Material Requirements Planning (MRP)
Definition
Material Requirements Planning (MRP) is a calculation engine that translates a production schedule into time-phased requirements for every component and raw material, using bills of materials, inventory records, and lead times.
In Practice
MRP logic is straightforward in principle: take the master production schedule, explode it through the bill of materials to find gross component requirements, net off on-hand and on-order inventory, then offset by lead time to generate planned orders with due dates. Run nightly, it tells buyers and schedulers exactly what to order or make, and when.
The catch is that MRP is only as good as its inputs. Inaccurate inventory records, stale lead times, or wrong BOM quantities produce confident but wrong recommendations, which is why data hygiene is a planner's constant chore. Another pitfall is nervousness: small schedule changes can cascade into storms of reschedule messages, so planners use firm time fences and exception filtering to keep the signal usable.
A machinery builder with 4,000-part BOMs simply cannot plan manually; MRP is what makes sure the one missing bracket does not idle a million-dollar assembly bay.
Related Calculators
Related Terms
The Master Production Schedule (MPS) is the anticipated build plan for finished products or key end items, stating what will be produced, in what quantity, and in which time period. It is the primary input that drives MRP.
Supply PlanningSupply planning determines how a company will meet the demand plan: what to make or buy, in what quantities, where, and when. It translates forecasted demand into production schedules, purchase plans, and inventory targets.
Lead TimeLead time is the elapsed time between initiating a process, such as placing an order, and its completion, such as receiving the goods. It is one of the most important inputs to inventory, planning, and customer promise decisions.
Push vs Pull StrategyA push strategy produces and positions inventory based on forecasts before demand occurs, while a pull strategy triggers production or replenishment only in response to actual demand. Most real supply chains combine both around a push-pull boundary.