Material Requirements Planning (MRP) - User Guide

Introduction to MRP

Material Requirements Planning (MRP) is a production planning, scheduling, and inventory control system designed to manage manufacturing processes. It helps organizations ensure they have the right materials, in the right quantities, at the right time to meet production demands.

Why MRP is Important

MRP systems help businesses:

• Reduce inventory costs by ordering materials only when needed
• Improve customer service by ensuring timely delivery
• Optimize production scheduling by planning material availability
• Minimize stockouts through proactive planning
• Coordinate purchasing and production activities

Core MRP Objectives

1. Ensure materials are available for production and products are available for delivery to customers
2. Maintain the lowest possible material and product levels in inventory
3. Plan manufacturing activities, delivery schedules, and purchasing activities

MRP Concepts

Understanding these fundamental concepts is essential for effective MRP usage:

1. Demand

Demand represents the need for finished products or materials. There are two types:

• Independent Demand: Demand from customers (e.g., sales orders, forecasts)
• Dependent Demand: Demand derived from the production of other items (e.g., components needed to manufacture a product)

2. Bill of Materials (BOM)

A Bill of Materials is a comprehensive list of:

• Raw materials
• Sub-assemblies
• Components
• Parts
• Quantities of each

...required to manufacture a finished product.

Example BOM Structure:

Product: Chair
├── Seat (1 unit)
├── Backrest (1 unit)
├── Legs (4 units)
├── Screws (16 units)
└── Wood Glue (50 ml)

3. Routing

A Routing defines the sequence of operations and resources required to manufacture a product:

• Operation steps
• Work centers/machines
• Time requirements
• Resource allocation

4. Lead Time

Lead Time is the time between initiating and completing a process:

• Manufacturing Lead Time: Time to produce an item
• Purchase Lead Time: Time from ordering to receiving materials

5. Safety Stock

Safety Stock is extra inventory held to guard against:

• Demand variability
• Supply delays
• Quality issues
• Forecast inaccuracy

6. Lot Sizing / Batch Size

Lot Sizing determines how much to order or produce:

• Fixed batch size
• Economic Order Quantity (EOQ)
• Lot-for-lot (produce exactly what's needed)
• Minimum order quantities

7. MRP Explosion

MRP Explosion is the process of:

1. Starting with demand for finished products
2. Breaking down (exploding) into component requirements
3. Calculating net requirements at each level
4. Scheduling production and purchases

MRP in Nama ERP

Nama ERP implements a comprehensive MRP system that integrates seamlessly with other modules. Here's how MRP concepts map to Nama ERP entities and processes:

Main Entity: MRP Document (سند تخطيط)

Navigation Path: Manufacturing > Material Resource Planning > planning raw materials Document

Arabic Name: سند تخطيط English Name: Planning Raw Materials Document

The MRP Document is the central entity that coordinates all material requirements planning activities.

Related Entities

Prerequisites

Before using MRP in Nama ERP, ensure the following master data is configured:

1. Items Configuration

For each item, configure:

• ✅ Primary UOM (Unit of Measure)
• ✅ Manufacturing Lead Time (for manufactured items)
• ✅ Purchase Lead Time (for purchased items)
• ✅ Safety Stock settings
• ✅ Minimum Order Quantity
• ✅ Manufacturable Flag (check if item can be manufactured)

2. Bill of Materials (BOM)

For manufactured items, create BOMs with:

• Component items and quantities
• Batch size (lot size)
• Associated routing
• Specific dimensions (if applicable)
• Default BOM flag

3. Routing

For manufactured items, create routings with:

• Operation sequence
• Resources required
• Time estimates
• Associated BOM (optional)

4. Warehouses

Configure warehouses with:

• MRP flag enabled (to include in MRP calculations)

5. Scenarios (Optional)

Create MRP scenarios for:

• Different planning horizons
• What-if analysis
• Custom available quantity calculations

6. Document Terms

Configure MRP document terms with:

• Purchase order book/term
• Production order book/term
• Item request book/term
• MRP purchase request book/term

MRP Document Workflow

The MRP process in Nama ERP follows this workflow:

Step 1: Create MRP Document

1. Navigate to: Manufacturing > Material Resource Planning > MRP Document
2. Click New to create a new MRP document
3. Fill in header information:

Header Fields

Step 2: Collect Demand

After filling header information, click the Collect button (تجميع).

