Distribution Requirements Planning: from one location to a network

What DRP is

Distribution Requirements Planning (DRP) is the standard method for planning stock across a distribution network: a plant or central warehouse supplying regional depots, distributors, or stores. Instead of each location reordering on its own signal, DRP works backwards from where the demand actually lands: each downstream location projects its expected requirements period by period, nets them against what it already has on hand and what is already on the way, and offsets by its replenishment lead time. What remains (the planned orders at each depot) rolls up to the supplying location as its demand.

The result is a time-phased picture: not just "the Coimbatore depot needs 400 units", but "it needs 400 units arriving in week 3, which means the Chennai warehouse must ship in week 2, which means the plant must have them ready in week 1". Every echelon sees the same schedule, so the centre plans against what its network will actually pull rather than a separate forecast of its own.

Where it sits after the six tools

Everything on this site so far is single-location logic, and it stays useful inside a DRP plan; it just runs once per location instead of once overall. The safety stock calculator sizes the buffer each depot needs against its own demand swings and lead-time wobble. The reorder point tells each depot the on-hand level that should trigger replenishment. The economic order quantity sizes each location's order so that ordering and holding costs stay lowest together, and the stockout cost estimator puts a rupee figure on what running dry at that location would actually cost.

What DRP adds is the connection between those per-location answers. A depot's planned orders are not independent demand at the warehouse; they are dependent demand, known in advance and scheduled in time. That changes what the centre should hold: rather than forecasting depot orders as if they were random, the warehouse plans against the network's rolled-up schedule, and holds buffer mainly for what genuinely is uncertain. The side tools keep their job at every level: turnover and days of supply reads whether stock at each echelon is moving as planned, and ABC classification tells you which items are even worth planning this tightly across the whole network.

Why the next questions are freight questions

The moment requirements are time-phased across locations, the binding constraint stops being the formula and starts being the vehicle. A DRP schedule might say the Madurai depot needs 400 units in week 3 and 350 in week 4, but whether you ship weekly part-loads or consolidate into one fuller truck every two weeks is not an inventory question. It is a trade-off between freight per unit, truck fill, and how much extra stock each depot carries to cover the longer gap between deliveries.

Ship small and often (the just-in-time direction) and stock at each depot stays lean, but the lorry runs part-empty and the freight cost per unit climbs. Ship big and rarely and the truck economics improve, but the DRP plan must push stock out earlier and each location holds more. The feasible plan is the one where the time-phased requirements and the delivery economics agree, and that is a calculation the inventory formulas on this site do not attempt.

Continue on jit.delivery

Those delivery-side questions (what a lane really costs per unit moved, how truck fill and empty return legs change the answer, and where the just-in-time trade-off lands for your network) live on jit.delivery, the sister toolset I run for the freight side. It picks up exactly where this suite stops: you arrive knowing how much each location needs and when; it works out what moving it that way costs.

The same stance applies across both sites: a calculator gives you a starting number, not a final answer. Validate any distribution plan against your own lanes, rates, lead times, and demand before you act on it.

Free freight calculators →