Definition of Material Requirements Planning (MRP)

Material Requirements Planning is the computerized ordering and scheduling system for manufacturing and fabrication industries. It uses bill of materials data, inventory data, and master production scheduling (MPS) to project what material is required, when, and in what quantity. MRP phases orders for dependent-demand items (such as raw materials, components, and parts) over a period to synchronize flow of materials and in in-process inventories with production schedules. It also computes and tracks the effects of hundreds of variables such as new orders, changes in various capacities, overloaded production centers, shortages, and delays by suppliers, and feeds financial data into the accounting system. In contrast to just-in-time (JIT) inventory (a demand-pull production system), MRP is a plan-push system. In contrast to an advanced planning system (a forward scheduling system) it is a backward-scheduling system.