TABLE OF CONTENTS F. Robert Jacobs
Indiana University
Bloomington, Indiana
Kevin J. Gaudette
Indiana University
Bloomington, Indiana
Material requirements planning (MRP) and its descendents have had a pervasive effect on production and inventory management over the past three decades. In fact, the majority of manufacturing companies in the United States use (or have used) an MRP-based system for planning production and ordering parts. This section discusses the theory and evolution of MRP, its inputs and system logic, and a variety of relevant topics of concern to users. It also describes other related systems in the MRP family of systems.
Independent vs. Dependent Demand . The key to understanding the theoretical basis of MRP is to first understand the two types of item demand: independent and dependent. Independent demand refers to the case where demand for each item is assumed to be unrelated to demand for other items. For example, if a firm manufactures bicycles, independent demand techniques for managing inventory ignore the fact that there are exactly two tires, one seat, one handlebar assembly, and the like on each bicycle. Instead, historical or forecasted demands are used for each part independently to determine the timing and quantity of orders. Although there are admittedly examples in which the independence assumption holds true, in most manufacturing environments demand for parts and assemblies are directly related to demands for finished goods, as illustrated by the simple bicycle example.
In contrast, dependent demand techniques recognize the direct link (dependence) between the production...
