Material Requirements Planning (MRP)

What is a Materials Requirement Planning MRP System?

A Material Requirements Planning (MRP) system is a planning and decision-making tool used in the production process which analyses current inventory levels vs production capacity and the need to manufacture goods, based on forecasts. MRP schedules production as per bills of materials while minimizing inventory. The technique is computerized and looks at requirements within a fixed period.

What are the main features of an MRP system?

  • A master production schedule: A statement of the planning including orders, forecasts and capacity.
  • Bill of materials (BOM): All the materials and components required to make the final product.
  • Inventory status file: Stock records that allow gross requirements to be adjusted to net requirements.

How does an MRP system work?

  • Step 1. Exploding: achieved by using the Bill of Materials (BOM), i.e. how many components are needed to prepare one item of manufacturing?
  • Step 2. Netting: the net quantity of material calculated by computing the difference between the stock available in the factory from the overall, gross requirement. This figure is provided by exploding.
  • Step 3. Offsetting: lead time is estimated for the entire operation that helps practitioners to compute the expected time for manufacturing. It also advises when the manufacturing process should begin so that items are available on the promised date .

What are the advantages of an MRP system?

A Material Requirements Planning (MRP) system is a planning and decision-making tool used in the production process which analyses current inventory levels vs production capacity and the need to manufacture goods, based on forecasts. MRP schedules production as per bills of materials while minimizing inventory. The technique is computerized and looks at requirements within a fixed period.

  • The MRP system is widely credited for playing a crucial part in decreasing factory inventory. It also assists in manufacturing industrial products that are more complex 
  • MRP focus is on what materials are required and when they need to be sourced. It is also helpful in product customisation
  • MRP has historically been seen as giving additional advantage because it is known to schedule and track every order whether for production or purchase

An icon of a document

Material Requirements Planning: login to view

Login to view our members-only guide to Material Requirements Planning. If you would like to gain access to over 1000 member-only guides, webinars and papers join CIPS now. Login or Join CIPS

DOWNLOAD THE FULL GUIDE
Materials Requirement Planning MRP

 

For addition reading on this topic visit Operations Management

 

Page Loading
Page Loading
Page Loading
Page Loading

Searching...

This may take up to 30 seconds