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Material Resource Planning

Material Resource Planning (MRP) has become a centerpiece for all manufacturing system. The key to successful production and operations management in a manufacturing company is the balancing of requirements and capacities. It’s that simple and yet very challenging.

To understand it is essential and to practice it can be a lot of fun. Remember what you are trying to do: Meet the needs of your customers. How? By having the product available when it is wanted. In production management, we do this by knowing planning ahead to have the capacity available.

To begin with we shall define MRP.

Material requirements planning (MRP): A system of planning and scheduling the time phased materials requirement for production operations.

Planning for Materials Needs: In recent years material requirements planning systems have replaced reactive inventory systems in many organizations Managers using reactive systems ask,” What should I do now? “Whereas managers using planning systems look ahead and ask,” What will I be needing in the future? How much and when?

Improved customer service and other advantages come at a cost, however. They require a system for accurate inventory and product buildup information. They also require a realistic master production schedule (MPS) to specify when various quantities of end items will be completed.

Demand Dependency: Demand dependency is an important consideration in choosing between reactive and planning systems. Demand dependency is the degree to which the demand for some item is associated with the demand for another items. With independent demand, demand for one item is unrelated to the demand for others. In the dependent demand situation, if we know the demand for one item, we can deduce the demand for one or more related items.

Appling MRP as a Scheduling and Ordering System: MRP is a system of planning and scheduling the time phased materials requirements for production operations. As such, it is geared toward meeting the end item outputs prescribed in the master production schedule.

 MRP Objectives and Methods: MRP provides the following:

MRP System Components: Shows the basic components of an MRP system.

 Using MRP Outputs for Materials Decision: MRP merely indicates what actions are needed to meet the MPS goal; now management must act to “Make things happen” to cause (control) the productive system to execute so that management gets the results it wants.

 Keeping MRP Current in a Changing Environment: MRP is not state; it is responsive to new job orders from customers and current shop conditions, as well as changes anticipated for the future.

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