A Method Study On Implementation of Material Requirement Planning (MRP-I) in Sample Bicycle Manufacturing Industry

Volume 4, Issue 3, March – 2019 International Journal of Innovative Science and Research Technology
ISSN No:-2456-2165
A Method Study on Implementation of Material

Requirement Planning (MRP-I) in Sample Bicycle
Manufacturing Industry
Vijay Prakash M Ananth Selvakumar Zeba Jihan
School of Management School of Management School of Management
SRM Institute of Science & SRM Institute of Science & SRM Institute of Science &
Technology Technology Technology
Chennai, India Chennai, India Chennai, India
Abstract:- Scheduling is the process that refers to inventory increase efficiency and productivity in
establishing the timing and use of resources involved in operations.
various operations within the organization. It relates to
efficient use of equipment and facility, human resources The inventory management is analyzed using Material
and materials. The problems faced due to absence of Requirement Planning also known as MRP-I. It is a system
scheduling in an organization are staff turnover, used for calculating the various materials and components
employee availability, covering of unusual periods of required for manufacturing a product. It consists of three
activity and so on. This paper highlights the problems phases namely: taking inventory of the materials and
an organization faces due to absence or low quality components on hand, identifying additional ones are needed
scheduling and how to overcome these. Michael J and then scheduling their production or purchase. It refers to
Brusco has subsequently developed a new heuristic the basic calculations used to determine component
based search on the simulated annealing algorithm, requirement from end product manufacturing.
which was to generate integer personnel schedules in
continuously operating organizations. The baseline of II. EXISTING PROBLEMS
any business is to achieve profitability and scheduling
has major impact on company’s profitability. The gaps A. Excess Inventory
in scheduling are chaos in operations, loss of credibility, Excess inventory occurs when inaccurate orders are
inefficient workflows and increased costs. The main aim made which leads to storage problems and also prevents
of this work is to nullify the gaps using scheduling tools from offering better products to customers.
and techniques and also to improve the revenue of the
organization. The data used for this analysis are B. Failure to Keep Track of Stock
primary data which were collected through interviews Tracking inventory with infrequent checks or using
and surveys. This analysis will help in identifying the manual process is not enough to manage the supply chain.
next level schedule in an organization. This analysis will Failing to keep close track of stock movement causes
help in taking scheduling in an organization to next accounting errors, resulting in added costs for the
level. organization.
Keywords:- Staff Turnover, Annealing Algorithm and C. Difficulty in Identifying Demand Patterns
Gaps. Changing demand can also be one of the biggest
challenges of SMBs, especially with ever-increasing and
I. INTRODUCTION changing product portfolios.
Scheduling is the process of arranging, controlling D. Low Product Turnover

and optimizing the work and workloads in a production Failure in tracking demand leads to a reduced product
process. It pertains to establish both the time and use of turnover due to fall in demand. Lower turnover leads to
resources within an organization. Under the operations excess inventory that result in requirement for bigger space
function namely manufacturing and services, scheduling in warehouse and increase in capital.
relates to use of equipment and facilities, the scheduling of
human activities, and receipt of materials. Allocation of the III. PURPOSE OF ANALYSIS
above parameters along with the inventory management
using forward and backward scheduling is done here. The This analysis is used to determine the quantity,
supervision of non-capitalized assets and stock items is components and sub components requirement to keep
major part in operations which is handled by inventory priorities updated for the production process through
management. Inventory management includes controlling Material Requirement Planning.
and overseeing of ordering inventory, storage of inventory
and controlling the amount of product ready for sale. So we
focus on inventory management which assists in managing
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ISSN No:-2456-2165
A. Scheduling & Planning A. Bill of Material
The main objective of this analysis is to ensure MRP systems are dependent on identifying the
planning of all manufacturing processes, this scheduling of components, their interrelationships and the accurate
different job works or part production or purchase will quantities for production planning. Bill of Material is
minimize or remove any kind of idle time for machine and necessary for the system to be effective. MRP systems
workers. ensure that the Bill of Material is correct.
B. Inventory Management The bill of materials explains what, how, and where
Ensure the availability materials at the moment’s to buy the required materials, and also includes instructions
notice. This eliminates the need for manual processing and for how to assemble the product from the various parts
it is also able to carry out material orders with ease. ordered. All manufacturers who are building products,
regardless of their industry, always get started by creating a
C. Maintaining Priorities bill of materials.
It is used to keep priorities updated and valid. MRP
System is used to respond to the changes taking place in the This is because the bill of material pulls together all
daily environment, to reorganize priorities and also to keep sorts of product information that it has on several disciplines
plans current and viable. such as design and engineering, document control,
operations, manufacturing, purchasing and contract
D. Determine the Quantity and Timing of Material manufacturer will consume data contained within the BOM
Requirements record to get the job done right. In fact, engineers and
MRP is used to determine what to order, how much to manufactures of industry rely so heavily on special subsets
order, when to order and when to schedule delivery. called the engineering bill of materials (EBOM) and the
manufacturing bill of materials (MBOM). Business
E. Cost Reduction activities like parts sourcing, outsourcing and manufacturing
In correlation with inventory management, cost is are the main needs for executing BOM and so it is important
reduced significantly through a steady flow of inventory, to create a BOM that is well organized, correct and up-to-
holding and reduced untimely delivery cost and ultimately date.
brining more revenue into the operation.
B. Master Production Schedule
F. Production Optimization It specifies the quantities and times when products are
Material flow throughout the supply chain, equipment needed and thereby dictates when all the contributory
and employees are able to work at a much faster and production activities should happen. The master production
efficient rate. schedule also commonly referred to as the MPS is
effectively the plan that the company develops for
IV. MRP-I SYSTEM production, staffing, inventory, etc.
It has variety inputs of such as data, e.g. forecast

demand, production costs, inventory costs, etc and as
output a production plan detailing amounts to be produced,
staffing levels, etc for each of a number of time periods.
This production plan,

