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Manufacturing · Material Requirements Planning (MRP)

Backward from the Customer Order — Which Raw Material, When, and How Much Should I Order?

Manufacturing 8 min read
#material requirements planning #mrp #bom explosion #dependent demand #lead time #lot sizing #manufacturing

Given final-product demand, compute backwards when and how much of every raw material and sub-component must be ordered or produced. Academic name: Material Requirements Planning (MRP); foundational Orlicky (1975), modern Vollmann-Berry-Whybark-Jacobs (2005), Hopp-Spearman (2008).

In plain words

For mid-size manufacturing SMBs running 50-500 end items and 200-2,000 raw materials and sub-components (automotive Tier-2, white-goods component shops, furniture and assembly, machinery). With each product’s parts list (BOM) and each part’s procurement or production lead time on file, the question is: a customer orders 200 units of product X with a fixed delivery week — which raw materials in what quantity must be ordered which week, and which sub-parts must enter assembly when? Material requirements planning (academic name MRP) answers this question backwards from the delivery date and is the core logic underneath every ERP. Done on paper or by ‘my supplier always takes 3 weeks’ rules of thumb, you either run out and stop the line, or burn cash on excess stock.

Sound familiar?

  • We are a mid-size manufacturer (automotive Tier-2 supplier, white-goods component shop, furniture + assembly, machinery shop) with 50-500 end items × 200-2,000 raw materials + sub-components; we use MRP inside our ERP but we run with default parameters and never tune it.
  • Our lead times are refreshed in the ERP every 6 months at best, sometimes once every 1-2 years; actual supplier performance may have drifted by 2-5 weeks, but the ERP computes on the old lead time.
  • Our BOMs are entered into the ERP late after engineering changes — production has started on the new revision but MRP still explodes the old BOM and orders the wrong raw materials.
  • MRP outputs come in full every week (1,000+ planned orders); short of time, the planner approves 'the first 20 on the list' and waves the rest through; the 'real need vs urgent action' split is not made.
  • A small input change on a part (demand 100 → 110, or an incoming order is one day late) churns MRP — half of next week's planned orders are revised, supplier trust erodes.
  • We have no safety stock policy, or it is too low because 'we trust suppliers'; one delivery slip stops the line because every part is planned 'just in time'.
  • Our lot-sizing policy is ERP default (lot-for-lot or fixed lot) — true setup cost and holding cost are not entered; we end up with either many small orders or large excess stocks.
  • Our BOM is multi-level (5-8 layers: end item → sub-assembly → module → part → raw material) but the planner only sees the top 2-3 layers; when lower-level parts will arrive is opaque.

Why it matters

Losses from intuitive or default-parameter material planning (the order-suggestion engine under the ERP; academic name MRP): (1) stale supplier lead times → wrong order timing — the ERP carries 2 weeks but the real one is 4 weeks; the system orders 2 weeks early, the part arrives 2 weeks late, the line stops; a typical mid-size shop sees 8-25 line stops per year, each 50-300K TRY of loss, (2) bill-of-materials revision lag → wrong raw materials — engineering changes enter the parts list 2-8 weeks late; in that window the system explodes the old list, new raw materials are not ordered or obsolete ones pile up; 200K-2M TRY per year of wrong-order plus obsolescence cost, (3) constant replan panic — a small input change (demand 100 → 110, one delivery slips by a day) churns the output and forces re-planning; the planner spends half their time ‘preventing unnecessary changes’, revised orders go to suppliers every week, the relationship erodes, (4) uncalibrated lot-size policy — the default rule (lot-for-lot or fixed lot) is not revised against real setup-vs-holding cost per part; the result is either 15-30% excess stock or 10-20% extra order processing cost, (5) missing safety buffer policy — without a buffer for lead-time variability and demand variability, the first slip stops the line; 5-20 line stops per year × 100K-500K TRY each, (6) lost traceability (pegging) — if a lower-level part is late, tracing back which end-item order is affected is weak, customer notifications are late, contract penalties accrue, (7) missing capacity check — classical material planning is materials only; if machine-hours and labour capacity are not validated, the plan looks optimal on paper but collapses on the floor; work orders reach the line, capacity is short, cancellations and delays pile up quickly. Field practice shows: correct parameter calibration + output discipline + frozen-horizon policy + safety lead-time buffer cuts inventory 15-30%, lifts on-time delivery 10-20%, raises planner productivity 30-50%. For a mid-size manufacturer with 100-500M TRY annual revenue, that is 4-25M TRY of operating margin per year. And these gains do not require new software — they come from running the existing ERP’s order-suggestion module correctly.

