The main function of material requirements planning is to guarantee material availability it is used to procure or produce the requirement quantities

on time both for internal purposes and for sales and distribution.

You must first create the master data to be able to work with the MRP component. To do this, you require the following components:
material master (LO-MD-MM) bills of material (LO-MD-BOM)

When you use MRP for in-house production, you also need the following components if you want to determine production dates:
work center (PP-BD-WKC) routings (PP-BD-RTG)

You also need the following components:

demand management (PP-MD-DEM) You need the Demand Management component to define requirement quantities and requirements dates for finished products and important assemblies. Demand Management also determines the strategy you are to use for planning, procuring, or producing a certain finished product. sales and distribution, if necessary

MRP at Plant or MRP Area Level Lot-Sizing and MRP Procedures Automatic Planning Run

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Sales and Distribution take requirements as concrete customer requirements from the market. In Demand Management, sales are planned in advance via a sales forecast. The result is the independent requirement, that is, the requirement for the finished product, tradable assemblies, trading goods and replacement parts. This result triggers material requirements planning. In order to cover these requirements, MRP calculates procurement quantities and dates as well as plans the corresponding procurement elements. The procurement element in the planning run is the planned order or, for external procurement, the purchase requisition. Both procurement elements are internal planning elements that can be changed, rescheduled or deleted at any time. If a material is produced in-house, the system also calculates the dependent requirements, that is, the quantity of components required to produce the finished product or the assembly, by exploding the BOM. If a material shortage exists, planned orders are created at every BOM level to cover requirements. The system then converts these planned procurement elements into exact procurement elements: production orders for in-house production and purchase orders for external procurement. The progress of the order for materials produced in-house is controlled by using the production order. The production order contains its own scheduling procedures, capacity planning and status management. Cost accounting is also carried out via the individual production order. Materials that are procured externally trigger the purchasing procedure. In this case, you must have chosen suitable vendors or you must have drawn up outline agreements. The quantities made available by production or by external procurement are placed in stock and are managed by Inventory Management.

The purpose of MRP is to guarantee material availability by planning for procurement or production of required quantities.
Material Reqmts Planning
Dependent Reqmts Sales Orders Planned Ind Requirements

Reservations Planned Order

Convert Purchase Requisition Purchase Order Schedule Line

Production Order

Warehouse