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Production and Supply Chain Management Information Systems
Production planners aggregate products into product groups to reduce the number of
variables they must consider when developing a production plan. Developing production
groups can be complicated. For example, cereal manufacturers can group together
different package sizes, or they might group together product brands (such as kids’
cereals, health cereals, and so on). A consumer products company may group by product
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type (e.g., shampoo, laundry detergent, and disposable diapers). The aggregate production
plan for Fitter will combine the only two products, NRG-A and NRG-B bars, into one
group to illustrate the process. The plan will be developed using a monthly time
increment. Ultimately, the monthly production plan will be disaggregated to determine
weekly raw materials orders and daily production schedules.
The SAP ERP Approach to Production Planning
The SAP ERP approach to the production planning process is shown in Figure 4-2. Refer to
this figure throughout this discussion to track the stages in the production planning process.
Sales forecasting Starting inventory
Sales and operations planning
Demand management
Detailed
MRP
scheduling
Purchasing Production
Source Line: Course Technology/Cengage Learning.
FIGURE 4-2 The SAP ERP production planning process
The information at each stage of the production process flows through the following
steps, which are explained in detail in the upcoming sections:
• Sales forecasting is the process of predicting future demand for a company’s
products.
• Sales and operations planning (SOP) is the process of determining what the
company will produce. In the diagram, the Sales forecasting and Starting
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