# 12.3.2b Comparing the Effects of MRP and Order Point

### Intended learning outcomes: Disclose the possible benefit of the net change MRP technique. Evaluate the effects of the MRP technique compared to the order-point technique.

Continuation from previous subsection (12.3.2)

If the independent demand changes only slightly, the net change MRP technique is usually faster. This technique attempts to consider only those net requirements that have changed. The four-step procedure is applied only to those articles whose projected available inventory has changed since the last MRP run. If planned production orders are changed, this will also affect the dependent demands for components, so that the MRP procedure must be repeated for each component. If a large number of items are affected, the entire order network will have to be recalculated — effectively a comprehensive rerun of the MRP algorithm.

Exercise: Compare the effects of the MRP technique compared to the order-point technique by choosing different values for the parameters as well as the monthly gross requirements.

## Course section 12.3: Subsections and their intended learning outcomes

• ##### 12.3 Deterministic Determination of Dependent Demand

Intended learning outcomes: Describe characteristics of discontinuous dependent demand. Explain material requirements planning (MRP) and planned orders. Disclose the determination of the timing of dependent demand and the load of a planned order.

• ##### 12.3.1 Characteristics of Discontinuous Dependent Demand

Intended learning outcomes: Describe the principle of lumpy dependent demand due to batch sizes at higher structure levels. Differentiate between two techniques for inventory management of components with lumpy demand.

• ##### 12.3.2 The Material Requirements Planning (MRP) Technique

Intended learning outcomes: Disclose a schematic representation of the MRP technique. Explain the determination of net requirements and batch sizes, using an example.

• ##### 12.3.2b Comparing the Effects of MRP and Order Point

Intended learning outcomes: Disclose the possible benefit of the net change MRP technique. Evaluate the effects of the MRP technique compared to the order-point technique.

• ##### 12.3.3 Determining the Timing of Dependent Demand and the Load of a Planned Order

Intended learning outcomes: Differentiate between mean lead time calculation and detailed planning calculation of the timing of dependent demands.