about MRP

Automated procurement process:
Purch. req. -> Purch. order-> Goods receipt->Invoice receipt

MRP process starts from sales and distribution receive requirements from customer and demand mgmt will plan sales via a sales forecast. It results a Independent requirement(it is also called demand planning in APO) to trigger the Material Planning. To satisfy the demand in both given quantity and time, Procurement has to be made. The procurement elements include Planned orders for in-house production or Purchase requisitions for external procurement. For materials produced in-house, the dependent requirements are determined by BOM explosion(to determine the quantity of components for producing the finished product or an assembly). Finally, planned order for in-house production has to be converted to production order; and purchase requisition has to be converted to purchase order.

In MRP, the requirement elements include sales orders, planned independent requirements, material reservations and as well as the dependent requirements that are created by BOM explosion.