ST FRANCIS INSTITUTE OF MANAGEMENT AND

Topics: Material requirements planning, Manufacturing resource planning, Inventory Pages: 7 (2263 words) Published: November 23, 2014

ST. FRANCIS INSTITUTE OF MANAGEMENT AND RESEARCH.

Assignment no: 2

Subject: Operational Management.

Topic: Material Requirement Planning.

SUBMISSION BY: Joel Fernandes.
Roll no - 41.
MMS - 1 Division – A

SUBMISSION TO: DR. SMITA JESUDASAN.

Material Requirements Planning.
Definition:
Material requirements planning (MRP) is a production planning and inventory control system used to manage manufacturing processes. Most MRP systems are software-based, while it is possible to conduct MRP by hand as well. An MRP system is intended to simultaneously meet three objectives: Ensure materials are available for production and products are available for delivery to customers. Maintain the lowest possible level of inventory.

Plan manufacturing activities, delivery schedules and purchasing activities. MRP is especially suited to manufacturing settings where the demand of many of the components and subassemblies depend on the demands of items that face external demands. Demand for end items are independent. In contrast, demand for components used to manufacture end items depend on the demands for the end items. The distinctions between independent and dependent demands are important in classifying inventory items and in developing systems to manage items within each demand classification. MRP systems were developed to cope better with dependent demand items. The three major inputs of an MRP system are the master production schedule, the product structure records, and the inventory status records. Without these basic inputs the MRP system cannot function. The demand for end items is scheduled over a number of time periods and recorded on a master production schedule (MPS). The master production schedule expresses how much of each item is wanted and when it is wanted. The MPS is developed from forecasts and firm customer orders for end items, safety stock requirements, and internal orders. MRP takes the master schedule for end items and translates it into individual time-phased component requirements. The product structure records, also known as bill of material records (BOM), contain information on every item or assembly required to produce end items. Information on each item, such as part number, description, quantity per assembly, next higher assembly, lead times, and quantity per end item, must be available. The inventory status records contain the status of all items in inventory, including on hand inventory and scheduled receipts. These records must be kept up to date, with each receipt, dis- bursement, or withdrawal documented to maintain record integrity. MRP will determine from the master production schedule and the product structure records the gross component requirements; the gross component requirements will be reduced by the available inventory as indicated in the inventory status records.

BENEFITS AND DRAWBACKS OF MRP.
MRP systems offer a number of potential benefits to manufacturing firms. Some of the main benefits include helping production managers to minimize inventory levels and the associated carrying costs, track material requirements, determine the most economical lot sizes for orders, compute quantities needed as safety stock, allocate production time among various products, and plan for future capacity needs. The information generated by MRP systems is useful in other areas as well. "A range of people in a typical manufacturing company are important users of the information provided by an MRP system," Stevenson wrote. "Production planners are obvious users of MRP. Production managers, who must balance workloads across departments and make decisions about scheduling work, and plant foremen, who are responsible for issuing work orders and maintaining production schedules, also rely heavily on MRP output. Other users include customer service representatives, who must be able to supply customers with projected delivery dates, purchasing...
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