Business Terms Dictionary

Material Requirements Planning (MRP)

A planning methodology that calculates the materials and components needed for production based on the Bill of Materials (BOM), inventory levels, and the Master Production Schedule (MPS). © Copyright 2025 Demand Driven Institute. Used with permission.

How does it work?


MRP works by determining the quantity and timing of material requirements, generating replenishment recommendations, and adjusting open orders when due dates and need dates are misaligned. Time-phased MRP schedules material needs by considering lead times, ensuring components arrive when required.


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Traditional MRP systems rely on forecasts and fixed schedules, often leading to excess inventory or shortages. ForgeFlow Cloud ERP’s DDMRP system enhances MRP by replacing forecast-driven planning with demand-driven replenishment, ensuring materials are available when needed without unnecessary stock buildup.
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