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MRP II refers to computer-based planning and scheduling designed such that it can enhance the management control over manufacturing and its ancillary functions. Some of the key terminologies associated with MRP (computerized) planning forms are:
Gross requirements: These represent futuristic needs for raw materials, part components, subassemblies and finished products by the end of the specified period. These requirements are either derived from the master schedule for end items or from the combined requirements of other items.
Scheduled receipts: These represent ordered materials from a vendor or outstanding in-house shop to be received at the onset of the period. MRP forms indicate quantity and projected time of receipt, and include planned receipts as well.
On hand: On hand is the quantity of a product expected to exist at the end of the specified time period. This includes amount retrieved from earlier period plus planned – scheduled receipts and ordered receipts minus gross requirements.
Net requirements: These represent net amount required in a specified period, equivalent to the gross requirements minus projected inventory from the earlier period coupled with scheduled receipts.
Planned order receipt: These represent to-be-ordered materials from a vendor or in-house shop to-be-received at the onset of the period, or are similar to a scheduled receipt.
Planned order release: These represent the planned amount to be ordered in the adjusted time period through the lead time offset such that the materials can be received on time. Upon the actual release of orders, the planned order releases are removed from the form, and the receipts generated by them are altered to scheduled receipts. The MPS determines gross or projected requirements for finished items to the MRP system, which do not consider inventory on hand or on order.
The MRP computer program subsequently explodes the demands for finished items into requirements for part components and materials by processing all major bills of materials on every single level. Thereafter, net requirements are measured by adjusting for current inventory and items ordered and recorded in the inventory status file.
Net requirements = Gross requirements – [On hand product quantity + Scheduled receipts]
