What is Material Requirements Planning?
MRP, Material Requirements Planning
Calculating how many materials are needed and by when to make it as planned.
What it means
Material requirement planning is a calculation that collects everything included in the production plan, calculates the required quantity of each material using the BOM, and subtracts existing inventory and incoming orders to find any shortages. It is called MRP in English abbreviation.
The key is that it is calculated “all at once.” If you count each order separately, multiple orders for the same inventory will count as their own.
At the pen factory
On the 8th day, Assistant Manager Choi counts each order separately and says "black refill 10 pieces short." When I put it together in one table, I need 200 pieces for two days, but there are 140 pieces in stock, so I am 60 pieces short, and it will run out on November 9th.
Why it matters
Knowing in advance what to buy and when can prevent the factory from shutting down due to lack of materials. For calculations to be correct, the BOM, plan, and inventory must all be accurate.
How this differs from Production plan
The production plan is “when and how many products to make,” and the material requirement plan takes that plan and calculates “when and how many materials are needed.”
Related terms
- RequirementQuantity of materials needed to make it as planned.
- Purchase RequisitionTelling the purchasing manager, “How many of these should I buy, and by when?”
- BOMA list of what and how many items go into making one product.
- Production planA table that determines what to make, on which day, and how many.