TO P I C 3 : Planning in industrial companies MPS, MRP and ERP. Industry 4.0 Flashcards
What is ABC classification
An inventory management system that uses the Pareto Principle (80/20) to establish control levels appropriate for each SKU’s financial importance
What are the problems with ABC classification?
Only takes into account financial aspects (ignores storage space, forecasting difficulties, and manufacturing issues
It is based on annual consumption, which may not reflect current inventory levels
What is a “B” Type of article in ABC classificaiton?
Medium volume (medium importance)
What is the reorder point system?
Stock control system that consists of ordering an amount whenever the level of stocks reaches the reorder level
What is the Economic Order Quantity (EOQ)
The amount ordered (Q) that minimizes the total cost of inventory management
What is the Total Annual Cost equal to?
Purchase Cost + Cost of Placing the order + Cost of stock maintenance
What is Economic Order Quantity equal to?
= Sqrt((2 * D * Co) / Cs)
What are the assumptions of the Economic Order Quantity
Demand is known and constant.
The delivery time is known and constant.
Discounts for quantity are not possible.
The cost of placing an order is independent of the size of the batch.
The cost of preparation is proportional to the number of orders.
The cost of storage is calculated based on average stock.
What is a MPS
A plan that specifies what is to be made and when
The MPS is a statement t of what is to be produced, not a forecast of demand
What is a MRP
A computer info system that helps manufacturers manage dependent demand inventory and schedule replenishment orders
