What Is MRP? Material Requirements Planning for Manufacturers

Material Requirements Planning, commonly called MRP, is the manufacturing-planning process used to determine which materials and products are required, how many are needed, and when purchasing or production must begin.

MRP connects customer demand, forecasts, inventory, Bills of Materials, Purchase Orders, Work Orders, lead times, and production schedules. It helps manufacturers obtain the right material in the right quantity at the right time without carrying unnecessary inventory.

Instead of waiting for shortages to disrupt production, an integrated MRP system evaluates current and future demand, identifies available and expected supply, and recommends the purchasing and manufacturing actions needed to satisfy requirements.

MRP helps manufacturers answer three essential questions: What is needed, how much is needed, and when is it needed?

Material Requirements Planning connecting customer demand, inventory, Bills of Materials, purchasing, Work Orders, and production scheduling

Material Requirements Planning converts customer demand and forecasts into time-phased purchasing, inventory, and manufacturing requirements.

What Is Material Requirements Planning?

Material Requirements Planning is a time-phased planning process that calculates the materials, subassemblies, and finished products required to satisfy expected demand.

MRP compares demand with:

Available inventory
Allocated inventory
Inventory awaiting inspection
Open Purchase Orders
Open Work Orders
Planned supply
Safety stock
Minimum order quantities
Purchasing and manufacturing lead times
Bill of Materials relationships

After evaluating demand and supply, MRP creates recommendations for purchasing materials, manufacturing products, expediting existing supply, postponing unneeded supply, or cancelling requirements that are no longer necessary.

MRP Is a Planning System

MRP does not physically purchase materials or manufacture products by itself. It provides the recommendations and dates that Purchasing, Production Planning, Inventory, and management use to coordinate supply.

Primary Objectives of MRP

Prevent Material Shortages

Identify missing material early enough for Purchasing or Production to respond before manufacturing is interrupted.

Reduce Excess Inventory

Purchase or manufacture supply according to time-phased demand instead of maintaining unnecessary quantities.

Improve Production Readiness

Coordinate materials, subassemblies, Work Orders, and outside processing with the production schedule.

Improve Purchasing Decisions

Provide buyers with required quantities, need dates, lead times, approved sources, and existing supply.

Improve Delivery Performance

Identify supply risks that may affect customer delivery commitments.

Provide Operational Visibility

Show how inventory and incoming supply will satisfy current and future demand.

The Three Questions MRP Answers

MRP Question	Planning Meaning
What is required?	The finished products, subassemblies, raw materials, components, packaging, and outside services needed to satisfy demand.
How much is required?	The gross requirement reduced by eligible inventory and expected supply.
When is it required?	The date on which material or production must be available, considering lead time and operation timing.

Customer Demand
and Forecasts

➜

Inventory and
Expected Supply

➜

BOM and
Lead-Time Analysis

➜

Purchase and Work
Order Recommendations

Information Required by MRP

MRP results are only as reliable as the data used in the calculation.

MRP Input	Purpose
Sales Orders	Create firm customer demand by product, quantity, and delivery date.
Delivery Schedules	Divide customer demand into required shipment quantities and dates.
Forecasts	Create expected future demand that may not yet be represented by firm orders.
Item Master	Provides make-or-buy status, lead time, units, planning rules, and sourcing information.
Bill of Materials	Defines the components and quantities required for each manufactured product.
Inventory	Provides current eligible quantities available to satisfy demand.
Inventory Allocations	Identifies inventory already reserved for another requirement.
Inspection Inventory	Identifies received material that may become available after acceptance.
Purchase Orders	Provide expected purchased quantities and delivery dates.
Work Orders	Provide expected manufactured quantities and completion dates.
Lead Times	Determine when purchasing or production actions must begin.
Safety Stock	Maintains a defined buffer quantity above projected demand.

Sources of Manufacturing Demand

Demand Source	Example
Customer Sales Order	A customer requires 100 assemblies by a specified delivery date.
Customer Delivery Schedule	A Sales Order requires 25 units monthly over four months.
Forecast	Expected future sales create planned demand before orders are received.
Work Order Component Demand	A released or planned Work Order requires BOM components.
Safety Stock	Inventory is planned to remain above a defined minimum level.
Internal Requirement	The business requires tooling, repair parts, demonstration units, or internal assemblies.
Service or Repair Demand	Maintenance or repair activity requires replacement components.

