Question

Distribution requirements planning should be used...?

a) when the EOQ formula is not readily available
b) to verify that the EOQ has been correctly determined
c) to determine total requirements in a distribution system
d) to determine a retailer's optimal order quantities

Answer 1

Distribution Requirements Planning (DRP) is used to determine total requirements in a distribution system, focusing on effective planning of inventory across distribution channels to meet customer demand.

Step-by-step explanation:

Distribution Requirements Planning (DRP) should be used c) to determine total requirements in a distribution system. DRP is a method used in business management for planning orders in a supply chain to ensure that the right quantities of goods are available where and when they are needed. It takes into account various factors such as lead times, demand forecasts, and safety stock levels to plan the inventory across the distribution network effectively.

Unlike the Economic Order Quantity (EOQ) model, which is aimed at minimizing the total costs associated with ordering and holding inventory, DRP is more comprehensive and focuses on meeting customer demand through strategic positioning and timing of inventory across the distribution channels. It is not a tool to verify the correctness of EOQ calculations, nor is it used because the EOQ formula is not available.