example mrp

8/12/2019 Example MRP

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Example MRP.

Next, it is going to be exposed the practical case of the operating MRP, we will see again themaking up of the scissors; remember the bill of materials(BOM) is the following:

Bill of materials

To a better understanding of the MRP, imagine you need 2 screws to make the scissor , therefore the bill of materialswill be the following

The initial dates are the following:

Master Production Schedule (MPS)

The Master Production Schedule shows we have to make 400 scissors during the 3 rd week, in the 4 th week 600,in the 6 th week 800, and in the 7 th week 300 scissors.

We will name (GR) Gross Requirements to the demand of fabrication of the products, the final products (in this casethe scissors) correspond to the quantity appeared in the MPS. To the intermediate products (in this case the screws)you have to multiply the necessary quantity to make the final product with its demand.

Gross Requirements of the MRP

Inventory Master File

The file indicated us that we have since the first week 550 scissors in stock, also it indicates that the security stock donot have to be less than 50 scissors.


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We will name Availability (A) to the initial stock of the final product we have to satisfy the before mentionednecessities.

We Will name Security Stock (SS) to the final quantity of the final product that cannot be useto satisfy thenecessities.

We will denominate Net Requirements (NR) to the quantity that we really need to satisfy the Gross Requirements(GR), taking into account the Availability (A) and the Security Stock (SS), the calculations will be the following:

1. If the availability is more than 0 , NR = GR-A+ SS2. If the availability is equal to 0 , NR = GR

Net Requirements of the MRP

Week 1:Gross Requirements are invalid, the availability is of 550 units, inside the security stock is 50, and thereforeif we do not have Gross Requirements there are not also Net Requirements.GR = 0

A= 550, SS = 50

NR = 0

Week 2:the same as the week 1, so we have an Availability of 550 units and the Security Stock is 50 units.Week 3:The Gross Requirements are 400 units, but we have an Availability of 550 inherited of the last week, so wecan satisfy the 400 units with the 550 available and we make sure that 50 we have 50 units for the Security Stock.NR = GR- A + SS; NR = 400- 550 + 50; NR = - 100

It is important to realise that the result is negative, that means that we do not need to make more scissors, becausethere are 150 available. 550-400 = 150

Week 4:We need to make 600 scissors but we only have 150 units that were left the weeks before, so the NetsRequirements are:NR = GR- A + SS; NR= 600-150+50; NR = 500

We have to make during the 4 th week 500 scissors; we ensure that the Security Stock has 50 units.

Week 5:The GR are invalid, we do not need to fabricate more because the NR are also invalid.Week 6:The Gross Requirements are 800 units, the Availability is invalid so,

NR= GR, NR=800


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We have to fabricate 800 units during the 6 th week, and our security stock is 50 units.

Week 7:The same as in the week 6, our Net Requirements are 300 units,NR= GR, NR=300

Net Requirements of the MRP

Lead Time - Emission of planned orders.

The last step to apply is to convert the Net Requirements in Emission of Planned Orders (EPO) by the lead time.

We denominate Lead Timeas the necessary time to convert the initial state to a final state; we will see it better withsome examples:

The lead time can be the time processed by a machine and the time needs to acquire a product, or the addition ofboth times. In the present case we see that in the 4 th week we should have 500 scissors, so the lead time will be thetime we need to make them, it can be one week, 2 weeks. it is very important to maintain constantly the Lead time,that is having an infinity capacity but by means of the MRPII we consider the capacity and the loading of work toadjust it in the indicated lead time.

The Emission of Planned Orders consists of indicating the quantity and the date in which we have to launch the newwarning of fabrication, the EPO is calculated transferring the time into the quantities resulted from the calculation ofthe Net Requirements, this process is defined by the lead time.

We consider that the lead tie for the code SC is of two weeks; therefore the EPO will be calculated transferring thetime into 2 weeks the net necessities.

Emission of Planned Orders

The final analysis would be that in the 2 nd week we need 500 units of row material in order to fabricate the 500 unitsin 2 weeks, so, in the 4 th week we can satisfy the Net Requirements. This 500 units are referred to the screws , leftand right side, but according to the Bill of Materials to make 1 scissor we need, one left side, one right side and twoscrews therefore to make 500 scissors we will need, 500 to the right side, 500 to the left side and 1000 screws. In thesecond week to ensure that the row material is going to be available we have to explosion the MRP with the articlesof the lowest level.


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Explosion of MRP.

The explosion of the MRPis just applying the before mentioned steps to the articles that belong to the inferior levels

of the Bill of Materials but, taking into account that now the Gross Requirements of the articles are the Emissions ofPlanned Orders of the highest level.

According to what we have said, the calculation of the Gross Requirements articles R, S, L will be makingautomatically.

Explosion of the MRP according to the bill of material.

Knowing that our stock has 700 units of the article L , 500 units of the article R, and 300 units of the article S which itsSecurity Stock has 125 units, we will calculate the Net Requirements of this articles applying the two rules mentionedbefore :

1. If the availability is more than 0 , NR = GR-A+ SS2. If the availability is equal to 0 , NR = GR


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Net Requirements according to the bill of material.

The last step is the explosion of the MRP that will be to apply the Lead time of each article to calculate their EPOconsidering the following Lead Time of the articles, the explosion will be the following:


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Emissions of Planned Orders according to the bill of material.v

example mrp

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