MRP systems and Functions of MRP systems

Where dependent demand exists, for example between finished product and its constituent parts, item forecasting or inventory control techniques based on EOQs are inappropriate for determining requirements. Also, the detailed scheduling of requirements for constituent parts becomes a more complex exercise. Independent demand, therefore, exists where demands are unrelated, such as between finished products and replacement parts and usually originates outside the company. For component parts and raw materials, the demand is very much related to the demand for the finished product. This demand is referred to as dependent demand.

Efforts to couple aggregate and detailed plans have produced the MRP system. Indeed, the need to produce a systematic and integrated approach to planning and control at various planning horizons and levels of detail have necessitated the introduction of such a system.

The value of an MRP system is that its logic has been computerised.

The power of the digital computer when linked to a comprehensive MRP system provides the necessary elements of a management information system.