MRP is a computer based system which is designed to manage the timing and ordering of the products demanded. The main function of MRP is elementary scheduling, inventory control and bill of material processing. Low inventory levels of the organizations are maintained with the help of MRP. It is majorly used for the planning of purchasing, manufacturing and delivering activities. The daily problem faced by the manufacturing organizations is that customers want products to be available in short time than it takes to make them. This means that they need some level of planning which is done through MRP. The types and quantities of materials purchased needs to be controlled by the companies. They need to plan that which products are to be produced, in what quantity and to make sure that they are able to meet the current and future demands of the customer at the lowest possible cost. The company will lose money and reputation if they made a bad decision in any of these areas. Few examples are given below: 1. If an insufficient quantity of manufacturing material is purchased or the wrong material is purchased, the company would not be able to meet contract requirement to supply product on time.
2. If an extreme quantity of an item is purchased it will waste the money while it remains as stock and even it may never be used.
3. If the company begins the production at wrong time than it can cause the deadline to be missed. MRP is the main tool which deals with these problems, it answers for a number of questions like: * What items are required?
* When are they required?
* How may are required?
MRP is applied on both items that are purchased from outside or which are produced internally. The inputs of the MRP system is BOM (bill of material), the main schedule which shows how much and when the product is need, and a file of inventory record which shows how much of the inventory is on the hand or how much is being ordered. By using these inputs,...