Improve Plant Operating Efficiency:

MRP controls the quantity and timing of deliveries of raw materials, parts, subassemblies, and assemblies. In MRP, the right materials are delivered at the right time. In addition, inflows may be slowed or accelerated in response to changes in production schedules. MRP results in reduction of labour, material, and variable overhead costs for the following reasons :

1. Reduced numbers of stock-outs and material delivery delays resulting in more production without enhance in the number of employees and machines.

2. Reduction of the incidence of scrapped subassemblies, assemblies, and products resulting in the utilization of correct parts.

3. Capacity of the production departments is enhanced as a result of decreased production idle time, increased efficiency of the physical movements of materials, and reduced confusion and planning delays.

All aforementioned benefits result mainly from the philosophy of MRP systems. MRP systems are depends on the philosophy that each raw material, part, and assembly needed in production should arrive simultaneously at the right time to produce the end items in the MPS. This philosophy results in accelerating materials that are going to be late and slowing down the delivery of materials that are going to be too early. For example, if one material is going to be late and nothing can be done about it, the other materials needed to assemble the end item shall not be needed until the one late material arrives. The MRP system modifies the due dates of all the materials so that materials arrive simultaneously to assemble the end item. A chief benefit of MRP systems is that production operations work on parts that are really required on their due dates so that production capacity is being utilized to directly support the MPS.