The correct answer is E. 99% accuracy. Material Requirements Planning (MRP) is a crucial component of inventory and production management in many industries, and its success heavily depends on the accuracy of the data it relies on.

To understand why 99% accuracy is the appropriate requirement, let’s delve into the concept of MRP and the implications of different levels of accuracy in data, and then evaluate why the other options are less suitable.

E. 99%:

MRP is a system used to plan and control the materials needed for production. It relies on accurate data, including inventory levels, lead times, and demand forecasts, to ensure that the right materials are available at the right time for production. In an MRP system, high accuracy is critical because any inaccuracies can lead to stockouts, excess inventory, production delays, and increased costs.

Requiring a minimum record accuracy of 99% means that only a 1% margin of error is acceptable. This high level of accuracy minimizes the chances of costly disruptions in the production process. It accounts for the fact that some degree of data inaccuracy is inevitable due to unforeseen circumstances or minor discrepancies but aims to keep these to a minimum.

This level of accuracy is considered a best practice in industries where MRP systems are used to manage complex supply chains and production processes. It ensures that the right materials are always available when needed, reducing the risk of costly downtime or overstock situations.

Now, let’s explore why the other options are not as suitable:

A. Lower than 90%:

A record accuracy requirement lower than 90% implies that up to 10% of data inaccuracy is acceptable. This level of inaccuracy is significantly higher and poses a substantial risk to the MRP system’s effectiveness.

It increases the likelihood of production disruptions, excess inventory, and missed delivery deadlines. In industries where precise production scheduling and inventory management are essential, a lower than 90% accuracy requirement is inadequate.

B. 90%:

While 90% accuracy may seem reasonable, it still allows for a relatively high 10% margin of error. In MRP systems, where precise planning and coordination are vital, a 90% accuracy requirement can result in significant issues.

It means that one in ten data points may be incorrect, leading to disruptions, inefficiencies, and increased costs. This level of accuracy is generally considered insufficient for successful MRP implementation.

C. 95%:

A 95% accuracy requirement allows for a 5% margin of error, which is still relatively high for MRP purposes. While it may be more lenient than the previous options, it does not provide the level of accuracy necessary to ensure a highly efficient MRP system.

A 5% margin of error can lead to substantial disruptions in production and inventory management, which can be costly and affect a company’s competitiveness.

D. 97%:

A 97% accuracy requirement is more stringent than the options listed above, but it still allows for a 3% margin of error. While it’s better than the lower accuracy requirements, it may not be adequate for MRP in industries where precision is paramount.

A 3% margin of error can lead to significant inefficiencies, production delays, and added costs. In practice, industries that rely on MRP systems often aim for higher accuracy levels to minimize the risk of errors.

In conclusion, the correct answer for the minimum record accuracy required for successful MRP is E. 99%. This high level of accuracy is essential to ensure that the MRP system operates effectively and efficiently, minimizing the risk of production disruptions, excess inventory, and increased costs.

The other options (A, B, C, and D) allow for higher levels of data inaccuracy, which can lead to problems and inefficiencies in the MRP process. To ensure that MRP serves its intended purpose in managing materials and production, a 99% accuracy requirement is typically considered the most suitable choice.