Material Requirements Planning (MRP) is a production planning and inventory management system used to manage manufacturing processes.
MRP is designed to efficiently manage manufacturing components by determining the quantity and timing of material purchases needed to meet production schedules. It calculates material requirements based on a bill of materials (BOM), inventory levels, and the master production schedule to ensure that materials are available for production and products are available for delivery to customers, thereby optimizing inventory levels.
A manufacturing plant for automotive parts utilizes an MRP system to synchronize the arrival of parts such as steel blanks and plastic mouldings with their production schedule, ensuring they maintain a two-week supply buffer while minimizing holding costs.
Typically used in environments with complex production setups where multiple components are required in sequence or combinations, like automotive assembly lines.
An electronics manufacturer uses an MRP system to align their circuit board components with their production schedule, reducing stock shortages of key components by monitoring usage rates and delivery lead times.
Commonly applied in electronics manufacturing where component shortages can halt production lines, emphasizing precise inventory control.