MRP

Material requirements planning (MRP) is a production planning, scheduling, and inventory control system used to manage manufacturing processes. It calculates the materials and components required to build finished products, determines when to release orders, and helps minimize inventory while meeting production deadlines.

MRP relies on three core inputs: the master production schedule (MPS), which specifies what needs to be produced and when; the bill of materials (BOM), which lists the components and subassemblies required for each product; and inventory status records, which track on-hand quantities, on-order items, and lead times. The planning process typically time-phases requirements by period, calculates gross material needs, offsets them by lead times, and applies existing inventory to determine net requirements. The system then generates planned order releases for purchasing or manufacturing activities and provides rescheduling notices as conditions change. The output includes planned orders, purchase orders, and production orders used to synchronize procurement and shop floor work.

History and evolution: MRP emerged in the 1960s, with early development attributed to Joseph Orlicky and its adoption by manufacturers such as IBM. It laid the groundwork for later concepts like MRP II, which expanded planning to capacity and shop-floor control, and for contemporary enterprise resource planning (ERP) systems that integrate MRP functionality with other business processes.

Applications and limitations: MRP is widely used in discrete manufacturing and assembly environments. Its effectiveness depends on data accuracy, stable demand, and reliable lead times; inaccuracies can lead to stockouts or excess inventory. Modern practice often treats MRP as a component of broader ERP systems, benefiting from integrated data and advanced analytics.