MRP (material requirements planning) calculates what to buy and what to make, in what quantity and by when, using demand, your bills of materials and current stock, so material arrives in time without over-ordering.
Material Requirements Planning (MRP) works out what to buy and what to make, in what quantity and by when, so that material arrives in time to meet demand without carrying more stock than necessary. It takes three inputs: the demand you are planning to satisfy, the bill of materials for each product, and what you currently hold or have on order. From those it calculates net requirements and produces a list of recommended purchase and works orders with dates attached.
How MRP calculates requirements
The logic is straightforward but unforgiving. MRP explodes demand down through each level of the bill of materials, subtracts free stock and existing orders, then offsets the result by the lead time for each item to work out when it has to be ordered. If the bill of materials is wrong, the stock figure is wrong, or the supplier lead time is optimistic, MRP will confidently produce a plan that cannot be executed. This is why MRP implementations succeed or fail on data accuracy rather than on the software itself.
Key points
- Needs three accurate inputs: demand, bills of materials and current stock.
- Classic MRP assumes infinite capacity, which is why plans can be undeliverable.
- MRP II added capacity, labour and machine time to the calculation.
Why MRP plans fail in practice
MRP II extended the idea to include capacity, labour and machine time, asking not only whether the material will be there but whether there is anyone free to run the job. That distinction still matters. Classic MRP assumes infinite capacity, which is why a plan it produces can look perfectly achievable on paper while requiring three shifts on a machine you only staff for one. Finite capacity scheduling exists precisely to close that gap.
MRP and DynamxMFG
DynamxMFG keeps the stock and BOM data MRP depends on accurate by capturing consumption as jobs run, and schedules against real capacity. Read the full guide to MRP software for manufacturers.
Related terms
Knowing the words is the easy part
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