MRP-II (Material Resource Planning)

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Manufacturing Resource Planning (MRP II) is defined by APICS as a method for the effective planning of all resources of a manufacturing
company. Ideally, it addresses operational planning in units, financial planning in dollars, and has a simulation capability to answer "what-if" questions and extension of closed-loop MRP.


Manufacturing Resource Planning (or MRP2) - Around 1980, over-frequent changes in sales forecasts, entailing continual readjustments in production, as well as the unsuitability of the parameters fixed by the system, led MRP (Material Requirement Planning) to evolve into a new concept : Manufacturing Resource Planning (e.g. MRP 2)[1]


This is not exclusively a software function, but a marriage of people skills, dedication to data base accuracy, and computer resources. It is a total company management concept for using human resources more productively.


1 Key functions and features
2 Benefits
3 Industry Specifics
4 MRP and MRPII: History and Evolution
5 MRP and MRPII: General Concepts
6 Criticism
7 References
8 See also


Key functions and features
MRP II is not a proprietary software system and can thus take many forms. It is almost impossible to visualize an MRP II system that does
not use a computer, but an MRP II system can be based on either purchased–licensed or in-house software. Almost every MRP II system is modular in construction. Characteristic basic modules in an MRP II system are:
Master Production Schedule (MPS)
Item Master
Data (Technical Data)
Bill of materials (BOM) (Technical Data)
Production Resources Data (Manufacturing Technical Data)
Inventories and Orders (Inventory Control)
Material Requirements Planning (MRP)
Shop Floor Control (SFC)
Capacity planning or Capacity
Requirements Planning (CRP)
Costing (Cost Control)
Reporting / Management (Cost Control)
Distribution resource planning (DRP)


together with auxiliary systems such as:
Lot Traceability
Contract Management
Tool Management
Engineering Change Control
Configuration Management
Shop Floor Data Collection
Sales Analysis and Forecasting
Finite Capacity Scheduling (FCS)
General Ledger
Accounts Payable (Purchase Ledger)
Accounts Receivable (Sales Ledger)
Sales Order Management
Distribution Requirements Planning (DRP)
[Automated] Warehouse Management
Project Management
Technical Records
Computer-aided design/Computer-aided manufacturing (CAD/CAM)

The MRP II system integrates these modules together so that they use common data and freely exchange information, in a model of how a manufacturing enterprise should and can operate. The MRP-II approach is therefore very different from the "point solution" approach, where
individual systems are deployed to help a company plan, control or manage a specific activity. MRP II is by definition fully integrated or at least fully


MRP II systems can provide:
Better control of inventories
Improved scheduling
Productive relationships with suppliers
For Design / Engineering:
Improved design control
Better quality and quality control


For Financial and Costing:
Reduced working capital for inventory
Improved cash flow through quicker deliveries
Accurate inventory records
Timely and valid cost and profitability information
Industry Specifics


MRP II systems have been implemented in most manufacturing industries. Some industries need specialised functions e.g. lot traceability in regulated manufacturing such as pharmaceuticals or food. Other industries can afford to disregard facilities required by others e.g. the tableware industry has few starting materials – mainly clay – and does not need complex materials planning. Capacity planning is the key to success in this as
in many industries, and it is in those that MRP-II is less appropriate.


MRP and MRPII: History and Evolution
Material Requirements Planning (MRP) and Manufacturing Resource Planning (MRPII) are predecessors of Enterprise Resource Planning (ERP), a business information integration system. The development of these manufacturing coordination and integration methods and tools made today's ERP systems possible. Both MRP and MRPII are still widely used, independently and as modules of more comprehensive ERP systems, but the original vision of integrated information systems as we know them today began with the development of MRP and MRPII in manufacturing.


