Material Requirements Planning: A Worked Example and Data Check

Material requirements planning is a method of scheduling purchases and production from three inputs: the master production schedule (how many finished products you will make, and in which weeks), the bill of materials (BOM, the list of parts in each product), and your stock and open purchase orders. Its output is a list of dated orders.

For each material, an MRP run works out:

• Gross requirement: the quantity the schedule consumes in a week.
• Net requirement: what is still missing after stock and incoming orders.
• Planned order release: the week to place the order so it arrives on time.

To calculate material requirements, take each week's gross requirement, add safety stock (the buffer you never plan to touch), subtract opening stock and scheduled receipts, and order any positive remainder. Then shift that order earlier by the lead time, the weeks between placing an order and receiving the goods.

Net requirement = max(0, gross requirement + safety stock − opening stock − scheduled receipts)

Opening stock is the previous week's closing stock. A scheduled receipt is an open purchase order with a confirmed arrival week. A planned receipt is the quantity MRP wants to arrive that week, rounded up to the order lot.

Our model uses illustrative numbers, not client data. A control panel needs 1 enclosure and 6 terminal blocks. The master schedule is 40, 60, 50, 80, 60 and 70 panels in weeks 3 to 8.

Enclosure: 120 on hand, an open order for 100 arriving in week 4, safety stock 20, lead time 3 weeks, bought in multiples of 50.

Take week 6. Net requirement = 80 + 20 − 70 − 0 = 30, which rounds up to one lot of 50. That 50 must arrive in week 6, so the order goes out in week 3. Closing stock = opening stock + scheduled receipt + planned receipt − gross requirement, so week 6 closes at 70 + 0 + 50 − 80 = 40.

Terminal blocks: 600 on hand, safety stock 120, lead time 2 weeks, ordered lot-for-lot (exactly the net requirement). Weekly demand from week 3 is 240, 360, 300, 480, 360 and 420. The orders are 120 in week 2, 300 in week 3, 480 in week 4, 360 in week 5 and 420 in week 6.

Check the working.

• Enclosures: 120 + 100 + 200 received = 420, minus 360 used, leaves 60, the week 8 closing stock.
• Terminal blocks: 2,160 used + 120 safety stock − 600 on hand = 1,680 to order, which equals 120 + 300 + 480 + 360 + 420.

If the enclosure were built in-house from sub-parts, each release above would become the gross requirement for those parts, one level down. That is how MRP steps through a multi-level BOM.

A wrong lead time shifts every release date. In the example, a 7-week lead time makes two enclosure orders late before the plan starts. MRP does not order the moment stock dips below safety stock. It orders one lead time before the shortage week, and ordering earlier only ties up cash.

Here is the same enclosure plan with different supplier lead times:

At 7 weeks, an order placed in week 1 cannot arrive before week 8. Without it, the plan is 10 enclosures short in week 6 and 70 short in week 7 (70 − 80 = −10, then −10 − 60 = −70).

In our experience, an out-of-date lead time is a common reason software releases orders later than you expect. Check it before you question the quantities.

Your data is good enough when it passes four tests. We estimate you can run them in a few days at most. The pass marks below are our recommendations, not official standards.

Does your bill of materials match the shop floor?

Pick 10 products. For each, walk the floor and list every part and quantity used to build one unit, then compare the list with the BOM. Pass: every part and quantity on all 10 products matches, with no missing part. Fail: any missing part or wrong quantity. A missing material is invisible to MRP.

Do your stock counts match the system?

Count your 20 highest-consumption items and compare each with the system figure. Pass: at least 19 of 20 items are within ±2% or one pack of the system figure, and none is out by a full lot. Fail: otherwise. Our cycle counting guide gives a schedule and count sheet.

Are your lead times the ones suppliers actually deliver?

For each key supplier, take the last five receipts and subtract order date from receipt date. Pass: at least 4 of the 5 receipts arrived within the lead time held in your system. Fail: fewer than 4 of 5. Reset the lead time to the longest of the five, then review. Safety stock should be sized against the variation you find.

Are open purchase orders confirmed and recorded?

List every open purchase order and check it has a supplier-confirmed date. Pass: every open order has a confirmed date, and none that is past due is still shown as a scheduled receipt. Fail: any past-due order still shown as a scheduled receipt; reschedule or cancel it. A late order counted as incoming hides a shortage.

Use a spreadsheet while your plan is small, inventory software with BOM support once components are shared across products, and an ERP when finance, HR and production must run on one system. These thresholds are our recommendation. They are not a published standard.

For what inventory software typically costs Indian buyers, see our inventory management software cost guide.

We built Arka Inventory natively on Salesforce, and it covers the inputs and purchase triggers that MRP depends on. Arka Inventory publishes this page.

• Bills of materials: standard or order-based, with a check of material availability against each BOM and tracking of consumption.
• Inventory visibility: stock across locations, lead time insights, inventory on order and raw material monitoring.
• Forecasting and purchase automation: sales orders, demand forecasts and current stock combine to schedule purchase requisitions (internal requests to buy) or purchase orders.

We supply the records and the forecast-driven purchase triggers. The week-by-week grid above is how you check any suggested order against your own data.

As of October 2026, our Advance plan is $499 a month billed yearly, with 2 users included and additional users at $52 a month. It adds bills of materials, production and kitting. Our Basic plan at $199 a month does not include them.

We offer a 15-day free trial with full access to all features and no credit card. Setup needs your inventory, product, warehouse and operational data, and onboarding takes a minimum of two weeks depending on data readiness. The four checks above show how ready your data is.

As of October 2026, Arka Inventory is rated 4.8 out of 5 from 46 reviews on the Salesforce AppExchange, Salesforce's app marketplace. Manufacturers including Meta Power Solutions and HCPL Hexmoto use us for inventory and operations management.