Material planning activity can be influenced by several factors, classified into two categories:
- Macro factors: These factors concern the rapid changes in global environment, such as global price trends, business cycles, import/export policies of the government, etc., which can influence the material planning. The government’s credit policy plays a critical role in banks following the guidelines mentioned therein, during the course of extending financial support to a business enterprise.
- Micro factors: These factors concern changes that may take place within the organization, such as plant capacity utilization, production plan, acceptable inventory holding, lead times, rejection rates, working capital, delegation of power, communication, seasonality, etc. that can affect the material planning.