How it's solved

Technical depth

In one sentence: Take end-item demand (the master schedule), explode each product’s Bill of Materials (BOM) (how many raw parts per finished unit), subtract on-hand stock + scheduled receipts, and time-shift the remaining net requirement back by the supplier lead time — each part gets a numerical answer to “when and how much should I order”.

This problem is studied in Operations Research (the discipline that uses math and computers to solve business decisions) and manufacturing engineering as Material Requirements Planning (MRP). MRP is distinct from classical EOQ (#093) and Wagner-Whitin (#016) lot sizing: EOQ and Wagner-Whitin solve a single-product lot-sizing problem under independent demand; MRP runs dependent demand (component demand derived from end-item demand) on multi-level BOM explosion + time-phasing. It is in a different layer from Aggregate Production Planning (#044, medium-term, production rate + workforce + overtime balance): APP is the upper aggregate plan, MRP is the part-level mid-detail plan, JSP (#001) is the shop-floor machine sequence. The standard hierarchy is APP → MPS (Master Production Schedule) → MRP → MES/JSP. Three stages:

1. Modelling. Input data: (a) Master Production Schedule (MPS) — end-item demand: for each end item, in each period (typically weekly; some plants daily), the planned production quantity; the MPS may be a disaggregation of APP output or a direct mix of customer orders + forecast, (b) Bill of Materials (BOM) — hierarchical parts list per end item: single-level BOM (parent → direct children) vs multi-level / indented BOM (full explosion); each parent-child relationship carries a quantity (how many child per parent), scrap factor (production loss), yield factor (quality acceptance); modular BOM (for configurable products), phantom BOM (an assembly that is never inventoried — passes straight through), (c) inventory records — for each part: on-hand stock, scheduled receipts (incoming planned deliveries), allocated quantity (reserved but not yet physically issued), safety-stock policy (fixed minimum, or computed from a service-level target), (d) lead times — for each part: procurement (purchase) or production (in-house) lead time: mean + distribution; safety lead time (a fixed buffer) optional, (e) lot-sizing rules — for each part: lot-for-lot (LFL, order exactly the net requirement), fixed lot size (FLS, fixed order quantity), periodic order quantity (POQ, group T periods), Wagner-Whitin (#016 algorithm, single-part optimum), Silver-Meal heuristic, Part-Period Balancing; minimum / maximum lot constraints + lot multiple (pallet, package multiplier), (f) low-level coding — in multi-level BOMs a part may appear at different levels (e.g. part B is a child of end item X and also a child of sub-module M); the low-level code is the deepest level at which the part appears; MRP explosion processes parts in low-level-code order, otherwise the same part is computed multiple times. Output: for each part × each period: gross requirements (total demand), net requirements (gross − on-hand − scheduled receipts + safety stock), planned-order receipts (planned receipt after the lot-sizing rule), planned-order releases (release date = receipt date − lead time).

