CPIM Practice Exam

What is the purpose of pegging in MRP and MPS?

1. To calculate lead time offsets

2. To identify the sources of gross requirements

3. To determine scheduled receipts

4. To manage planned order releases

The correct answer is: To identify the sources of gross requirements

Pegging is a critical process used in Material Requirements Planning (MRP) and Master Production Scheduling (MPS) that relates to tracing the sources of demand for specific components or materials. Its primary function is to support inventory management by allowing organizations to identify which customer orders or production schedules are driving the need for certain parts or materials. When pegging is employed, it connects the gross requirements of an item with the specific end items that created that demand. This visibility helps organizations manage their inventory more effectively, as they can see not just what they need, but also why they need it. This information is vital for prioritizing production schedules, handling customer orders, and making informed decisions about inventory investments. Understanding the sources of gross requirements through pegging also enables better collaboration across departments, as supply chain professionals can communicate more effectively with sales, production, and procurement teams about demand fluctuations and fulfillment processes. This entire mechanism ultimately serves to enhance responsiveness to changes in demand, improve order fulfillment accuracy, and maintain optimal inventory levels.