Operations Manager: MRP1

MRP Inventory Plan (MRP1)

MRP1 computes weekly net requirements for an inventory item for up to 20 weeks in the future. The model then schedules planned order releases and receipts to satisfy those requirements. Leadtimes can range from 0 to 6 weeks. MRP1 can handle a variety of practical complications in inventory planning, such as units previously allocated to specific future production runs, previously scheduled order receipts, lot sizing, safety stocks, and yields which are less than 100% of production quantities.

MRP1 makes it easy to do a great deal of what-if analysis. A common problem in lot-sizing is that it frequently leads to carrying excess stock during periods of low demand. You can attempt to minimize excess stock by trying different lot sizes. If leadtimes are uncertain, you can add “safety leadtime” by trying larger leadtime values. If yields are uncertain, you can decrease the yield percentage. Another option is the POQ model in the next section.