Manufacturing resource planning (MRP II) is defined as a method for the effective planning of all resources of a manufacturing company. Ideally, it addresses operational planning in units, financial planning, and has a simulation capability to answer " what-if" questions and is an extension of closed-loop MRP (Material Requirements Planning). This is not exclusively a

software Software is a set of computer programs and associated documentation and data. This is in contrast to hardware, from which the system is built and which actually performs the work. At the lowest programming level, executable code consists ...

function, but the management of people skills, requiring a dedication to

database In computing, a database is an organized collection of data stored and accessed electronically. Small databases can be stored on a file system, while large databases are hosted on computer clusters or cloud storage. The design of databases sp ...

accuracy, and sufficient computer resources. It is a total company management concept for using human and company resources more productively.

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 In-house software is computer software for business use within an organization. In-house software can be developed by the organization itself or by someone else, or it could be acquired. In-house software however may later become available for com ...

. Almost every MRP II system is

modular Broadly speaking, modularity is the degree to which a system's components may be separated and recombined, often with the benefit of flexibility and variety in use. The concept of modularity is used primarily to reduce complexity by breaking a sy ...

in construction. Characteristic basic modules in an MRP II system are: *

Master production schedule A master production schedule (MPS) is a plan for individual commodities to be produced in each time period such as production, staffing, inventory, etc. It is usually linked to manufacturing where the plan indicates when and how much of each produ ...

(MPS) * Item master data (technical data) *

Bill of materials A bill of materials or product structure (sometimes bill of material, BOM or associated list) is a list of the raw materials, sub-assemblies, intermediate assemblies, sub-components, parts, and the quantities of each needed to manufacture an end ...

(BOM) (technical data) * Production resources data (manufacturing technical data) * Inventories and orders (inventory control) * Purchasing management *

Material requirements planning Material requirements planning (MRP) is a production planning, scheduling, and inventory control system used to manage manufacturing processes. Most MRP systems are software-based, but it is possible to conduct MRP by hand as well. An MRP system ...

(MRP) * Shop floor control (SFC) *

Capacity planning Capacity planning is the process of determining the production capacity needed by an organization to meet changing demands for its products. In the context of capacity planning, design capacity is the maximum amount of work that an organization ...

or capacity requirements planning (CRP) *

Standard costing Standard cost accounting is a traditional cost accounting method introduced in the 1920s, as an alternative for the traditional cost accounting method based on historical costs.Adolph Matz (1962) ''Cost accounting.'' p. 584. Overview Standard co ...

(cost control) and frequently also Actual or FIFO costing, and Weighted Average costing. * Cost reporting / management (cost control) together with auxiliary systems such as: and related systems such as: 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 interfaced.

MRP and MRPII

History and evolution

(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 system An information system (IS) is a formal, sociotechnical, organizational system designed to collect, process, store, and distribute information. From a sociotechnical perspective, information systems are composed by four components: task, people ...

s as we know them today began with the development of MRP and MRPII in manufacturing. MRP (and MRPII) evolved from the earliest commercial

database management In computing, a database is an organized collection of data stored and accessed electronically. Small databases can be stored on a file system, while large databases are hosted on computer clusters or cloud storage. The design of databases span ...

package developed by Gene Thomas at IBM in the 1960s. The original structure was called BOMP (bill-of-materials processor), which evolved in the next generation into a more generalized tool called

DBOMP DBOMP (Database Organization and Maintenance Processor) was an early hierarchical database system from IBM for DOS. DBOMP was introduced in the late 1960s as a successor to IBM's "Bill of Materials Processor" called BOMP, introduced in 1965 when ...

(Database Organization and Maintenance Program). These were run on mainframes, such as

IBM/360 The IBM System/360 (S/360) is a family of mainframe computer systems that was announced by IBM on April 7, 1964, and delivered between 1965 and 1978. It was the first family of computers designed to cover both commercial and scientific applica ...

. 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 Efficiency is the often measurable ability to avoid wasting materials, energy, efforts, money, and time in doing something or in producing a desired result. In a more general sense, it is the ability to do things well, successfully, and without ...

