Material Requirements Planning (MRP)

Definition

Material Requirements Planning (MRP) can be described as a master schedule of finished goods into time-phased requirements for raw materials, components, and sub-assemblies. It creates a production plan specifying the quantities and timing of all materials needed to produce final products.

Functions of MRP

An MRP system performs several purposes, including:

• Inventory Management: Ensures materials are available when needed, avoiding excess stock or shortages.
• Cost Savings: Reduces manual planning time and prevents unnecessary orders or excess inventory, ultimately cutting costs.
• Production Process Improvement: Keeps materials flowing smoothly, improving workflow, efficiency, and throughput.