Why do we perform all the MRP processing for one level before going to the next-lower level? What would happen if we did not?

Material Requirements Planning (MRP) is a widely-used approach to production planning and inventory control. Its primary objective is to ensure that the right materials are available at the right time and in the right quantities to fulfil customer orders. MRP works in a hierarchical manner, starting with the finished products at the top level and breaking them down into their components at successively lower levels.

In an MRP system, the planning process is executed layer by layer, starting at the highest level (i.e., end products) and moving down to lower levels (i.e., subassemblies, components, and raw materials). This is done to ensure that the planning of one level is based on accurate and up-to-date information from the level above. By completing the MRP processing for one level before going to the next lower level, it is possible to create an accurate and timely production plan for each level. This helps to minimize production delays, reduce excess inventory, and optimize the overall supply chain management.

If MRP processing is not executed for one level before moving on to the next lower level, the accuracy of the production plan will be compromised. Any changes or adjustments in the higher levels will not be reflected in the lower levels, leading to discrepancies in the production plan. This may cause a ripple effect throughout the supply chain, as the inaccurate plan can result in a lack of materials needed for production, delays in production, increased inventory holding costs, or even stockouts. In addition, the overall efficiency and effectiveness of the MRP system will be diminished, potentially leading to negative business outcomes. In conclusion, it is crucial to perform MRP processing for one level at a time before moving on to the next lower level, as this approach ensures an accurate and efficient production plan throughout the entire supply chain. Failing to do so may result in operational inefficiencies, increased costs, and customer dissatisfaction.