 Operates at an aggregate level.
 It is cost driven and attempts to meet the specified
requirements at minimum cost.
V. ANALYSIS AND INTERPRETATION
We conducted this analysis in bicycle manufacturing

industry. The below data is obtained from one of the
leading bicycle manufacturing company in India. Based on
that data’s we performed our analysis with the aid of tool
like MRP-I. We solved out the listed problems that helps
by means of minimizing the cost of production and time,
maximizing inventory utilization.
Fig 1:- MRP-I Systematic Diagram

ISSN No:-2456-2165
B. Handle bar
Inventory on Hand = 6760 units, Order Quantity =

3892 units, Lead Time = 1 month, Pre Order: None
Fig 2:- Product Structure
Order Inventory
Lead Time
Parts Quantity on Hand
(Month)
(Units) (Units)
BICYCLE 3276 1 4277
HANDLE
6760 1 3892
BAR
SEAT 6687 1 4042
WHEEL 8089 2 10,852
RIM 15,107 2 5874
TIRE 15,928 2 1036

Fig 4:- MRP Calculation of Handle Bar
FRAME 3276 1 2275
CHAIN 3433 2 4032 C. Seat

Table 1:- Bill of Material 4042 units, Lead Time = 1 month, Pre Order: None
A. Bicycle
4277 units, Lead Time = 1 month, Pre Order: Order place
on December (previous year) of 4277 units, to be delivered
in 1st month (January).
Fig 5:- MRP Calculation of Seat
D. Wheel (2)
Inventory on Hand = 10,852 units, Order Quantity =
Fig 3:- MRP Calculation of Bicycle 8059 units, Lead Time = 2 month

ISSN No:-2456-2165
Pre Order: Order place on December (previous year)
of 8089 units, to be delivered in 2nd month (February).
Fig 8:- MRP Calculation of Tire
G. Frame
Fig 6:- MRP Calculation of Wheel Inventory on Hand = 2275 units, Order Quantity =
E. Rim (2)
15,107 units, Lead Time = 2 month, Pre Order: None
Fig 9:- MRP Calculation of Frame

Fig:- 7 MRP Calculation of Rim
H. Chain
F. Tire (2) Inventory on Hand = 4032 units, Order Quantity =
Inventory on Hand = 1136 units, Order Quantity = 3433 units, Lead Time = 2 month, Pre Order: None

ISSN No:-2456-2165
REFERENCES
[1]. Sagbanşua, L. and Alabay, M. (2010). An MRP Model

for Supply Chains. International Business Research,
3(4), pp.124-131.
[2]. Asis Sarkar, A Simple Case Study of Material
Requirement Planning, Issue 5, Volume 9, IOSR-
JMCE (Nov. Dec. 2013), PP 58-64.
[3]. Ade Isasya, MATERIAL REQUIREMENT
PLANNING ANALYSIS IN MICRO, SMALL AND
MEDIUM ENTERPRISE CASE STUDY:
GROOVELINE ‐ AN APPAREL OUTSOURCING
COMPANY, No. 3, Volume 4, Journal of Business
and Management 2015, PP 317-329.
[4]. Mahadevan B., Operations Management Theory and
Practice, Pearson Publication, 3rd Edition, 2015.
[5]. R. Panneerselvam, Production & operations
management, Prentice Hall India private limited, 2017.
Fig 10:- MRP Calculation of Chain
I. Observation
Fig 11:- Observation table (which month, what to order and

how much to order)
VI. CONCLUSION
Using MRP-I calculation the inventory scheduling is

calculated and planned on what quantity must be ordered
every month based on the availability of material in hand
and requirement. This calculation will help to increase the
profitability of company by means of decreasing the capital
cost in production of bicycles. It helps to maintain the
safety stock level for the purpose of round the clock
productions. This schedule planning method helps to place
the order of sub components and manage inventory
effectively. It can also be used to manage the inventory cost
and purchasing cost effectively. This will also help in
making a better decision in manufacturing of bicycles.

A Method Study On Implementation of Material Requirement Planning (MRP-I) in Sample Bicycle Manufacturing Industry

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Volume 4, Issue 3, March – 2019 International Journal of Innovative Science and Research Technology

A Method Study on Implementation of Material

Scheduling is the process of arranging, controlling D. Low Product Turnover

IJISRT19MA207 www.ijisrt.com 104

It has variety inputs of such as data, e.g. forecast

This production plan,

V. ANALYSIS AND INTERPRETATION

We conducted this analysis in bicycle manufacturing

Fig 1:- MRP-I Systematic Diagram

IJISRT19MA207 www.ijisrt.com 105

Inventory on Hand = 6760 units, Order Quantity =

Fig 2:- Product Structure

WHEEL 8089 2 10,852

RIM 15,107 2 5874

TIRE 15,928 2 1036

CHAIN 3433 2 4032 C. Seat

Fig 5:- MRP Calculation of Seat

IJISRT19MA207 www.ijisrt.com 106

Fig 8:- MRP Calculation of Tire

Fig 9:- MRP Calculation of Frame

IJISRT19MA207 www.ijisrt.com 107

[1]. Sagbanşua, L. and Alabay, M. (2010). An MRP Model

Fig 11:- Observation table (which month, what to order and

Using MRP-I calculation the inventory scheduling is

IJISRT19MA207 www.ijisrt.com 108

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