theaggregate production plan
As the process moves from planning toexecution, each step must be tested for
feasibility
The MPS is the result of the productionplanning process
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BOM (Table Example)
Top
Leg
Long Rail
Short Rail
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BOM (Product Structure)
Short Rails
(2)
Table
(End Item)
Long Rails
(2)
Legs
(4)
Top
(1)
Leg Assembly
(1)
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Code
Level Code Component
0 Table (end-item)
1 Leg assembly (1)
2 Short rails (2)
2 Long rails (2)
2 Legs (4)
1 Top(1)
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MRP versus Order-Point Systems
Attribute MRP Order Point
Demand Dependent Independent
Order
philosophy
Requirements Replenishment
Forecast Based on master
schedule
Based on past
demandControl
concept
Control all items ABC
Objectives Meet manufacturing
needs
Meet customer
needs
Lot sizing Discrete EOQ
Types of
inventory
Work in process and
raw materials
Finished goods
and spare parts
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Example of MRP Logic and Product Structure Tree
B(4)
E(1)D(2)
C(2)
F(2)D(3)
AProduct Structure Tree for Assembly A Lead Times
A 1 day
B 2 days
C 1 day
D 3 days
E 4 days
F 1 day
Total Unit Demand
Day 10 50 A
Given theproduct structure treefor A and the lead time and
demand information below, provide a materials requirements
plan that defines the number of units of each component and
when they will be needed
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LT = 1 day
Day: 1 2 3 4 5 6 7 8 9 10
A Required 50
Order Placement 50
First, the number of units of A are scheduled
backwards to allow for their lead time. So, in the
materials requirement plan below, we have to place
an order for 50 units of A on the 9th day to receive
them on day 10.
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Next, we need to start scheduling the components that make up
A. In the case of component B we need 4 Bs for each A.
Since we need 50 As, that means 200 Bs. And again, we back
the schedule up for the necessary 2 days of lead time.Day: 1 2 3 4 5 6 7 8 9 10
A Required 50
Order Placement 50
B Required 200
Order Placement 200
B(4)
E(1)D(2)
C(2)
F(2)D(3)
A
SparesLT = 2
4x50=200
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Day: 1 2 3 4 5 6 7 8 9 10
A Required 50
LT=1 Order Placement 50B Required 200
LT=2 Order Placement 200
C Required 100
LT=1 Order Placement 100
D Required 400 300
LT=3 Order Placement 400 300
E Required 200LT=4 Order Placement 200
F Required 200
LT=1 Order Placement 200
B(4)
E(1)D(2)
C(2)
F(2)D(3)
A
Finally, repeating the process for all components, we have the
final materials requirements plan:
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MRP Example
A(2) B(1)
D(5)C(2)
X
C(3)
Item On-Hand Lead Time (Weeks)
X 50 2
A 75 3
B 25 1
C 10 2
D 20 2
Requirements include 95 units (80 firm orders and 15 forecast) of Xin week 10
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A(2)
X
Day: 1 2 3 4 5 6 7 8 9 10
X Gross requirements 95
LT=2 Scheduled receipts
Proj. avail. balance 50 50 50 50 50 50 50 50 50 50
On- Net requirements 45
hand Planned order receipt 45
50 Planner order release 45
A Gross requirements 90
LT=3 Scheduled receipts
Proj. avail. balance 75 75 75 75 75 75 75 75
On- Net requirements 15
hand Planned order receipt 15
75 Planner order release 15
B Gross requirements 45
LT=1 Scheduled receiptsProj. avail. balance 25 25 25 25 25 25 25 25
On- Net requirements 20
hand Planned order receipt 20
25 Planner order release 20
C Gross requirements 45 40
LT=2 Scheduled receipts
Proj. avail. balance 10 10 10 10 10
On- Net requirements 35 40hand Planned order receipt 35 40
10 Planner order release 35 40
D Gross requirements 100
LT=2 Scheduled receipts
Proj. avail. balance 20 20 20 20 20 20 20
On- Net requirements 80
hand Planned order receipt 80
20 Planner order release 80
It takes2 As for
each X
