Introduction to Material Requirements Planning | Input and Output Of MRP

Introduction to MPR (Material Requirement

MRP is a simple system of calculating arithmetically
the requirements of the input materials at different points
of time based on actual production plan. MRP can also be
defined as a planning and scheduling system to meet
time-phased materials requirements for production operations.
MRP always tries to meet the delivery schedule of end
products as specified in the master production

MRP Objectives

MRP has several objectives, such as:

  • Reduction in Inventory
    By providing the right quantity of
    material at right time to meet master production
    schedule, MRP tries to avoid the cost of excessive

  • Meeting Delivery Schedule:
    By minimizing the delays in materials procurement,
    production decision making, MRP helps avoid delays in
    production thereby meeting delivery schedules more

  • Improved Performance: By
    stream lining the production operations and minimizing
    the unplanned interruptions, MRP focuses on having all
    components available at right place in right quantity at
    right time.

MRP System

A simple sketch of an MRP system is shown
in figure. It can be seen from the figure that an MRP
system has three major input components:

Material Requirements Planning System Architecture
Fig.  Material Requirements
Planning System Architecture
  • Master Production Schedule
    MPS is designed to meet the market
    demand (both the firm orders and forecasted demand) in
    future in the taken planning horizon. MPS mainly depicts
    the detailed delivery schedule of the end products.
    However, orders for replacement components can also be
    included in it to make it more comprehensive.

  • Bill of Materials (BOM)
    BOM represents the product
    structure. It encompasses information about all sub
    components needed, their quantity, and their sequence of
    buildup in the end product. Information about the work
    centers performing buildup operations is also included in

  • Inventory Status
    Inventory status file keeps an
    up-to-date record of each item in the inventory.
    Information such as, item identification number, quantity
    on hand, safety stock level, quantity already allocated
    and the procurement lead time of each item is recorded in
    this file.

After getting input from these sources, MRP logic
processes the available information and gives information
about the following:(Output Of MRP)

  • Planned Orders
    This is the order quantity of
    an item that is planned to be ordered so that it is
    received at the beginning of the period under
    consideration to meet the net requirements of that
    period. This order has not yet been placed and will be
    placed in future.

  • Planned Order
    This is the order quantity of an
    item that is planned to be ordered in the planned time
    period for this order that will ensure that the item is
    received when needed. Planned order release is determined
    by offsetting the planned order receipt by procurement
    lead time of that item.

  • Order Rescheduling:
    This highlight the need of any expediting, de-expediting,
    and cancellation of open orders etc. in case of
    unexpected situations.