Material Requirement Planning (MRP) A computerized information system to aid in managing dependant demand inventory and scheduling replenishment orders Purposes of MRP Inventory – right part, quantity, time Capacity – complete load Priority – due date Getting the right material to the right place at the right time

Material Requirement Planning (MRP) Inputs to MRP Bill of material (BOM) Master production schedule (MPS) Inventory record database Bill of Material (BOM) all the components of an item usage quantities (for unit parent) the parent-component relationships

Material Requirement Planning (MRP) Bill of Material Seat Assy Ladder back Assy Back slats Seat Frame Seat Cushion Seat Frame Board Back legs Chair Front legs Leg supports

Material Requirement Planning (MRP) Bill of Material Chair Ladder back subassy Front legs Leg supports Seat subassy 1 2 4 1 Back legs Back slats Seat Frame Seat Cushion 2 4 1 1 Seat Frame Board 4

Material Requirement Planning (MRP) Master Production Schedule (MPS) Details of how many end items will be produced within specified periods of time April May Aggregate 670 Week number 1 2 3 4 5 6 7 8 Ladder-back Chair Kitchen chair Desk chair 150 150 120 120 200 200 200 200

Material Requirement Planning (MRP) Projected on-hand inventory (37) Inventory Record A record that shows an item’s lot-size policy, lead time and various time-phased data Lot size = 230 unit Lead time = 2 wks Week No. 1 2 3 4 5 6 7 8 Gross requirements 150 120 Scheduled receipt Projected on-hand inventory (37) Planned receipt Planned order release 230 117 117 117 227 227 77 187 187 230 230 230 230

Material Requirement Planning (MRP) Projected on-hand inventory (37) Inventory Record Lot size = 230 unit Lead time = 2 wks Safety stock = 80 unit Week No. 1 2 3 4 5 6 7 8 Gross requirements 150 120 Scheduled receipt 230 Projected on-hand inventory (37) Planned receipt Planned order release 117 117 117 227 227 307 187 187 230 230 230 230

Material Requirement Planning (MRP) Projected on-hand inventory (37) Inventory Record Lot for Lot Lead time = 2 wks Week No. 1 2 3 4 5 6 7 8 Gross requirements 150 120 Scheduled receipt 230 Projected on-hand inventory (37) Planned receipt Planned order release 117 117 117 Uncertain future order Perishable goods 3 150 120 3 150 120

Material Requirement Planning (MRP) Master Production Schedule Customer Order Forecast Master Production Schedule (MPS) Inventory Records MRP Explosion Bill of Material Material Requirement Planning (MRP)

Material Requirement Planning (MRP) Example A C B D D 2 F Week No. 1 2 3 4 5 6 Gross requirements of A 80 Gross requirements of C 50

Material Requirement Planning (MRP) For A (LT = 1 wk; lot for lot) Week No. 1 2 3 4 5 6 Gross requirements Scheduled receipt Projected on-hand inventory Planned receipt Planned order release 80 80 80 For C (LT = 1 wk; lot for lot) Week No. 1 2 3 4 5 6 Gross requirements Scheduled receipt Projected on-hand inventory Planned receipt Planned order release 50 50 50

Material Requirement Planning (MRP) For D (LT = 2 wks; lot size = 100) Week No. 1 2 3 4 5 6 Gross requirements Scheduled receipt 50 Projected on-hand inventory (15) Planned receipt Planned order release Week No. 1 2 3 4 5 6 Gross requirements Scheduled receipt 50 Projected on-hand inventory (15) 65 85 Planned receipt 100 Planned order release 80 100

Manufacturing Resource Planning (MRPII) Master Production Schedule Customer Order Forecast Master Production Schedule (MPS) Inventory Records MRP Explosion Bill of Material Material Requirement Planning (MRP) Financial Data Manufacturing Resource Planning (MRPII) Purchasing Reports Financial Reports Marketing Reports HRM Reports Manufacturing Reports

Enterprise Resource Planning (ERP)