MRP, short for Material Requirements Planning, is an industrial planning method that emerged in the 1960s. From a production plan (or an order book), bills of materials — the list of components and raw materials needed for each product — and the current stock position, MRP determines what to order or manufacture, in what quantity and by when, so that materials are available at the right time without generating costly excess stock.
MRP logic rests on the notion of "dependent demand": the demand for a component derives directly from that of the finished product containing it. The algorithm explodes the bills of materials, subtracts available stock and orders already placed, applies the lead times specific to each item, then proposes purchase or manufacturing orders scheduled over time. It is called MRP II (Manufacturing Resources Planning) when the calculation also factors in available production capacity — machines, labour and work centres.
MRP relies on management parameters such as the economic order quantity (EOQ), which balances ordering cost against holding cost, and it feeds availability commitments such as ATP (Available-to-Promise). It is therefore an essential operational building block of overall supply chain management, or SCM.
eyeot's Supply Chain module implements this kind of requirements calculation to support procurement planning.