Material Requirement Planning:

Material Requirement Planning (MRP) is a computational procedure used to covert the master production schedule for end product into a detailed schedule for raw materials and components used in the end products. The detailed schedule indicates the quantities of each item, when it must be ordered, and when it should be delivered to achieve the master schedule. The capacity requirement for production plan coordinates labour and equipment resources with material requirement. It is most important for job shop and batch production of products that have multiple components, each of which must be purchased and fabricated. It is the proper technique for determining quantities of dependent demand items that constitute the inventories of manufacturing: purchased parts, raw materials,  work-in-process (WIP), and so on.

Providing capacity for production planning is straightforward in concept. Its application is complicated by the sheer magnitude of the data that must be processed. The master schedule specifies the production of final products in terms of month by month deliveries. Each of products may contain hundred of components. Those components are produced from raw materials, some of which are common among the components (e.g. sheet steel for stampings). Some of the components themselves can be common to several different products. For all products, the components are assembled in to subassemblies, which are added to form other subassemblies, and so forth, until the final products are completed. All of these factors must be accounted for in material requirements planning.

For providing capacity to production plan properly, it should receive inputs from several files :

• Master production schedule,
• Product design data, in the form of a bill of material file,
• Inventory records, and
• Capacity requirement planning.