Materials Requirement Planning (MRP) System
Materials Requirement Planning (MRP) System is a method of lowering the firm's investment in inventory without impairing production
- EOQ is used to determine how much to order
- A computer is used to compare production needs (the "bill of materials") with available inventory balances
- Orders are generated based upon the time it takes for a product to move through the process of becoming a finished good, and the lead time required to get materials
- Every dollar released from inventory can be invested to increase the firm's before-tax profits
- 1994, HarperCollins Publishers