UNIVERSITY OF DAR ES SALAAM

COLLEGE OF ENGINEERING AND TECHNOLOGY

DEPARTMENT OF MECHANICAL AND INDUSTRIAL ENGINEERING

GROUP ASSIGNMENT

COURSE (IE 340): ENGINEERING OPERATION MANAGEMENT

ACADEMIC YEAR: 2025/2026

COURSE INSTRUCTOR: DR. KAFUKU

PARTICIPANTS: GROUP NO 1 MEMBERS

Introduction

Material Requirements Planning (MRP) is a standard supply planning system to help businesses,
product-based manufacturers, understand inventory requirements while balancing supply and
demand.
 MRP systems are used to efficiently manage inventory, schedule production and deliver
the right product on time and at optimal cost.
 MRP (Material Requirements Planning) began in the 1960s, when manufacturing
companies were looking for a better way to control inventory and production planning.
Before that time, many factories relied on manual calculations and simple reorder
methods, which often caused shortages or excess stock.

Dependent demand is the demand for a component or material that is directly determined by
demand of another product.

MRP system is appropriate for items that have a dependent demand

Independent demand

This is the demand coming directly from the customer or market.

MRP II

 This is an integrated computer-based system that is used to optimize the manufacturing

process by planning all resources used in production including materials, machinery and
human resources, it extends beyond MRP by incorporating capacity planning and demand
forecasting.
 This system was developed after detecting some weaknesses in MRP for example MRP
assumed that if material exist production can happen, but was wrong because you may
have materials but machines are busy, no enough workers hence the capacity is not
enough
 So MRP II adds capacity requirement planning

EPR (enterprise resource planning)

 This is an integrated computer-based system that manages and coordinate all major
business functions of an organization using one central database.
 Before development of these systems the companies had many separate data units, that
means for each department there was a system for coordinating the specific information,
so this led to data duplication, delay in information and poor decision making
 After discovery of this new system the entire business was integrated into one system of
database, hence ERP works on the principle of “one company-one database -Realtime
information”
ABOUT MRP

The basic principle of MRP

The basic principle of MRP is only to ensure that all necessary materials, components, spare
parts or sub-assemblies are available at the right time and in the write quantity so as to meet the
production schedules while minimizing the on-hand inventory

for example, if one gearbox needs 4 bearings then 200 gearboxes will need 800 bearings so this
system ensures availability of these 800 bearings at the right time, so MRP do this calculation for
thousands of components simultaneously

Objectives of MRP

(a) Ensuring Availability of Materials

MRP guarantee that necessary components, sub-assemblies, and raw materials are available for
production, without any delay so that the product is delivered to the customer at the right time.

(b) It maintains minimum inventory level

MRP ensures that the level of inventories on hand such as the raw materials available at the store
are not at high quantity.

(c)It enhances Scheduling of the company

Improve the accuracy of production schedules and provide better, clear data for the management
issues.

Basic inputs in MRP

For a material requirement planning system to operate three main objectives are required, these
are

(a) Master production schedule

 Drives MRP process with a schedule of finished products; states which end items are to
be produced, when these are needed and in what quantities.
 Quantities may consist of a combination of customer orders and demand forecasts.
 Quantities represent what needs to be produced, not what can be produced.
 the system determines how much time and labor are required to complete each step of
each build and when they need to happen so that the production can occur without delay
 The production schedule also identifies what machinery and workstations are needed for
each step and generates the appropriate work orders, purchase orders and transfer orders.
If the build requires subassemblies, the system takes into account how much time each
subassembly takes and schedules them accordingly.
 (b) Bill of material

 From the master schedule, MRP calculates the required volume and timing of assemblies,
sub-assemblies and materials. To do this it needs information on what parts are required
for each product. This is called the ‘bill of materials
 BOM Shows way a finished product or parent item is put together from individual
components.
 Production planners explode BOM to determine the number, due dates, and order dates of
subcomponents.

(c) Inventory Records File

• Detailed information regarding the quantity of each item, available in hand, on order to
be released, for use in various time periods.

• MRP system using inventory master file is used to determine the quantity of material
available for use in a given period.

• If sufficient items not available, the system includes the item on the planned order release
report.

The outputs of MRP

(a) Planned order report

This is a recommended schedule generated by the MRP system that outlines the quantity and
timing of future material requirements

(b) order release report

This one provides the formal authorization to initiate the production, assembly, or purchasing of
materials to fulfill scheduled demand

(c) order changes report

It’s also commonly referred to as an exception Report, this document highlights existing orders
that require manual intervention because they no longer align with current demand or supply
condition

MRP terminologies

• Gross Requirements – total expected demand for an item by time period

 • Scheduled Receipts – material already ordered scheduled to arrive from vendors or
elsewhere in the pipeline.

