Material Requirements Planning (MRP) was originally developed in order to improve productivity in business, maintain low inventory levels and to plan the manufacturing process.
In manufacturing situations, the demand for RMs, components and sub-assemblies is dependent upon the production plan for the final product. It is therefore possible to determine how many parts or components will be needed in each time period once the production requirements for the final product are established.
MRP is a computerised system that exploits this information of the dependence on demand, by managing inventories and controlling the production lot-sizes of the numerous parts that go into the making of the final product.
MRP is commonly regarded as a ‘push’ system. It is simply a method of projecting the requirements of the individual components of a product to determine three major functions: control of inventory levels, assignment of priorities for components and the determination of capacity requirements.