ASSIGNMENT 4 (OPTIONAL) 12 marks:

1. Performance metric in ERP is measured by the performance of purchasing manufacturing and

distribution department. Explain what you understand on optimizing performance for each of the
department listed below:

a. Purchasing department, optimizing the cost is more important than product quality

While controlling costs is important for a purchasing department, optimizing

performance should not be solely focused on cost reduction at the expense of
product quality. Optimizing performance in the purchasing department
involves balancing cost control with quality assurance to ensure that the
organization procures high-quality goods and services at a reasonable cost.

(2 Marks)

b. Manufacturing department, producing more products is better rather than

considering the customer demand

Optimizing performance in the manufacturing department should be focused on

meeting customer demand rather than simply producing more products. While
maximizing production volume is important, it should not come at the expense of
meeting customer needs and preferences.

(2 Marks)

c. Distribution unit focusses on cost of delivery stages rather than total system cost

While controlling delivery costs is important for the distribution department,

optimizing performance should not be solely focused on minimizing delivery
costs at the expense of overall system cost. Optimizing performance in the
distribution department involves balancing cost control with meeting
customer needs and ensuring timely and efficient delivery.

(2 marks)
2. The customer order decoupling point was described as the point at which the demand
changed from independent to dependent. Define the decoupling point for:

a. Make to stock

The decoupling point for Make-to-Stock (MTS) is the point in the production process
where the manufacturing process splits into two distinct parts: the upstream
production of goods (usually in bulk) and the downstream delivery of individual units
to customers. At the decoupling point in a Make-to-Stock production system,
finished goods are produced and held in inventory, awaiting customer orders. The
point at which the products are stocked separates the production process from the
delivery process, with the production process serving as the upstream supply of
finished goods and the delivery process serving as the downstream supply of
individual units to customers.

(2Marks)

b. Assemble to order

The decoupling point for Assemble-to-Order (ATO) is the point in the production
process where the products' components are made-to-stock, and the final
assembly of the product is delayed until a specific customer order is received. In
an Assemble-to-Order production system, the products' basic components are
produced in advance and held in inventory, while the final assembly of the
product is completed after a customer order is received. The decoupling point is
the point where these component inventories are held, separating the upstream
production of basic components from the downstream assembly of the final
product to customer specifications.
(2 Marks)

c. Make / Engineer to order (2 marks)

In a Make/Engineer-to-Order production system, the product design and

engineering processes are customized to meet the specific customer's
requirements, and the production process begins only after the customer's
order is received. The decoupling point is the point where the product design
and engineering processes end, separating the upstream design and engineering
processes from the downstream production process.