MATERIAL REQUIREMENTS PLANNING (MRP)
Muhammad Ridwan Andi Purnomo, ST, MSc, PhD
Department of Industrial Engineering
Faculty of Industrial Technology
Universitas Islam Indonesia
Introduction
Planned end items to be produced are made from several
components.
The components must be ready at right time to ensure MPS could be
executed at right time.
Material requirements planning (MRP) is the system used to avoid
missing parts.
It establishes a schedule (priority plan) showing the components
required at each level of the assembly and, based on lead times,
calculates the time when these components will be needed.
Nature of demand
Independent: not related to the demand for any other product.
Example: a company produces wooden tables, demand for the tables
is independent. MPS is for independent demand.
Dependent: depends on other product. Ex: demand for the sides,
ends, legs, and tops depends on the demand for the tables.
Objectives of MRP
Determine requirements: 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. The decisions:
What to order.
How much to order.
When to order.
When to schedule delivery.
Keep priorities current: dynamic changes must be anticipated. MRP
must be able to determine which components must be a priority to
stabilise the MRP.
Linkages to Other Manufacturing Planning
and Control (MPC) Functions
Input of MRP
Input of MRP:
MPS.
Inventory records.
Bills of material.
MPS: a statement of which end items are to be produced, the quantity
of each, and the dates they are to be completed.
Inventory records:
Planning factors: includes information such as order quantities,
lead times, safety stock, and scrap.
Status of each item: how much is available, how much is allocated,
and how much is available for future demand.
Bill of Materials (BOM)
APICS defines BOM: a listing of all the subassemblies, intermediates,
parts, and raw materials that go into making the parent assembly
showing the quantities of each required to make an assembly.
3 important points of BOM:
Shows all the parts required to make a product.
Each part or item has only one (unique) part number. Thus, if a
particular number appears on two different bills of material, the
part so identified is the same.
A part is defined by its form, fit, or function. If any of these change,
then it is not the same part and it must have a different part
number.
Bill of Materials (BOM)
Example of BOM:
Bill of Materials (BOM)
Product tree: defines relationship between parent and components.
Bill of Materials (BOM)
Multi level bill: a logical groupings of parts into subassemblies based
on the way the product is assembled.
Bill of Materials (BOM)
Multiple bill: used when companies usually make more than one
product, and the same components are often used in several
products.
Bill of Materials (BOM)
Indented bill: uses indentations as a way of identifying parents from
components.
Bill of Materials (BOM)
Planning bill: an artificial grouping of components for planning
purposes. Ex: suppose the company manufactured tables with three
different leg styles, three different sides and ends, and three different
tops.
Reports in MRP
Where-used report: gives the parents for a component.
Pegging report: shows the parents creating the demand for the
components, the quantities needed, and when they are needed.
Example:
MRP Process
Processes in MRP arrangement:
1. Exploding and offsetting
2. Gross and Net Requirements
3. Releasing Orders
4. Capacity Requirements Planning
5. Low-Level Coding and Netting
6. Multiple Bills of Material
MRP Process
1. Exploding and offsetting
Exploding: process of multiplying the requirements by the usage
quantity and recording the appropriate requirements throughout
the product tree.
Offsetting: process of placing the exploded requirements in their
proper periods based on lead time.
Example:
MRP Process
Example problem: conduct exploding and offsetting for the product
tree as shown in previous slide, if 50 and 100 units of A are required in
period 5 and 6.
MRP Process
2. Gross and net requirements
Example, if available stock for A is 20 units while available stock for B
is 10 units, then:
MRP Process
Example: complete following MRP table, lead time for the part is 2
weeks while lot size = 100.
MRP Process
Releasing an order: authorization is given to purchasing to buy the
necessary material or to manufacturing to make the component.
Scheduled receipts: orders placed on manufacturing or on a vendor
and represent a commitment to make or buy.
Net requirements = gross requirements - scheduled receipts - available
inventory
Problem example
Complete the following table. Lead time for the item is two weeks,
and the order quantity is 200. What action should be taken?
MRP Process
5. Low-Level Coding and Netting
A component may reside on more than one level in a bill of material.
It is necessary to make sure that all gross requirements for that
component have been recorded before netting takes place. The
component must be pulled down to the lower level before netting.
MRP Process
Example:
Thank You !
