Components of an MRP System

MRP system is a computer-based management information system that was developed in the 1960s to overcome the problems of manual record keeping of dependent demand inventory transactions. However, the functioning of the system is not confined to the tabulation of inventory transaction. It extends to processing information for production scheduling and taking capacity planning decisions. Figure presents an overview of an MRP system.

Figure: Materials Requirement Planning System              

An MRP system translates the demand for end products into raw material and component requirements. The system requires the following information to operate successfully:

• Customer orders pending for future deliveries and unfinished orders that must be completed in the planned production period

• Demand forecasts that specify the quantity of products demanded and the time period in which these demands are to be satisfied

• Capacity information that helps in anticipating and correcting resource shortages

• Details of the dependent demand inventory items at the various stages of the transformation process and the stages through which these items traverse to make an end product

• Changes in inventory requirements due to product design changes expected during the planning time period

• Available level of inventories at the beginning of the planning time period

• Quantities of ordered, purchased, or contracted inventory items that an organization expects to receive during the planning time period

Once all pre-requisite information is received, operations managers convert it into a form acceptable to the MRP system. Three elements common to all available variants of MRP system are:

• Inputs

• Processing

• Outputs              

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