From the course: Inventory Management Foundations
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Materials requirements plan
From the course: Inventory Management Foundations
Materials requirements plan
- The Material Requirements Plan or MRP not only helps you manage your inventory it actually defines the specific inventory needed to make your finished products. Once you determine how many products you will make this year, the material requirements plan calculates and schedules all raw materials, components and subassemblies needed to create your final product and meet your customer orders. The MRP is a combination of three inputs. First is the bill of materials or BOM. This is the recipe to make the final product telling you what items are required and how many of each. The BOM also specifies the production sequence so you know which items are needed first. In this example, you cannot assemble C until you first make two of the D components. Your final product is normally made up of materials, components, and subassemblies in this manner. This is a very simple example. As you can imagine, the bill of materials for an…
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