A system to support manufacturing and fabrication organisations by the timely release of production and purchase orders using the finished goods production plan to determine the materials required to make the product.

The process that uses the MPS as demand, explodes the bill of material for specified MPS items, nets those requirements against on-hand inventory and existing open orders, and recommends placing new production and purchase orders and changes to existing orders based on parameters that consider safety stock levels, lot sizes and lead times. It is based on the idea of dependent demand (demand for an item is due to its usage in other items) and starts at the highest level in the bill of material, stopping at the first level where the quantity of inventory plus incoming receipts is adequate to meet demand and it is not necessary to send a requirement to the next lower level. While sometimes considered complex due to many levels in the bill of material or a large number of items, MRP in general is just a calculator and depends completely on the accuracy of the MPS, bills of material and order date and quantity information to be useful.

A planning technique which uses material bills, open order data, stock data and master production schedule (MPS) data to calculate the material required as well as when to order it. Originally, it was therefore mainly used to control and order stocks. Today, however, it is above all a method applied to control and maintain due dates on orders. This is due to the fact that the method not only makes recommendations when to release replenishment orders but also re-plans open orders when due orders are not in schedule. The method itself is a two-step logical operation, which is repeated at each production level and starts with the manufactured product: Future stocks are calculated from the present stock and known future issues. Bills of materials serve to compute lower level requirements.

A decision-making methodology used to determine the timing and quantities of materials to purchase.