Material Requirement Planning

Inventory
• Inventory is the stock of any item or resource
used in an organization.
 Inventory System
• Inventory system is the set of policies and
controls that monitor levels of inventory and
determine what level should be maintained,
when stock should be replenished, and how
larhe order should be.
 Aggregate Production Plan
• Aggregate plan provides the general range of
operation, the master scheduler must specify
exactly what is to be produced.
• The term sales and operations planning has
been coined by companies to refer to the
process that helps companies keep demand
and supply in balance. In operations
management we have traditionally called this
process aggregate plnning.
 Master production schedule
• Master production schedule is the time-
phased plan specifying how many and when
the firm plans to build each end item.
• For example, the agreegate plan for a
furniture company may specify the total
volume of mattress it plans to produce over
the next month or next quarter. The MPS goes
the next step down and identifies the exact
size mattresses and their qualities and style.
The Aggregate Plan and the Master
Production Schedule for Mattresses
 Material Requirement Planning
• Materials requirements planning (MRP): 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
 Master Production schedule
- The master schedule deals with end items and is
a major input to the MRP process
- All production systems have limited capacity and
limited resources
– The aggregate plan provides the general range of
operation, the master scheduler must specify
exactly what is to be produced To determine an
acceptable feasible schedule to be released to
the shop, trial master production schedules are
run through the MRP program.
Material Requirement Planning System
Structure
 Aggregate Forecasts
Firm orders
product of demand
from known
plan from random
customers
customers

Engineering Master production

Schedule (MPS) Inventory
design
transactions
changes

Material
planning
Bill of (MRP Inventory
material computer record file
file program)
Secondary reports
Primary reports
Exception reports
Planned order schedule for Planning reports
inventory and production Reports for performance
control control
 Bill of Material
• Bill of materials (BOM): contains the complete
product description, listing the materials,
parts, and components along with the
sequence in which the product is created.
– One of the three main inputs to the MRP
program.
• Often called the product structure file or
product tree because it shows how a product
is put together.
Bill of Materials (Product Structure
Tree) for Product A
Bill of Materials (Product Structure
Tree) for Product A
Level Coding of Bills of Materials