Material Requiremant Mrp

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Good morning to all of u.presented by:-Lishma Soni

Nancy Parveen jainRavesh

Divya.


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MATERIAL REQUIREMANT

PLANNING(MRP) MRP is a technique of determining the

requirement for raw material

components,& spare parts etc required formanufacturing products. if delievery dateof product is known then everything can

be planned very easily like time requiredor quality of material required etc.


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Material requirement planning isa system used for planning thefuture requirement of dependent demand items.thisplanning is done on threeinputs:-


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Inputs in MRP.

No. of items already in the inventory(inventory status).

No. of finished goods to be produced inthe near future using these items.

No.of units of the item required formanufacturing a single unit of the finishedproduct.


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Inputs of MRP

BILL OF MATERIAL MASTER PRODUCTION SCHEDULE. INVENTORY STATUS.


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BILL OF MATERIAL.

Bill of material is a document which tellsus about an items product

structure,showing the sequence in whichcomponents are assembled & theirrequired numbers.it also contain detailes

about the workstations at which the itemsis assembled.


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Master production schedule.

An aggregate production plan tells us howmany units of a product have to be

manufactured in the coming 6-18monthson a weekly or monthly basis.


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Inventory status.

It tells us about the status of the inventory of anitems at present,or in a given interval of time in

the coming future.this includes scheduledreceipts of units of items in the interval of timeas a result of orders placed in the recent past tosuppliers.the inventory status files also contain

details about the suppliers of the items,the leadtime taken by him to supply the item,& the sizeof each order to be placed to him.


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Outputs in MRP

Planned orders report Orders release report Order changes report


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Planned order report

This report gives information aboutplanned orders to be released on some

future date during a given interval of time.it is helpful in preparing for the fundsrequired for the payments to the suppliers

in the future according to the dates & order sizes.


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Order release report

This report gives the information aboutplanned orders to be released on the

present date.it helps the purchse managerto release purchase order to the suppliers.


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Order change report

Open order are those which have beenplaced in the past,& the suppliers of the

items is preparing for these suppliers to bemade to the company.during the lead timethe MPS of the company may fluctuate.


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BENEFITS Appropriate use of material so that less

wastage is incurred. Availability of material at right time. Optimum utilization of working capital. More efficiency,more productivity.

No delay in the delievery of products. Efficient working of production.


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Saving in the form of time & money. Minimize the cost of production. Continues flow of control.


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Seasonal Inventory

Decoupling InventoryCyclic InventoryPipe line InventorySafety Stock


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Seasonal Inventory :- Organizationscarry inventory to meet fluctuations in

demand arising out of seasonality. Inorder to meet the demand, inventory buildup happens during non-peak periods.

Decoupling Inventory :- Manufacturingsystems typically involve a series of

production and assembly workstations.One way to simplify the productionplanning and control problem is to

decouple successive stages usinginventor at some intermediate oints.


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Cyclic Inventory :- It is customary fororganizations to order inventory in repeated cycles

and consume them over time. Each cycle beginswith replenishment and ends with completedepletion of the inventory.

Pipeline Inventory :- It pertains to the level of inventory that organizations carry in the long rundue to non-zero lead time for order, transport andreceipt of material from the suppliers.

Safety Stock :- Organizations also haveadditional investment in inventory to buffer

against uncertainties in demand and supply of raw


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There are several costs associated withinventory planning and control. These

costs could be classified under threebroad categories.

Inventory Carrying CostCost Of Ordering

Cost Of Shortages


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Inventory Carrying Cost :- ICC includes cost of stores and warehousing and administrative costs.The other ICC includes insurance costs, cost of obsolescence, damages and wastage. Thecomponents of ICC exert considerable pressure onan organization to keep inventory to low levels.

Cost Of Ordering :- Organizations perform a seriesof tasks related to ordering material. These includessearch and identification of appropriate sources of supply, price negotiation, contracting and purchaseorder generation, follow-up and receipt of material.

All these involve manpower, resources and time thatcould be classified under cost of ordering.

Cost of Shortages :- Despite careful planning, it islikely that organizations run out of stock. It alsointroduces additional costs arising out of pushing


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Organizations employ some methods tomanage and control inventory. Continuous Review (Q) System The Periodic Review (P) System

Continuous Review (Q) SystemOrganizations widely use a continuous

review system called a two-bin system. Inoperation, the available inventory is stockedin two bins, first in a smaller bin and thebalance in a larger bin. As the material inconsumed, the larger bin is emptied first. Assoon as the larger bin is empty, an order isplaced with a supplier for a predetermined


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The Periodic Review (P) System

An alternative model for inventorycontrol, known as periodic review system,operates differently from the Q system. Ina periodic review system, the inventorylevel in the system is reviewed at fixedintervals of time. Therefore, thesesystems are also known as fixed orderinterval systems.

In P system, the twodecisions when and how much are

made in a different fashion compared to


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Managing inventory is an issue pertaining toa large no and variety of items.Organizations, therefore, devise suitableways of categorising the items and adoptmechanisms that have variable levels of control on the different categories of items.

ABC Classification :- The ABC classification

of inventories is based on the cost (orvalue) of items consumed. Very high valueitems are A class items and may require

tighter control. Medium value items are


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On the basis of unit cost of the item(XYZ classification)a) High unit cost (X Class item)b) Medium unit cost (Y Class item)c) Low unit cost (Z Class item)

On the basis of movement of inventory(FSN classification)a) Fast movingb) Slow movingc) Non-moving

On the basis of criticality of items(VED classification)a) Vitalb) Essentialc) Desirable

On the basis of sources of supplya) Importedb) Indigenous( National suppliers)

Material Requiremant Mrp

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