Understanding Material Requirements Planning (MRP): A Comprehensive Guide
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CHAPTER 14: Material Requirements Planning (MRP)
Independent vs. Dependent Demand
Independent Demand
Finished goods, such as computers, have independent demand, meaning their demand is uncertain and influenced by external factors.
Dependent Demand
Components of finished products, like computer parts, have dependent demand, meaning their demand is certain and directly related to the demand for the finished product.
What is Material Requirements Planning (MRP)?
Material Requirements Planning (MRP) is a dependent demand technique that uses a bill-of-material, inventory data, expected receipts, and a master production schedule to determine the materials and components needed to produce finished goods.
Benefits of MRP
- Better response to customer orders
- Faster