Material Requirements Planning MRP
Below is a MRR and PLR article in category Business -> subcategory Other.
Material Requirements Planning (MRP)
Overview
Material Requirements Planning (MRP) is a computer-based system that helps production managers streamline inventory management and scheduling for dependent demand items. These items, such as raw materials and component parts, rely on the production levels of final goods. For instance, in a bicycle manufacturing plant, dependent demand items might include aluminum, tires, seats, and derailleurs.
Evolution of MRP
Introduced in the 1940s and 50s, the first MRP systems utilized mainframe computers to convert information from a bill of materials into production and purchasing plans. Over time, MRP systems evolved to include feedback mechanisms that allowed production teams to update the system inputs as needed. This advancement led to Manufacturing Resources Planning (MRP II), which integrated various departments like marketing, finance, and HR into the planning process. Enterprise Resources Planning (ERP) further expanded this concept by interlinking all functional areas across an enterprise using computer technology.
How MRP Works
MRP starts by working backward from a production plan for finished goods. It converts this plan into a schedule of requirements for subassemblies, components, and raw materials needed to meet production timelines. Essentially, MRP answers three key questions: What is needed? How much is needed? When is it needed?
Benefits of MRP
By breaking down inventory needs into planning periods, MRP ensures timely production while minimizing inventory levels and carrying costs. When implemented correctly, MRP assists production managers in planning for capacity needs and efficiently allocating production time.
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