C215 - Chapter 14

Question 1

What is Enterprise Resource Planning (ERP)?

Answer 1

Software system used for identifying and planning the enterprise-wide resources needed to coordinate all activities involved in producing and delivering products.

• ERP = a big computer system that links all parts of a company together into one database.
  •Combines functions like finance, operations, marketing, HR, and supply chain.
  •Everyone uses the same real-time information, which improves coordination and decisions.

👉 In short: ERP = one system that connects the whole business so everyone works with the same info.

Question 2

SCM Software

Answer 2

• Focuses on managing the flow of materials, information, and money between companies — from suppliers → manufacturer → distributors → customers.
• Goal: coordinate and optimize the supply chain to reduce costs and improve service.

👉 In short: SCM = manage and control the flow of goods and information.

Examples:
•Tell suppliers when to ship materials,
• Track a delivery truck’s location,
• Update inventory levels instantly.

Question 3

Supply Chain Intelligence (SCI)

Answer 3

analyze data to make the supply chain proactive and intelligent.

Turns raw information — like sales data, shipping times, and inventory levels — into useful insights that help improve planning, forecasting, and performance

Question 4

Application service provider (ASP)

Answer 4

Sets up and runs ERP systems

Question 5

Benefits of ERP

Answer 5

• Improves organization information flow/ integrates internal and external members of supply chain

Tangible
- reductions in inventory/staffing, purchasing costs, logistics/transportation costs
- improved order management, production, cash flow, revenue and profits, delivery, productivity

Intangible:

• improved visibility of corporate data, customer responsiveness, integration between systems, standardization, flexibility, sharing of info, visibility
• happier customers since deliveries are on time

-Decisions can be made quickly

Question 6

2 Costs of ERP

Answer 6

1. Takes a long time to implement and see benefits
2. Requires extensive, complex training.

Question 7

Dependant Demand

Answer 7

• is derived from finished products
• The demand for component parts is based on the number of end items being produced

-

Question 8

Independent Demand

Answer 8

Demand for finished products (items sold directly to customer)

• demand for item is unrelated to the demand for other items

Question 9

Material Requirements Planning (MRP)

Answer 9

System that uses
1. MPS
2. inventory records data
3. BOM
to calculate material requirements

Question 10

2 Objectives of Material Requirement Planning (MRP)

Answer 10

1. Determine quantity and timing of material requirements
2. Maintain priorities
   • MRP system responds to changes in daily environment, to reorganize priorities and keep plans viable.

Question 11

Bill of Material (BOM)

Answer 11

Lists all subassemblies, component parts, raw materials that go into an end items and shows usage quantity of each required

Question 12

Capacity Requirements Planning (CRP)

Answer 12

-method used to calculate production capacity availability

-It takes the detailed schedule from MRP and checks if there’s enough work center capacity to complete it.

-Process of checking whether a company has enough capacity — like machines, labor, and time — to meet its production schedule.

-Reveals potential problems in order to prevent them

Question 13

MPS, MRP, and CRP Work Together

Answer 13

1. MPS (Master Production Schedule)
   • Decides what finished products to make, how many, and when.
   • Example: “Build 500 bikes next week.”
   2. MRP (Material Requirements Planning)
      • Uses the MPS to figure out what materials and parts are needed and when to order them.
      • Example: “We need 500 frames, 1,000 tires, and 500 seats by Monday.”
   3. CRP (Capacity Requirements Planning)
      • Checks if the company has enough machine time, labor hours, and space to make those 500 bikes.
      • If capacity is short → reschedule or add shifts.

Strategic Business Plan
↓
Aggregate Plan (ASP)
↓
Master Production Schedule (MPS)
↓
Material Requirements Planning (MRP)
↓
Capacity Requirements Planning (CRP)