Independent and Dependent Demand

MRP distinguishes between independent demand and dependent demand.

Demand Type	Definition	Example
Independent Demand	Demand not calculated from another item within the BOM structure.	A customer order for a finished assembly.
Dependent Demand	Demand calculated from the requirements of a parent item.	Four fasteners required for each ordered assembly.

A customer order for 100 finished assemblies creates independent demand for the finished product. If each assembly requires four fasteners, the BOM creates dependent demand for 400 fasteners before considering inventory, scrap, or other planning rules.

Bill of Materials Explosion

MRP uses the Bill of Materials to convert parent-item demand into component requirements.

Finished Product
Demand

➜

Level 1
Components

➜

Level 2
Subcomponents

➜

Raw Material and
Purchased Parts

BOM Item	Quantity Per	Parent Demand	Gross Requirement
Finished Assembly	1	100	100
Subassembly A	2	100	200
Purchased Component B	3	100	300
Raw Material C	4	200 Subassemblies	800

Learn more in our Bill of Materials guide.

Gross Requirements and Net Requirements

Gross requirements represent total demand before available and expected supply are considered.

Net requirements represent the remaining demand after eligible supply is applied.

Planning Element	Quantity
Gross Requirement	500
Available Inventory	150
Accepted Purchase Order Supply	200
Safety Stock Requirement	50
Net Additional Requirement	200

Actual net-requirement logic may also consider allocations, inspection status, due dates, lot sizes, order multiples, minimum quantities, past-due supply, and planning policies.

Time-Phased Material Planning

MRP does more than calculate a total shortage. It determines when each requirement occurs and whether supply arrives in time to satisfy it.

Date	Demand	Expected Supply	Projected Available
Beginning Balance	—	—	300
March 5	100	—	200
March 12	150	—	50
March 18	200	250 Purchase Order	100
March 25	175	—	-75

The March 25 requirement creates a projected shortage even though the total inventory and Purchase Order supply appeared sufficient for earlier demand.

MRP must evaluate both quantity and timing. Supply that arrives after the requirement date does not prevent a production shortage.

Lead-Time Offsetting

After determining when an item is required, MRP works backward using lead time to recommend when the Purchase Order or Work Order should be released.

Planning Event	Date
Component Required for Production	April 30
Receiving and Inspection Allowance	3 days
Supplier Lead Time	20 days
Recommended Purchase Order Release	Approximately April 7

Lead-time calculations may include:

Supplier lead time
Manufacturing lead time
Receiving time
Inspection time
Material-handling time
Outside-processing time
Queue time
Setup and run time
Transportation time

Make-or-Buy Planning

The Item Master identifies whether an item is normally purchased or manufactured.

Supply Type	MRP Recommendation
Buy	Create, expedite, defer, increase, decrease, or cancel a Purchase Order.
Make	Create, expedite, defer, increase, decrease, or cancel a Work Order.
Phantom	Explode demand directly to the phantom item’s components.
Consigned or Customer-Owned	Plan quantity while observing ownership, availability, and valuation rules.
Service or Outside Processing	Create purchasing demand for the required operation or service.

Learn more in our Item Master Data Management guide.

MRP Planning for Purchased Items

For purchased items, MRP evaluates available and expected supply before recommending a new Purchase Order.

A planning sequence may include:

Apply eligible available inventory.
Apply inventory awaiting inspection when its expected availability supports the need date.
Apply open Purchase Order quantities in due-date order.
Identify Purchase Orders that should be expedited.
Identify Purchase Orders that may be postponed.
Create a planned Purchase Order for uncovered demand.

Purchase Recommendation	Meaning
Create	No existing supply covers the net requirement.
Expedite	An existing Purchase Order is scheduled after the material need date.
Defer	Supply is scheduled earlier than needed and may increase inventory unnecessarily.
Increase Quantity	An existing order can be adjusted to cover additional demand.
Decrease Quantity	Existing supply exceeds current projected requirements.
Cancel	The Purchase Order is no longer required, subject to supplier and contractual restrictions.

