Material Requirements Planning (MRP)

Material Requirements Planning (MRP)

1. SAGE University Indore Material Requirements Planning Presented To Presented By Prof. Rishabh Pare Deepankshi Nikam Aditya Joshi Lakshya Sahay Rupesh Yadav

2. Meaning of Materials Planning Materials Planning has been defined as the scientific way of determining the requirements of raw materials, components and other items needed for production within the economic investment policies. It is rather a sub system in the overall planning activity. The factors affecting materials planning can be classified into micro and macro factors. Factor such as price trends, business cycles, government policy, credit policy etc. form part of macro factors; while factors such as corporate objectives, plant capacity utilization, working capital, lead times, inventory levels, delegation of power, seasonality, communication system etc. are micro in nature.

3. What is MRP MRP ( Material requirements planning ) is designed to assist manufacturers in inventory and production management. “Material requirements planning (MRP) is a production Planning scheduling, and inventory control system used to manage manufacturing processes”.

4. Objectives of MRP The main theme of MRP is “getting the right materials to the right place at the right time”. Ensure materials are available for production. Maintain the lowest possible material and product levels in store. Plan manufacturing activities, delivery schedules and purchasing activities.

5. How dose MRP work? M RP uses information from the bill of materials ( BOM ), inventory data and the master production schedule to calculate the required materials and when they will be needed during the manufacturing process.

6. MRP in manufacturing MRP is essential to the efficiency, effectiveness and ultimately the profitability of a manufacturing operation. Without the right raw materials and components on hand, manufacturers can't hope to keep up with the demand for products at the optimal cost and quality. They will also be less able to respond to fluctuations in demand by adjusting production. MRP can also make the later stages of production, such as assembly and packaging, proceed more smoothly and predictably by removing most of the uncertainty over inventory and minimizing the time needed to manage it.

7. Benefits of MRP The primary objective of MRP is to make sure that materials and components are available when needed in the production process and that manufacturing takes place on schedule. Additional benefits of MRP are: reduced customer lead times to improve customer satisfaction; reduced inventory costs; effective  inventory management  and optimization -- by acquiring or manufacturing the optimal amount and type of inventory, companies can minimize the risk of stock-outs, and their negative impact on customer satisfaction, sales and revenue, without spending more than necessary on inventory; improved manufacturing efficiency by using accurate production planning and scheduling to optimize the use of labor and equipment; improved labor productivity; and more competitive product pricing.

8. Disadvantages of MRP MRP has drawbacks, including: Increased inventory costs: While MRP is designed to ensure adequate inventory levels at the required times, companies can be tempted to hold more inventory than is necessary, thereby driving up inventory costs. An MRP system anticipates shortages sooner, which can lead to overestimating inventory lot sizes and lead times, especially in the early days of deployment before users gain the experience to know the actual amounts needed. Lack of flexibility: MRP is also somewhat rigid and simplistic in how it accounts for lead times or details that affect the master production schedule, such as the efficiency of factory workers or issues that can delay delivery of materials. Data integrity requirements: MRP is highly dependent on having accurate information about key inputs, especially demand, inventory and production. If one or two inputs are inaccurate, errors can be magnified at later stages. Data integrity and data management are thus essential to effective use of MRP systems.

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