MRP-I and MRP-II are inventory management systems used in manufacturing. MRP-I determines material requirements based on a master production schedule, bill of materials, and inventory levels. It outputs work orders and purchase orders. MRP-II evolved from MRP-I by integrating additional data like finances and capacity planning. MRP-II helps schedule resources and tie inventory to accounting. Distribution resource planning (DRP) is similar but for distributing finished goods to meet demand. DRP sets inventory parameters and calculates time-phased requirements based on sales forecasts and orders.
MRP-I and MRP-II are inventory management systems used in manufacturing. MRP-I determines material requirements based on a master production schedule, bill of materials, and inventory levels. It outputs work orders and purchase orders. MRP-II evolved from MRP-I by integrating additional data like finances and capacity planning. MRP-II helps schedule resources and tie inventory to accounting. Distribution resource planning (DRP) is similar but for distributing finished goods to meet demand. DRP sets inventory parameters and calculates time-phased requirements based on sales forecasts and orders.
MRP-I and MRP-II are inventory management systems used in manufacturing. MRP-I determines material requirements based on a master production schedule, bill of materials, and inventory levels. It outputs work orders and purchase orders. MRP-II evolved from MRP-I by integrating additional data like finances and capacity planning. MRP-II helps schedule resources and tie inventory to accounting. Distribution resource planning (DRP) is similar but for distributing finished goods to meet demand. DRP sets inventory parameters and calculates time-phased requirements based on sales forecasts and orders.
MRP-I and MRP-II are inventory management systems used in manufacturing. MRP-I determines material requirements based on a master production schedule, bill of materials, and inventory levels. It outputs work orders and purchase orders. MRP-II evolved from MRP-I by integrating additional data like finances and capacity planning. MRP-II helps schedule resources and tie inventory to accounting. Distribution resource planning (DRP) is similar but for distributing finished goods to meet demand. DRP sets inventory parameters and calculates time-phased requirements based on sales forecasts and orders.
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MRP-I and MRP-II
MRP-I
Developed in 1970s, raw material whenever required by any organization is managed i.e, which materials are required by company gets stored in a database. Also, it tells about shortage of any material. Material Requirement Planning is widely used approach for production planning and scheduling in industry.
Function of MRP is to provide material availability i.e., it is used to produce the requirement quantities on time. This process involves monitoring of stocks and demand, leading to automatic creation of procurement proposals for purchasing or production. Main objective of MRP is to determine which material is required, quantity required and by when it is required. Objectives of MRP
Inventory reduction:
Determines how many components are needed and when in
order to meet MASTER PRODUCTION SCHEDULE.
Reduction in production and delivery lead times.
It helps to meet delivery deadlines by coordinating inventories, procurement and production decision. Realistic commitments Improves customer satisfaction. MRP System Architecture
Inputs
• Master Production Schedule
• Product Structure file • Item Master File
Outputs
Planned Order Release
• Work orders • Purchase Orders • Rescheduling orders Master Production Schedule
Indicates when each ordered item will be produced
in coming weeks, and in how much quantity. Based on actual customer orders and predicted demand. It is a plan specifying timing and quantity of production for each end item. MPS inputs come from sales and marketing . Product Structure File (Bill Of Materials)
A listing of all of the raw materials, parts,
subassemblies, and assemblies needed to produce one unit of a product . BOM Shows way a finished product or parent item is put together from individual components. Parent item shown at highest level or level zero ,Parts that go into parent item are called level 1 components and so on Inventory Master File
Detailed information regarding the quantity of each item,
available in hand, on order to be released, for use in various time periods. MRP system using inventory master file is used to determine the quantity of material available for use in a given period. If sufficient items not available , the system includes the item on the planned order release report . Entering Item Master Information, Entering Basic Item Information, Entering Item Text, Assigning Item Responsibility, Entering Item Classification Codes, Entering Item Unit of Measure Information, Entering Item Manufacturing Information, Entering Item Grade and Potency Information, Transferring Item Number Changes to Other Files MRP-Outputs