• Projected on Hand – Expected amount of inventory that will be on hand at the beginning
of each time period.

• Net Requirements – The actual amount needed in each time period.

• Planned Order Receipts – Quantity expected to be received by the beginning of the period
in which it is shown.

• Planned Order Releases – Planned amount to order in each time period; planned order
receipts offset for lead times.

The relevance of material requirement planning

• Avoiding Production Delays

Think about a car factory. If steel, engines, or tires don’t arrive on time, the whole assembly line
can grind to a halt. MRP makes sure all the materials are available exactly when they’re needed,
so production keeps running smoothly without interruptions.

• Reducing Inventory Costs

Keeping too much raw material or finished products in storage costs money warehouse space,
insurance, and even the risk of damage. MRP helps companies order only what they actually
need, which cuts down on unnecessary storage costs.

• Better Customer Satisfaction

In real life, customers expect products to be delivered on time. For instance, an electronics
company needs to deliver laptops on the scheduled dates. MRP helps production schedules
match demand, so orders are fulfilled promptly, keeping customers happy.

• Efficient Use of Resources

Machines, labor, and money are all limited resources. MRP helps plan production efficiently,
making sure machines aren’t sitting idle and workers aren’t waiting around for materials. This
saves costs and boosts overall productivity.

• Helps with Large Projects

For companies building complex equipment like airplanes or industrial machines, there are
thousands of components to manage. MRP keeps track of every part from raw materials to semi-
finished products so nothing is forgotten or delayed.

• Improves Decision-Making

MRP provides managers with accurate information on what materials are needed and when. This
helps them make smarter decisions about purchasing, production schedules, and even negotiating
with suppliers

Industrial Use of MRP

in Industry 3.0, Industry 4.0, and Industry 5.0

The Third Industrial Revolution (Industry 3.0 (1970s-2000s))

The Third Industrial Revolution, also known as the Digital Revolution, began in the 1970s. This
era saw the integration of digital technologies into manufacturing, with various innovations like
computers, microprocessors, and programmable logic controls (PLCs). Industry 3.0 transformed
traditional manufacturing methods by shifting them from analog to digital enabling automation
and enhancing precision in production of products in the industries (Orlicky, 1975).

Although industry 3.0 continues to be used in many factories today. It established the foundation
for smart factory concept and enable the development of more advanced manufacturing
technologies. Early material Requirements planning systems were designed with three main
goals; guaranteeing material availability for production, keeping inventory level as low as
possible, and effuciency planning manufacturing activities, delivery schedules and purchasing.

Uses of MRP in Industry 3.0

Material Requirement Planning gained windspeed adoption in 1970’s as computers were

introduced into manufacturing. Over the following decades it became the key tool for
organisations worldwide in the 21st century, increasing the global competition and more open
markets heightened the demand for efficient production planning making MRP more essential.

Managing Inventory

In industry 3.0 MRP is effective tool for inventory management, the primary goal is to maintain
sufficient stock to support production needs while avoiding excessive inventory that raises
storage cost and tie up capital.
Planning Material Requirements

Material Requiremnt Planning provides industries with structured method to calculate the precise
quantities of materials needed for productions, it uses key inputs such as; sales forecast,
confirmed customer ordres and current invetory level which determines what exactly must be
ordered that can enable company to plan purchase in advance and avoid excessive inventory.

Scheduling Production

MRP plays a vital role n production scheduling by creating a clear, structured production plant
that specifies when each manufacturing activity should occur.

 Receipt of the Order: The manufacturing company receives an order for the production of
1,000 cars of a certain model.

 Calculation of Material Requirements: It is calculated which parts (body / engines / tires /

electronics) are needed to fulfill this order.

 Checking the Stocks: The system checks which and how many of these parts are already
in stock through manual inputs from the operators.

 Ordering Missing Parts: All missing parts are ordered at a suitable time according to the
calculation.

 Capacity Check: A check is made as to whether both the required production lines and
the personnel are available in the time required for production.

 Production Release: Once all these steps have been completed or fulfilled, the order is
released and production can begin.

The final step in the process typically involves monitoring production and ensuring that the order
is completed safely. If problems arise during production, they can be quickly identified and
rectified.

The Fourth Industrial revolution (Industry 4.0 (2010-present))

Industry 4.0 also known as the fourth industrial revolution marks the next major transformation
in manufacturing. It begun in Germany in 2011 and intergratea physical andk technologies
including; Internet of things(IoT), Artificial Inteligenc(Ai) Cloud corrupting Industry 4.0 enables
higher operational efficiency, greater production flexibility and data driven decision making.

