Material requirements planning (MRP), Requirements of MRP, MRP input, MRP processing, MRP outputs, MRP II (Manufacturing Resources Planning)

Material requirements planning (MRP)

A computer-based information system that translate requirements of MPS for end items into time-phased requirements for subassemblies, components, & raw materials

• Working backward from the due date using lead times & other information to determine when & how much to order

Benefits of MRP

• Low levels of in-process inventories, due to an exact matching of supply to demand
• The ability to keep track of material requirements
• The ability to evaluate capacity requirements generated by a given master schedule
• A means of allocating production time
• The ability to easily determine inventory usage by backflushing

Backflushing: Exploding an end item’s BOM to determine the quantities of the components that were used to make the item

Requirements of MRP

In order to implement & operate an effective MRP system, it is necessary to have

• A computer & necessary software program to handle calculation & maintain records

• Accurate & up-to-date

- Master schedules, Bills of materials, Inventory records

• Integrity of file data

MRP input

• The Master Schedule (MPS)

- The master schedule separates the planning horizon into a series of time periods or time buckets

Planning horizon must cover the cumulative lead time

Cumulative lead time: Sum of the lead times that sequential phases of a process require, from ordering of parts or raw materials to completion of final assembly

• The Bill of Materials (BOM)

- A list of all the raw materials, parts, subassemblies, & assemblies needed to produce one unit of a product

Product structure tree: A visual depiction of the requirements in a bill of materials, where all components are listed by level

• The Inventory Records

- Includes information on the status of each item by time period

MRP processing

MRP processing takes the end item requirements specified by the master schedule & explodes them into time-phased requirements for assemblies, parts, & raw materials using the bill of materials offset by lead times

MRP outputs

Primary reports: Production & inventory planning & control are part of primary reports

• Planned orders (a schedule indicating the amount & timing of future orders)

• Order releases (authorizing the execution of planned orders)

• Changes (revisions of due dates or order quantities, or cancellations of orders)

Secondary reports: Performance control, planning, & exceptions belong

• Performance-control reports (Evaluation of system operation, including deviations from plans & cost information)

• Planning reports (Data useful for assessing future material requirements)

• Exception reports (Data on any major discrepancies encountered)

MRP II (Manufacturing Resources Planning)

Expanded approach to production resource planning, involving other areas of a firm in the planning process & enabling capacity requirements planning

• Closed-Loop MRP (When any system began to include feedback loops, referred to as closed-loop)