Material Requirement planning (MRP) is a technique used to determine the quantity and timing requirements of ―depended demand‖ materials used in the manufacturing operation. The materials can be purchased externally or produced in-house. The important characteristic is that their use is directly dependent on the scheduled production of a larger component or finished product, hence the term ―dependent demand‖. For example, a refrigerator door is dependent demand item in the production of a refrigerator.
Material Requirements Planning (MRP) is a production planning and inventory control system used to manage manufacturing processes. Most MRP systems are software-based, while it is possible to conduct MRP by hand as well. An MRP system is intended to simultaneously meet three objectives:
- Ensure materials are available for production and products are available for delivery to customers.
- Maintain the lowest possible material and product levels in store
- Plan manufacturing activities, delivery schedules and purchasing activities.
Most versions of MRP act as information processing systems which seek to develop and maintain a set of orders that support the plan, while simultaneously maintaining inventories within the production system at reasonably low levels. Orders within MRP system fall into two categories: (1) open orders which have been released but have not yet arrived and (2) planned orders which are developed in anticipation of future releases.