CPIM Practice Exam

The ability to relate the demand for an item shown on a material requirements planning grid back to the parent creating the demand is called what?

1. Where-used

2. Offsetting

3. Pegging

4. Exploding

The correct answer is: Pegging

The ability to relate the demand for an item back to the parent that creates the demand is known as pegging. Pegging is a crucial process in material requirements planning (MRP) because it helps in identifying which specific parent items or customer orders are generating the requirement for a component or subassembly. This visibility ensures that inventory is managed efficiently and resources are allocated appropriately to meet demand. By utilizing pegging, organizations can prioritize how to fulfill demand based on its relationship to parent items, which aids in better planning and decision-making. This practice is essential for managing materials efficiently, especially in complex manufacturing environments where multiple components are required for various products. The other choices represent different concepts in MRP. For instance, where-used refers to tracking where a specific component is utilized within the bill of materials, and offsetting pertains to adjusting lead times in planning. Exploding is the process of breaking down a parent item into its component parts based on the bill of materials but does not directly relate to the demand and its relationship to the parent.