Help Rewrite: "MRP is based on dependent demand. Dependent demand is caused by the demand for

a higher-level item. Tires, wheels, and engines are dependent demand items based on the

demand for automobiles, for example.

Determining the number of dependent demand items needed is essentially a straightfor-

ward multiplication process. If one part A takes five parts of B to make it, then five parts of

A require 25 parts of B. The basic difference in independent demand covered in Chapter 11

and dependent demand covered in this chapter is as follows: If part A is sold outside the firm,

the amount of part A that we sell is uncertain. We need to create a forecast using past data

or do something like a market analysis. Part A is an independent item. However, part B is a

dependent part and its use depends on part A. The number of B needed is simply the number

of A times five. As a result of this type of multiplication, the requirements of other dependent

demand items tend to become more and more lumpy as we go further down into the product

creation sequence. Lumpiness means that the requirements tend to bunch or lump rather than

having an even dispersal. This is also caused by the way manufacturing is done. When manu-

facturing occurs in lots (or batches), items needed to produce the lot are withdrawn from

inventory in quantities (perhaps all at once) rather than one at a time."