MRP - Materials Requirement Planning

An MRP or Materials requirement planning system is a production /purchasing planning system which decomposes finish goods into their different component parts and helps set a schedule as to when these need to be produced or purchased in order to fill a certain customer order of finish goods by a certain date.

A well operated MRP system should allow the production process to operate on a just in time basis with minimal inventory levels and better production scheduling. MRP systems are usually operated on computers and depending on the software purchased they can be linked to electronic inventory control systems and production computer systems to track production, inventory, and finish goods in stock.

The inputs into an MRP system are the following: A production schedule outlining the exact quantities of product to be made, the current inventory holding, and the bill of materials for each finish product line. The MRP system then aggregates all of this information and either creates purchase/manufacturing orders or submits them automatically to suppliers and production.