Operation Management-ICAI-Inter-Material Requirement Planning

2.11 Material Requirement Planning
Material requirement planning (MRP) refers to the basic calculations used to determine component
requirements from end item requirements. It also refers to a broader information system that uses the
dependence relationship to plan and control manufacturing operations.
MRP is a technique of working backward from the scheduled quantities and needs dates for end items
specified in a master production schedule to determine the requirements for components needed to meet
the master production schedule. The technique determines what components are needed, how many are
needed, when they are needed and when they should be ordered so that they are likely to be available as
needed. The MRP logic serves as the key component in an information system for planning and controlling
production operations and purchasing. The information provided by MRP is highly useful in scheduling
because it indicates the relative priorities of shop orders and purchase orders.
“Materials Requirement Planning (MRP) is a technique for determining the quantity and timing for the
acquisition of dependent demand items needed to satisfy master production schedule requirements.”
MRP is one of the powerful tools that, when applied properly, helps the managers in achieving effective
manufacturing control.
MRP Objectives:
1. Inventory reduction: MRP determines how many components are required, when they are required
in order to meet the master schedule. It helps to procure the materials/components as and when
needed and thus avoid excessive build up of inventory.
2. Reduction in the manufacturing and delivery lead times: MRP identifies materials and component
quantities, timings when they are needed, availabilities and procurements and actions required to
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Production Planning and Productivity Management
meet delivery deadlines. MRP helps to avoid delays in production and priorities production activities
by putting due dates on customer job orders.
3. Realistic delivery commitments: By using MRP, production can give marketing timely information
about likely delivery times to prospective customers.
4. Increased efficiency: MRP provides a close coordination among various work centres and hence
helps to achieve uninterrupted flow of materials through the production line. This increases the
efficiency of production system.
Functions served by MRP
1. Order planning and control: When to release orders and for what quantities of materials.
2. Priority planning and control: How the expected date of availability is compared to the need date for
each component.
3. Provision of a basis for planning capacity requirements and developing a broad business plans.