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Day: 1 2 3 4 5 6 7 8 9 10
X Gross requirements 95
LT=2 Scheduled receipts
Proj. avail. balance 50 50 50 50 50 50 50 50 50 50
On- Net requirements 45
hand Planned order receipt 45
50 Planner order release 45
A Gross requirements 90
LT=3 Scheduled receipts
Proj. avail. balance 75 75 75 75 75 75 75 75
On- Net requirements 15
hand Planned order receipt 15
75 Planner order release 15
B Gross requirements 45
LT=1 Scheduled receiptsProj. avail. balance 25 25 25 25 25 25 25 25
On- Net requirements 20
hand Planned order receipt 20
25 Planner order release 20
C Gross requirements 45 40
LT=2 Scheduled receipts
Proj. avail. balance 10 10 10 10 10
On- Net requirements 35 40hand Planned order receipt 35 40
10 Planner order release 35 40
D Gross requirements 100
LT=2 Scheduled receipts
Proj. avail. balance 20 20 20 20 20 20 20
On- Net requirements 80
hand Planned order receipt 80
20 Planner order release 80
B(1)A(2)
X
It takes
1 B for
each X
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A(2) B(1)
X
C(3)
Day: 1 2 3 4 5 6 7 8 9 10
X Gross requirements 95
LT=2 Scheduled receipts
Proj. avail. balance 50 50 50 50 50 50 50 50 50 50
On- Net requirements 45
hand Planned order receipt 45
50 Planner order release 45
A Gross requirements 90
LT=3 Scheduled receipts
Proj. avail. balance 75 75 75 75 75 75 75 75
On- Net requirements 15
hand Planned order receipt 15
75 Planner order release 15
B Gross requirements 45
LT=1 Scheduled receiptsProj. avail. balance 25 25 25 25 25 25 25 25
On- Net requirements 20
hand Planned order receipt 20
25 Planner order release 20
C Gross requirements 45 40
LT=2 Scheduled receipts
Proj. avail. balance 10 10 10 10 10
On- Net requirements 35 40hand Planned order receipt 35 40
10 Planner order release 35 40
D Gross requirements 100
LT=2 Scheduled receipts
Proj. avail. balance 20 20 20 20 20 20 20
On- Net requirements 80
hand Planned order receipt 80
20 Planner order release 80
It takes 3
Cs for
each A
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A(2) B(1)
C(2)
X
C(3)
Day: 1 2 3 4 5 6 7 8 9 10
X Gross requirements 95
LT=2 Scheduled receipts
Proj. avail. balance 50 50 50 50 50 50 50 50 50 50
On- Net requirements 45
hand Planned order receipt 45
50 Planner order release 45
A Gross requirements 90
LT=3 Scheduled receipts
Proj. avail. balance 75 75 75 75 75 75 75 75
On- Net requirements 15
hand Planned order receipt 15
75 Planner order release 15
B Gross requirements 45
LT=1 Scheduled receiptsProj. avail. balance 25 25 25 25 25 25 25 25
On- Net requirements 20
hand Planned order receipt 20
25 Planner order release 20
C Gross requirements 45 40
LT=2 Scheduled receipts
Proj. avail. balance 10 10 10 10 10
On- Net requirements 35 40hand Planned order receipt 35 40
10 Planner order release 35 40
D Gross requirements 100
LT=2 Scheduled receipts
Proj. avail. balance 20 20 20 20 20 20 20
On- Net requirements 80
hand Planned order receipt 80
20 Planner order release 80
It takes 2
Cs for
each B
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A(2) B(1)
D(5)C(2)
X
C(3)
Day: 1 2 3 4 5 6 7 8 9 10
X Gross requirements 95
LT=2 Scheduled receipts
Proj. avail. balance 50 50 50 50 50 50 50 50 50 50
On- Net requirements 45
hand Planned order receipt 45
50 Planner order release 45
A Gross requirements 90
LT=3 Scheduled receipts
Proj. avail. balance 75 75 75 75 75 75 75 75
On- Net requirements 15
hand Planned order receipt 15
75 Planner order release 15
B Gross requirements 45
LT=1 Scheduled receiptsProj. avail. balance 25 25 25 25 25 25 25 25
On- Net requirements 20
hand Planned order receipt 20
25 Planner order release 20
C Gross requirements 45 40
LT=2 Scheduled receipts
Proj. avail. balance 10 10 10 10 10
On- Net requirements 35 40hand Planned order receipt 35 40
10 Planner order release 35 40
D Gross requirements 100
LT=2 Scheduled receipts
Proj. avail. balance 20 20 20 20 20 20 20
On- Net requirements 80
hand Planned order receipt 80
20 Planner order release 80
It takes 5
Ds for each
B