Q:

What is "MRP"?

A:

Quick Answer

MRP stands for material requirements planning, which is a computer-based, inventory control system that is designed to assist production managers in planning, scheduling and managing manufacturing processes. MRP systems ensure that a company has sufficient products to delivery to clients, raw materials available for production and manufacturing activities well planned.

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Full Answer

MRP was first developed in 1964, by Joseph Orlicky, as a response to the Toyota Manufacturing Program. The first computerized MRP was tested by Black & Decker in the same year, with Dick Alban as the project leader. Since then, Orlicky's MRP has evolved to become a major component in manufacturing organizations.

A material requirements planning or MRP system works backwards. It uses a production plan for finished goods to ascertain production requirements, such as the amount of raw materials needed to produce new inventory. This system is designed to answer three basic questions: What is needed in the market and throughout the manufacturing process? What quantity is needed? At what stage is it needed?

An MRP integrates data from the bill of materials, or BOM, and production schedules to calculate the shipping and purchasing schedules for a particular product. This helps ensure that enough materials are available for production and product shortages are avoided. MRP reduces wastage by ensuring that the products and material levels in stock coincide with market demand. It also helps manage manufacturing functions, purchasing schedules and delivery schedules.

For an MRP system to be successful, the data fed into it must be accurate to avoid stock errors and serious production problems.

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