The vision for MRP and MRPII was to centralize and integrate business information in a way that would facilitate decision making for production line managers and increase the efficiency of the production line overall. In the 1980s, manufacturers developed systems for calculating the resource requirements of a production run based on sales forecasts. In order to calculate the raw materials needed to produce products and to schedule the
purchase of those materials along with the machine and labor time needed, production managers recognized that they would need to use computer and software technology to manage the information. Originally, manufacturing operations built custom software programs that ran on mainframes.


Material Requirements Planning (MRP) was an early iteration of the integrated information systems vision. MRP information systems helped managers determine the quantity and timing of raw materials purchases. Information systems that would assist managers with other parts of the
manufacturing process, MRPII, followed. While MRP was primarily concerned with materials, MRPII was concerned with the integration of all aspects of the manufacturing process, including materials, finance and human relations.


Like today's ERP systems, MRPII was designed to integrate a lot of information by way of a centralized database. However, the hardware, software, and relational database technology of the 1980s was not advanced enough to provide the speed and capacity to run these systems in real-time[2], and the cost of these systems was prohibitive for most businesses. Nonetheless, the vision had been established, and shifts in the underlying business processes along with rapid advances in technology led to the more affordable enterprise and application integration systems that big
businesses and many medium and smaller businesses use today (Monk and Wagner).


MRP and MRPII: General Concepts
Material Requirements Planning (MRP) and Manufacturing Resource Planning (MRPII) are both incremental information integration business process strategies that are implemented using hardware and modular software applications linked to a central database that stores and delivers business data and information.


MRP is concerned primarily with manufacturing materials while MRP-II is concerned with the coordination of the entire manufacturing production, including materials, finance, and human relations. The goal of MRP-II is to provide consistent data to all players in the manufacturing process as the
product moves through the production line.


Paper-based information systems and non-integrated computer systems that provide paper or disk outputs result in many information errors, including missing data, redundant data, numerical errors that result from being incorrectly keyed into the system, incorrect calculations based on
numerical errors, and bad decisions based on incorrect or old data. In addition, some data is unreliable in non-integrated systems because the same data is categorized differently in the individual databases used by different functional areas.


MRPII systems begin with MRP, Material Requirements Planning. MRP allows for the input of sales forecasts from sales and marketing. These forecasts determine the raw materials demand. MRP and MRPII systems draw on a Master Production Schedule, the break down of specific plans for each product on a line. While MRP allows for the coordination of raw materials purchasing, MRPII facilitates the development of a detailed production schedule that accounts for machine and labor capacity, scheduling the production runs according to the arrival of materials. An MRPII output is a final labor and machine schedule. Data about the cost of production, including machine time, labor time and materials used, as well as final production numbers, is provided from the MRPII system to accounting and finance (Monk and Wagner).


Authors like Pochet and Wolsey [3] argue that MRP and MRP II, as well as the planning modules in current APS and ERP systems, are actually sets of heuristics. Better production plans could be obtained by optimization over more powerful mathematical programming models, usually integer programming models. While they acknowledge that the use of heuristics, like those prescribed by MRP and MRP II, were necessary in the past due to lack of computational power to solve complex optimization models, this is no longer true.


1. ^ Waldner,
Jean-Baptiste (1992). CIM:
Principles of Computer Integrated Manufacturing [1].
Chichester: John Wiley & Sons Ltd. pp. p47. ISBN 047193450X.
2. ^ Shum,
Paul (2003). Knowledge and
Innovation Culture as Determinants of Financial Performance in New Product
Development. Australia: The International Journal of
Knowledge, Culture and Change Management.
3. ^ Wolsey,
Laurence (2006). Production
Planning by Mixed Integer Programming. Springer. ISBN
2. Monk, E. and Wagner, B., Concepts in Enterprise Resource Planning,
2nd Edition, 2006, Editor, Mac Mendelsohn, Canada: Thomson Course


See also
Enterprise resource planning (ERP)
Just In Time (business)
Material requirements planning (MRP)
Scheduling (production processes)
Supply chain management
Distribution Resource Planning
Warehouse management system
Warehouse control system