Body
This is based on 3 Steps inside the process.
1) Exploding - The levels inside MRP is based on Bill of Materials (BOM). The BOM lists the number and types of components needed for each item of manufacture. BOMs are characterized by the number of levels involved, following the structure of assemblies and sub assemblies. The first level the MPS represents explodes down to the final assembly. . Thus a given number of finished products is exploded to see how many items are required at the final assembly stage..
2) Netting - Netting is the subtraction of stock on hand from the gross requirement determined through explosion. This gives the quantity of each item needed to manufacture the required finished products.
3) Offsetting - This determines when manufacturing should start so that the finished items are available when required. To offset, a lead time has to be assumed for the operation. The lead time is the anticipated time for manufacturing. This whole process repeats for the next level in the BOM until the bottom level is reached. These will give the requirements and timings to outside suppliers.
Another way to look at this:
Level 0 is something that is only sold. Level 1 is something that is used to make level 0 items, level 2 is used to make level 1 and so on. Then, all level 0’s are planned/calculated first since the demand for these is driven from the sales orders. Then the level 1’s are planned and so on.