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Material Requirements Planning

Materials requirements planning (MRP) is 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

Dependent demand drives MRP

MRP is a software system

MaterialMaterial RequirementsRequirements PlanPlan OutputOutput

Authorized master production schedule Other sources of demand
Authorized
master production
schedule
Other
sources
of demand
Inventory transactions
Inventory
transactions
Inventory records
Inventory
records
MRPMRP explosionexplosion
MRPMRP
explosionexplosion
Material requirements plan
Material
requirements
plan
Bills of materials Engineering and process designs
Bills of
materials
Engineering
and process
designs

MasterMaster ProductionProduction ScheduleSchedule

April May 1 2 3 4 5 6 7 8 Ladder-back chair 150 150 Kitchen
April
May
1
2
3
4
5
6
7
8
Ladder-back chair
150
150
Kitchen chair
120
120
Desk chair
200
200
200
200
Aggregate
production plan
for chair family
670670
670670

BillBill ofof MaterialsMaterials

Bill Bill of of Materials Materials Back legs Front legs Back slats Leg supports Seat cushion
Back legs
Back
legs

Front

legs

Bill Bill of of Materials Materials Back legs Front legs Back slats Leg supports Seat cushion

Back slats

of of Materials Materials Back legs Front legs Back slats Leg supports Seat cushion Seat-frame boards
of of Materials Materials Back legs Front legs Back slats Leg supports Seat cushion Seat-frame boards
of of Materials Materials Back legs Front legs Back slats Leg supports Seat cushion Seat-frame boards
of of Materials Materials Back legs Front legs Back slats Leg supports Seat cushion Seat-frame boards

Leg supports

of Materials Materials Back legs Front legs Back slats Leg supports Seat cushion Seat-frame boards A

Seat cushion

of Materials Materials Back legs Front legs Back slats Leg supports Seat cushion Seat-frame boards A
of Materials Materials Back legs Front legs Back slats Leg supports Seat cushion Seat-frame boards A
of Materials Materials Back legs Front legs Back slats Leg supports Seat cushion Seat-frame boards A
of Materials Materials Back legs Front legs Back slats Leg supports Seat cushion Seat-frame boards A

Seat-frame

boards

A

Ladder-back

chair

BillBill ofof MaterialsMaterials

AA LadderLadder--backback chairchair B (1) C (1) D (2) E (4) Ladder-back Seat Front Leg
AA
LadderLadder--backback
chairchair
B
(1)
C
(1)
D (2)
E (4)
Ladder-back
Seat
Front
Leg
subassembly
subassembly
legs
supports
F (2)
G
(4)
H
(1)
I (1)
Back
Back
Seat
Seat
legs
slats
frame
cushion
J (4)
Seat-frame
boards

Example of MRP Logic and Product Structure Tree

Given the product structure tree for “A” and the lead time and demand information below, provide a materials requirements plan that defines the number of units of each component and when they will be needed

Product Structure Tree for Assembly A

A B(4) C(2) D(2) E(1) D(3) F(2)
A
B(4)
C(2)
D(2)
E(1)
D(3)
F(2)

Lead Times

A 1 day

B 2 days

C 1 day

D 3 days

E 4 days

F 1 day

Total Unit Demand

Day 10

50 A

Day 8

20 B (Spares)

Day 6

15 D (Spares)

Finally, repeating the process for all components, we have the final materials requirements plan:

 

Day:

1

2

3

4

5

6

7

8

9

10

A

Required

                 

50

LT=1

Order Placement

               

50

 

B

Required

             

20

200

 

LT=2

Order Placement

         

20

200

     

C

Required

               

100

 

LT=1

Order Placement

             

100

   

D

Required

         

55

400

300

   

LT=3

Order Placement

   

55

400

300

         

E

Required

         

20

200

     

LT=4

Order Placement

 

20

200

             

F

Required

             

200

   

LT=1

Order Placement

           

200

     
A B(4) C(2) D(2) E(1) D(3) F(2)
A
B(4)
C(2)
D(2)
E(1)
D(3)
F(2)

Part D: Day 6

40 + 15 spares

Master Production Schedule (MPS)

Time-phased plan specifying how many and when the firm plans to build each end item

 Time-phased plan specifying how many and when the firm plans to build each end item
 Time-phased plan specifying how many and when the firm plans to build each end item

MPS (Specific End Items)

Types of Time Fences

Frozen

No schedule changes allowed within this window

Moderately Firm

Specific changes allowed within product groups as long as parts are available

Flexible

Significant variation allowed as long as overall capacity requirements remain at the same levels

Example of Time Fences

Capacity

Moderately

Firm

Frozen

Flexible

Forecast and available capacity Firm Customer Orders
Forecast and available
capacity
Firm Customer Orders

8

15

Weeks

26

Material Requirements Planning System

Based on a master production schedule, a material requirements planning system:

Creates schedules identifying the specific parts and materials required to produce end items

Determines exact unit numbers needed

Determines the dates when orders for those materials should be released, based on lead times

Firm orders from known customers Engineering design changes
Firm orders
from known
customers
Engineering
design
changes
Forecasts of demand from random customers Inventory transactions
Forecasts
of demand
from random
customers
Inventory
transactions

Aggregate

product

plan

Inventory transactions Aggregate product plan Master production Schedule (MPS) Material planning Bill of
Inventory transactions Aggregate product plan Master production Schedule (MPS) Material planning Bill of
Inventory transactions Aggregate product plan Master production Schedule (MPS) Material planning Bill of

Master production Schedule (MPS)

Aggregate product plan Master production Schedule (MPS) Material planning Bill of (MRP material computer file
Material planning Bill of (MRP material computer file program) Primary reports Planned order schedule for
Material
planning
Bill of
(MRP
material
computer
file
program)
Primary reports
Planned order schedule for
inventory and production
control
order schedule for inventory and production control Inventory record file Secondary reports Exception

Inventory record file

Secondary reports

Exception reports Planning reports Reports for performance control

control Inventory record file Secondary reports Exception reports Planning reports Reports for performance control

Bill of Materials (BOM) File A Complete Product Description

Materials

Parts

Components

Production sequence

Primary MRP Reports

Planned orders to be released at a future time

Order release notices to execute the planned orders

Changes in due dates of open orders due to rescheduling

Cancellations or suspensions of open orders due to cancellation or suspension of orders on the master production schedule

Inventory status data

Secondary MRP Reports

Planning reports, for example, forecasting inventory requirements over a period of time

Performance reports used to determine agreement between actual and programmed usage and costs

Exception reports used to point out serious discrepancies, such as late or overdue orders

Additional MRP Scheduling Terminology

Gross Requirements

Scheduled receipts

Projected available balance

Net requirements

Planned order receipt

Planned order release