An inventory and purchasing planning system that integrates product components, lead times and deadlines. A system to support manufacturing and fabrication organizations by the timely release of production and purchase orders using the production plan for finished goods to determine the materials required to make the product. Orders for dependent demand items are phased over time to ensure that the flow of raw materials and in-process inventories matches the production schedules for finished products. The 3 key inputs are:

• The master production schedule.

• Inventory status records.

• Product structure records

MRP is a manufacturing related activity concerned with managing the materials required to produce products. This includes collecting, inventorying, and distributing parts in the most cost-effective and efficient means possible. When manufacturing data has been collected (parts, assemblies, resources) the lead-time and cost of component can be predicted under any manufacturing conditions. As soon as an order is received the workload on the manufacturing organization and the delivery time can be calculated. MRP systems also keep track of customers, suppliers and accounting functions. Inventory can be purchased and assemblies made "Just in Time". The records kept by an MRP system highlight inadequacies such as overloaded production centers and delays by suppliers. The effect of new orders, changes in capacity, shortages, delays and a myriad of other disturbances are calculated and tracked.

The major effects that an MRP system will have on a manufacturing operation will be:

• Reduced inventory.

• Accurately predicted delivery times.

• Accurate costing at different stages of the manufacturing process.

• Improved use of manufacturing facilities.

• Faster responses to changing conditions.