MRP calculation and examples

An MRP calculation request matches your supply of components, raw materials, and stock items with current and future demand for your released and other items.

The results of the MRP calculation request display in a simple list by company, site, and item.

You can use the MRP calculation justification page to analyze what to purchase and/or manufacture by which date.

You should regard MRP as an integral component of your stock management. By only ordering items when there is a requirement for them keeps stock levels and associated stock overhead costs to a minimum.

MRP calculation process

The MRP calculation assesses the potential component requirements. It does this by searching for components and raw materials in sales orders, purchase orders, work orders, and any current or past demand not delivered on the MRP calculation Start date, per site.

If the MRP calculation parameters include a company, MRP assesses the potential component requirements for all sites for the company.

If the MRP calculation parameters explode work order suggestions, MRP determines the lowest level component according to the bill of material definition when assessing the potential component requirements. The MRP calculation will process the released item and component requirements together with any other supply and demand, to create suggestions for all levels of the bill of material.

For every potential requirement, the MRP calculation:

  1. Checks the Explode bill of material checkbox to determine if the released item needs to be exploded into its component parts, according to the bill of material definition.

  2. Checks the Replenishment method for the released item and each component item-site record is By MRP.

    Establishes the starting stock level for each item, by site.

    Starting stock is calculated from the total Accepted stock quantity on the MRP calculation Start date.

    Supply and demand transactions with a due date in the past are included in the starting stock level calculations. These are considered to be supplies not received and demand not delivered on the MRP calculation Start date.

  3. Groups the results into weekly buckets.

    The MRP request criteria Start date and Period in weeks determine the weekly buckets.

  4. Generates suggestions for each weekly bucket where the potential requirements exceed any supply of the item.

    Generated suggestions include an uplift to component quantities when a Scrap factor % is defined on the bill of material.

    Supply and demand transactions with a due date in the past are set to the MRP calculation parameter Start date and appear in the first weekly bucket.

    The date of the first requirement in the bucket is the Sunday of the appropriate weekly bucket.

    The suggested order start date is from the calculated due date. Purchasing suggestions consider the item-site Purchase lead time; production suggestions consider the item-site Production lead time.

    The bill of material and routing do not influence the start date for production suggestions.

MRP calculation examples

The following MRP calculation examples have a 1:1 relationship between the released item and each component in the bill of material structure.

BOM level 1 R1: Released item
BOM level 2 C1: Component + S1: Subassembly
BOM level 3   SC1: Subassembly component

The MRP calculation request criteria for Example 1 and Example 2:

  • From item / To item = R1
  • Period in weeks = 5

Example 1: Do not explode bill of material

Item-site R1 record: Safety stock = 50, Batch quantity = 100

  Bucket 1 Bucket 2 Bucket 3 Bucket 4 Bucket 5
Total demand 300 200 100 50 600
Total supply 100 200 300 100 25
Starting stock (1) 100 (a) 100 (b) 100 300 350
MRP calculation (2) 200 – 300 – 50 300 – 200 – 50 400 – 100 – 50 400 – 50 – 50 375 – 600 – 50
MRP calculation total –150 50 250 300 –275
Initial suggestion 150       275
Generated
suggestion: R1 (3)		 200       300

Starting stock (1):

  • (a) is calculated from the total quantity of Accepted stock on the MRP calculation parameter Start date.
  • (b) is calculated from the item-site Safety stock plus the excess suggested in Bucket 1.

MRP calculation (2) = (Total supply + Starting stock) – Total demand – Safety stock

Generated suggestion (3) is rounded up to the item-site Batch quantity.

Example 2: Explode bill of material

Item-site R1 record: Safety stock = 50, Batch quantity = 100

Item-site C1, S1, SC1 records: Safety stock = 50, Batch quantity = 100

  1. MRP calculation processes level 1 R1: Released item.

      Bucket 1 Bucket 2 Bucket 3 Bucket 4 Bucket 5
    Total demand 300 200 100 50 600
    Total supply 100 200 300 100 25
    Starting stock 100 100 100 300 350
    MRP calculation 200 – 300 – 50 300 – 200 – 50 400 – 100 – 50 400 – 50 – 50 375 – 600 – 50
    MRP calculation total –150 50 250 300 –275
    Initial suggestion 150       275
    Generated
    suggestion: R1    		 200       300

  2. MRP calculation explodes R1 BOM and creates its component requirements.

      Bucket 1 Bucket 2 Bucket 3 Bucket 4 Bucket 5
    Total demand: C1 200       300
    Total demand: S1 200       300

  3. MRP calculation processes level 2 C1: Component.

      Bucket 1 Bucket 2 Bucket 3 Bucket 4 Bucket 5
    Total demand: C1
    (see 2 above)    		 200 0 0 0 300
    Additional demand 200 200 0 0 200
    Total supply 50 50 0 0 50
    Starting stock 300 50 100 100 100
    MRP calculation 350 – 400 – 50 100 – 200 – 50 100 – 0 – 50 100 – 0 – 50 150 – 500 – 50
    MRP calculation total –100 –150 50 50 –400
    Initial suggestion 100 150     400
    Generated
    suggestion: C1    		 100 200     400

  4. MRP calculation processes level 2 S1: Subassembly.

      Bucket 1 Bucket 2 Bucket 3 Bucket 4 Bucket 5
    Total demand: S1
    (see 2 above)    		 200 0 0 0 300
    Total supply 0 0 0 0 0
    Starting stock 300 100 100 100 100
    MRP calculation 300 – 200 – 50 100 – 0 – 50 100 – 0 – 50 100 – 0 – 50 100 – 300 – 50
    MRP calculation total 50 50 50 50 –250
    Initial suggestion         250
    Generated
    suggestion: C1    		         300

  5. MRP calculation explodes S1 BOM and creates its component requirements.

      Bucket 1 Bucket 2 Bucket 3 Bucket 4 Bucket 5
    Total demand: SC1         300

  6. MRP calculation processes level 3 SC1: Subassembly component.

      Bucket 1 Bucket 2 Bucket 3 Bucket 4 Bucket 5
    Total demand: SC1
    (see 5 above)    		 0 0 0 0 300
    Total supply 0 0 0 0 0
    Starting stock 75 75 75 75 75
    MRP calculation 75 – 0 – 50 75 – 0 – 50 75 – 0 – 50 75 – 0 – 50 75 – 300 – 50
    MRP calculation total 25 25 25 25 –275
    Initial suggestion         275
    Generated
    suggestion: CS1    		         300