what is pegged requirements

It is the link between receipt and issue. More Precisely

it is the back tracking of information about
to which parent material a child item is allocated.
A requirement linked to a demand is called a pegged
requirement.
Use of Pegged Requiremets:

You can use the Pegged requirements function to retrace

from any BOM level

1) which requirements are the source of which procurement

proposals

2) which independent requirements (especially sales

orders)
are affected if a procurement proposal is cancelled or a
date or quantity is changed on a lower level.

Pegged Requirement function provide the facility to find

out,
Which requirements(like sales order or PIR) have caused to generate which
procurement proposal(like planned order or Purchase req. or purch. order ). and It
finds the link between the that requirement and its respective procurement proposal.