Material Requirements Planning (MRP)

At the end of this topic, you will be able to explain the concepts behind Materials Requirement Planning and the main steps in the process. We begin by introducing the concepts behind MRP in better to understand the process and its recommendations We discuss definitions and planning data you will want to set up to run the MRP wizard. Then we go through steps of the MRP wizard. Finally we examine the MRP results and see how to automatically generate production or purchasing documents from the recommendations.

1. MRP is a planning tool that calculates requirements for produced or purchased items by processing the demand, supply and stock on hand. 
2. The demand for items is derived from sales documents, a forecast, production orders, sales blanket agreements, defined inventory levels and inventory transfer requests.
3. The wizard considers expected supply from purchase orders, purchase quotations, purchase requests, production orders and purchase blanket agreements.
4. The results of the MRP run are the MRP recommendations. The recommended documents can be: purchase orders, purchase requests, purchase quotations, inventory transfer requests and production orders. 
5. Forecasts are used to plan stock levels in advance, before receiving actual requirements, such as sales orders. 
6. In the planning data of the item master, you can set parameters that affect MRP recommendations.
7. An MRP scenario is a set of parameters defined throughout the wizard steps that is used to determine the MRP results.
8. The horizon is the period for which the wizard displays the MRP results.
9. There are four elements in the MRP Result: Initial Inventory, Supply, Demand and Final Inventory
10. In the Recommendation tab of the MRP results we see the list of all recommended documents.
11. From the Order Recommendation window we can generate recommended documents.