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What is MRP Since before the Industrial Revolution there had been a need for a better inventory control system In times before people would use a system of either ordering their materials beforehand or by ordering their materials as needed The problem with this was either there would be too much inventory or too little inventory to meet the demand needed Large quantities of inventory can be very costly for purposes of warehousing and deterioration of the material eg food spoilage animal infestation etc Secondly the cost of waiting for inventory as in a pull system can be costly as well The loss of customers for the wait of the final product can be very detrimental to the business as well as the supplier of raw material Thirdly there is the matter of taxes The cost of keeping inventory over the next fiscal year is considered an asset and therefore taxable Furthermore there was no way of linking the various structures within the organization To purchase something the purchaser would have to negotiate with the supplier Than the purchaser would have to go to the accounting department assuming that the authority was given to the purchaser to buy the material to procure the money for the transaction Than the accountant would send an order to the receiving warehouse The receiving warehouse would make sure there was room and then go to the mail department The process goes on and on and therefore would create a huge amount of paperwork to accompany each transaction within an organization So until the 1950s and 1960s the technology did not exist to be able to eliminate such problems with inventory like this So in the 1970s a new system was introduced called MRP Material requirements planning MRP is a computerized inventory control and production planning system This model integrates production purchasing and inventory management of interrelated products The MRP model was based upon three distinct principles the dependence of
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