Material Requirements Planning (MRP)
MRP simulator to understand inventory, demand forecasting, and supply chain optimization
Start simulating an MRP business
What Is This About?
Material Requirements Planning (MRP) is a critical business process for managing inventory, forecasting demand, and optimizing supply chains. This simulator demonstrates how inventory management, demand forecasting, and supply chain policies affect business performance using a milk tea shop as a practical example.
The Challenge: Balancing Inventory Costs
Businesses face constant tradeoffs:
- Too much inventory: High storage costs and spoilage losses
- Too little inventory: Missed sales opportunities and customer dissatisfaction
- Poor forecasting: Mismatch between supply and demand leads to losses
In maturing businesses, prices often reach the point where even slight imbalances in supply result in losses, requiring accurate forecasting and optimized inventory management.
Who Is This For?
This simulator is designed for:
- Operations Managers: Managing inventory and supply chains in retail, manufacturing, or food service
- Business Owners: Understanding how inventory policies affect profitability
- Supply Chain Analysts: Optimizing reorder points, lead times, and capacity planning
- Students & Learners: Understanding MRP concepts through hands-on simulation
- Anyone Planning a Business: Wanting to understand the financial impact of inventory decisions
How It Works
This simulator models a milk tea shop with three key components:
Notes
Shortage does NOT affect net P/L. It is just there to visualize missed opportunities.
A positive P/L with great shortage is still a worthy business to run.
To avoid complicating the simulation, demand is not influenced by prices.
In general, shorter lead time, longer shelf life, higher restocking threshold should lead to higher revenue.
That said, storage costs are often neglected in practice. It is possible to make more sales with yet lower profitability.
For simpler simulations, go to Restaurant ERP
Has This Helped You?
If you found this MRP simulator useful for understanding inventory management:
- Share it with your team or on social media
- Bookmark this page for future reference
- Write backlinks to this page when referencing MRP implementation
This simulator provides a practical reference for:
- Inventory management strategies
- Demand forecasting techniques
- Supply chain optimization
- Cost-benefit analysis of inventory policies
For Those Who Want to Do It Properly Themselves
Ready to implement MRP in your business? Here's your starting point: