Dependent demand

Dependent demand
Primary topic
Related topics
Methods and techniques

Dependent demand defines all parts and resources needed to produce finished goods needed to satisfy independent demand of customers and all other external market forces [1]. It is a common production planning concept used in ERP and MRP systems, dependent demand is calculated based on BOM bill of material needed to produce each particular finished product. Calculation of this number is based on market analysis, orders of customers and wholesalers, predictions, strategic plans, production capacity, availability of machines and human resources, etc. [2].

Dependent demand defines all the parts and resources needed to produce the finished goods needed to meet the independent demand of customers and all other external market forces. This is a common concept of production planning used in ERP and MRP systems, the dependent demand is calculated on the basis of the BOM material list needed to produce each individual finished product. The calculation of this number is based on market analysis, customer orders and wholesalers, forecasts, strategic plans, production capabilities, machine availability and human resources.

Material requirements planning[edit]

Material requirements planning (MRP) - these are techniques supporting production management that improve the production processes in a given company. These techniques optimize the stocks of the company. MRP methods are based mainly on professional computer software. However, if we do not have such a possibility, these systems are based on manual planning.

Application MRP[edit]

The MRP system eliminates many time-consuming calculations which result from adapting the production plan to the repeated changes in operating conditions, which are most often caused by delays in deliveries or unplanned changes in demand. With this solution, you can combine these things into one system:

  • description of the size of orders and delivery dates of the company
  • specify when the production started
  • determine the size of given stocks in warehouses

The objectives of MRP[edit]

  1. Reducing the size of records in the company.

2 Reducing the number of employees who deal with the supply of materials.

  1. Reducing the number of orders that have not been completed by the lack of various materials.
  2. Reducing the time that we spend waiting for the products and deliveries.
  3. Creating a long-term planning plan.
  4. Controlling the stages occurring in production.

The main purpose of the MRP system is to control the production process of a given company. On the basis of data, deliveries of goods and materials are planned, tailored to needs. The MRP system uses this data, among others, from Bom (Bill of Materials), i.e. a register of materials that we need to produce a given product.

The enterprise information system combines the combination of materials that are needed to manufacture the product and the production process plan. In addition, it analyzes the size of stocks, determines when these stocks need to be completed so that they do not lie in stores for too long. With this information, we are able to deliver materials to appropriate positions without unnecessary storage. Because there are frequent disruptions in the production process, the company must constantly monitor the implementation of the inventory plan and act accordingly when needed.

Enterprise Resource Planning[edit]

Enterprise Resource Planning (ERP system) - it is an IT system supporting enterprise resource management. It implements all managerial functions in the functional areas of the company. Despite the many tasks implemented by the ERP system, the most important element is the production of financial analyzes that are produced for the needs of the Chief Executive Officer.

This system is called the most effective way of enterprise resource plans, which allows for ongoing management and control at all levels of business operations. An important aspect is also the fact that the system is a holistic approach to the topic of supporting company management.

Features of ERP:

  • Consideration of all sectors of the company's operations
  • Supporting controlling
  • Integration of all functions that the company has as well as its subsystems.
  • Taking into account all the undertakings that the company performs within the logistics within the enterprise and projects related to the supply chain.

The advantages of using the ERP system[edit]

The use of ERP improves the functioning of the company's areas in terms of logistics, finance, customer service or production. The most important gains that we will achieve thanks to this system are the reduction of inventories, improvement of the management process and use of resources, improvement of activities related to the collection and use of information, improvement of production and logistic operations.

References[edit]

Footnotes[edit]

  1. Mentzer, J. T., Moon, M. A., Estampe, D., & Margolis, G. (2007)
  2. Grubbström, R. W., & Thuy Huynh, T. T. (2006)

Author: Magdalena Worłowska