Expanded Tertiary Education Equivalency and Accreditation Program

(ETEEAP)
Inventory Management

NAME: Cyril John Ramos DATE: October 28, 2019

PROGRAM: BSBA - _______ PROF.: Mr. Brandy I. Valdez

Instruction: Answer each question in a clear and organized paragraph. Cite examples
applicable to your workplace.

1. What is ERP
Answer :
 Enterprise Resource Planning is a software designed for
organizing and managing business process (core and
administrative) by sharing information across functional areas /
units.
 A tool being used by medium and large companies to streamline
information source, which means using a single database for
different modules to use in doing analysis, reports and orders. It
started by provides a single interface for managing all routine
activities performed in manufacturing – from order entry to
after-sales customer service. This was extended to suppliers and
customer.
Further enhancements were made for which the supply chain
management (SCM) software was added to improve decision
making in the supply chain
 Their objective is to allow for the simultaneous aggregation, de-
aggregation, and manipulation of data to support the creation of
multiple business scenarios on a cross-functional basis as well
as for the examination of business decisions from both
centralized and decentralized points of view.
 iDempiere Business Suite (OSGi + ADempiere): open
source Enterprise Resource Planning (ERP) software that is
fully navigable on PCs, tablets and smartphones, it has
also customer relationship management (CRM) and supply
chain management (SCM) functions.
 SAP S/4HANA is SAP's ERP for large enterprises. It is the
successor of SAP R/3 and SAP ERP and is optimized for SAP's
in-memory database SAP HANA.

(Source:Operations Management - an integrated approach ; Wikipedia; )

2. How ERP Connects the Functional Units

Answer :
 ERP connects the functional units by using a central database
from which all applications (functional units) get their
information. This prevents redundancies and can provide up the
minute information.
 Another is that this would enable all modules (tools) being used
by a certain company to be on one platform instead of using
multiple soft wares for every module. This provides savings to a
company specially that they do not need to create or procure
multiple systems for similar tasks.
 It integrates the complete range of an organization’s operations
in order to present a holistic view of the business functions from
a single information and IT infrastructure. This would improve
the organizational information flow which in return increases its
ability to incorporate best practices that facilitate better
managerial control, speedier decision making, and cost
reductions throughout the organization.

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  ExxonMobil –consolidate 300 different information systems
into one ERP system by using SAP R/3 in its petrochemical
operations in the U.S.

 Arapahoe County Government – had challenges with reports

generation, delayed payments to vendors and budget
management difficulties due to lack of long term planning.
After implementing an ERP system, they were able to eliminate
the redundant financial systems consisting of excel spreadsheets
and access databases; improved timelines and accuracy of
reports; improved visibility, vendor relations and negotiating
power. There are other significant changes which made
Arapahoe improve in both operations and inventory
management. This also provides proof that the ERP can also be
used not just by traditional manufacturing companies.

(Source:Operations Management - an integrated approach)

3. How Manufacturing Planning and Control fits within ERP.

Answer :
 The manufacturing planning and control (MPC) system is
concerned with planning and controlling all aspects of
manufacturing, including managing materials, scheduling
machines and people, and coordinating suppliers and key
customers.
 This is one of the major modules in an ERP system for
manufacturing companies, as it uses Quantitative Techniques to
Optimize the Manufacturing Processes i.e. to give customer the
Most possible value (utility) at the Lowest possible Total Cost
(consumption of resources)
 ERP systems mark a significant turning point in the
development of MPC systems because they enable firms to meet
the global directive of continuous improvement of supply-chain
processes through flexible, customer-driven information
management
 In firms that have an integrated ERP system and database, the
MPC system should integrate with and support cross-functional
planning through the ERP system.
 Manufacturing companies can effectively monitor inventory and
output by using ERP which has an integrated MPC module on it
as it would be linked to both manufacturing, procurement and
sales data aside from the other modules that can also be utilized
to further improve operations.
(Source:https://www.youtube.com/watch?v=2SYeEt5vNec,
http://mdcegypt.com/Pages/Operation%20Management/Production%20And%20
Operation%20Management/MPC/MPC.asp#Evolution_of_MPC,
https://pdfs.semanticscholar.org/41a1/0928b167a3a12e2267de5867b67195563b4f
.pdf,
https://pdfs.semanticscholar.org/5c8f/07a31d5af70409aca6c1e1512e3f8d4ed97e.p
df )

