MRP
Material Requirements Planning (MRP) is the calculation that translates demand (sales orders + forecast) into a time-phased plan of material purchases and production. Given a forecast of finished goods needed by date, MRP works backwards through the BOM and lead times to produce a recommendation: buy X kg of raw material A by date Y; produce Z units of sub-assembly B by date W.
Modern MRP (sometimes called MRP II) integrates with production scheduling, capacity planning, and supplier collaboration — and is increasingly AI-augmented to account for variable lead times, supplier reliability, and demand uncertainty rather than treating these as fixed.
MRP is what stops a factory both running out of parts and drowning in them — it calculates exactly what to buy or make, and by when, from the demand and the BOM. Its classic weakness is treating lead times and supply as fixed, which is where AI-augmented planning now helps.
orders + forecast
& lead times
buy & make
To build 100 units that each need 2 of part A = 200 gross. With 50 on hand and 30 already on order: net requirements = 200 − 50 − 30 = 120 units of part A to procure (before any safety stock).
What is MRP II?
Manufacturing Resource Planning — MRP extended to integrate capacity planning, scheduling and finance, not just material requirements.
What is the difference between MRP and ERP?
MRP is the specific material-planning calculation; ERP is the broad system that runs the whole business. MRP is typically one function within an ERP.