Final answer:
Materials Requirements Planning (MRP) is a system used in manufacturing to ensure timely availability of all materials needed for production. It involves calculating requirements based on the production schedule, inventory data, and BOM. MRP helps in reducing inventory costs and improving production efficiency and customer service.
Step-by-step explanation:
Materials Requirements Planning (MRP) is a production planning, scheduling, and inventory control system used to manage manufacturing processes. MRP ensures that materials and products are available for production and delivery to customers at the right time. The system calculates the amount of materials needed based on the production schedule of finished goods by using data from bill of materials (BOM), inventory data, and the master production schedule (MPS).
MRP helps organizations to minimize inventory levels and costs, increase production efficiency, and improve customer service. The process starts with a demand for finished goods, typically represented by a sales forecast or actual customer orders, which is then translated into production and purchasing plans for the components needed to produce those goods.