Material Requirements Planning, or MRP, is used to generate production schedules for the manufacture of complex products. MRP uses the demand schedule for a finished product, and all the various subcomponents that go into the finished product to work backwards and develop a detailed just-in-time production schedule, which meets the demand schedule.
MRP's main focus is finding a feasible just-in-time production schedule to meet demand. MRP does not, however, attempt to optimize the production schedule to minimize total production costs. In many cases, the problems solved by MRP are so complex optimization would be prohibitive.
Suppose you are a manufacturer of human powered vehicles. You have a given schedule of demands for finished products over time. You need to know when and how many of each component, subcomponent, etc. is needed to meet demand.
Your final products are as follows:
Unicycles, made from a seat and a wheel,
Bicycles, made from a seat, two wheels, and a chain, and
Tandem bikes, made from two seats, two wheels, and two chains.
Each product is assembled from a set of components. Each component in turn may be assembled from other subcomponents. For simplicity and generality, we will refer to all products, components, and subcomponents as parts.
The subcomponents are as follows:
Wheels, made from a hub and 36 spokes,
Chains, made from 84 links,
It takes a certain amount of time, called the lead time, to produce each batch of parts. The component parts for each part must be on hand when you begin production of a part. Additionally, each part is assembled on one of six production lines. Each production line has a given capacity. On lines that produce more than one part, the parts must compete for production time.
The production lines and parts assembled on them are as follows: