Question

What do we mean when we say that MRP is based on dependent demand?

Short answer

Answer

Dependent demand means the demand directly related to the primary source like raw material. As increased demand leads to MRP increment, the cost of the product is set according to the demand.

Step-by-step solution

MRP 

MRP stands for market retailer price. It is quite interchangeable with the concept of manufacturing resources. Hereby, MRP saves time. Likewise, demand for any product can be utilized by providing its MRP rather than collecting the raw material of the dependent product.

MRP leading the dependent demand

MRP is considered the basic reason for the dependent demandthat can influence the customer; they can be rejected due to high MRP on productivity.

In case of dependent demand, MRP is concluded from all the raw materials used to manufacture the product. In the above example, it is said that consumers do not have to pay for each raw material but have to pay the concluded amount.