Materials Requirements Planning (MRP) and ERP
The difference between a gross requirements plan and a net
requirement plan is that a net plan adjusts for on-hand inventory
and scheduled receipts at each level.
Once the MRP system is in place, it provides information to
assist decision makers in other functional areas such as the
amounts of labor required, cash needs, purchase requirements, and
The similarities between Material Requirements Planning
(MRP) and Distribution Resource Planning (DRP) are that the
procedures and logic are analogous.
The difference between Material Requirements Planning
(MRP) and Material Resource Planning II (MRP II) is that MRP II
includes or integrates functions within the firm in addition to the
management of dependent demand inventories. Examples of these
additional functions include: Order entry, invoicing, billing, pur-
chasing, production scheduling, capacity planning, and warehouse
The is no one “ideal” lot sizing technique that should be used
by all manufacturing organizations. Lot-for-lot is the goal to be
sought. However, where setup costs are significant and demand is
not particularly lumpy,
is a simple method and typically
provides satisfactory results. Too much concern with lot sizing
yields spurious results because of MRP dynamics.
In a DRP system, inventory residing within the system is
moved within the system, rather than entering or leaving the sys-
tem. Therefore, although effort should be made to reduce total
inventory to minimize overall carrying cost, carrying cost per se
does not have a significant effect on appropriate lot size.
MRP is usually a part of the overall production planning
process. Its most important capability is including the timing/
scheduling factor in inventory planning. MRP II, of course, ad-
dresses the timing/scheduling of other resources in addition to
(a) When a work center is only over capacity for one week
(or a short time), the production planner has a number of
Splitting an order to an earlier or later week
Requesting overtime, an alternate (perhaps more ex-
pensive) production process
(b) A consistent lack of capacity suggests a capital invest-
ment to increase capacity, add a shift, or develop an
outside source. Redesign of the product may also be an
The master schedule is expressed in terms of:
(1) end items in a continuous (make-to-stock) company;
(2) customer orders in a job shop (make-to-order) company;
(3) modules in a repetitive (assemble-to-stock) company.
Virtually all functions of the firm impact an MRP system.
For instance, purchasing performance affects delivery, changes in
capacity (i.e., labor, maintenance, breakdowns) impact through-
put, sales impact the master schedule as do financial issues such
as capital expenditure for capacity, engineering performance such
as meeting schedules and preference (or flexibility) for particular
approaches to design/processing.