MRP Planning for Manufactured Items

For Make items, MRP evaluates finished or subassembly inventory and existing Work Order supply.

A planning sequence may include:

Apply eligible finished-goods or subassembly inventory.
Apply inventory awaiting inspection when appropriate.
Apply open Work Order quantities in completion-date order.
Identify Work Orders that should be expedited.
Identify Work Orders that can be deferred.
Create a planned Work Order for uncovered demand.
Explode planned Work Order demand into component requirements.

A planned Work Order may create additional dependent demand throughout multiple BOM levels.

Learn more in our Manufacturing Work Order Management guide.

How MRP Evaluates Inventory Availability

Recorded quantity on hand is not always equal to usable inventory.

Inventory Status	Planning Treatment
Available	Can normally satisfy demand.
Allocated	Already reserved for another demand requirement.
Awaiting Inspection	May be considered expected supply rather than currently available inventory.
Quality Hold	Should not satisfy demand until released.
Rejected	Should not satisfy normal production demand.
Expired	Should not satisfy demand unless formally evaluated and released.
Customer-Owned	May be available only for the applicable customer or program.
Consigned	May be available subject to ownership and usage rules.
Location Restricted	May require transfer or may be unavailable to the requesting site.

Incorrect Availability Creates Incorrect MRP Results

Treating held, allocated, expired, rejected, or customer-restricted inventory as generally available can hide real material shortages.

Inventory Allocations and MRP

Inventory allocation reserves available material for specific demand.

Allocations help MRP and production planning determine:

Which inventory is already committed
Which Work Orders are materially ready
Which customer orders have priority
Which shortages remain uncovered
Whether available inventory can be reassigned
Whether purchasing or production should be expedited

MRP should avoid applying the same inventory quantity to multiple requirements.

Safety Stock and Reorder Policies

Safety stock is inventory maintained above expected demand to reduce the risk of shortages caused by variability.

Variability may result from:

Supplier delivery delays
Unexpected customer demand
Production scrap
Inventory inaccuracies
Long or unstable lead times
Quality rejections
Demand fluctuations

Planning Rule	Purpose
Safety Stock	Maintains a defined inventory buffer.
Reorder Point	Initiates replenishment when inventory reaches a specified level.
Minimum Order Quantity	Prevents recommendations below a supplier or production minimum.
Order Multiple	Rounds recommendations to package, batch, reel, lot, or production multiples.
Maximum Inventory	Limits replenishment that would create excessive stock.

Lot Sizing and Order Quantities

The net requirement does not always become the exact recommended order quantity.

MRP may adjust quantities according to:

Minimum purchase quantity
Supplier package quantity
Order multiple
Economic order quantity
Production batch size
Maximum order quantity
Fixed lot size
Lot-for-lot planning
Yield or scrap allowance

Net Requirement	Planning Rule	Recommended Quantity
73	Lot-for-lot	73
73	Order multiple of 25	75
73	Minimum buy of 100	100
230	Fixed production batch of 100	300

Past-Due Purchase Orders and Work Orders

Open supply with a due date in the past should be evaluated carefully.

A past-due order may:

Still be expected and available shortly
Require supplier confirmation
Require production-status confirmation
Need a revised due date
Need to be expedited
Need to be cancelled or replaced
Be complete operationally but not closed in the ERP system

Past-Due Supply Can Hide Future Shortages

MRP should not assume that an old open order will automatically arrive in time. Buyers and planners should confirm realistic supply dates.

MRP Pegging and Demand Traceability

Pegging connects a material or production requirement with the demand that created it.

Customer Sales
Order

➜

Finished Product
Requirement

➜

Subassembly
Requirement

➜

Purchased Component
Requirement

Pegging allows users to determine:

Which customer order created a requirement
Which parent item requires the component
Which Work Order will consume the material
Which Purchase Order or Work Order will provide supply
Which delivery date is at risk
Whether demand is firm, forecasted, or safety stock

Without pegging, a buyer may see a shortage but not understand which customer, product, Work Order, or delivery will be affected.

Demand Priorities and Allocation Decisions

When supply is insufficient, manufacturers must determine which demand receives available inventory first.

