Material Requirements Planning (MRP)

The MRP calculation follows a systematic logic called 'netting and explosion.' Starting from the Master Production Schedule, MRP determines the gross requirement for each finished product in each time period. It then 'explodes' the BOM to calculate gross requirements for every component and raw material at every level. Next, it 'nets' these requirements against available inventory and scheduled receipts (open purchase orders and production orders) to determine the net requirement — what still needs to be produced or ordered. Finally, it 'offsets' the net requirements by lead time to determine when orders must be released: if a component has a 2-week lead time and is needed in week 8, the order must be released in week 6. This process cascades down through every level of the BOM, ensuring that materials at every level arrive just in time for their consumption. The output is a set of planned order releases for both purchased and manufactured items, which drives purchasing actions and production scheduling.

MRP and production scheduling are complementary systems that must work in harmony. The MPS feeds MRP with the demand signal — what needs to be produced. MRP determines whether materials will be available to support that schedule. If MRP identifies material shortages, the scheduler may need to adjust the production sequence to produce items with available materials first. In modern practice, production scheduling tools like LinePlanner operate alongside MRP/ERP systems: the ERP handles material planning and procurement, while LinePlanner provides the visual, granular scheduling interface for the shop floor. This division of labor plays to each system's strengths — ERP excels at data processing and material calculations, while visual scheduling tools excel at human-friendly planning interaction and real-time schedule adjustment. The key integration point is ensuring that the production schedule in LinePlanner stays synchronized with the material availability data in the ERP system.

Despite its power, MRP has well-known limitations. MRP assumes infinite capacity — it calculates material needs without checking whether production capacity is available, which can generate infeasible plans. Capacity Requirements Planning (CRP) is needed to validate MRP output against actual capacity. MRP depends on data accuracy: BOM errors, incorrect inventory records, or stale lead times produce incorrect purchase and production plans. MRP uses fixed lead times, but in reality lead times vary with shop load, priority, and lot size. MRP's time-bucketed logic (typically weekly) may be too coarse for factories that need shift-level precision. MRP generates nervousness — small changes in the MPS can cascade into large changes in planned orders, creating instability. These limitations explain why many manufacturers supplement MRP with lean tools (kanban for high-runners, visual scheduling for shop floor execution) rather than relying solely on MRP-driven planning.