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The first information systems to be used for production control tasks were introduced in the 1960s - based on the MRP algorithm, which stands for Material Requirements Planning. It is currently referred to as MRP-I, for reasons that will be explained below.

Largely ignored by academia, MRP-I was regarded as a technique that was designed to be used in practice, taking into account the limited computer power of that time. The planning functionality offered by MRP-I can be summarized as follows:

1. Material explosion. This means that a Bill of Materials (BOM) is used to generate the demand for components as a result of demand for an end-item. The BOM holds the information on what components are needed
to produce an end-item and how many components are needed.
2. Lead time offsetting. This means that a fixed lead time, needed to produce an item from its components, is taken to offset the date the item is needed to determine the production date for the components.

The well-known weakness of MRP-I is that it disregards capacity constraints – it only gives information what materials need to be produced and when they need to be produced, based on a standard lead time. This means that for MRP-I, a lead time is used as an input of the planning process, whereas in reality, the lead time depends on the capacity load of the resources being planned.

There are weaknesses in the MRP-I approach that are less well known, such as the synchronization of material supply: when a downstream assembled item cannot be produced in time because of a shortage of components, MRP-I will nevertheless order other components to be available in time, only for these components to wait for the missing components to arrive. 

Manufacturing Resources Planning (MRP-II) has added functions to MRP-I in an attempt to compensate for some of the MRP-I weaknesses. However, the basic planning concept has not changed, even in today's ERP systems. The output of MRP-I is a list of proposed orders that still need to be checked against material availability, capacity availability, excess orders, and orders requested too early. This is typically the task of a human planner, using tools such as spreadsheets. Even today, many companies work like this: MRP-I generates a list of orders, they are imported into a spreadsheet, and a human planner then creates a feasible plan that can be executed. In some cases, the results are fed back to the ERP system, for example, as firm planned orders. During this process, a large part of the MRP-I output is either changed or ignored.

Thanks to the introduction of advanced planning systems, such as Quintiq Company Planner, the MRP logic is complemented by capacity planning and material coordination. I will write more about that in a future post.