In planning, which concept links the demand for a final product to the sources of its material requirements?

• A. Allocation
• B. MRP explosion
• C. Pegging
• D. Demand elaboration

Answer: (C)

Pegging links the demand for a final product to the specific sources of its material requirements. In planning, it provides a trace from a parent demand—such as a customer order or forecast—back to the exact components or subassemblies that will satisfy it. This visibility lets you see which orders or lots are driving the need for particular parts, so you can prioritize or adjust plans when shortages or changes occur. For example, if product X requires components A and B, pegging shows that the demand for X creates specific, traceable requirements for A and B, tied to the corresponding orders or forecasts. This is different from the MRP explosion, which is about breaking end-item demand down through the bill of materials to generate all dependent requirements, and from allocation or demand elaboration, which involve resource distribution and expanding demand details without linking to its source materials.