Distribution requirement planning (DRP)


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Distribution requirement planning (DRP)

It is a more sophisticated approach that considers multiple distribution stages and the characteristics of each stage. It is a logical extension of MRP, although there is one fundamental difference between the two.

  • MRP is determined by a production schedule that is defined and controlled by the enterprise. On the other hand, DRP is guided by customer demand, which is not controllable by the enterprise.
  • So, while MRP generally operates in a dependent demand situation, DRP operates in an independent environment where uncertain customer demand determines inventory requirements. The manufacturing requirements planning component coordinates the scheduling and integration of materials into finished goods.
  • MRP controls inventory until manufacturing or assembly is complete. DRP then takes coordination responsibility once finished goods are received in the plant warehouse.

 

The fundamental DRP planning is the schedule, which coordinates requirements across the planning horizon. There is a schedule for each SKU and each distribution facility. Schedules for the same SKU are integrated to determine the overall requirements for replenishment facilities such as the plant warehouse. The schedules are developed using weekly time increments known as ‘buckets’. The schedule reports current on-hand balance, safety stock, performance cycle length and EOQ.


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