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276 CHAPTER 8 The Material Planning Process

In contrast to consumption-based planning, the MRP technique calcu-
lates requirements for a material based on its dependence on other materials. To
understand the specifi cs of the MRP technique, we must fi rst consider two related
concepts—dependent and independent requirements. The terms dependent and
independent refer to the source of the requirements. A material has a dependent
requirement if its requirement is dependent on the requirements for another
material. For example, a bicycle is made of several components such as wheel
assemblies and a seat. The requirement for wheel assemblies and seats is depen-
dent on the requirement for bicycles. Therefore, wheel assemblies and seats have
a dependent requirement. Typically, semifi nished goods (e.g., wheel assemblies)
and raw materials (e.g., seats) have dependent requirements because they are
used to make other materials (fi nished goods or other semifi nished goods). In
contrast, the requirement for bicycles, a fi nished good, is not dependent on any
other material. Instead, it is based on customer demand. Thus, bicycles, and fi n-
ished goods in general, have independent requirements.
The MRP technique is used to calculate and plan requirements for mate-
rials at all levels of the BOM. This procedure, known as exploding the BOM,
is illustrated in Figure 8-5. The input to MRP is the independent requirement
for the fi nished goods, which is calculated by the sales and operations planning
step of the material planning process. We will examine this technique in greater
detail in the process section of this chapter. For now, it is suffi cient to under-
stand that the independent requirements are determined based on actual and
forecasted sales. These calculated requirements are called planned indepen-
dent requirements (PIRs). In contrast, actual sales orders are also known as
customer independent requirements (CIRs), or simply customer require-
ments. PIRs drive the requirements calculations for each successive level in
the BOM. Going further, the requirements for each level are dependent on the
requirement for higher-level materials. For example, if the PIR for bicycles is
100 and each bicycle uses 2 wheel assemblies and 1 seat, then the MRP calcula-
tion will create dependent requirements of 200 wheel assemblies and 100 seats.
A variation to MRP is master production scheduling (MPS), which
utilizes a process similar to MRP but focuses exclusively on the requirements

Figure 8-5: MRP vs. MPS

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