1. Material Requirements Planning (MRP)
Professor Ahmadi

2. Material Requirements Planning (MRP)
MRP is a dependent demand technique that uses bill-of material, inventory, expected receipts, and a master production schedule to determine material requirement.

3. Inventory Classifications
Process stage
Demand Type
Number & Value
Other
Raw Material
WIP
Finished Goods
Independent Dependent
A Items B Items C Items
Maintenance Operating

4. MRP and The Production Planning Process
Forecast &
Firm Orders
Material
Requirements
Planning
Aggregate
Production
Resource
Availability
Master
Scheduling
Shop
Floor
Schedules
Capacity
Realistic?
No, modify CRP, MRP, or MPS
Yes

5. MRP Systems - Input and Output
Inventory
Purchasing
Master
Production
Schedule
Bill of
Materials
Material
Requirements
Planning System
Status
Planned Order
& Other Reports
Item Master
Data

6. MRP Benefits
Increased customer satisfaction due to meeting delivery schedules
Faster response to market changes
Improved labor & equipment utilization
Better inventory planning & scheduling
Reduced inventory levels without reduced customer service

7. Lead times must be reliable Difficult to implement
Evaluation of MRP
Most beneficial to process-focused systems that have long processing times and complex multistage production steps
Lead times must be reliable
Difficult to implement

8. MRP - a planning and scheduling technique with fixed lead times
MRP and JIT
MRP - a planning and scheduling technique with fixed lead times
JIT - a way to move material expeditiously

9. MRP in Services
Can be used when demand for service or service items is directly related to or derived from demand for other services
restaurant - rolls required for each meal
hospitals - implements for surgery
etc.

10. List of components & quantities needed to make product
Bill-of-Material
List of components & quantities needed to make product
Provides product structure (tree)
Parents: Items above given level
Children: Items below given level
Shows low-level coding
Lowest level in structure item occurs
Top level is 0; next level is 1 etc.

11. Example: Bill-of -Material for a Moped
The following product structure diagram represents the bill of materials for a dual-carburetor Model 442 Moped.
MOPED
Level 0
ENGINE
ASSEMBLY
GAS
TANK
WHEEL
ASSEMBLY
(2)
FRAME
Level 1
MOTOR
CARBURETOR
(2)
HUB
ASSEMBLY
TIRE
Level 2

12. Requirements for Effective Use of Dependent Demand Inventory Models
Effective use of dependent demand inventory models requires that the operations manager know the:
master production schedule
specifications or bills-of-material
inventory availability
purchase orders outstanding
lead times