Material requirements planning (MRP)
Material requirements planning (MRP) is the calculation engine that converts a production schedule into time-phased material orders. It explodes each product's bill of materials against the master production schedule, nets out on-hand inventory and open orders, applies lot-sizing rules, and offsets by lead time to produce planned purchase orders and work orders: what to order, how much, and when, for every component.
Examples
A single-level explosion: The MPS calls for 500 control units in week 12. Each unit uses two sensor boards: 1,000 gross. With 240 boards on hand and 200 arriving on an open order, the net requirement is 560. At an 8-week lead time, MRP plans the purchase order release for week 4.
Nervousness in action: A customer slides one order by a week. The overnight run generates 60 reschedule messages across 14 suppliers, most for moves of 2 or 3 days. The planner sets firm planned orders inside a 4-week fence so minor shifts stop propagating.
Lot sizing: Lot-for-lot ordering of a $0.85 connector creates 18 purchase orders a year. Switching to a fixed lot near the economic order quantity, 2,400 pieces, cuts that to 6 orders with a negligible rise in carrying cost.
Definition
The logic is simple and unforgiving. Take gross requirements from the master production schedule, explode them level by level through the bill of materials, subtract stock and open orders to get net requirements, batch them with a lot-sizing rule, and offset each planned order by the item's lead time to set its release date. Most plants run this nightly inside an ERP system.
MRP is only as good as its inputs. A bill of materials that is 98% accurate sounds fine until errors multiply across 400 line items; inventory records off by one bin make planned orders wrong before they print; quoted lead times that quietly drifted from 6 to 9 weeks produce a system that schedules shortages with confidence. Plants that trust their MRP act on its messages. Plants that do not plan in spreadsheets, and the system decays further.
The classic pathology is nervousness: a small change at the top cascades into hundreds of reschedule messages at the component level, whipsawing suppliers. Time fences, firm planned orders, and damping rules keep minor shifts from propagating; without them, suppliers learn to ignore the schedule entirely.
Related Terms
Enterprise resource planning (ERP)
Master production schedule (MPS)
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