Manufacturing & production
MRP explained: material requirements planning with a worked example
How MRP works: gross requirements, netting, lot sizing and lead-time offsetting, with a worked example and the data quality MRP depends on.
Material requirements planning (MRP) calculates which materials and components a plant needs, in what quantities and when, to meet the production plan. It answers the planner's daily question: *what should we buy or make, and when, so production never waits for materials and the warehouse isn't full of things nobody needs?* MRP is logic, not magic, and it is only as good as the data behind it.
The inputs MRP needs
| Input | What it is |
|---|---|
| Master production schedule | Finished products to make, by week (production planning) |
| Bill of materials | Components and quantities per product (bill of materials) |
| Inventory on hand | Current stock of each material |
| Scheduled receipts | Open purchase orders and job orders already due |
| Lead times | How long each material takes to buy or make |
| Lot sizing rules | Order quantities, minimums, multiples |
| Safety stock | Buffer for uncertainty (reorder point and safety stock) |
The four steps of MRP logic
- Explode the BOM: gross requirement = planned production × quantity per unit.
- Net: net requirement = gross requirement − stock on hand − scheduled receipts + safety stock.
- Size the lot: round the net requirement to the order quantity rules.
- Offset by lead time: release the order early enough to arrive when needed.
Worked example
A furniture plant plans 500 chairs in week 6. Each chair needs 4 legs.
| Step | Calculation | Result |
|---|---|---|
| Gross requirement | 500 × 4 | 2,000 legs in week 6 |
| On hand | 600 legs | |
| Scheduled receipt | Open PO due week 3 | 400 legs |
| Safety stock | 200 legs | |
| Net requirement | 2,000 − 600 − 400 + 200 | 1,200 legs |
| Lot sizing | Supplier sells in boxes of 250 | Order 1,250 legs |
| Lead time | 2 weeks | Release the PO in week 4 |
MRP repeats this for every component at every level of the BOM, including sub-assemblies made in-house.
Why MRP output goes wrong
| Problem | Result |
|---|---|
| Inaccurate BOMs | Wrong quantities ordered |
| Inaccurate stock | Over- or under-ordering (cycle counting) |
| Wrong lead times | Materials arrive late or too early |
| Open POs not updated | Phantom supply |
| Constantly changing plans | Nervous plans that planners stop trusting |
Fix data quality before blaming the logic.
MRP in Philippine plants
Imported materials with long and variable lead times, inter-island shipping and supplier minimum order quantities make planning harder. Use realistic lead times based on history, safety stock for critical imported materials and a frozen window in the production schedule to limit last-minute changes.
MRP, MRP II and ERP
- MRP: material planning logic
- MRP II: adds capacity planning and other manufacturing resources
- ERP: connects manufacturing planning with purchasing, inventory, sales, HR and finance
Many companies run MRP-style planning inside an ERP, where purchasing and inventory data are already connected. See manufacturing ERP.
Getting started
- Clean BOMs and item master data.
- Make inventory records accurate.
- Record realistic lead times by supplier.
- Run planning weekly, review suggestions and release orders.
- Track material shortages that stop production and fix their causes (raw materials control).
Where Cirquolus fits
The Cirquolus production management system supports production planning and job orders connected to purchasing and warehouse inventory, giving planners current stock and open purchases when deciding what to buy and make. Discuss planning rules for your products with our team during discovery.
Frequently asked questions
What is MRP in manufacturing?
Material requirements planning: a method that calculates material quantities and timing needed to meet the production plan.
What are the inputs of MRP?
The master production schedule, bills of materials, inventory on hand, scheduled receipts, lead times, lot sizing rules and safety stock.
What is the difference between MRP and ERP?
MRP plans materials for production. ERP connects manufacturing with purchasing, sales, inventory, HR and finance.
Why does MRP give wrong suggestions?
Usually because of inaccurate BOMs, stock records, lead times or open orders.
Bring this workflow to a Cirquolus demo.
Show us your current process, companies and branches. We will map it to the modules you need and propose a realistic rollout.