A Working MRP System Allows a Firm to React to Even

question 14

Essay

A working MRP system allows a firm to react to even minor changes in production requirements. Discuss both the advantages and disadvantages of having such ability.

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Definitions:

Output

The amount of products or services produced by a company, industry, or economic system.

Total Fixed Cost

The sum of all costs that do not change with output level, including rent, salaries, and insurance.

Short Run

A period in economic analysis during which at least one input, such as plant size or capital, is fixed, limiting the ability to adjust to demand changes.

Long Run

A period in which all factors of production and costs are variable, allowing for full adjustment to changes in the economic environment.