2. Algorithm — BOM explosion + time-phasing. The MRP core algorithm is deterministic and recursive: start from end items, explode the BOM hierarchy downward per part. (a) Level-by-level processing: with low-level coding, each part is processed at its deepest level, top-down through the hierarchy. (b) For each level, for each part, for each period: gross requirements = parents’ planned-order releases × per-parent quantity + independent demand (e.g. spare-parts sales); net requirements = max(0, gross − on-hand − scheduled receipts + safety stock); planned-order receipts = apply the lot-sizing rule; planned-order releases = receipts shifted back by the lead time (time-phasing). (c) After each level: the planned-order releases of this level form the gross requirements of lower-level parts. (d) Pegging: each planned order is recorded with traceback to the end-item order that triggered it; this answers the question ‘if a part is late, which customer order is affected’ instantly. (e) Lot-sizing sub-problem: per part, the chosen lot-sizing rule computes planned-order receipts — LFL is simplest (net = receipt), FLS uses a fixed lot, POQ groups T periods, Wagner-Whitin single-part optimum (DP), and modern industrial MRP often defaults to LFL because computation is simple and nervosity is lowest. (f) MRP-II extension (Wight 1984): the above MRP-I output is a materials plan; MRP-II additionally validates the MPS via Rough-Cut Capacity Planning (RCCP) and validates planned-order releases via Capacity Requirements Planning (CRP) for machine-hours / labour; if capacity is short the master schedule is revised. This deterministic algorithm runs millions of times per day inside every ERP; academic MRP research focuses not on the algorithm itself but on parameter calibration (lead times, safety stock, lot-sizing rules) and nervosity control.

3. Field integration — parameter calibration + nervosity control. Even with a deterministic algorithm, field performance hinges on parameter calibration: (i) lead-time maintenance — actual supplier performance is tracked monthly per part; the ERP lead time is refreshed at most every 6 months; for single-source parts a safety lead time is added, (ii) BOM revision discipline — engineering change orders (ECOs) enter the ERP before production starts and carry an effective-from date; for the same part, the BOM revision becomes active in MRP explosion on the right date, (iii) frozen horizon + time fence policy — Hopp-Spearman (2008) solution: the first N weeks (typically 1-4 weeks) are ‘frozen’ — MRP output is not changed in this window, supplier commitments are treated as binding; from N+1 on, ‘slushy’ — small changes allowed with planner approval; further out, ’liquid’ — free re-planning. A time-fence breach (change in frozen) is escalated, (iv) lot-sizing-rule calibration — once a year, per part, true setup cost + holding cost drive a review of the lot-sizing rule; A-class part (high turnover) → Wagner-Whitin or Silver-Meal, C-class (low) → POQ or FLS, (v) safety-stock calibration — from lead-time variability + demand variability and a service-level target; high for single-source + long-lead-time critical parts, low for multi-source + short-lead-time parts, (vi) MRP-output discipline (exception management) — a daily 1,000+ planned-order output cannot be fully scanned; ERP exception flags: lead-time slip, below safety stock, capacity conflict, ECO-affected, open-order delay — these are prioritised; the planner sees the exception queue first. Output is three-layered: (a) planned-order release list — each day, for which part what quantity to release; PO to the supplier for purchase, work order for in-house production, (b) planned-order receipt view — the planner’s time-phased screen: per part, next 4-12 weeks net requirements, on-hand projection, planned-order receipts + releases, exception flags, (c) pegging view — if a part is late, which end-item order is impacted, which customer to notify. Monthly planning committee: lead-time realisation vs ERP input, BOM revision lag, MRP nervosity (planned orders revised per week), exception-queue size, line-stop root causes. Two-way sync of ERP + PLM (engineering) + MES (production tracking) + SCM (supplier).

