Concept explainers
Describe a production environment in which MRP would be useful. Describe a production environment in which MRP would not be useful.
To identify: The production environment where MRP is useful and not useful.
Material Requirement Planning is software-based inventory control for production planning and scheduling in the manufacturing process. The main objective of MRP is to ensure the availability of requirements when it is needed, to maintain the inventory at the lowest possible level, and to plan the activities of scheduling, delivering in the production process.
Explanation of Solution
MRP is useful for complex products which have to assemble by order, for discrete demand items (i.e. the components or subparts of items which do not need to be held in inventory but should be available on time when it is required to make the production process run continually without any delay) and for the dependent demand (i.e. the final product must be dependent on the components or subparts, so it should be held there inventory to make the production process meet the demand).
MRP is useless for small production units with few components with no much variation in demand and output.
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