What is the ability to relate the demand for an item shown in an MRP record back to the parent causing the demand called?

The ability to trace the demand for an item back to the specific parent item that generates that demand is known as pegging. Pegging is a key feature in Material Requirements Planning (MRP) systems as it allows planners to understand the source of demand for components or materials in the supply chain. This traceability helps in managing inventory levels, prioritizing production schedules, and ensuring that resources are allocated efficiently.

When demand arises for a lower-level item, pegging connects that demand to the higher-level parent or assembly that requires it. This adds a layer of visibility and control, enabling better decision-making regarding production and inventory management. Consequently, it allows organizations to respond effectively to changes in demand, whether due to customer orders or shifts in production schedules.

Understanding this concept is essential for supply chain professionals as it directly impacts planning accuracy and inventory cost management, supporting the overall effectiveness of the MRP process.