Chap 3.7: Material Management Strategies

Front

Define FORECASTING

Back

Forecasting is a materials planning tool that uses past data and market trends to predict customer demand

Front

Describe FORECASTING

Back

• - Forecasting helps managers determine the quantity of materials needed to meet predicted customer demand.

  • => This helps avoid ordering too little or too much.

• 
  - Insufficient materials can disrupt production and lead to unmet customer demand.

• Excessive materials increase costs due to:

  • * Storage costs for idle stock

  • * Material waste due to expiry or damage**

• 
  - Forecasting is a valuable tool for ensuring a business has the right materials to produce goods and services.

Front

Impact of FORECASTING on Efficiency

Back

Decreases the likelihood of ordering and storing excessive materials, optimizing resource use and reducing wastage.

Front

Impact of FORECASTING on Effectiveness

Back

Increases the business's ability to meet customer demand, enhancing customer satisfaction, sales, and market share.

Front

Advantages of FORECASTING

Back

• Improved customer satisfaction: Ensures better fulfillment of customer demand.

• • Reduced waste and enhanced reputation: Minimizes overstocking, benefiting the environment and the company's image.
  

• • Lowered operational costs: Reduces storage costs by optimizing inventory levels.

Front

Disadvantages of FORECASTING

Back

• Limited flexibility: Difficulty in responding to unexpected demand fluctuations.

• • Inaccurate predictions: Outdated data can lead to ordering errors and production disruptions.
  • Resource demands: Forecasting requires significant time and resources for data analysis and specialist hiring.

Front

Define MASTER PRODUCTION SCHEDULE (MPS)

Back

A plan that outlines:
-WHAT OUTPUT a business intends to produce
- HOW MANY
- WHEN to produce

Front

Describe MASTER PRODUCTION SCHEDULE (MPS)

Back

● MPS breaks down the production process and determines output targets that align with predicted customer demand.

● MPS specifies details such as:

- Location
- Timing
- Quantity of the production of outputs.
● Managers then use this information to help them determine:
- Materials

- Machinery

- Labour
required to meet those production targets.

Front

Impact of MPS on Efficiency

Back

Prevents excessive production, optimizes resource use, and reduces waste.

Front

Impact of MPS on Effectiveness

Back

More likely to produce the correct quantity of products to meet customer demand, increasing customer satisfaction, sales, and market share.