Aim of Materials Requirement Planning ( MRP) is to optimise your inventory ( Stock of Goods). Overstocking results in blocking your capital, Higher Inventory carrying cost & spoilage due to lack of proper planning. Understocking leads to emergency purchases at higher cost & Loss of production.
Enterprise Resource Planning (ERP ) system aid proper planning & actions these days so that companies can improve their purchasing, Stocking & Utilizing efficiencies. A Bill of Materials (BOM) will be prepared by giving a list of materials required for unit item production & total quantity production.
Materials classified according to functions like raw materials, Plant & Machinery items, Spares, Stores Stock Items , Direct Department stock items etc. and codified properly based on a certain criteria.
