Steps in the Material Requirements Planning Process Video

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  • 0:05 Material Requirements Planning
  • 0:56 Scheduling
  • 2:34 MRP Process
  • 4:29 Lesson Summary
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Lesson Transcript
Instructor: Natalie Boyd

Natalie is a teacher and holds an MA in English Education and is in progress on her PhD in psychology.

Businesses need to coordinate purchasing, manufacturing, and delivery to customers. To help them, many use a material requirements planning system, or MRP. In this lesson, we'll explore what an MRP is and the steps in the MRP process.

Material Requirements Planning

Malik owns a company that makes t-shirts. He has to buy lots of materials to make his t-shirts: material, thread, ink for the designs, and many others. Malik worries that his business is too complicated. It's not just all the materials from different vendors that he has to buy. He wonders how he can keep track of what needs to be ordered, what needs to be made, and what needs to be delivered to his customers. Malik might want to use a material requirements planning system, or MRP, which is a computer-based system to coordinate purchasing, manufacturing, and delivery in a company.

With an MRP, Malik can easily see what he needs to order from his suppliers, how many t-shirts he needs to make, and what he needs to deliver to the stores that order from him. How does an MRP work? To help Malik plan, let's look at scheduling and the MRP process.

Scheduling

Malik's business has a lot of moving parts. He has to order materials, put the materials together to make his t-shirts, then move the t-shirts from his warehouse or factory to his customers, the stores who will ultimately sell his t-shirts to the people who will wear them. How can Malike coordinate all that? And more specifically, how can he make sure that his schedule meets the needs of his customers?

In MRP, there are two ways of scheduling: backward and forward. Backward scheduling involves starting with the date the stores need to have the product on the shelf and working backwards from there. For example, if a store calls Malik and tells him that they need to have his t-shirt on their shelves in 45 days, he can work backwards from there. If he knows that it takes about 5 days to deliver the shirts to the store, 27 days to manufacture an order the size the store needs, and 10 days to order and receive materials, then Malik can work backwards to figure out that he needs to order supplies in the next 3 days to have that order delivered on time.

Backward scheduling works well if there is a specific deadline to meet. But what if there isn't? For example, what if Malik's customer calls and says they don't have a deadline, but they'd like to have the t-shirt order as soon as possible. Then Malik could use forward scheduling, which involves calculating a schedule based on the starting date of the manufacturing process. For example, Malik can calculate that he will order the materials in 3 days, he'll have the materials in 10 days, take 27 days to manufacture the t-shirts, and 5 days for delivery. Thus, Malik can then tell the client they will have the order in their hands in 45 days.

MPR Process

Malik understands forward and backward scheduling, but he's still not sure how to use an MRP to help him coordinate all the different parts of the manufacturing process. What are the steps for material requirements planning? Though it is a computer-based program, there are certain steps that the computer goes through and inputs that Malik needs to put into the computer. They are:

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