Material Requirements Planning
What data does MRP require?
MRP requires at minimum the master production schedule or demand signal, bill of materials, inventory status, and scheduled receipts or open orders to compute net requirements.
What is the core MRP calculation?
MRP compares gross requirements to available supply, subtracts on-hand inventory and scheduled receipts, then applies lot-sizing and lead-time offsets to create planned order quantities and release dates.
What is the lowest-level planning rule in MRP?
MRP typically plans items by the lowest BOM level in which they appear, processing end items first and then cascading requirements to lower-level components.
Material Requirements Planning (MRP) is a production planning and inventory control method that calculates what materials are needed, in what quantities, and when they must be available. It uses the master schedule, bill of materials, inventory balances, and scheduled receipts to explode requirements, offset lead times, and generate planned purchase and production orders so materials arrive on time and inventory stays lean.
In practice, MRP operates as the planning layer that turns a demand signal into timed material actions. On the shop floor, the master schedule or sales order drives a BOM explosion down every assembly level. Each component requirement is offset by its lead time and compared to on-hand stock and scheduled receipts to expose net shortages in weekly or daily planning buckets. That calculation triggers raw material purchases, kitting, staging, and work-order release timing so operators never wait on missing parts at the point of use. In warehousing, MRP depends on accurate inventory status and transaction timing; late receipts or wrong issues shift net requirements into the wrong bucket and distort release dates. In SAP-style logistics, MRP explicitly ensures material availability by automatically generating procurement suggestions for purchasing and manufacturing, keeping supply and demand aligned while minimizing excess inventory.
False stockouts from bad inventory accuracy: If cycle counts, receipts, issues, or scrap postings are wrong, MRP believes stock is unavailable and generates unnecessary expedites or duplicate purchase orders even though the material is physically present.
Line stoppage from lead-time underestimation: When system lead times are shorter than reality, the MRP release date falls too late, and shortages appear at kitting or the machine after the work order is released.
Excess WIP from inaccurate BOMs or demand spikes: With an inaccurate BOM or rapid demand changes, MRP over-releases orders, flooding receiving, staging, and storage with material that cannot be consumed on time.