Alternatives

Manual + spreadsheet + planner experience (no MRP)

Free

Zero licence

Who it fits: Very small shop (5-20 end items, 30-100 parts), single-level BOM dominant

  • + Zero software cost
  • + Planner experience stays in front
  • + BOM mental explosion is feasible at low variety
  • − Above 20 end items / multi-level BOM, mental explosion is infeasible
  • − Time-phasing is unsustainable manually — that a part must be ordered 3 weeks early is forgotten
  • − Dependent-demand maths is wrong — components are forecast like independent demand
  • − No pegging — if a part is late, no traceback to the impacted customer
  • − $30K-150K/year missed optimisation at 50+ end items

Local ERP's basic MRP module

Enterprise

$10K-80K licence + $3K-20K/year maintenance (TR-style mid-market ERP)

Who it fits: Mid shop (30-200 end items, 200-1,500 parts), multi-level BOM, automotive Tier-2 / furniture / white-goods

  • + BOM explosion + time-phasing standard
  • + Local-language UI + local support
  • + Purchasing + inventory + production integrated
  • + Lot-sizing rules: LFL, FLS, POQ standard
  • − MRP-II (capacity validation) usually limited — only RCCP, CRP weak
  • − Frozen horizon + time fence policy is not in the UI or is managed by hand
  • − Exception-management module is basic — exception flags limited
  • − Advanced lot-sizing rules (dynamic-program optimum) absent — non-heuristic optimal lot sizing weak
  • − Nervosity control via frozen horizon is by manual discipline

International tier-1 ERP / APS platform's MRP + MRP-II module

Enterprise

€800K-6M licence + €150K-1.2M/year maintenance (large international platforms)

Who it fits: Large shop (200+ end items, 2,000+ parts), multi-site, automotive Tier-1, white-goods OEM

  • + MRP-II (RCCP + CRP) mature: master schedule capacity-validated
  • + Frozen horizon + time fence + slushy/liquid policies configurable
  • + Exception management mature — prioritised exception queue
  • + Advanced lot-sizing rules (dynamic-program optimum, marginal-cost heuristic, setup-holding balancing) standard
  • + Full multi-level + two-way pegging
  • + Nervosity-control recommendations and what-if simulation
  • − High licence + long (18-30 month) rollout
  • − Customisation to a local manufacturing ecosystem extends the project
  • − BOM hierarchy + lot-sizing policies must be rebuilt
  • − Broad planning-team training programme

Open-source ERP + academic MRP reference + in-house build

Open Source

Licence free; in-house build 20-40 weeks or $120K-500K consulting

Who it fits: Manufacturer with a tech team, integration with the existing system, an 'MRP improvement' project

  • + No licence cost
  • + The material-planning method is well-documented across textbooks and has clear open-source reference implementations
  • + Frozen horizon + nervosity-control rules flexibly designed
  • + 30+ TR theses (YÖK 'malzeme ihtiyaç planlama', 'MRP', 'BOM patlatma') with available reference implementations
  • − In-house OR specialist + production engineer + software team required
  • − Academic prototype to production: 12-24 months
  • − Pegging + exception management limited in open source, built from scratch
  • − Maintenance and version updates in-house

Recommendation

Small
<30 end items, <100 parts, single-level BOM dominant: manual + spreadsheet may be enough, but the basic MRP module in a local ERP is already low-cost — recommended. Three baseline improvements (a written BOM library + revision discipline, monthly lead-time refresh, simple lot-for-lot policy) deliver 10-15% inventory reduction. A full MRP-II / APS investment does not pay back.
Medium
30-200 end items, 200-1,500 parts, multi-level BOM, automotive Tier-2 / furniture / white-goods: local ERP’s MRP module + frozen horizon + safety lead-time policy + exception management discipline, or the core MRP-II modules of a mid-market international ERP. 9-15 month parameter-calibration + policy project. Expected inventory -15-25%, on-time delivery +10-15%, planner productivity +30-40%. Payback 18-30 months. Important: most of these gains come from using the existing MRP correctly, not from new software.
Large
200+ end items, 2,000+ parts, multi-site, automotive Tier-1 / white-goods OEM: full international tier-1 ERP + MRP-II + APS + master scheduling + S&OP integration. €1-5M/year total investment. Payback 30-54 months. Inventory -20-30%, on-time delivery +15-20%, planner-supplier trust visibly improved under MRP nervosity control. Frozen horizon + time fence + multi-level pegging fully operational.