Collect Dialog Parameters

The system will prompt you to select which demand sources to include:

• ☑️ Include Sales Orders (تضمين أوامر البيع)

  • Includes confirmed customer orders within the date range

• ☑️ Include Manual Demands (تضمين الطلبات اليدوية)

  • Includes manually created demand documents

• ☑️ Include Forecasts (تضمين التوقعات)

  • Includes sales forecast documents

What Happens During Collection

The system will:

1. Search for demand documents within the specified date range
2. Extract item requirements from each document
3. Populate the Lines (التفاصيل) collection with demand sources
4. Create Required Lines (الاحتياجات) by aggregating demand according to the aggregation period
5. Calculate available quantities for each item

Step 3: Review Required Lines

After collection, review the Required Lines tab:

Required Lines Fields

Step 4: Analyze Requirements

Click the Analyze button (تحليل) to perform MRP explosion.

What Happens During Analysis

The system performs these calculations:

1. For Each Required Line:

   • Fetches the BOM (if item is manufacturable)
   • Fetches the Routing
   • Calculates available quantity
   • Calculates safety stock
   • Determines net requirement

2. Net Requirement Calculation:

   Net Requirement = Required Qty + Safety Stock - (Available Qty + Potential Available)
   

3. Batch Size Calculation:

   • If BOM has a batch size, calculates number of batches needed
   • Adjusts net requirement to whole batches
   • Considers minimum order quantities

4. MRP Explosion:

   • For manufactured items, explodes BOM to find component requirements
   • Recursively analyzes component requirements (dependent demand)
   • Considers lead times to calculate order dates

5. Creates Analysis Lines:

   • One analysis line for each item-period-dimension combination
   • Links parent-child relationships for BOM explosions

Step 5: Review Analysis Results

After analysis completes, review the Analysis (التحليل) tab:

Analysis Line Fields

Step 6: Review Planned Orders

The analysis automatically generates planned orders in two tabs:

Planned Production Lines (خطوط الإنتاج المخطط)

Contains production orders to be created:

Planned Purchase Lines (خطوط الشراء المخطط)

Contains purchase orders to be created:

Step 7: Generate Purchase and Production Orders

Select Lines to Generate

1. Review planned production and purchase lines
2. Check the Selected checkbox for lines you want to generate
3. Use Select All buttons to quickly select all lines in a tab

Generate Documents

Click one of these action buttons:

• Generate Production Orders (إنشاء أوامر إنتاج)

  • Creates production documents from selected production lines
  • One document per line (by default)

• Generate Purchase Orders (إنشاء أوامر شراء)

  • Creates purchase documents from selected purchase lines
  • One document per line (by default)

• Gen Single Purchase Order (إنشاء أمر شراء واحد)

  • Consolidates all selected purchase lines into one purchase document
  • Groups items by supplier (if configured)

After Document Generation

• Generated documents are linked in the Doc field of each planned line
• Documents are created in draft status (with @ symbol in code)
• You can review and edit generated documents before committing
• The Selected checkbox is automatically cleared (if configured)

Understanding MRP Results

Reading the Analysis Tab

The analysis tab shows the complete MRP explosion with all levels of BOM:

Level 0: Finished Product (from sales orders/forecasts)
    ├─ Level 1: Sub-assembly 1
    │       ├─ Level 2: Component A
    │       └─ Level 2: Component B
    └─ Level 1: Raw Material C

Hierarchical Relationships:

• Parent Analysis Line ID: Links to parent in BOM structure
• Master Row ID: Links back to the original required line
• Parent BOM: The BOM that generated this requirement

Net Requirement Calculation Logic

The system calculates net requirements using this logic:

1. Start with Gross Requirement (from demand)
2. Add Safety Stock
3. Subtract Available Quantity
4. Subtract Potential Available (incoming purchases/production)
5. Result = Net Requirement (if positive)

If the item has a batch size:

6. Calculate batches needed = CEILING(Net Requirement / Batch Size)
7. Final Net Requirement = Batches Needed × Batch Size

