What term describes the capability to identify the sources of a given item's gross requirements and/or allocations?

• A. Demand forecasting
• B. Bills of materials
• C. Pegging
• D. Material requirements planning

Answer: (C)

Pegging is the ability to trace a component’s demand back to its source, showing exactly which parent item, customer order, or allocation created a given gross requirement. This traceability is crucial when you need to understand why a component is needed, allocate scarce supply to specific orders, or analyze how changes in one demand source affect others. In practice, pegging ties a specific unit of demand to its origin, whether that’s a higher-level assembly, a customer order, or a production plan, so planners can see where every requirement came from and respond accordingly.

Demand forecasting looks ahead to expected demand in general, not to the specific source of a current requirement. Bills of materials describe the product structure and how components come together, but they don’t map each demand unit to its source. Material requirements planning is the overall planning approach that uses BOMs and lead times to compute needs, but pegging is the feature that provides the traceability from demand to source.