Priority may be based on:

Customer commitment date
Order priority
Customer importance
Contract requirement
Work Order release status
Production sequence
Material expiration
Revenue impact
Critical product or service requirement

The ERP system should make allocation decisions visible and preserve an audit history when inventory is reassigned.

How MRP Improves Purchasing

MRP gives buyers a consolidated view of future material requirements and existing supply.

Purchasing recommendations may provide:

Internal part number
Manufacturer part number
Approved suppliers
Supplier part numbers
Quantity required
Recommended order quantity
Required receipt date
Recommended order date
Current inventory
Open Purchase Order supply
Demand source
Supplier lead time
Minimum buy and order multiple
Historical pricing

Fewer Emergency Purchases

Buyers receive earlier visibility into material requirements and expected shortages.

Lower Excess Inventory

Purchase quantities can be aligned with time-phased requirements.

Improved Supplier Communication

Required quantities and dates provide clearer information for supplier scheduling.

Better Expediting Decisions

Buyers can focus on supply that directly affects production and customer commitments.

Learn more in our Purchase Order Management guide.

How MRP Improves Production Planning

MRP identifies manufactured items that must be created and the dates by which they are required.

Production planners can use MRP to:

Create planned Work Orders
Release Work Orders when materials are available
Prioritize production based on demand dates
Coordinate parent and component Work Orders
Identify capacity risks
Plan outside processing
Evaluate make-or-buy decisions
Reschedule existing Work Orders
Reduce unneeded production

MRP and Scheduling Are Related but Different

MRP determines what supply is required and when it is needed. Production scheduling determines how operations are assigned to work centers, machines, employees, and specific time periods.

Learn more in our Manufacturing Production Scheduling guide.

How MRP Improves Inventory Management

MRP provides future visibility that cannot be obtained from a simple quantity-on-hand report.

Inventory teams can review:

Current on-hand quantity
Available quantity
Allocated quantity
Inspection quantity
Expected Purchase Order supply
Expected Work Order supply
Future demand
Projected available balance
Shortage date
Excess or stagnant inventory

This helps reduce unnecessary purchases while protecting production from shortages.

Learn more in our Manufacturing Inventory Management guide.

MRP and Demand Forecasting

Forecasts allow manufacturers to plan expected demand before firm customer orders are received.

Forecast planning should define:

Forecast item
Forecast quantity
Forecast period
Customer or market relationship
Consumption by actual Sales Orders
Confidence or planning category
Review and expiration rules

Avoid Double-Counting Forecast and Firm Orders

When actual customer orders represent demand already included in the forecast, the forecast should be consumed or reduced according to the organization’s planning policy.

MRP and Production Capacity

Traditional MRP focuses primarily on material availability. A complete production plan must also consider capacity.

Capacity constraints may involve:

Work-center hours
Machine availability
Qualified employees
Tooling and fixtures
Inspection equipment
Outside-processing capacity
Maintenance downtime
Setup requirements

Planning Question	System Function
Do we have the required materials?	MRP
Do we have enough labor and machine capacity?	Capacity planning
Which operation should run on which resource and when?	Production scheduling
What actually happened on the shop floor?	Manufacturing execution and labor reporting

Typical MRP Run Process

Validate Planning
Data

➜

Collect Demand
and Supply

➜

Explode BOM
Requirements

➜

Calculate Projected
Balances

➜

Generate and Review
Recommendations

Validate Planning Data

Review Item Master records, BOMs, lead times, units of measure, inventory statuses, and open-order dates.

Collect Demand

Gather Sales Orders, delivery schedules, forecasts, safety stock, Work Order requirements, and other demand.

Collect Supply

Gather available inventory, inspection inventory, Purchase Orders, Work Orders, and planned supply.

Explode Bills of Materials

Convert manufactured-item requirements into dependent demand for components and subassemblies.

Calculate Projected Balances

Apply supply to demand in date order and identify projected shortages or excess quantities.

Create Recommendations

Recommend new Purchase Orders and Work Orders, plus changes to existing supply.

Planner Review

A planner evaluates exceptions, priorities, feasibility, supplier constraints, and capacity before releasing actions.

MRP Exception Messages

Exception messages focus attention on supply requiring action.

