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Production and Supply Chain Management Information Systems
Notice that the demand management process involves no user input. Input is from the
sales and operations planning step. The SAP ERP software also uses information from the
factory calendar (working days in week and month) to calculate the MPS.
Fitter does not currently do this sort of planning because it has no way to formally
share sales forecast data between Marketing and Production. The company cannot relate
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its possible sales to its capacity and to the time available to make the product. Thus, Fitter
cannot produce an accurate master production schedule.
The MPS is an input to the detailed scheduling and materials requirements planning
processes. Materials requirements planning (MRP) is discussed next, followed by a
discussion of detailed scheduling.

Exercise 4.4
Develop a weekly production plan for August, like the one for January shown in Figure 4-14.
For the weekly sales periods, the last week will include two days in September. The factory
calendar information is shown in Figure 4-15.

8/1–8/5 8/8–8/12 8/15–8/19 8/22–8/26 8/29–8/31 9/1–9/2
4 5 5 5 3 2
20 20 20 20 20 23
Source Line: Course Technology/Cengage Learning.
FIGURE 4-15 Fitter’s factory calendar for August

Materials Requirements Planning (MRP)
Materials requirements planning (MRP) is the process that determines the quantity and
timing of the production or purchase of subassemblies and raw materials required to
support the master production schedule. The materials requirements planning process
answers the questions, “What quantities of raw materials should we order so we can meet
that level of production?” and “When should these materials be ordered?” In this section,
you will see how Fitter could accurately plan its raw materials purchases if it had an
ERP system.
In Fitter’s case, all product components (ingredients, snack bar wrappers, and display
boxes) are purchased, so the company could use the materials requirements planning
process to determine the timing and quantities for purchase orders. To understand
materials requirements planning, you must understand the bill of material, the material’s
lead time, and the material’s lot sizing, which we will discuss in the following sections.

Bill of Material
The bill of material (BOM) is a list of the materials (including quantities) needed to make
a product. The BOM for a 500-pound batch of the NRG-A or NRG-B bars is shown in
Figure 4-16.

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