What are the advantages and disadvantages of MRP systems?


Quick Answer

The advantages of MRP systems include the abilities to minimize inventory levels, reduce carrying costs, track material requirements, allocate production time and organize future capacity needs. The disadvantages of MRP systems include dependence on accurate input information, their time-consuming nature and the expensive cost of implementing the system. The primary functions of MRP systems include inventory control, production planning, scheduling and organization.

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Full Answer

MRP systems benefit manufacturing firms and play a major role in assembly-line production. This type of system helps production managers with scheduling, planning and inventory organization. The information produced by MRP systems is useful for making scheduling decisions and balancing workloads across departments. MRP systems are useful for creating projected delivery dates, managing purchase orders and tracking inventory requirements. The system generates minimum inventory levels, which help reduce associated costs. MRP systems plan for material production, allocating time to individual products and future demand forecasts.

A potential drawback of the system is the dependency on accurate input information. For example, organizations that fail to maintain accurate inventory records experience issues with the output for material planning. These issues range from excessive order quantities to scheduling delays.

MRP systems require an accurate master-production schedule and up-to-date inventory records to generate useful information. The system consists of a robust database that includes inventory records and production schedules. As a result, the system requires consistent maintenance. MRP systems require a considerable investment of time and capital, which is a disadvantage for some organizations.

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