Material Requirements Planning (MRP)
📦 Time-phased material ordering
Also known as	MRP I, Little MRP
Originated	1960s–1970s
Originator	Joseph Orlicky
Key inputs	MPS, BOM, Inventory records
Key output	Planned orders (make & buy)
Part of	MRP II

Material Requirements Planning (MRP)

Material Requirements Planning (MRP), also called MRP I to distinguish it from MRP II, is a computation-driven planning technique that determines what materials are needed, how many, and when they must be ordered or manufactured. It answers the question: "Given what we want to build (MPS), what it's made of (BOM), and what we already have (inventory), what do we need to order or make, and when?"

Contents

Core logic
Three fundamental inputs
BOM explosion & netting
Outputs & action messages
Lot-sizing techniques
Relationship to other modules
See also

Core logic

MRP performs four steps for every item in the BOM, level by level from finished goods down to raw materials:

graph TD
    A["1. Explode
Break MPS into component needs
using the BOM"] --> B["2. Net
Subtract on-hand inventory
& scheduled receipts"]
    B --> C["3. Lot-size
Group net requirements
into order quantities"]
    C --> D["4. Offset
Subtract lead time to
determine order release dates"]

    style A fill:#d5e8f5,stroke:#333
    style B fill:#d5f5d5,stroke:#333
    style C fill:#fff3cd,stroke:#333
    style D fill:#f5d5d5,stroke:#333

Three fundamental inputs

Master Production Schedule (MPS) — States what end items to build and when. This is the demand that drives MRP.
Bill of Materials (BOM) — Defines the parent-component relationships and quantities for every product. MRP "explodes" through the BOM to derive dependent demand.
Inventory records — Provide current on-hand balances, allocated quantities, scheduled receipts (open orders), lead times, lot-sizing rules, and safety stock levels.

BOM explosion & netting

Consider a simple product: a table requires 1 top and 4 legs. If the MPS calls for 100 tables in week 5:

Component	Gross Req.	On-hand	Scheduled Receipts	Net Req.	Lead Time	Order Release
Table top	100	30	0	70	2 wks	Week 3
Table leg	400	150	50 (wk 3)	200	1 wk	Week 2

The netting formula: Net Requirements = Gross Requirements − On-hand − Scheduled Receipts + Safety Stock

Outputs & action messages

MRP generates two types of output:

Planned orders — Recommendations to release manufacturing orders (to Shop Floor Control) or purchase orders (to Purchasing).
Action messages (exception reports) — Alerts when the planner needs to intervene:
- Release order — It's time to release a planned order
- Expedite — An open order is needed sooner than its due date
- De-expedite — An open order's need date has moved out
- Cancel — An open order is no longer needed

Lot-sizing techniques

MRP must group net requirements into order quantities. Common techniques:

Lot-for-Lot (L4L) — Order exactly the net requirement each period. Minimises inventory but maximises order frequency.
Fixed Order Quantity (FOQ) — Always order a fixed amount (e.g., a full pallet).
Economic Order Quantity (EOQ) — Balances ordering cost vs. carrying cost.
Period Order Quantity (POQ) — Covers a fixed number of periods of demand per order.

Relationship to other modules

graph TB
    MPS["MPS"] -->|"what to build"| MRP["MRP"]
    BOM["BOM"] -->|"product structure"| MRP
    INV["Inventory"] -->|"stock status"| MRP
    MRP -->|"make orders"| SFC["SFC"]
    MRP -->|"buy orders"| PUR["Purchasing"]
    MRP -->|"planned load"| CRP["CRP"]

    style MRP fill:#cedff2,stroke:#333