Exception	Meaning
Create Purchase Order	Purchased supply is required and no existing order covers the requirement.
Create Work Order	Manufactured supply is required and no existing order covers the requirement.
Expedite	Existing supply arrives after the need date.
Defer	Existing supply arrives earlier than necessary.
Increase Quantity	Existing supply does not cover total projected demand.
Decrease Quantity	Existing supply exceeds expected demand.
Cancel	Existing supply is no longer required.
Past Due	Supply or demand date has passed without completion.
Invalid BOM or Lead Time	Required planning data is missing or inconsistent.

Why MRP Recommendations Require Planner Review

MRP recommendations are calculated from system data and planning rules. A knowledgeable buyer or planner should review them before creating or changing orders.

Planner review may consider:

Supplier capacity
Contractual purchase commitments
Customer priority
Alternate components
Engineering changes
Quality holds
Minimum supplier charges
Economic purchasing opportunities
Work-center capacity
Outside-processing availability
Inventory accuracy
Unrecorded operational changes

MRP provides structured recommendations; planners apply business judgment, current supplier information, and operational knowledge.

MRP Data Accuracy Requirements

Poor data creates unreliable recommendations.

Data Problem	Possible MRP Result
Incorrect Inventory Quantity	False shortage or hidden shortage.
Incorrect BOM Quantity	Components are overplanned or underplanned.
Missing BOM Component	Required material is never recommended.
Incorrect Make-or-Buy Status	MRP recommends the wrong supply type.
Incorrect Lead Time	Orders are recommended too early or too late.
Old Open Purchase Order	MRP assumes nonexistent supply is available.
Old Open Work Order	MRP assumes unfinished production will cover demand.
Incorrect Unit Conversion	Order and inventory quantities become inaccurate.
Obsolete Item Remains Active	MRP recommends unsupported material.

Material Requirements Planning Best Practices

Maintain accurate Item Master data.
Use current approved Bills of Materials.
Maintain realistic purchasing and manufacturing lead times.
Record every inventory transaction promptly.
Separate available, allocated, inspection, held, rejected, and customer-owned inventory.
Close completed Purchase Orders and Work Orders.
Update expected supply dates when schedules change.
Review past-due supply before each planning run.
Maintain correct make-or-buy classifications.
Validate units of measure and conversion factors.
Use appropriate safety stock rather than excessive informal buffers.
Maintain minimum quantities and order multiples.
Prevent forecast and Sales Order demand from being double counted.
Use pegging to identify the source of requirements.
Review MRP recommendations before release.
Coordinate MRP with production capacity and scheduling.
Measure supplier delivery performance.
Use cycle counting to improve inventory accuracy.
Monitor shortage and expediting trends.
Re-run MRP after significant demand or supply changes.

Common MRP Problems

Problem	Possible Result	Better Control
Planning from Spreadsheets	Demand, inventory, and supply become outdated and disconnected.	Use live ERP demand and inventory data.
MRP Run Too Infrequently	New shortages and schedule changes are missed.	Run planning at an interval appropriate to business activity.
Every Recommendation Automatically Released	Unnecessary or unrealistic orders are created.	Use planner review and approval.
Inventory Accuracy Is Poor	Recommendations cannot be trusted.	Use controlled transactions and cycle counting.
Lead Times Are Static	Order dates do not reflect actual supplier or production performance.	Review historical and current lead times.
Capacity Is Ignored	Material may be available even though production cannot meet the schedule.	Integrate MRP with capacity planning and scheduling.
No Demand Pegging	Buyers and planners cannot identify which customer or order is affected.	Maintain demand-to-supply relationships.
Obsolete Supply Remains Open	MRP underestimates new supply requirements.	Reconcile and close invalid orders.

MRP and Planning KPIs

KPI	What It Measures
Material Availability	Percentage of released Work Orders with required material available.
Shortage Rate	Frequency of material shortages affecting production.
Expedite Rate	Frequency of emergency purchasing or production action.
Supplier On-Time Delivery	Supplier performance against confirmed due dates.
Purchase Recommendation Accuracy	How closely recommendations align with actual requirements.
Work Order Recommendation Accuracy	How closely planned production aligns with actual demand.
Inventory Turnover	How efficiently inventory investment supports sales and production.
Excess Inventory	Inventory exceeding current and projected demand.
Schedule Adherence	Production completion compared with planned dates.
Planning Lead-Time Accuracy	Planned lead times compared with actual performance.
Past-Due Supply	Open Purchase Orders and Work Orders with expired due dates.
Inventory Accuracy	Recorded quantity compared with verified physical quantity.