If the item has a minimum order quantity:

8. Final Net Requirement = CEILING(Net Requirement / Min Order Qty) × Min Order Qty

Safety Stock Calculation Methods

Nama ERP supports three safety stock calculation methods:

1. Quantity-Based

• Fixed quantity specified on item master
• Simple and straightforward
• Best for stable demand items

2. Periods Count - Current Period

• Safety stock = Required Qty × Safety Stock Factor
• Example: If required qty = 100 and factor = 1.2, safety stock = 20

3. Periods Count - Next Periods

• Looks ahead at next N periods
• Sums requirements from future periods
• More dynamic, responds to demand patterns

4. Periods Count - Plan Average

• Calculates average demand across all periods
• Multiplies by safety stock factor
• Smooths out demand variability

Understanding Lead Times

Lead times affect the Order On date calculation:

Order Date = Required Date - Lead Time

For Manufactured Items:

• Uses Manufacturing Lead Time from item master
• Example: Required on March 15, Lead time = 5 days → Order on March 10

For Purchased Items:

• Uses Purchase Lead Time from item master
• Example: Required on March 15, Lead time = 10 days → Order on March 5

Generating Production and Purchase Orders

Document Generation Process

When you click generate buttons, the system:

1. Validates Configuration

   • Checks document terms are configured
   • Verifies books have auto-coding enabled
   • Validates required fields

2. Creates Documents

   • Instantiates appropriate document type
   • Sets book and term from MRP document term config
   • Copies dimensions from MRP document

3. Populates Document Lines

   • For purchase documents: Creates purchase lines from planned lines
   • For production documents: Creates production order with BOM components

4. Sets Document Details

   • Value date from planned line date
   • Warehouse from planned line
   • Supplier (for purchase documents)
   • BOM and routing (for production documents)

5. Commits Documents

   • Automatically commits documents
   • Links generated documents back to planned lines
   • Updates MRP document status

Production Order Generation

For each selected production line, the system creates:

Production Order Header:

• Item to produce
• Quantity
• BOM and Routing
• Warehouse

Production Order Components:

• Exploded from BOM
• Quantities calculated based on production quantity
• Considers yield and potency factors

Production Order Co-Products:

• Copied from BOM co-products
• Quantities proportionally calculated

Production Order Resources:

• Copied from routing resources
• Time calculated based on quantity

Production Order Operations:

• Copied from routing operations
• Sequenced according to routing

Purchase Order Generation

For each selected purchase line, the system creates:

Purchase Document Header:

• Supplier (if specified)
• Warehouse
• Fiscal period

Purchase Document Lines:

• Item to purchase
• Quantity
• Value date from planned date
• Price (blank - to be filled manually)

Handling Generated Documents

After generation:

1. Review Generated Documents

   • Click document reference to open
   • Review quantities and dates
   • Add pricing information (for purchases)
   • Verify BOM/routing selection (for production)

2. Edit if Needed

   • Documents are created and committed automatically
   • Use "Start Editing" if changes are needed
   • Make adjustments
   • Commit again

3. Track Generation

   • Generated documents have From Doc pointing to MRP document
   • MRP document tracks generated docs count
   • Can regenerate if needed (previous docs will be deleted if not committed)

Advanced Features

1. Rolling MRP Planning

Use Previous MRP Document to link MRP runs:

Benefits:

• Carries forward remaining quantities from previous run
• Supports continuous planning (e.g., monthly MRP runs)
• Avoids double-counting requirements

Requirements:

• Previous and current documents must have same Scenario
• Previous document's To Date must be before current document's From Date

Example:

January MRP: From Date = Jan 1, To Date = Jan 31
February MRP: From Date = Feb 1, To Date = Feb 28, Previous = January MRP

February MRP will start with remaining quantities from January.

