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Requirements – Material Requirements Planning (MRP)

Blog: Biz-Performance, David Brown

Requirements – Material Requirements Planning (MRP)


The Material Requirements Planning (MRP) application calculates item demand and time phases all inventory status dates in time increments (periods) defined by the user. MRP simulates the flow of material in a manufacturing operation, matches current and anticipated demand with current and anticipated supply and suggests corrective action for potential conflicts. MRP is an interactive process that is responsive to a changing environment and provides the user with necessary reaction time to implement a new plan.
The primary requirements for the MRP application are:
  • Accurate current inventory status
  • Master Production Schedule statement of production quantities
  • Desired planning horizon for each item
Inventory is managed by scheduling what is needed as end item products, and then determining the sub-assemblies and piece parts required to make the product. Material Requirements Planning (MRP) is a tool that allows the Master Production Schedule (MPS) of end items to be translated into hundreds or thousands of timephased requirements and plans for all components of the end product. This requires accurate Bills of Material, inventory balances, order status, and part-related information such as lead times. Also required are understanding and education on how to use the information. MRP provides the information to maintain detailed schedules properly, but the materials organization must turn these schedules into action.


  • Calculate time phased demand for a specific item or assembly
  • Back schedule orders from production due dates on the master schedule based on lead times
  • Process MRP using:
    • Regenerative mode
    • Net change mode
  • Group parts by low level codes and process each level in sequence
  • Drive MRP requirements from:
    • Master Production Schedule
    • Customer Orders (Order Entry System)
    • Forecasting System
    • Firm Planned Orders (Shop Floor Control)
    • Combination of all above
  • Reschedule orders to match unsatisfied demand with the first scheduled supply
  • Specify an order Reschedule tolerance limit to minimize the unnecessary rescheduling of orders thereby, limiting nervousness in the MRP plan
  • Specify a time limit for rescheduling (expediting) orders causing a planned order to be generated when a scheduled supply cannot be expedited in time to meet the demand because of exceeding the time limit
  • Suggest new orders when inventory levels fall below a predetermined level (safety stock)
  • Perform explosion calculations on the basis of information in the item master and BOM files
  • Perform netting calculations on the basis of perpetual inventory records, gross requirements, and firm planned and released order status
  • Allow unlimited planning horizons
  • Have variable time period sizes
  • Ability of the shop calendars and MRP lead time back off logic to allow for:
    • A variable number of days per week
    • A variable beginning of the week
    • Holiday and shutdown days
  • Process MRP using:
    • Bucketed format
    • Use variable lot sizing logic in generating planned order quantities (e.g., lot-for-lot, period order quantity, fixed order quantity, etc.)
  • Provide automatic units of measure conversion for generating planned orders in the appropriate units
  • Recognise multiple sources of demand:
    • Safety stock
    • Floor stock/bulk stock
    • Customer orders
    • Forecast orders
    • Inter-plant demand
    • Master Schedule demand
    • Service parts requirements
    • Allocation to firm orders
    • Allocation to open orders
    • Dependent demand
  • Include BOM Engineering change effectiveness in the MRP plan
  • Prioritise demand in a user requested sequence
  • Peg MRP demand to:
    • Customer order
    • Master schedule order
    • Forecast item
    • Work order
  • Peg MRP demand through multiple levels
  • Process both:
    • Finite capacity scheduling
    • Infinite capacity scheduling
  • Define rounding procedures to be used in MRP calculations
  • View MRP reports by:
    • Product line
    • Planner code
    • Buyer code
    • Item number
  • Set tolerance factors to reduce the number of action messages generated by MRP
  • Exclude designated inventory locations (e.g., MRB, etc.) from MRP calculations
  • Exclude designated work order types from MRP calculations
  • Exclude designated purchase order types from MRP calculations.


  • Material Requirements Planning Report – Printed on demand, this report details the gross and net requirements of all components and assemblies over the established planning horizon. Requirements should be pegged to the demand type which caused them
  • Planning Action Report – Printed on demand, this report notifies planners, buyers and work centers of plan changes and suggested actions due to MRP exception conditions. Exception conditions are a result of comparing the latest plan with a new calculation of the desired supply
  • MRP Time Series – Printed on demand, this report indicates in timebucket format a part’s gross and net requirements and details information on open purchase orders, work orders, MRP suggested reschedules and new order releases by period date.
  • Excess and Obsolete Inventory Report – Lists by item number the various inventory quantities that are deemed excess by the MRP process. It indicates the item number and quantity that exceeds the total MRP requirements. This report will not show item numbers excluded from MRP planning, such as various indirect items planned using history (order point planned).
  • Master File Exceptions Report – A report produced by the MRP process. It lists by item number any master file exceptions encountered, such as:
    • Parts without lead times
    • Parts without a designated planner or buyer codes
    • Parts coded as “make” without a BOM
    • Master schedule demand outside manufacturing calendar
    • Parts without a low level code
  • Hazardous Materials Requirements Report – Produced from the output of the MRP process. It lists the gross and net requirements for item numbers coded as hazardous materials. If a part, either product or bi-product, is listed as a requirement on the BOM, it can generate requirements in the MRP process. This report summarizes the item’s net requirements (in the case of a product) or total production (in the case of a bi-product) by master schedule time period.
  • Projected Days of Supply Report – A report produced from the output of the MRP process. It lists by planner and by inventory location (two reports) each item number’s projected demand for the next three time periods and the inventory supply onhand and onorder to cover the demand.


  • Master Production Schedule – The MRP application receives the manufacturing orders (independent demand) from the MPS. These orders drive the requirements portion of the MRP system.
  • Inventory Control – The MRP application is dependent on inputs from the Inventory Control application for an accurate current inventory status and part information such as lead times.
  • Bill of Material – Provides product structure information for the requirements explosion.
  • Purchasing/Receiving – Scheduled receipts provide supply information for raw and component materials. MRP may generate purchase requisitions for “need-to-order” items.
  • Shop Floor Control – The requirements planning process needs to know the status of released work orders in the shop floor application.

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