The MRP is done to achieve the following objectives:
(i) Inventory reduction
(ii) Reduction in production & delivery lead times
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(iii) Realistic commitments
(iv) Increased efficiency.
(i) Inventory reduction:
MRP determines how many of a component is needed and when, in order to meet the master schedule. MRP enables the manager to procure that component as it is needed, thereby avoiding cost of excessive inventory.
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(ii) Reduction in production & delivery lead times:
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MRP identifies materials and components quantities, timings, availabilities, and procurement and production actions required to meet delivery lead times. By coordinating inventories, procurement and production decisions, MRP helps avoid delays in production. It prioritizes production activities by putting due dates on consumer job orders.
(iii) Realistic commitments:
Realistic delivery promises can enhance customer satisfaction. By using MRP, production department can give marketing department timely information about likely delivery times to prospective customers. Potential new customer orders can be added to the system to show the manager how the revised total load can be handled with existing capacity. The result can be a more realistic delivery date.
(iv) Increased efficiency:
MRP provides close coordination among various work centres as products progress through them. Consequently, production can proceed with fewer indirect personnel, such as materials expeditors, and with fewer unplanned interruptions because MRP focuses on having all components available at appropriately scheduled times. The information provided by MRP encourages production efficiencies.