Material Requirement Planning (MRP) refers to basic calculations method or tool/software for the materials required to develop the end product along with their time of procurement.
It is a technique for determining the quantity of the raw materials required to develop the end product and the timing of the acquisition for the same and making the end products available for the end users.
Basic features of MRP
Inventory Reduction: MRP helps to procure the materials as and when needed based on the demand of the same. Thus it helps to avoid excess build up of inventory which is a very costly affair. It also reduces the inventory cost significantly by doing the same.
Reduction in manufacturing and delivery lead times: MRP identifies materials and components quantities, timings when they are actually needed. MRP helps to avoid delays in production and priorities production activities by putting due dates properly for each order.
Realistic delivery commitments as per the schedule date: By using MRP, production can give marketing timely information about likely delivery times to prospective customers.
Increase efficiency of the production system: MRP provides a close co-ordination among various work centers and helps achieve uninterrupted flow of materials through production line. This increases the efficiency of the production system.