ITPEC FE Morning April 2022 Question 71
The figure below shows the work procedure for MRP (Material Requirements Planning), a technique pertaining to a production management system. Which of the following is a necessary piece of information for calculating the net requirements to be inserted into A in the figure below?
Explanation
Inventory status (stock on hand, outstanding orders, work in process) — net requirements are what is still short after subtracting what is already available or on its way.
MRP runs through the steps in the figure, each using its own input:
- •Gross requirements: the master schedule exploded through the bill of materials into the total quantity of every component
- •Net requirements (A): gross requirements minus stock on hand, outstanding (residual) orders and quantities in process, which is the inventory status
- •Order quantity: the shortage rounded to lots and adjusted for safety stock by the ordering policy
- •Arrangement plan: the order dates, set back from the need dates by the lead times in the standard schedule
Answer (b)
Why not others:
- •(a) — the bill of materials is needed one step earlier, to explode the master schedule into gross requirements
- •(c) — the ordering policy (lot sizing, ordering method, safety stock) is applied one step later, to turn the shortage into order quantities
- •(d) — the standard schedule (lead times) is used for the arrangement plan, to decide when each order must be placed
Key rule: In MRP, gross requirements come from the BOM, net requirements subtract inventory status, order quantities apply the ordering policy, and timing uses lead times.
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