Operations Management: An Integrated Approach, 5th Edition

AN OVERVIEW OF MRP

Material requirements planning (MRP) is an information system that uses the concept of backward scheduling. MRP enables companies that produce items in batches to have the right materials in the right amounts available at the right time. While having the material is critical, the company also needs the capacity to process the materials on time. Companies use capacity requirements planning (CRP) to check that enough work is scheduled for operations and that the amount of work is feasible. CRP reveals potential problems, which gives operations a chance to prevent problems from occurring. For example, if you know that you need 250 hours of test equipment time four weeks from now and you only have 200 hours of test equipment time available during that week, you can do something about it now. You can change the master schedule so that some of the items needing testing are scheduled for a different time period, or you can authorize additional workers in the test area, or authorize overtime for that work center. You don't wait until four weeks from now and then figure out what to do.

Material requirements planning (MRP)

A system that uses the MRP, inventory record data, and BOM to calculate material requirements.

Capacity requirements planning (CRP)

Determines the labor ...