By establishing firm planned orders early in the time horizon, an operations manager can reduce ________________.
Theory:
If by making a small change in Master production Schedule (MPS), Materials Requirement Planning (MRP) changes significantly, the MRP system is called to be nervous. This nervousness can be reduced by establishing firm orders in the early time horizon. Once a firm order is created, MRP planning process will not change the delivery time and quantum of this order, providing a fixed schedule to your suppliers that they trust.
Low nervousness will lead to lower inventory costs and improved supplier relations.
Answer:
By establishing firm planned orders early in the time horizon, an operations manager can reduce nervousness in MRP systems.
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