Management

IEOR 4000: Production Management

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Professor Guillermo Gallego

Material Requirements Planning (MRP)

Material Requirements Planning (MRP) is a computer-based production planning and inventory

control system. MRP is concerned with both production scheduling and inventory control. It is

a material control system that attempts to keep adequate inventory levels to assure that required

materials are available when needed. MRP is applicable in situations of multiple items with complex

bills of materials. MRP is not useful for job shops or for continuous processes that are tightly linked.

The major objectives of an MRP system are to simultaneously:

1. Ensure the availability of materials, components, and products for planned production and for

customer delivery,

2. Maintain the lowest possible level of inventory,

3. 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,...