Why Accounting Software Is Not a Complete MRP System

Accounting software is designed primarily to manage financial transactions. It may record inventory purchases and sales without providing the production-planning logic required by manufacturers.

Manufacturing Requirement	Typical Accounting Software Limitation
Multi-Level BOM Explosion	Component demand may not be calculated through product structures.
Work Order Planning	Manufactured supply may not be time-phased.
Inventory Allocations	Available inventory may not reflect production commitments.
Projected Availability	Future demand and supply may not be compared by date.
Material Pegging	Shortages may not be connected to customers and parent orders.
Production Scheduling	Work-center, machine, and operation capacity may not be managed.
Lot and Serial Genealogy	Material-to-finished-product relationships may be incomplete.

Manufacturers often compensate with spreadsheets, but disconnected spreadsheets become difficult to maintain as products, customers, BOM levels, suppliers, orders, and inventory transactions increase.

MRP vs. Manufacturing ERP

System	Primary Scope
MRP	Plans materials and manufactured supply based on time-phased demand.
MRP II	Extends planning to capacity, labor, machines, schedules, and manufacturing resources.
Manufacturing ERP	Integrates MRP with customer orders, purchasing, inventory, Work Orders, quality, shipping, costing, and accounting.

MRP is a critical manufacturing ERP function, but ERP provides the transactions and business processes that create and execute the MRP plan.

How MRP Integrates with Manufacturing ERP

ERP Process	MRP Relationship
Customer Orders	Create firm demand and delivery requirements.
Forecasting	Creates expected future demand.
Item Master	Provides make-or-buy, lead-time, UOM, lot-size, and sourcing rules.
Bill of Materials	Creates dependent component demand.
Inventory	Provides available, allocated, inspection, held, and expected quantities.
Purchasing	Executes Purchase Order recommendations.
Work Orders	Execute manufactured-supply recommendations.
Production Scheduling	Assigns planned operations to resources and dates.
Shop Floor Reporting	Updates actual operation progress and Work Order completion.
Quality Management	Controls inspection availability, holds, rejections, and accepted supply.
Shipping	Consumes finished-product supply and fulfills customer demand.
Costing	Provides purchase, inventory, labor, and production cost information.

Material Requirements Planning with SimpleManufacturing™

SimpleManufacturing™ connects MRP with customer orders, delivery schedules, Item Master data, Bills of Materials, inventory, receiving inspection, Purchase Orders, Work Orders, production scheduling, quality management, and purchasing.

SimpleManufacturing™ MRP Capability	Business Benefit
Customer Demand Planning	Uses Sales Orders and delivery schedules to establish required quantities and dates.
Multi-Level BOM Explosion	Calculates dependent demand for assemblies, subassemblies, and purchased components.
Inventory Availability	Evaluates eligible inventory while distinguishing allocations and restricted statuses.
Inspection Supply	Identifies received material awaiting acceptance as expected supply.
Purchase Order Supply	Applies incoming purchased quantities by scheduled receipt date.
Work Order Supply	Applies manufactured quantities by planned completion date.
BUY Item Recommendations	Creates and adjusts planned purchasing requirements.
MAKE Item Recommendations	Creates and adjusts planned manufacturing requirements.
Expedite and Defer Recommendations	Identifies supply scheduled too late or earlier than necessary.
Demand Pegging	Connects each requirement with its customer, parent item, Work Order, or planning source.
Planning Dates	Calculates required supply and release dates using lead times.
Integrated Purchasing	Allows approved recommendations to become Purchase Orders.
Integrated Work Orders	Allows approved MAKE recommendations to become controlled production orders.
Production Visibility	Connects planned supply with scheduling, shop-floor status, shortages, and completion.

One Planning Process from Customer Demand Through Supply

SimpleManufacturing™ uses live ERP information to show how existing inventory, inspection quantities, Purchase Orders, and Work Orders will satisfy demand—and which purchasing or manufacturing actions remain necessary.