Uses of MRP in Industry 4.0

Real-Time Inventory Tracking

In industry 4.0 inventory management achieves significantly higher necessary and reliability
through digital connectivity. This real-time visibitlg ebanle companies to maintain their lower
inventory level, reduce holding cost and ensure production continuity without stockcuts or
disruptions.

Predictive Maintenance

Industry 4.0 predictive maintanace significantly improve manufacturing reliability by using

sensors that continuously monitor machine conditions such as temperature, vibration, and sound
detecting early sign for potential failure before breakdowns. Unlike to traditional systems where
unexpected downtime disrupted production and material planning.

Running Simulations Using Digital Twins

In Industry 4.0, MRP systems are enhanced through the use of digital twins, which are virtual
models of physical production systems. These digital replicas receive real-time data from
machines, production lines, and inventory systems, allowing them to accurately reflect actual
operating conditions. A digital twin creates a virtual representation of physical assets, systems, or
processes that maintains continuous synchronization through real-time data streams (Process
Genius, 2025).

Before implementing a production plan, the MRP system can simulate different scenarios using
the digital twin, such as changes in demand, machine breakdowns, or variations in material
availability. This enables organizations to identify potential problems, optimize schedules, and
adjust material requirements in advance. As a result, production planning becomes more flexible
and efficient.

The Fifth Industrial revolution (Industry 5.0)

Industry 5.0 represents the next phase of industrial evolution, focusing on human-centric
innovation. Unlike its predecessors, Industry 5.0 emphasizes collaboration between humans and
machines, leveraging the strengths of both to achieve optimal outcomes. It places humans at the
centre of production systems, asking not "What can we do with new technologies?" but "What
can technology do for us?" (Interlake Mecalux, 2021). This approach aims to enhance human
creativity, well-being, and job satisfaction. Industry 5.0 emphasizes collaboration between
humans and machines, with three core pillars: human-centricity, sustainability, and resilience
(Nahavandi, 2019).

Uses of MRP in Industry 5.0

Real-Time Analysis and Decision Support

In industry 5.0 Material Requirement Planning plays key role by enabling real-time analysis
while keeping humana central to decision making. The system emproves planners to stimulate
various production and supply chain scenarios such as the impact of accepting new customera
order on existing schedules, workforce availability and materials supply before commiting to
final decision . The proactive simulation enable to to asses risk, identify potential disruptions and
select optimal solution.

Environmental Conservation

In industry 5.0 manufacturing evolves beyond pure effucieny and profit to prioritize
sustainability and enviromental responsibility. Morden MRP based on intelligent planning
systems supports this transition by intergrating enviromental data such as energy consumption,
emision and material effectively into the planning process. This enable human planners to
evaluate and select production schedules that minimize waste, reduce energy peaks, lower
emission and favor processes with smaller enviromental footprints all while meeting output
demands. By consuming real-time data insight with human judgment, these system provide
smaller, more sustainable decision making that balances productivity with ecological
conservation.

Strategic Project Monitoring

In Industry 5.0, production planning has expands beyond the use of static tools such as
spreadsheets that are updated occasionally. Instead, modern MRP-based intelligent planning
systems use real-time digital applications that allow managers to monitor projects as they
progress. These systems provide instant visibility of order status, inventory levels, and
production phases across different departments and locations.

Thus makes it easier for managers to follow complex projects involving many users and
processes, identify delays early, and make timely decisions. Rather than waiting for reports,
decision-makers can see the current situation as it happens and respond immediately.
Advantages of MRP

• Improved Business Results

• Improved Manufacturing Results

• More Accurate and Timely Information

• Less Inventory

• Less Materials Obsolescence

• Time Phased Ordering of Materials

• Higher Reliability

• More Responsiveness to Market Demand

• Reduced Production Cost

Disadvantages of MRP

• Increase in Material Acquisition Cost

• Higher Transportation Costs and Higher Unit Cost

• Potential Hazard of a Production Slowdown or Shutdown

• Use of Standardized Software Packages

• Does not Take into Account Plant Capacity and Distribution Capacity

High Stock-Out Cost

References

Orlicky, J. (1975). Material requirements planning: The new way of life in production and
inventory management. McGraw-Hill.

Vollmann, T. E., Berry, W. L., Whybark, D. C., & Jacobs, F. R. (2005). Manufacturing planning
and control for supply chain management (5th ed.). McGraw-Hill/Irwin.

Heizer, J., Render, B., & Munson, C. (2017). Operations management: Sustainability and supply
chain management (12th ed.). Pearson.

Nahmias, S., & Olsen, T. L. (2015). Production and operations analysis (7th ed.). Waveland
Press.

Stevenson, W. J. (2021). Operations management (14th ed.). McGraw-Hill Education.