Demand and production plan
Shows which products are planned, when and in what quantities.
ERP Guides
Production and materials planning guide
How to Apply Material Requirements Planning (MRP)
Material Requirements Planning (MRP) evaluates the materials needed for planned production using bills of material, available inventory and open supply or production records. Useful results depend on accurate, current source data. This guide explains how to prepare the MRP process and review its output.
Core inputs to an MRP run
Bill of material
Defines components and quantities required for products and semi-finished goods.
Inventory and reservations
Shows available quantities and stock reserved for other work.
Open supply and production
Accounts for expected deliveries and quantities still to be produced.
Apply the MRP process in six steps
- 1
Confirm the production and order plan
Define which production plan, orders and planning horizon the MRP run will use. Make sure demand quantities and dates are approved and current; do not treat draft plans as firm requirements.
- 2
Check bills of material and production data
Confirm that the current bill of material includes the materials required for each product or semi-finished item, with correct quantities and units. Validity dates, scrap allowances and other production data should match the planned product and date.
- 3
Validate inventory and reservations
Review available stock, quality-inspection or blocked stock, warehouse transfers and existing reservations. If physical stock differs from system records, investigate the accuracy before acting on the plan result.
- 4
Include open supply and production orders
Check purchase orders expected by the required date and production orders in progress. Verify quantities, delivery or production dates and remaining work; delayed or cancelled orders can distort the plan.
- 5
Run the plan and review its results
Review requirements using a planning horizon and time buckets that fit your decision cycle. Examine shortages, excesses or date differences by item, warehouse, requirement date and source of demand. Do not treat an output as an approved order automatically.
- 6
Resolve exceptions and review again
When unexpected shortages or excess requirements appear, first check demand, bill of material, inventory, reservations and open orders. After correcting data, review the plan again and align the results with production and purchasing owners.
A simple requirements review example
Example: the production plan contains 100 units, and the bill of material requires 2 units of material A for each. Gross requirement is 200 units. If 50 are available and 40 units of open supply are confirmed by the required date, the net shortage to review is 110 units. In practice, also validate reservations, scrap, units, supply dates and bill-of-material validity.
Gross requirement
200
Stock + confirmed open supply
90
Net shortage to review
110
Check before acting on the plan
- Are the production plan and demand dates current?
- Are the bill of material and units correct?
- Are available stock and reservations consistent?
- Are open order quantities and dates realistic?
- Do procurement or production lead times meet the requirement date?
- Have recommendations been reviewed by the responsible owners?
Frequently asked questions
What data is needed for an MRP plan?
Core inputs include a production or demand plan, bills of material, inventory and reservations, open purchase orders, production orders in progress and procurement or production lead times. Data should use consistent item codes, units and date conventions.
Why can MRP results be inaccurate or incomplete?
Out-of-date bills of material, incorrect stock, unrecorded reservations, wrong units, duplicate demand or unrealistic lead times can affect results. When recommendations are unexpected, first check the accuracy and dates of source records.
How often should an MRP plan be run?
Frequency depends on how quickly orders change, lead times and how often the production plan is updated. Reassessing after significant demand, stock or date changes can be combined with a regular planning cadence.
Is an MRP recommendation automatically a purchase order?
No. A planning result is decision support. Its quantity and date should be checked against inventory, reservations, open supply, supplier terms and approval rules. Conversion into an order follows the company’s purchasing process.
MRP output is a reliable planning input only when demand, bills of material, inventory and open orders are current. Review recommendations before acting and reassess the plan after significant data changes.