Frequently Asked Questions About Material Requirements Planning

What does MRP stand for?

MRP stands for Material Requirements Planning.

What is MRP in manufacturing?

MRP is the process used to calculate which purchased and manufactured items are required, how many are needed, and when supply must become available.

What are the three main questions answered by MRP?

MRP determines what materials are required, how many are required, and when they are required.

What information does MRP use?

MRP commonly uses Sales Orders, forecasts, Bills of Materials, inventory, allocations, Purchase Orders, Work Orders, lead times, safety stock, and planning rules.

What is BOM explosion?

BOM explosion converts demand for a parent manufactured item into requirements for its subassemblies, materials, and purchased components.

What is a gross material requirement?

A gross requirement is the total demand before inventory and expected supply are applied.

What is a net material requirement?

A net requirement is the remaining demand after eligible inventory and expected supply are considered.

What is independent demand?

Independent demand originates outside the BOM relationship, such as a customer order or forecast for a finished product.

What is dependent demand?

Dependent demand is calculated from the quantity required by a parent item’s Bill of Materials.

How does MRP use inventory?

MRP applies eligible inventory to time-phased demand while considering allocations, inspection status, quality holds, ownership, expiration, and other restrictions.

How does MRP use Purchase Orders?

Open Purchase Order quantities are treated as expected supply according to their confirmed receipt dates.

How does MRP use Work Orders?

Open Work Order quantities are treated as expected manufactured supply according to their planned completion dates.

What is MRP pegging?

Pegging connects a material or supply requirement with the customer order, forecast, parent item, Work Order, or other demand source that created it.

What is an expedite recommendation?

It indicates that existing supply is expected after the requirement date and may need an earlier delivery or completion date.

What is a defer recommendation?

It indicates that existing supply is scheduled earlier than necessary and may be postponed to reduce excess inventory.

What is lead-time offsetting?

Lead-time offsetting works backward from the required date to determine when purchasing or manufacturing should begin.

Does MRP create Purchase Orders automatically?

MRP can generate planned purchasing recommendations. Many organizations require buyer review and approval before converting recommendations into Purchase Orders.

Does MRP create Work Orders automatically?

MRP can generate planned Work Order recommendations. Production planners normally review material, capacity, priority, and scheduling before release.

What is the difference between MRP and production scheduling?

MRP determines which supply is needed and when. Production scheduling assigns Work Order operations to resources and specific times.

What is the difference between MRP and ERP?

MRP plans materials and manufactured supply. Manufacturing ERP integrates MRP with customer orders, purchasing, inventory, production, quality, shipping, costing, and accounting.

Why does MRP produce incorrect results?

Incorrect inventory, BOMs, lead times, units of measure, order dates, make-or-buy settings, or open-order statuses can create unreliable recommendations.

How often should MRP be run?

The appropriate frequency depends on order volume, production activity, lead times, schedule changes, and operational requirements. Many manufacturers run MRP daily or after significant demand or supply changes.

How does SimpleManufacturing™ perform MRP?

SimpleManufacturing™ evaluates Sales Order demand, Bills of Materials, available and inspection inventory, Purchase Orders, Work Orders, lead times, and planning rules to create BUY and MAKE recommendations with demand pegging.

Plan Materials and Production Before Shortages Occur

Material Requirements Planning provides manufacturers with a structured method for balancing customer demand, inventory, incoming supply, Bills of Materials, purchasing lead times, and production requirements.

Instead of reacting to shortages after production stops, MRP identifies potential supply problems early and recommends the actions needed to protect manufacturing schedules and customer delivery commitments.

Demand, Supply, Timing, and Traceability in One Plan

An integrated MRP system helps manufacturers reduce shortages, control inventory investment, improve purchasing, coordinate Work Orders, and understand which customers and products are affected by every material requirement.

SimpleManufacturing™ provides integrated MRP designed for small and mid-sized manufacturers that require live Sales Order demand, multi-level BOM explosion, inventory visibility, Purchase Order and Work Order supply, lead-time planning, demand pegging, and actionable BUY and MAKE recommendations.

Schedule an MRP and Manufacturing ERP Demonstration