Material Requirements Planning (MRP) is a ‘time-phasing’ production software program that determines the gross and net requirements of purchased materials and shop floor orders.
The program can be manual or computerized. However, today, it is the latter method that is used more often since the number of finished goods, raw materials and production processes has become more complex.
Prerequisites of MRP
There are some fundamental conditions that must be in place to successfully operate an MRP system. Some of these conditions include,
- A Master Production Schedule exists (this could simply be a sales order backlog)
- Bill of Materials created for all finished goods
- Inventory items are uniquely identified
- Current and accurate inventory records exist for all parts
- Purchase and production part lead times are known and input for each item
Benefits of MRP
An MRP system provides a method for determining what raw materials and production processes are needed and when they need to be available to produce the company’s finished goods.
This allows the company to determine when finished product will be available so that customer sales orders can be confirmed with realistic ship dates.
The Bottom Line. Material Requirements Planning is a method to determine the need of purchased materials and production / shop floor orders over discrete periods of time. MRP systems can be manual or computerized. One of the most important benefits, derived from using an MRP, is the ability to provide customers with realistic ship dates for sales orders.
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