Primary Reports Work orders / Planned orders - schedule indicating the amount and timing of future orders. Order Release - Authorization for the execution of planned orders. Action Notices or Rescheduling Notices - which orders are to be released, revised and canceled during the current time period. Secondary Reports Performance control Reports – evaluate system operations . They aid in measuring deviations from plans, and also provide information to assess cost performance. Planning Reports – are useful to forecast future inventory requirements. Exception Reports – these help to find the major discrepancies such as late and overdue orders, excessive scrap rates, reporting errors, etc. Parent X 1 2 3 4 Part Z : lead Time of 2 weeks, lot size - 50 Release 30 30 Week 1 2 3 4 Part Y : lead Time of 2 weeks, lot size - 50 Gross Requirement 100 Week 1 2 3 4 Gross 0 30 0 30 Scheduled Receipts 0 0 0 0 Requirement Scheduled 0 0 0 0 Projected (20) 20 20 Receipts available Projected (30) 30 0 0 20 available Net requirements 80 Net 0 0 0 30 requirements Planned Order 0 50 Planned Order 100 Receipts Receipts
Planned Order 50 0 Release Planned Order 100 Release Evolution to MRP-II
Manufacturing Resource Planning (MRP II) is an integrated information system used by businesses. Manufacturing Resource Planning (MRP II) evolved from early Materials Requirement Planning (MRP) systems by including the integration of additional data, such as employee and financial needs.
The system is designed to centralize, integrate, and process information for effective decision making in scheduling, design engineering, inventory management, and cost control in manufacturing.
Both MRP and MRP II are seen as predecessors to Enterprise resource planning (ERP), which is a process whereby a company, often a manufacturer, manages and integrates the important parts of its business.
An ERP management information system integrates areas such as planning, purchasing, inventory, sales, marketing, finance, and human resources. ERP is most frequently used in the context of software, with many large applications having been developed to help companies implement ERP. Understanding MRP-II
MRP II is an extension of the original materials
requirements planning (MRP I) system. Materials requirements planning (MRP) is one of the first software- based integrated information systems designed to improve productivity for businesses.
A materials requirements planning information system is a
sales forecast-based system used to schedule raw material deliveries and quantities, given assumptions of machine and labor units required to fulfill a sales forecast.
By the 1980s, manufacturers realized they needed software
that could also tie into their accounting systems and forecast inventory requirements. MRP II was provided as a solution, which included this functionality in addition to all the capabilities offered by MRP I. MRP I included the following three major functionalities:
Master production scheduling
Bill of materials Inventory tracking
MRP II includes those three, plus the following:
Machine capacity scheduling
Demand forecasting Quality assurance General accounting Distribution Resource planning (DRP)
Distribution Resource Planning or DRP refers to a planning process that allows you to define some inventory level control parameters, such as the security or safety stock, and to calculate inventory requirements over time based on sales forecasts and orders. It is a method used in business administration for planning orders within a supply chain. DRP enables the user to set certain inventory control parameters and calculate the time-phased inventory requirements. This process is also commonly referred to as distribution requirements planning. Distribution Requirements Planning (DRP) is the process of determining the right quality of finished goods to be sent to each distribution center or warehouse in order to meet customer demand. During DRP, customer and forecasted demand are translated into purchase orders. This process depends on actual demand signals such as customer orders as those orders are used to plan the gross requirements of the supply source. This process integrates several variables such as: Product quantity required at start of cycle Maximum product quantity available at start of cycle Recommended order quantity at start of cycle Pending request at end of cycle inventory
For optimal operation, the Distribution Resource Planning process
requires the collection of different input data, such as: Sales forecasts Revenue forecasts Inventory at start of cycle Security stock required for cycle A certain company is a local distributor of sports equipment. Part of its distribution network is selling these items in 7 / 11 Convenience Stores located within the X, Y and Z area. The details are as follows
Store Area Available balance Safety Stock Lead time Order Quantity