Ask in the meeting

  • Is the order-suggestion engine's core logic (parts-list explosion + time-phasing + level-by-level processing + low-level coding) fully standard, or a simplified variant? Is pegging multi-level and two-way?
  • Which lot-sizing rules are supported — lot-for-lot, fixed lot, periodic order quantity, min/max lot, mandatory lot multiple? Can the single-part dynamic-program optimum (detailed in #016) be selected per part, or only heuristics?
  • Are frozen horizon + time fence (slushy / liquid regions) policies configurable in the UI — per part or per part class; is a frozen-window change escalated; what mechanisms exist for MRP nervosity control?
  • What exception types does the exception-management module support — lead-time slip, below safety stock, capacity conflict, ECO-affected order, open-order delay? Are exception queue priority + closure time reported?
  • Are the capacity-validation modules (rough-cut capacity check first, then part-level detailed capacity check; academic names RCCP and CRP) standard integrations or add-ons? If the Master Production Schedule is capacity-infeasible, is there automatic feedback?
  • How is BOM revision managed — does an Engineering Change Order (ECO) enter the ERP first with an effective-from date, and does the MRP explosion switch to the new revision on the correct date? Is multi-active BOM revision (old product still in production, new revision started) supported?
  • Are safety-stock policies configurable per part — fixed minimum, service-level-based, different by ABC class? Is safety lead time (lead-time buffer) a separate parameter?
  • In a pilot with real operational data (12-16 weeks), what savings report can be produced against the prior MRP configuration — inventory reduction, on-time delivery, nervosity (planned orders revised per week), exception-queue size?
  • If the contract ends, in which standard format (JSON, XML, CSV) can we export the BOM library, lead-time history, lot-sizing policies, MRP-output archive and pegging history?

Technical details

Editor’s note

In plain speech this problem is called “materials planning”, “production-requirements plan” or “the ERP’s order suggestion”. The academic name is Material Requirements Planning (MRP), named by Orlicky (1975) Material Requirements Planning who built the foundational framework. The modern industrial canonical textbook is Vollmann, Berry, Whybark and Jacobs (2005); the modern manufacturing-OR perspective is Hopp and Spearman (2008) Factory Physics; the MRP-II extension is Wight (1984); the early-period field survey is Anderson, Schroeder, Tupy and White (1981).

Distinction from #016 (Wagner-Whitin lot sizing): #016 solves the single-product, independent-demand, multi-period lot-sizing problem optimally via dynamic programming — for one part, “how much to produce each week”, a single-product setup-vs-inventory trade-off. MRP runs on multi-product, multi-level BOM, dependent demand: starting from end-item demand, working backwards to decide when + how much to order for every raw material + sub-component; the lot-sizing sub-problem inside MRP is solved per part (Wagner-Whitin can be the chosen rule). MRP’s core is BOM explosion + time-phasing; lot sizing is a side module.

Distinction from #044 (Aggregate Production Planning, APP / HMMS): #044 solves the medium-term (3-18 months), multi-product-family, workforce + overtime + subcontractor balancing problem via LP/QP — at aggregate level, “in March what is the production rate, the workforce count, the overtime hours”. APP is the upper aggregate plan; MRP is its disaggregation to product-part-week detail; Vollmann et al. (2005) defines this hierarchy: APP → Master Production Schedule → MRP → MES/JSP. APP decides workforce, MRP decides materials.

Distinction from #092 (CAPP): #092 produces the operation sequence + machine selection + setup plan for a new part; this process plan says how the part is made. MRP takes the process plan as input (per-part production lead time and which sub-parts it consumes, via BOM) and decides when + how much to produce. CAPP is the design-to-make bridge, MRP is the plan-to-supply bridge.

Distinction from #001 (JSP): #001 decides the machine sequence at shop level, “this time which part on which machine at which hour”. MRP is upper-level: “this part to be released which week, in what quantity”. MRP’s planned-order releases feed JSP’s pool. Hierarchically: APP → MRP → JSP. MRP runs in weekly time buckets, JSP in hours / minutes.

