CIPS Level 4 Whole Life Asset Management L4M7 · Free Practice Question Medium
Question 17
How do gross material requirements plan (gross MRP) and net material requirements plan (net MRP) differ?
-
A
The gross MRP is mostly paper-based, but the net MRP must be computerised
-
B
The net MRP includes the amount of inventory on hand, whereas the gross MRP does not
-
C
The gross requirement doesn't take taxes into account, whereas the net requirement includes the tax considerations
-
D
The gross MRP includes consideration of available inventory, whereas the net MRP does not
Reveal correct answer
Correct answer: D
Explanation
Material requirement planning (MRP) is a production planning and material (inventory) control system used in manufacturing. Objectives of MRP are to ensure materials are available for production while minimising inventory and to plan production and procurement activities.
MRP software combines the master production schedule, the bill of materials and the inventory information to work out the net requirements (net MRP) of what to purchase or produce and when.
These net requirements are worked out using the following equation:
Net requirements = Total requirements - Available inventory
Where:
Total requirement = Gross requirements (gross MRP)
Available inventory = Inventory on hand + Units on order
In the other words, Gross MRP = Net MRP + Available inventory, so the answer should be "The gross MRP includes consideration of available inventory, whereas the net MRP does not"
LO 2, AC 2.3
Discussion
Think the marked answer is wrong, or have a better explanation? Share it below — comments appear after review.
