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The forecast should be cost-effective: The benefits should outweigh the costs.
Evaluation of MRP:
The advantages of the MRP system over conventional inventory-planning approaches viz., fixed order
quantity system (Q system) and fixed order-point system (P system) are
(a) Improved customer service,
(b) Reduced inventory levels and
(c) Improved operating efficiencies of production departments.
However, MRP systems cannot be used in all the production system. Conventionally, MRP is applied only to
manufacturing system which process discrete products for which BOM can be generated. MRP is seldom
used in service system viz., petroleum refineries, retailing systems, transportation firms and other nonmanufacturing systems.