Most-skipped point in the sector: lead-time inflation and MRP nervosity. Practitioner ERPs carry the supplier’s historical-average lead time (e.g. 2 weeks) but the actual supplier has drifted to 3-5 weeks over the last 6 months; the ERP computes on the old lead time, MRP releases the order at the wrong time, the line waits and stops. Fix: track lead time in real time (per part, the mean + distribution of the last N deliveries); refresh the ERP lead time monthly at minimum; define a safety lead time (fixed buffer) for critical parts. Hopp and Spearman (2008) Factory Physics analyses MRP nervosity systematically: small input changes (demand 100 → 110, or one incoming order 1 day late) churn MRP output — half of next week’s planned orders are revised, suppliers get revised POs weekly, the relationship erodes. Fix: a frozen horizon policy — the first 1-4 weeks ‘frozen’, MRP output is not changed in this window, supplier commitments are binding; then a ‘slushy’ region with planner-approved small changes; then ’liquid’, free re-planning. Time-fence breaches (a change inside frozen) are escalated.

Second skipped point: BOM revision discipline. After an engineering change (ECO), the new part or revised quantity must be entered into the BOM; the practitioner engineering team updates the engineering file but enters the ERP BOM 2-8 weeks late. In that window MRP explodes the old BOM — new raw materials are not ordered, obsolete materials pile up. Fix: the ECO is entered into the ERP first; an effective-from date is defined; multi-active BOM revisions are supported for the same part (old product still in production, new revision started); MRP explosion switches to the active revision on the correct date.

Third skipped point: capacity validation gap (MRP-I vs MRP-II). Classical MRP-I is materials only; production capacity (machine-hours, labour-hours) is not checked. Planned orders reach the line but capacity is short — orders are cancelled or delayed. Wight (1984) MRP-II adds Rough-Cut Capacity Planning + Capacity Requirements Planning: MPS is capacity-validated, MRP planned-order releases are validated against machine-hours / labour, and the master schedule is revised when capacity is short. Without this loop, MRP produces a ‘paper-optimal’ plan and the shop floor breaks down.

Fourth skipped point: uncalibrated lot-sizing policy. The ERP default rule (lot-for-lot or fixed lot) is applied uniformly to all parts; once-a-year per-part review against true setup vs holding cost is not done. A-class parts (high turnover, 80% of value) deserve Wagner-Whitin or Silver-Meal optimum; C-class parts (low) can use POQ or FLS; without this segmentation, the shop ends up with either 15-30% excess stock or 10-20% extra order-processing cost.

A step-by-step path for an SMB

Stage 1 — Measure first, plan later. At least 12 months of MRP field data: per part, actual lead time (PO release → goods receipt) vs ERP-input lead time, deviation + distribution; BOM revision lag (ECO approval → ERP BOM update); MRP weekly output: how many planned orders generated, how many revised weekly (nervosity); exception-queue size + closure time; line-stop root causes (part absence, capacity shortage, quality reject); inventory turnover and obsolescence rate by part class (ABC). Supplier performance: on-time delivery rate, fill rate, lead-time realisation.

Stage 2 — Build the knowledge capital. BOM library audit: all end items have active multi-level BOM + revision discipline; low-level coding correct. Lead-time table: per part, the last 6 months’ mean + distribution, safety lead time where needed. Lot-sizing policy table: per-part rule recommendation from ABC class + setup cost + holding cost. Safety-stock table: high for critical parts (service level 98%), low for C-class (85-90%). Master Production Schedule discipline: customer-order + forecast disaggregation, frozen horizon policy defined.

Stage 3 — Pilot. 12-16 weeks. For one part class (e.g. the A-class top-turnover 30-50 end items + their BOMs), MRP parameters calibrated + frozen horizon policy + monthly lead-time refresh + annual lot-sizing review + exception-management discipline operate. The decision stays with the planner; MRP recommends. Success criterion written in advance: in the pilot class, inventory -12% minimum, on-time delivery +8% minimum, weekly nervosity (revised planned orders) -30% minimum.

