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Material Requirements Planning MRP is designed to assist manufacturers in inventory and production management Using MRP helps ensure that materials will be available in sufficient quantity and at the proper time for production to occur without incurring excess costs by having the materials on hand too early MRP assists in generating and as needed revising production plans to meet expected demands and replenishment plans to assure the timely availability of raw materials and all levels of product components MRP begins by compiling a Bill of Materials BOM for each end product or component of interest This is a listing of the components and quantities that are needed to manufacture the end product or component Theoretically the compilation of BOMs continues recursively enumerating the subcomponents that are needed to manufacture each component until only raw materials appear in the generated BOMs In practice a manufacturer may prefer to extend the BOM enumeration for only a specified number of levels and to assume that components andor raw materials beneath that level are available on demand Next MRP requires information on the lead times associated with each manufacturing or assembly procedure that is required to produce the components and end products Lead time is the time required to assemble or manufacture the needed components into the end product or higher-level component and thus is the time elapsed between the point at which all needed components are present and the end of assembly or manufacturing These lead times may be compiled per unit of each componentproduct or may be based on predetermined batch sizes MRP combines the BOMs the lead times and estimates of demand for end products to generate the Master Production Schedule which details a schedule of assembly and production that enables the manufacturer to meet the estimated demand This schedule addresses only the final level of assembly or production resulting in end products and includes both the timing and quantities of production The Master Production Schedule
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