How Does an MRP Inventory System Reduces Inventory Levels

question 17

Multiple Choice

How does an MRP inventory system reduces inventory levels?

• A)by reducing the uncertainty regarding when materials are needed
• B)by receiving materials exactly when needed and in exact quantities
• C)by computing the exact costs of purchasing and carrying inventory
• D)none of the above

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Definitions:

Sensitive

Responsive or easily affected by external conditions or stimuli.

Economic Theory

A concept or principles developed to explain how economies work and how economic agents interact.

Substitute Goods

Goods or services that act as substitutes for each other, meaning that if the price of one goes up, the demand for the other also rises.

Production Costs

The total expenses incurred in manufacturing a product or offering a service, including raw materials, labor, and overhead.