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Chapter Exam

5. Material Requirements Planning

Material Requirements Planning (MRP) is a material planning methodology developed in the 1970's making use of computer technology. The main features of MRP are the creation of material requirements via exploding the bills of material, and time-phasing of requirements using posted average lead times.

III. Detailed Scheduling & Planning

1.1 Basics of Inventory
1.2 Inventory Planning

2.1 Identifying Information Used in Material Planning
2.2 MRP Mechanics
2.3 MRP O/P & Managing Projects

3.1 Detailed Capacity Planning
3.2 Detailed Capacity Management


For a MTS product group the difference bet’n a supply & demand results in a change of inventory. For a MTS product group the difference bet’n supply demand results in change in backlog.

Input Outpts SOP

Input to SOP:

  • Statement of projected demand (marketing): this is a sales plan based on the most up to date information available from the market place.
  • Market Intelligence (marketing): Information about potential external factors that could have an impact on product or service demand from the market place.
  • Actual Sales & Booked Orders (sales): Updated information from customers regarding existing orders that have been placed.
  • Management Targets (management): These are performance targets that have been established in areas that are critical to the success of the business.
  • Indication of capabilities & capacities (manufacturing or purchasing): Information about potential capacity constraints of resources that should be considered over the planning horizon.
  • Estimation of Financial Resources Required (finance): a plan for the amt of funding reqd. to support the level of demand & supply activity over the course of the planning horizon.
  • New Product Information (Product development): Information abt. new products or product changes that will be introduced during the period covered by the sales & operations plan.
  • New Process Information (process Engineering): Information abt. new processes or process changes that will be introduced during the period covered by the sales & operations plan.

Monthly SOP Process

A Sales and Operations Planning process normally includes a series of meetings, finishing with a board level meeting at which, key long term decisions are taken, and the current progress against the Business Plan is reviewed.  The review has to cover at least 15 months.

The inputs to the SOP are forecast values and/or requirements from customer order management, sales information system, and controlling.

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