MATERIAL REQUIREMENTS

PLANNING (MRP)
Planning of Material
How much??
When???
To smoothen production flow

Prof. S.R. Khandagale,JJMCOE,Jaysingpur 1

MRP Objectives
1. Reduction in Inventory Cost:
Right quantity of material at Right time

2.Meeting Delivery Schedule

MRP helps avoid delays in production

3. Improved Performance:
Proper utilizing machines & materials

Prof. S.R. Khandagale,JJMCOE,Jaysingpur 2

MRP System

Prof. S.R. Khandagale,JJMCOE,Jaysingpur 3

Master Production Schedule (MPS)
MPS mainly describes the detailed delivery
schedule of the end products.
However, orders for replacement components can
also be included in it to make it more
comprehensive.
It gives scheduling of raw materials for processing
How much??
When??

Prof. S.R. Khandagale,JJMCOE,Jaysingpur 4

 Bill of Materials (BOM)
• BOM represents the product structure.

• It encompasses information about all sub

components needed, their quantity

• Their sequence of buildup in the end product.

• Information about the work centers performing

buildup operations is also included in it.

Prof. S.R. Khandagale,JJMCOE,Jaysingpur 5

 Inventory Status File
• Inventory status file keeps an up-to-date
record of each item in the inventory.

Information with inventory status file

• item identification number,
• quantity on hand,
• safety stock level,
• quantity already allocated
• procurement lead time
Prof. S.R. Khandagale,JJMCOE,Jaysingpur 6
 OUTPUTS
Planned Orders Receipts:
This is the order quantity of an item that is planned to be ordered so
that it is received at the beginning of the period under consideration to
meet the net requirements of that period. This order has not yet been
placed and will be placed in future.

Planned Order Release:

This is the order quantity of an item that is planned to be ordered in
the planned time period for this order that will ensure that the item
is received when needed.
Planned order release is determined by offsetting the planned order
receipt by procurement lead time of that item.

Order Rescheduling:
This highlight the need of any expediting, de-expediting, and
cancellation of open orders etc. in case of unexpected situations.

Prof. S.R. Khandagale,JJMCOE,Jaysingpur 7

 When to use MRP ???

• Multiple items with complex bills of materials

MRP is not useful for job shops or for
continuous processes that are tightly linked.
• MRP is applicable for dependent demands

1. Dependent demand

2. Independent demand

Prof. S.R. Khandagale,JJMCOE,Jaysingpur 8

 Benefits of MRP
• Reduce Component Shortages
• Reduce Inventory Levels
• Improve Shipping Performance
• Improve Customer Service
• Simplified and Accurate Scheduling
• Reduce Purchasing Cost
• Improve Production Schedules
• Reduce Lead Times
• Improve Plant Efficiency
• Reduction in Excess Inventory
• Reduce Overtime
• Improve Supply Schedules
• Improve Calculation of Material Requirements
• Improve Competitive Position
Prof. S.R. Khandagale,JJMCOE,Jaysingpur 9
 How to carryout MRP for given job
INPUTS required
• BOM of job
• MPS details of job( i.e. end job delivery date and quantity
Inventory records
1. lead time
2. Stock available
3.Safety limits
4.Order type(lot size or FOQ)

Enter the above data in MRP sheet provided so as to plan the

dates

Prof. S.R. Khandagale,JJMCOE,Jaysingpur 10

 Format of MRP sheet

Gross requirement: Total requirement

Scheduled receipt: Qty which is already ordered
On hand : available qty
Planned order receipt: time when order qty is received
planned to Planned order release : time
Prof. S.R. when order is required to release
Khandagale,JJMCOE,Jaysingpur 11
 PROCEDURE
Get delivery date and Qty from MPS
Study carefully BOM & find no of parts and
quantities
Find lead times, in hand & safety stock values for
each component
Arrange element with lower grade
Fill the sheet accordingly

Prof. S.R. Khandagale,JJMCOE,Jaysingpur 12

 Case study
Data from MPS
We require 200 nos of A items at 5 week ,Lead

Data from BOM

Final product A is consist of 2 nos of B part & 3 nos of C parts

Data from INVENTORY FILE

Item Lead time (1 week) safety stock In hand Order type Scheduled recipets

A 2 - 10 L2L 0

B 1 - 10 L2L 0

C 1 - 10 L2L 0
Prof. S.R. Khandagale,JJMCOE,Jaysingpur 13
Prof. S.R. Khandagale,JJMCOE,Jaysingpur 14