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Material requirements planning (MRP) is a computer-based inventory management system that was developed in the 1960s and remains in widespread use today. MRP's central function is to develop a plan for the production of finished goods taking into account the inventory requirements of their component parts and raw materials. By doing this, MRP helps to ensure the necessary materials and components will be on hand when they are required and helps to minimize the inventory levels necessary.
An example of how MRP works can be found in the manufacturing of a simple product such as a chair. In order to build a chair, fabric, wood and other components are required. MRP will calculate the amount of each component required taking into account the number of chairs to be produced, the availability of components, and the current inventory levels. This in turn helps to minimize customer lead times, as components can be procured quickly when needed. It also contributes to customer satisfaction, as finished goods can be produced and shipped quickly upon request.
MRP requires accurate and comprehensive data in order to successfully plan production. As a result, the implementation of an MRP system often requires a considerable investment of time and money. MRP also follows a strict production schedule, meaning that priority is not given to urgent orders. This can lead to delays in fulfilling customer requests.
In summary, material requirements planning is a proven and reliable system for managing inventory and producing finished goods. MRP helps to ensure that the required materials and components are available when needed, helps to minimize inventory costs and customer lead times, and contributes to improved customer satisfaction. However, MRP is reliant on accurate data, has a high initial cost to implement, and follows a strict production schedule.
An example of how MRP works can be found in the manufacturing of a simple product such as a chair. In order to build a chair, fabric, wood and other components are required. MRP will calculate the amount of each component required taking into account the number of chairs to be produced, the availability of components, and the current inventory levels. This in turn helps to minimize customer lead times, as components can be procured quickly when needed. It also contributes to customer satisfaction, as finished goods can be produced and shipped quickly upon request.
MRP requires accurate and comprehensive data in order to successfully plan production. As a result, the implementation of an MRP system often requires a considerable investment of time and money. MRP also follows a strict production schedule, meaning that priority is not given to urgent orders. This can lead to delays in fulfilling customer requests.
In summary, material requirements planning is a proven and reliable system for managing inventory and producing finished goods. MRP helps to ensure that the required materials and components are available when needed, helps to minimize inventory costs and customer lead times, and contributes to improved customer satisfaction. However, MRP is reliant on accurate data, has a high initial cost to implement, and follows a strict production schedule.