ASSIGNMENT 1

MANAGEMENT INFORMATION SYSTEM

Submitted By:

Roll No. 55, 5th Semester,

Department of IT

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TOPIC:

What do you understand by Enterprise Resource Planning (ERP)?Explain Material Requirement Planning (MRP) and closed loop planning.

Definition of Enterprise Resource Planning

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ERP is defined as an Integrated Computer based planning technique used in Organizations and Enterprises for management and resource planning. Resources here mean both internal and external resources of an organization. Various resources of an organization can include financial resource, tangible resource, human resource and also various material requirements. ERP can also be defined as an application and software architecture that facilitates Information flows between various business functions inside and outside of an organization. It consolidates business environment into a uniform system environment. Basically what ERP systems do is that it integrates and automates processes within an entire organization regardless of the organization’s behaviour.

A traditional definition of ERP as given by APICS – The Educational Society for Resource Management is given below-

‘ERP is a method for effective planning and control of all resources needed to take, make, ship and account for customer orders in a manufacturing, distribution or service company.’

ERP are used in various Industries and organizations like manufacturing, distribution, transportation, education, healthcare, banking and others.

ERP delivers a single database that contains all data for the various software modules. It typically addresses areas such as:

Manufacturing:

Engineering, bills of materials, scheduling, capacity, workflow management, quality control,

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cost management, manufacturing process, manufacturing projects and manufacturing flow.

Supply chain management :  

Order to cash, inventory, order entry, purchasing, product configuration, supply chain planning, supplier scheduling, inspection of goods, claim processing and commission calculation.

Financials:

General ledger, cash management, accounts payable, accounts receivable, fixed assets.

Project management:

Billing, time and expense, performance units, activity management.

Human resources:

Human resources, payroll, training, time and attendance, roistering, benefits.

Advantages of ERP:

1. Ease of Use.2. General Purpose.3. Totally Integrated System.4. Readymade solutions for most of the Problems.5. Integration of all functions already established.6. Dependency on Human Resources eliminated.7. Suppliers and customers can do online

communication.

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Materials Requirement Planning

Management resource planning is basically a planning tool, which is based on sales forecast used in the production schedule. Whether production schedule is based on historical past sales data or market forecast, it takes into account the changes in the demand for the end-products.

The idea of MRP is not entirely new. It was developed in the 1970’s and used before for job-lot production or custom – build order. However with the advent of Computers and Information Technology the availability of quick information and data processing is now facilitated.

Basically MRP performs the following five functions:

1. It keeps track of a computerised Inventory Control.2. It manages an efficient Production Planning

System.3. Management Information system.4. Manufacturing Control System.5. Time-phasing of requirements using posted

average lead times.The demand for the end-products is independent

as also some service parts and some service parts and some other higher order assemblies sold direct to customers. Other requirements of materials, components and parts have dependent demands based on end-products, which are quantitatively expressed in the production schedule.

In MRP, safety stock at the item level disappears and the ‘order quantity formula’ which assumed a fairly constant demand, with some minor fluctuations, need

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not be calculated for discrete demands for most of the dependant demand inventory items.

The recognition of the fact that ‘time’ is a more important element with respect to delivery and materials availability as per schedule rather than quantity, gives this planning tool a new meaning eliminating carrying cost altogether.

Product Structure File

Master Production Schedule

Inventory master file

Fig. - Overview of the MRP System

Advantages of Material Resource Planning:

1. It reduces inventory levels.2. It reduces Component shortages.3. Improves Shipping Performance and Customer

Service.

Materials requirement planning

Manufacturing Orders Purchase

orders

Various Reports

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4. Productivity and Production levels increase.5. Reduces Manufacturing Costs and Lead Times.6. Simplified and accurate Scheduling.7. Higher Production quality.8. Communication Levels Increase.

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