2. Scenario-Based Planning

Create scenarios for:

• Different planning assumptions
• What-if analysis
• Custom availability calculations

Scenario Features:

• Available Quantities Query: Custom SQL query to calculate available quantities
• Potential Available Query: Custom SQL query for potential available
• Do Not Divide Qty By Batch Size: Produce entire batch quantity rather than splitting into multiple production orders

SELECT SUM(netQty)
FROM QtyTransLine
WHERE item_id = {itemId}
  AND warehouse_id IN ({warehouseIds})

3. Available Qty Source Document

Instead of scenario queries, you can create an MRP Available Qty Source document:

Features:

• Manually specify available quantities per item/warehouse
• Specify whether quantity is "Total Available" or "Predicted Purchase"
• More controlled than scenario queries
• Easier for users to understand and maintain

Usage:

1. Create MRP Available Qty Source document
2. Add lines for items with custom available quantities
3. Select this document in MRP Document's Available Qty Source field

4. Manual Edits to Requirements

Override calculated requirements:

Edited Net Required (الاحتياج الصافي المعدل):

• Manually specify exact net requirement
• Overrides all calculations
• Use for special cases or adjustments

Edited Batches Count (عدد الدفعات المعدل):

• Specify exact number of batches to produce
• Only works if item has batch size defined
• Cannot be used with Edited Net Required

5. Merge Planned Lines

Use the Merge action to combine planned lines:

Merging Production Lines:

1. Select 2 or more planned production lines (same item and order type)
2. Click Merge button
3. System combines quantities into first selected line
4. Removes other selected lines

Requirements:

• Lines must have same Item
• Lines must have same Order Type
• At least 2 lines must be selected

6. Dimension Handling in MRP

MRP respects item dimensions during planning:

Supported Dimensions:

• Warehouse
• Locator
• Size
• Color
• Lot ID
• Revision ID
• Active Percentage
• Inactive Percentage
• Box/Package
• Measures
• Sub-item
• Serial Number

Configuration: Manufacturing module configuration controls which dimensions are:

• Considered in BOM/Routing Search
• Used as aggregation keys in MRP planning

Example: If "Size" is enabled in MRP:

• Red chairs and blue chairs are planned separately
• Different BOMs can exist for different sizes
• Requirements are tracked per size

7. Period-Based Safety Stock

For items with variable demand:

Configuration:

1. Set Safety Stock Calculation Type = "Periods Count"
2. Set Safety Stock = number of periods or factor
3. Choose calculation method on MRP Document

Periods Calc Method Options:

• Required In Current Period: Safety stock = Current period demand × factor

• Next Periods: Safety stock = Sum of next N periods' demand

• Plan Average: Safety stock = (Total demand / Total periods) × factor

8. Multiple UOM Handling

MRP works with items that have multiple units of measure:

Unit Used for MRP (configured in Manufacturing Configuration):

• Base Unit
• Primary UOM
• Secondary UOM

All requirements are converted to this unit for planning, then converted back to item's primary UOM for document generation.

9. Handling Recurring Demand

For ongoing production schedules:

Approach 1: Monthly MRP Runs

• Run MRP monthly
• Use previous MRP document to carry forward
• Generate orders for next month

Approach 2: Rolling Forecast

• Update forecast document regularly
• Rerun MRP with updated forecast
• Adjust planned orders as needed

Approach 3: Manual Demand

• Create manual demand documents for regular requirements
• Include in MRP collection
• Suitable for internal consumption patterns

Summary

Material Requirements Planning in Nama ERP provides a comprehensive solution for:

• ✅ Planning material requirements based on demand
• ✅ Exploding BOMs to determine component needs
• ✅ Calculating net requirements considering availability
• ✅ Generating purchase and production orders automatically
• ✅ Supporting rolling plans and scenarios
• ✅ Handling complex manufacturing environments

MRP Workflow Summary

1. Create MRP Document → Configure date range and parameters
2. Collect Demand → Gather from sales orders, forecasts, manual demands
3. Review Requirements → Check required lines are complete
4. Analyze → Run MRP explosion and calculations
5. Review Analysis → Verify net requirements and planned orders
6. Generate Documents → Create purchase and production orders
7. Execute → Review and commit generated documents

Key Success Factors

1. Accurate Master Data: BOMs, routings, lead times
2. Reliable Demand: Sales forecasts and orders
3. Regular Planning: Run MRP at appropriate frequency
4. Review Results: Don't auto-generate without review
5. Continuous Improvement: Refine based on actual performance