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You are here5. Material Requirements Planning

5. Material Requirements Planning

By Anonymous - Posted on 08 July 2012

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.

MRP II was developed as the second generation of MRP and it features the closed loop system: production planning drives the master schedule which drives the material plan which is the input to the capacity plan. Feedback loops provide input to the upper levels as a reiterative process.

MRP has 2 major objectives: determine requirements and keep priorities current.

Determine requirements through explosion
MRP derives demand for components, subassemblies, materials, etc., from demand for and production schedules of parent items.  The material requirements plan’ s objective is to determine what components are needed to meet the MPS and, based on lead time, to calculate the periods when the components must be available. It must determine the following:
- What to order,
- How much to order,
- When to order,
- When to schedule delivery.

Keep priorities current through offseting
MRP offsets replenishment orders (purchase orders or production schedules) relative to the date when replenishment is needed. The demand for, and supply of, components changes daily. Customers enter or change orders. In this ever-changing world, a MRP must be able to keep plans current. It must be able to add and delete, expedite, delay and change orders.

Nature of demand
There are 2 types of demand: independent and dependent. Independent demand is not related to the demand for any other product. It must be forecast. However, since dependent demand is directly related to the demand for higher-level assemblies or products, it can be calculated. MRP is designed to this calculation.

An item can have both a dependent and an independent demand. Dependency can be horizontal or vertical. The dependency of a component on its parent is vertical. However, components also depend on each other (horizontal dependency). If one component is going to be a week late then the final assembly is a week late. The other components are not needed until later. Planners are concerned with horizontal
dependency when a part is delayed or there is a shortage, for then other parts will have to be rescheduled.

The MPS drives the MRP. The MRP is a priority plan for the components needed to make the products in the MPS. The plan is valid only if capacity is available when needed to make the components and the plan must be checked against available capacity. The process of doing so is called capacity requirements planning (CRP).

MRP drives , or is input to, Production Activity Control (PAC) and purchasing. MRP plans the release and receipt dates for orders. PAC and purchasing must plan and control the performance of the orders to meet the due dates.

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