A process designed to handle purchasing and scheduling the production of dependent-demand components is:
A. economic part-period (EPP).
B. lot-for-lot (LFL).
C. economic order quantity (EOQ).
D. material requirements planning (MRP).
E. economic run size (ERS).
The correct answer and explanation is :
The correct answer is:
D. Material Requirements Planning (MRP).
Explanation:
Material Requirements Planning (MRP) is a systematic process used to manage inventory, production scheduling, and procurement of dependent-demand components in manufacturing. It is specifically designed to ensure that the right materials are available at the right time and in the right quantity to meet production requirements.
Understanding Dependent-Demand Components
Dependent-demand components are parts or materials whose demand is directly tied to the production of a final product. For example, in the manufacturing of cars, the demand for tires, engines, and seats depends on the number of cars being produced. Unlike independent-demand items (such as finished goods), dependent-demand components must be carefully planned and synchronized with production schedules.
How MRP Works
MRP takes several inputs to determine how much and when to order materials:
- Master Production Schedule (MPS): Outlines the planned production of finished goods.
- Bill of Materials (BOM): A structured list of all components required to manufacture a product.
- Inventory Records: Provide details on stock levels, outstanding orders, and lead times.
Using these inputs, MRP calculates:
- What materials are needed.
- How much of each material is required.
- When materials should be ordered or produced.
Advantages of MRP
- Reduces inventory costs by preventing overstocking or stockouts.
- Enhances production efficiency by ensuring materials are available when needed.
- Improves scheduling and coordination across the supply chain.
In contrast, other options like Economic Order Quantity (EOQ) and Lot-for-Lot (LFL) focus on inventory control but do not provide comprehensive scheduling for dependent-demand components like MRP does. Therefore, MRP is the best choice for managing purchasing and scheduling in a manufacturing setting.