How does MRP work (step by step)?
A simple summary of the Material Requirements Planning (MRP) process steps is as follows: • The orders and forecast for each time period, usually 1 day, for each end item are subtracted from the stock on hand plus any scheduled receipts to give the day to day projected available balance. • If the projected available balance falls below zero, or the safety stock if there is one, the MRP program will suggest rescheduling an existing order. If there are no orders to re-schedule, MRP will create a planned order to correct the projected available balance. • The planned order quantity is set to either just enough to restore the projected available balance (lot for lot), a fixed quantity multiple (lot size) or can be a number of more complex calculations involving looking periods ahead, minimums, maximums, multiples etc.. • All planned orders, offset by the lead time either create purchase orders or, for manufactured parts, are exploded into the component parts using the parts bill of materia