Stage 4 — Rollout. 9-18 months to extend across the whole part catalogue + full BOM revision discipline + frozen horizon + MRP-II capacity validation + multi-level pegging. Monthly planning committee: lead-time realisation vs ERP input, BOM revision lag, MRP nervosity, exception-queue size, line-stop root-cause analysis, lot-sizing rule fit to ABC class, safety-stock calibration refresh.

Risks — what can go wrong

  1. Stale lead-time input (most frequent). ERP lead time reflects the value of 6 months ago; actual supplier performance has drifted. MRP releases the order at the wrong time, the part arrives late, the line stops. Fix: a monthly lead-time refresh procedure is mandatory; per part, mean + distribution of the last N deliveries; safety lead-time buffer for critical parts.

  2. BOM revision lag. Engineering changes enter the ERP 2-8 weeks late; in that window MRP wrongly explodes the old BOM. Fix: the ECO enters the ERP first + effective-from date + multi-active BOM revision support; engineering-production ECO discipline tracked in the monthly committee.

  3. MRP nervosity (constant re-planning panic). Small input changes churn MRP output, the planner spends half their time ‘preventing unnecessary changes’, revised POs are sent weekly, supplier trust erodes. Fix: frozen horizon + time fence policy — the first 1-4 weeks frozen, then slushy (planner-approved small changes), then liquid free; time-fence breaches are escalated (Hopp-Spearman 2008).

  4. Single-supplier ERP / software lock-in. Without a contract clause for ‘annual standard-format export (JSON, XML, CSV) of the BOM library, lead-time history, lot-sizing policies, MRP-output archive and pegging history’, leaving the system means losing years of production-planning memory. The ERP contract must explicitly cover BOM + lead-time + MRP-configuration ownership.

  5. MRP-II / capacity validation skipped. MRP-I is materials only — capacity (machine-hours, labour) not checked, paper-optimal plan, shop-floor breakdown. Fix: at minimum Rough-Cut Capacity Planning (RCCP) for MPS validation, later Capacity Requirements Planning (CRP) for MRP output; if the ERP module is weak, add an external module or spreadsheet check.

Solution method — technical view

ApproachTypical scaleSolve timeMRP nervosity risk
Manual + spreadsheet (no MRP)<20 end items, single-level BOMhours/batchN/A (no algorithm)
Local ERP’s basic MRP module30-200 end items, multi-level BOMminutes (overnight batch)High (if policy missing)
Local ERP + frozen horizon + safety lead-time + exception discipline30-200 end items, calibrated parametersminutes (overnight batch)Low-medium
International tier-1 ERP / APS MRP-II200+ end items, multi-level pegging, RCCP+CRPminutes-hoursLow (built-in policy)
Open-source ERP + in-house MRP moduleManufacturer with a tech teamminutes-hoursDesign-dependent

Lot-sizing rule choice by part class:

RuleLogicFit
Lot-for-Lot (LFL)Order exactly the net requirementC-class, low setup cost
Fixed Lot Size (FLS)Fixed order quantityPallet / package-multiplier mandatory parts
Periodic Order Quantity (POQ)Group T periods into one lotB-class, moderately regular demand
Wagner-Whitin (1958)Single-part DP optimumA-class, high-value, deterministic demand
Silver-Meal heuristicMarginal-cost ruleA/B class, near-optimum
Part-Period BalancingBalance setup with holdingB-class, simple heuristic

Frozen horizon + time fence calibration:

RegionLengthPolicy
Frozen1-4 weeksNo change; supplier commitment
Slushy4-12 weeksSmall changes with planner approval
Liquid12+ weeksFree re-planning

MRP-I → MRP-II → integrated MRP framework:

  • MRP-I (Orlicky 1975): BOM explosion + time-phasing + lot sizing — materials only.
  • MRP-II (Wight 1984): MRP-I + Rough-Cut Capacity Planning (RCCP, MPS-level rough capacity) + Capacity Requirements Planning (CRP, part-level detailed capacity) + financial projection (cash flow).
  • Integrated MRP: MRP-II + APP (#044, upper medium-term plan) + S&OP + supplier integration + multi-level pegging + frozen horizon + exception management.