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 material A raw material, also known as a feedstock, unprocessed material, or primary commodity, is a basic material that is used to produce goods, finished goods, energy, or intermediate materials that are feedstock for future finished products. As feedst ...

s 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 A mainframe computer, informally called a mainframe or big iron, is a computer used primarily by large organizations for critical applications like bulk data processing for tasks such as censuses, industry and consumer statistics, enterprise ...

(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 resources. Like today's ERP systems, MRPII was designed to tell us about 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, 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, E. and Wagner, B., Concepts in Enterprise Resource Planning, 2nd Edition, 2006, Editor, Mac Mendelsohn, Canada: Thomson Course Technology.

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 MRPII is concerned with the coordination of the entire manufacturing production, including materials, finance, and human resources. The goal of MRPII is to provide consistent data to all members 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 In statistics, missing data, or missing values, occur when no data value is stored for the variable in an observation. Missing data are a common occurrence and can have a significant effect on the conclusions that can be drawn from the data. Miss ...

, redundant data,

numerical error In software engineering and mathematics, numerical error is the error in the numerical computations. Types It can be the combined effect of two kinds of error in a calculation. * the first is caused by the finite precision of computations involv ...

s 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, or of actual sales demand in the form of customers orders. These demands determine the raw materials demand. MRP and MRPII systems draw on a master production schedule, the breakdown 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 Manufacturing cost is the sum of costs of all resources consumed in the process of making a product. The manufacturing cost is classified into three categories: direct materials cost, direct labor cost and manufacturing overhead. It is a factor i ...

, including machine time, labor time and materials used, as well as final production numbers, is provided from the MRPII system to

accounting Accounting, also known as accountancy, is the measurement, processing, and communication of financial and non financial information about economic entities such as businesses and corporations. Accounting, which has been called the "languag ...

and

finance Finance is the study and discipline of money, currency and capital assets. It is related to, but not synonymous with economics, the study of production, distribution, and consumption of money, assets, goods and services (the discipline of fina ...

. For the companies that want to integrate their other departments with their manufacturing management, ERP software are necessary.

Benefits

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 Working capital (WC) is a financial metric which represents operating liquidity available to a business, organisation, or other entity, including governmental entities. Along with fixed assets such as plant and equipment, working capital is consi ...

for inventory * Improved

cash flow A cash flow is a real or virtual movement of money: *a cash flow in its narrow sense is a payment (in a currency), especially from one central bank account to another; the term 'cash flow' is mostly used to describe payments that are expected ...

through quicker deliveries * Accurate inventory records

Criticism

Authors like Pochet and Wolsey argue that MRP and

MRP II Manufacturing resource planning (MRP II) is defined as a method for the effective planning of all resources of a manufacturing company. Ideally, it addresses operational planning in units, financial planning, and has a simulation capability to a ...

, as well as the planning modules in current APS and ERP systems, are actually sets of

heuristics A heuristic (; ), or heuristic technique, is any approach to problem solving or self-discovery that employs a practical method that is not guaranteed to be optimal, perfect, or rational, but is nevertheless sufficient for reaching an immediate, ...

. Better production plans could be obtained by

optimization Mathematical optimization (alternatively spelled ''optimisation'') or mathematical programming is the selection of a best element, with regard to some criterion, from some set of available alternatives. It is generally divided into two subfi ...

over more powerful

mathematical programming Mathematical optimization (alternatively spelled ''optimisation'') or mathematical programming is the selection of a best element, with regard to some criterion, from some set of available alternatives. It is generally divided into two subfi ...

models, usually

integer programming An integer programming problem is a mathematical optimization or Constraint satisfaction problem, feasibility program in which some or all of the variables are restricted to be integers. In many settings the term refers to integer linear programmin ...

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 mitigated to some extent by recent improvements in computers.

References

{{DEFAULTSORT:Manufacturing Resource Planning Computer-aided engineering Enterprise resource planning terminology Business terms Production planning Supply chain management