What Is Material Requirements Planning (MRP)?

Material requirements planning, or MRP, is a calculation that explodes a bill of materials through all its levels, nets the result against current inventory and open orders, and time-offsets it to generate planned make or buy orders. It works backward from a finished-goods demand to everything that demand requires. From "I need one hundred bicycles by Friday" it derives "therefore I need two hundred tires by Wednesday" automatically. Classic MRP is infinite-capacity: it plans the materials without checking whether the machines have the hours to do the work.

This entry defines material requirements planning and shows how the concept lives inside EDGEBIC by User Solutions. For the wider index of planning terms, see the manufacturing glossary, and for the fuller closed-loop version, read what is manufacturing resource planning MRP-II.

How it works

MRP runs in three moves. First it explodes the bill of materials: starting from a demand for a parent item, it walks down every level of the product structure, multiplying each component quantity by the demand to produce the total, or gross, requirement for every item. Second it nets: it subtracts on-hand inventory and any scheduled receipts already on order, leaving the net requirement, which is what genuinely needs to be made or purchased. Third it offsets: it pushes each net requirement backward in time by that item's lead time, so parts and sub-assemblies are planned to arrive just before the step that consumes them.

The output is a set of planned orders, each with a quantity and a date. Some are make orders that will become manufacturing work; some are buy orders that will become purchase requisitions. Until a planner firms them, they remain suggestions on the plan, dotted lines showing what would need to happen for the top-level demand to be met.

The one thing MRP does not do is check capacity. It plans the materials as though every machine had unlimited hours. That simplifying assumption is what makes the calculation fast and level-by-level clean, and it is also why a separate finite-capacity pass is needed before those planned dates can be trusted as commitments.

A concrete example

Imagine planning a dinner party by working backward from the menu. You decide to serve one hundred plates of pasta. The recipe, the bill of materials, says each plate needs one hundred grams of pasta and fifty grams of sauce. The explosion multiplies that out: ten kilograms of pasta and five kilograms of sauce.

Now you net. Three kilograms of pasta are already in the pantry, so the net requirement drops to seven kilograms, which becomes a shopping item. Then you offset: the pasta must be bought by the day before, because the store takes a day to deliver, so the planned buy order carries a date one day ahead of the party. What MRP never asks is whether your single oven can actually cook one hundred plates at once. That is the capacity question, and it comes later.

How EDGEBIC uses it

EDGEBIC uses material-driven planning to decide what to build and buy, then hands the result to a finite-capacity engine that decides when it can actually run. The material side nets demand against on-hand inventory and scheduled receipts, projects the available balance forward bucket by bucket, and raises replenishment suggestions for items that fall short. This is the infinite-capacity layer: it answers what and how much, without pretending to know machine load.

The finite-capacity engine is what makes EDGEBIC more than plain MRP. Once the material requirements are known, the scheduling engine places the resulting operations on real work centers with real shift hours, refusing to book more time than a machine has. So the unrealistic infinite-capacity date, such as "build two hundred tires by Wednesday even though the tire machine is full", is corrected into an honest date that reflects capacity. The material plan proposes; the finite schedule disposes.

Because the two layers share one product structure, the components that MRP nets and the operations the scheduler places come from the same bill of routing, so a change to either is visible to the other. To see how netting turns gross demand into a buy-or-build number, read what is a net requirement in MRP, and for the forward projection that carries stock period by period, see what is projected available balance. For the finite engine that turns material plans into real schedules, continue with what is advanced planning and scheduling.