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Production and Supply Chain Management Information Systems
Notice once again the need for software to help with this kind of calculation. Of
course, a human being can do these computations, but with many products and
constituent materials, the calculations become very tedious and prone to error. Even for
a small company such as Fitter, doing the calculations with reasonable speed and
accuracy requires software help. Notice also the information needed to do the MRP
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calculation: starting with a sales forecast, the software works down to the master
production schedule and then to a schedule of required raw materials.
Exercise 4.5
Develop an MRP record, similar to the one in Figure 4-17, for wheat germ for the five
weeks of January. Wheat germ must be ordered in bulk-container quantities, so the
planned orders must be in multiples of 2,000 pounds. Use a lead time of one week and an
initial on-hand inventory of 3,184 pounds; assume that an order of 8,000 pounds is
scheduled for receipt during Week 1. Are there any weeks when you, as a planner, would
consider placing an order above or below the minimum required? Why? (Assume that
there are no problems with storage capacity or shelf life.)

Exercise 4.6
Fitter’s purchasing policy has been to carry high levels of inventory to avoid stockouts.
Why can inventory levels be lower with an integrated ERP system and MRP-based
purchasing? If you had to calculate the financial advantage of this change, how would you
do it?

Materials Requirements Planning in SAP ERP
The MRP list in SAP ERP looks very much like a Stock/Requirements List, which you saw
in Figure 4-12 (for NRG-A bars). The MRP list shows the results of the MRP calculations,
while the Stock/Requirements List shows those results plus any changes that have
occurred since the MRP list was generated (planned orders converted to purchase orders
or production orders, material receipts, and so on). Because the materials requirements
planning calculations are time consuming to process for a company producing hundreds of
products using thousands of parts, the materials requirements planning process is usually
only repeated every few days—or perhaps weekly. The Stock/Requirements List, however,
allows the users of the system to see what is happening (and what will happen) with a
material in real time.
Compare the data shown in the MRP record in Figure 4-17 with the MRP list for oats
in Figure 4-18 and the Stock/Requirements List in Figure 4-19.

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