Final answer:
In the lot size calculation step of MRP, a determination is made about the need to procure materials, considering demand and inventory levels to optimize ordering and holding cost.
Step-by-step explanation:
The question refers to the process within Material Requirements Planning (MRP). In the lot size calculation step of MRP, the determination is indeed made regarding the need to procure materials or components. This step determines the order quantities considering both demand and the economic order quantity to optimize inventory levels. If procurement is necessary, the MRP will generate planned orders that reflect the required quantity and timing based on the production schedule.
The procurement decision is guided by factors such as order costs, holding costs, lead times, and demand forecast accuracy. For example, if demand for a product is consistent, then it might be more economical to order larger quantities less frequently to save on order costs. On the other hand, if demand is unpredictable, a company may opt for smaller order quantities to avoid excess inventory. The ultimate goal of the MRP system is to ensure materials are available for production while minimizing inventory costs.