Complete Overview of MRP Cycle

                    The main task of Material Requirements Planning is to ensure material availability, that is, to procure the requirement quantities for in-house production and for sale on time.

                    The logistics chain starts off with sales and distribution and demand management. Sales and distribution receives requirements in the form of customer requirements from the market and demand management will plan sales via a sales forecast. The resulting independent requirements trigger materials planning.

                     In order to satisfy demand, the order quantities and dates have to be determined and the appropriate procurement elements need to be dispatched. The procurement elements of materials planning and of external procurement are the planned orders and the purchase requisitions (for external procurement). Both are only internal elements.

                   For materials produced in-house, the dependent requirements are determined by BOM explosion. Dependent requirements are the quantity of components necessary for the production of a finished product or an assembly.

                   When materials’ planning has finished volume planning and time scheduling, the internal procurement elements must be converted into real procurement elements: the procurement element for production is the production order, the one for external procurement is the purchase order.