Distribution: inventory and transport - distribution requirements planning (DRP-I)

4 important questions on Distribution: inventory and transport - distribution requirements planning (DRP-I)

What is the purpose of DRP-I?

To improve the management of inventory in distribution chains.

What are the three most important characteristics of inventory replenishment systems?

1. An average demand is used and irregular demand patterns are not taken into account
2. The systems only determine when an order should be placed, not when the goods are actually needed
3. The systems do not anticipate or warn about fluctuation in demand

What causes the multiplier effect?

Decision making at each link in the distribution chain based on its own inventory replenishment system results in a multiplier effect and an unbalanced inventory.
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What is dependant depend an independant demand?

Dependant demand is the demand that is generated by orders in a previous link or the demand that is calculated based on the independent demand.

Independent demand is the demand that is not dependant on orders/ demand in a previous link but is determined by the final consumer, or future demand that is forecasted.

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