Academic references

Listed in the page frontmatter under sources. Orlicky (1975) foundational; Vollmann, Berry, Whybark and Jacobs (2005) modern canonical textbook; Hopp and Spearman (2008) modern manufacturing-OR perspective and MRP nervosity analysis; Wight (1984) MRP-II extension; Anderson et al. (1981) early-period field survey.

Sources

  • Orlicky, J. A. (1975). Material Requirements Planning. McGraw-Hill. The book that named MRP and built the foundational framework.
  • Vollmann, T. E., Berry, W. L., Whybark, D. C. and Jacobs, F. R. (2005). Manufacturing Planning and Control for Supply Chain Management (5th ed.). McGraw-Hill. Modern industrial canonical textbook.
  • Hopp, W. J. and Spearman, M. L. (2008). Factory Physics (3rd ed.). Waveland Press. Modern manufacturing-OR perspective; MRP nervosity analysis.
  • Wight, O. W. (1984). Manufacturing Resource Planning: MRP II — Unlocking America’s Productivity Potential. Oliver Wight Publications. The MRP-II (capacity validation + master schedule + financial projection) framework.
  • Anderson, J. C., Schroeder, R. G., Tupy, S. E. and White, E. M. (1981). Material requirements planning systems: The state of the art. Production and Inventory Management, 22(4), 51-67. Early-period field survey of MRP systems.
  • YÖK Thesis Center — keyword: ‘malzeme ihtiyaç planlama’ or ‘MRP’ or ‘BOM patlatma’ — 30+ theses from TR academia. tez.yok.gov.tr

Glossary

Material Requirements Planning
The time-phased, dependent-demand planning algorithm that computes, from end-item demand backwards via BOM and lead times, when and how much of every raw material and sub-component is needed.
Bill of Materials
The hierarchical tree that, at each level of a manufactured product, lists the immediate components and their quantities, recursively down to raw materials.
MIP
An optimization model where some decision variables are forced to be whole numbers (e.g. number of trucks, number of shifts).
EOQ
The classic inventory formula for the most economic order quantity to place with a supplier.
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A New Part Order Arrives — How Do I Get the Optimal Operation Sequence + Machine Choice + Setup?

If you are an SMB CNC manufacturer, tooling shop or engineering workshop producing 50-500 different parts, every new order puts the same decision in front of you: you take the customer's CAD model and have to work out on which machine, in which order, with which tool and fixture, and in how many setups the part will be made. If you simply write down the first feasible sequence that comes to mind, setup time grows 3-5x and parts that miss tolerance are reworked; finding the right sequence means comparing several alternative routings for the same part. When the decision lives only in one engineer's head, the similar-part memory walks out of the door when that engineer leaves, and routings of older parts are not refreshed when a new machine is bought. This page is for production-engineering teams who want to make the operation sequence and the machine assignment written and comparable as the bridge from design to make.

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Five Suppliers Quote the Same Part — How Much Do I Buy from Each?

You run a manufacturer with 20-200 staff and buy the same raw material or component from 4-8 different suppliers. Each supplier differs on price, quality, lead time, capacity, payment terms, and financial stability; deciding who stays on the approved list and how much of each order goes to whom are two separate calls. A wrong pick can trigger a months-long quality crisis or stop the line when a single supplier fails; the 'cheapest bid wins' approach hides quality, late-delivery, and compliance costs and ends up 15-40% more expensive. Scoring 5-15 bids across 8-12 criteria by hand in a spreadsheet becomes inconsistent fast.

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