ITPEC FE Morning October 2019 Question 73

MRP (Material Requirements Planning) — calculate component needs from production plans and existing inventory.

MRP follows three core steps:

1. Gross requirement — using the production schedule and BOM (Bill of Materials), calculate how many components are needed
2. Net requirement — subtract available inventory to find the actual order quantity
3. Order timing — schedule orders backward from the need date, accounting for manufacturing or procurement lead time

Why not others:
- (a) CAD — Computer-Aided Design; used for engineering drawings, not material planning
- (b) CRP — Capacity Requirements Planning; plans production capacity (machines, labor), not materials
- (c) JIT — Just-In-Time; a lean manufacturing philosophy that minimizes inventory, but does not describe this specific three-step calculation process

Key rule: MRP answers three questions — what to order, how much to order, and when to order.

AI-generated — may contain errors