4. Discuss the role of master production scheduling in Manufacturing Planning and Control
(MPC).
Answer :
 Master Production Scheduling - is a manufacturing planning
tool that is used to capture a number of variables from different
elements of the organization (customer demand, capacity,
inventory levels, material flows, etc) and then describe which
parts the organization will manufacture and at what frequency.
 A master production schedule (MPS) is a plan for individual
commodities to be produced in each time period such
as production, staffing, inventory, etc. Using MPS helps avoid
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 shortages, costly expediting, last minute scheduling, and
inefficient allocation of resources.
 The master schedule determines whenever deliveries are needed
to be made. This coordinates with various management
information systems such as marketing, finance, and others
 Master production scheduling software establishes load and
utilization requirements for machines and equipment. This
allows for the absolute best capacity utilization and a much more
efficient flow of production.
 This is important for MPC as without these variables, production
and delivery of good would have their delays / shortage.
 Determines the level of operations that balance market demand
with material, labor, and equipment capabilities. This is because
the master schedule translates the plan into a specific number of
items that are needed to be produced within a given time.
 The master schedule produces trial and error schedules that give
production alternate routes to follow. This accounts for any
unexpected mishaps within production to be taken care off
immediately.
(Source: http://supplychain-mechanic.com/?p=204 ;
https://www.planettogether.com/blog/functions-of-master-production-scheduling-
mps; https://www.wisdomjobs.com/e-university/production-and-operations-
management-tutorial-295/master-production-schedule-mps-9613.html)

5. Explain how the bill of material assists the Master Production Scheduling
Answer :
 Bill of materials (BOM) – lists all the subassemblies, component
parts, and raw materials that go into an end item and shows the
usage quantity of each required.
 This would assist MPS by providing accurate information in
terms of variables that will be used in manufacturing. If data
provided is inaccurate, there is a possibility that either
production will be stalled due to lack of materials or over stock
of raw materials.
 We can say that BOM is the “recipe” of a dish while MPS is the
“menu”. BOM allows us to determine how much of each
component or material is needed. This being said, BOM is
essential to MPS as this would determine what is needed and
how many in order to make a certain output.
 Using a cabinet manufacturer, we can say that the cabinet is the
actual menu (MPS), while the parts needed to build it (screws,
planks, paint, etc.) would be the recipe (BOM). We first need to
check the materials necessary and make sure that it is complete
before we start producing the final product. Lacking 1 or more
parts of the recipe could cause MPS to fail as this would lead to
delays or worst cancellation of production.
(Source: Operations Management - an integrated approach)

6. Determine how actual Master Production Scheduling (MPS) Performance can be

monitored and controlled.
Answer :
 Measurements are the feedback loop to both performance and
improvement in general. The master production schedule (MPS)
is one of the most important processes in an enterprise resource
planning (ERP) business system and therefore should have
robust measurements to drive that performance and
improvement. Several metrics can help with this goal. The first
one most organizations use is the weekly schedule attainment
measure. This metric is done by locking the schedule (for
measurement purposes only) at the end of the week. During the
following week, changes are monitored and documented to
understand accuracy and root cause.
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 (Source:https://www.globalspec.com/reference/47620/203279/chapter-9-
measuring-the-master-production-scheduling-process)

7. What is the main difference between push and pull systems?

Answer :
 The push system of inventory control involves forecasting
inventory needs to meet customer demand. Companies must
predict which products customers will purchase along with
determining what quantity of goods will be purchased. The
company will in turn produce enough product to meet the
forecast demand and sell, or push, the goods to the consumer.

An example of a push system is Materials Requirements

Planning, or MRP. MRP combines the calculations for financial,
operations and logistics planning. It is a computer-based
information system which controls scheduling and ordering. Its
purpose is to make sure raw goods and materials needed for
production are available when they are needed.
 The pull inventory control system begins with a customer's
order. With this strategy, companies only make enough product
to fulfill customer's orders. One advantage to the system is that
there will be no excess of inventory that needs to be stored,
thus reducing inventory levels and the cost of carrying and
storing goods.
An example of a pull inventory control system is the just-in-
time, or JIT system. The goal is to keep inventory levels to a
minimum by only having enough inventory, not more or less,
to meet customer demand. The JIT system eliminates waste by
reducing the amount of storage space needed for inventory and
the costs of storing goods.
 In the pull system production orders begin upon inventory
reaching a certain level, while on the push system production
begins based on demand (forecasted or actual demand). Both
systems has advantages and disadvantages which is why a 3rd
system which combined the 2 systems was created (Push-Pull
System).
 The type of inventory control system will depend in large part
on what type of product is being produced. The production of
large items, such as automobiles, is too complex and takes too
long to only produce the amount needed to fulfill specific
customer orders. Computer companies, such as Dell, are
incorporating the push-pull system, where raw materials and
goods are pre-ordered and stored, but the actual computer is not
assembled until the customer makes an order.

(Source: Operations Management - an integrated approach,

https://smallbusiness.chron.com/push-system-vs-pull-system-inventory-control-
12650.html; https://en.wikipedia.org/wiki/Push%E2%80%93pull_strategy)

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