Since the 1970s, Material Requirement Planning (MRP) is being used for planning the future requirements of dependent demand items. It refers to the basic calculations to determine component requirements from the final product requirements. It also denotes broader information system that uses the dependence relationship to plan and control manufacturing requirements. Since its introduction, this system has undergone several reformations that exhibit the increased accessibility of computers and the changing role of manufacturing. It is one of the available tools for planning and control of inventory. The system itself has undergone several changes over the period. In the 1980s, MRP evolved into a more robust manufacturing resource planning (MRP II). This paper introduces MRP as an information system that enables managers to improve the efficiency of operations, shorten delivery lead times to customers and reduce inventory levels.

Since 1970, MRP systems have been universally applicable in manufacturing firms especially in automotive sector. It has emerged as a major production planning and control system. Much of the credit for introducing MRP goes to Joseph Orlicky, George Plossl and Oliver Wight and to a professional society known as the American Production and Inventory Control Society (APICS). The rationale is that MRP is a logical and practical approach to the problem of determining the number of parts, components, and material needed to produce each end item. It also provides the schedule specifying when each of these parts, components and materials shall be ordered and produced. MRP was the first inventory system to recognize that inventories of raw materials, components and finished goods need to be handled separately. In the process of planning inventory levels for these various types of goods, the system also plans purchasing activities, manufacturing activities, and delivery schedules. Thus the system is more than an inventory control system; it is a production scheduling system as well (Russell and Taylor, 2004). MRP is an information system working on the relationship between the production schedules and demand for the component items by providing forward visibility for planning, problem solving and providing a way to change material plans in concert with production schedule changes. MRP is one of the powerful tools that, when applied properly, helps the mangers in achieving effective manufacturing control (Telsang, 2005). It has three basic components: bill of material, the master production schedule and inventory records.

This paper highlights the implications of MRP in an Light Commercial Vehicle (LCV) firm, and how the firm prepares MRP for the dependent demand items. A new technique has been given, where the firm can develop MRP by utilizing the Bill of Material (BOM) file to know the current stock and simultaneously find the shortages so that the replenishment orders may be initiated by the purchase department at the earliest.

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