3E

• What does managing materials involve?

  organising and monitoring the delivery, storage, and use of materials required for production.
• effect of improving material management in business?

  enhance the efficiency and effectiveness of an operations system
• What is needed production to occur?

  • materials must be delivered to the right place in the correct quantities and at the scheduled time.
  • The way in which inputs and outputs are stored should also match the needs of a business.
• What is forecasting?


  Forecasting is a materials planning tool that predicts customer demand for an upcoming period using past data and market trends
• effect of forecasting in business

  • assists managers to make informed decisions relating to the quantities of materials needed to meet predicted customer demand.
  • helps managers to avoid ordering insufficient or excessive amounts of supplies.
  • If a business does not have enough of a certain material, production may stop and it may fail to meet customer demand.
  • having an excessive amount of materials can increase a business’s costs due to idle stock in storage. Materials can also be wasted due to expiry or become damaged when stored for extended periods of time
• The impact of forecasting on efficiency

  • Forecasting decreases the likelihood of ordering and storing excessive amounts of materials which optimises the use of resources by reducing wastage.
  • Having enough materials minimises halts in the production process which improves productivity.
• The impact of forecasting on effectiveness

  Forecasting improves a business’s ability to meet customer demand which can contribute to increased customer satisfaction, sales, and market share.
• Advantages of forecasting

  • Informed decisions about the quantity of materials required can improve a business’s ability to meet customer demand.
  • Forecasting prevents the excessive ordering of materials that may go to waste if unneeded. This can help minimise the business’s impact on the environment and improve its reputation.
  • reduces the cost of storage as it prevents the need for a large space to store materials.
• Disadvantages of forecasting

  • If a business is too reliant on forecasting, it may be unable to meet unexpected increases in customer demand.
  • The quantity of materials ordered may be incorrect as historical data and market trends may not reflect future demand.
  • It can be time consuming to analyse historical data and market trends.
  • Production halts may occur if the business has insufficient materials due to inaccurate predictions.
  • Businesses may need to hire forecasting specialists, which increases training and wage costs.
• Define MPS

  is a plan that outlines what a business intends to produce, in specific quantities, within a set period of time.
• Characteristic of MPS


  • A master production schedule breaks down the production process and determines output targets that align with predicted customer demand.
  • The master production schedule specifies details such as the location, timing, and quantity of the production of outputs.
  • Managers then use this information to help them determine the materials, machinery, and labour required to meet those production targets.
• impact of master production schedules on efficiency

  • Prevents a business from producing an excessive amount of products, which optimises the use of resources by reducing wastage.
  • Promotes an organised operations system and minimises the number of avoidable errors that occur, which improves productivity by reducing the number of interruptions to production.
• impact of master production schedules on effectiveness

  A business is more likely to produce the correct quantity of products to meet customer demand, which can improve customer satisfaction and increase sales and market share.
• Advantages of Master Production Schedule (MPS)

  • Improves a business's reputation by having a reduced impact on the environment
  • Prevents the business from producing an excessive amount of products, therefore reducing the amount of wastage
  • Provides employees with a clear schedule of operations that includes the timeline and quantity of production targets
  • Allows employees to develop a positive work-life balance
  • Reduces likelihood of production being brought to a halt and time being wasted due to an organisation error
  • Helps businesses meet customer demand, which can increase sales and net profit figures
• Disadvantage of MPS

  • Businesses that are constantly changing details of their operations system may find a master production schedule unhelpful as it is not a flexible program.
  • It can be time consuming to map out details of production.
  • Implementing and maintaining this plan can be expensive
• Define MRP

  Materials requirement planning (MRP) is a process that itemises the types and quantities of materials required to meet production targets set out in the master production schedule.
• Characteristics of MRP


  Materials requirement planning creates a detailed plan of the exact materials needed to meet production targets.
• What manager need to consider when doing MRP

  • Operations managers are required to consider the materials a business has on hand.
  • Using this information, managers can determine what materials need to be ordered in the quantities required.
  • Managers should also consider how long it will take for materials to be delivered
• impact of materials requirement planning on efficiency

  • Having the exact materials required reduces avoidable halts in production which enhances productivity by allowing operations to flow smoothly.
  • Having the exact materials needed for production reduces the amount of excess stock that expires or becomes damaged in storage which optimises resources by reducing waste.
• Impact of MRP on effectiveness

  Ensures there are sufficient materials to meet customer demand. Meeting customer demand helps meet the objective of increasing customer satisfaction and sales.
• Advantage of MRP

  • Materials requirement planning ensures a business only has the exact materials it needs, decreasing waste generated in production. This can help minimise the business’s impact on the environment and improve its reputation.
  • By determining the exact materials required, it is less likely that production will halt due to insufficient materials or organisational errors.
  • Accurate ordering of the quantities of materials required avoids excess storage and therefore reduces associated expenses.
• Disadvantage of MRP

  • time consuming to constantly update the materials plan
  • Implementing and maintaining the materials plan can incur additional administrative and training costs
• Define Just in Time (JIT)

  JIT is an inventory control approach that delivers the correct type and quantity of materials as soon as they are needed for production.
• Characteristics of JIT

  • By delivering materials to be used immediately, Just in Time ensures that a business minimises the stock it has on hand.
  • Reducing the amount of stock held decreases storage costs and prevents stock from becoming damaged or expiring.
  • When JIT is implemented well, it should lead to the elimination of all idle stock and waste.
  • As the business does not have extra stock on hand, the business needs to ensure that its suppliers deliver the right materials, on time, in the correct quantities, and to the correct location, for this strategy to be successful.
• impact of Just in Time on efficiency

  • minimal stock can free up areas in the workspace that can be utilised to increase production.
  • Minimising the amount of stock held can prevent resources from becoming damaged or expiring, allowing resources to be used optimally.
• impact of JIT on effectiveness

  • Costs saved from reducing storage space can be used in other areas of the business, such as sales and marketing, which can meet the objective of increasing sales.
  • A reduction in idle stock can reduce expenses associated with waste which can meet the objective of increased profits.
• Advantages of JIT

  • eliminates idle stock, therefore limiting the amount of stock wasted from expiry or damage in storage. This can help minimise the business’s impact on the environment and improve its reputation.
  • Allows a business to switch to the production of a different product without wasting resources as there are minimal materials on hand to go through.
  • Reduces storage costs and expenses associated with waste, meaning this money can be used in other areas of the business.
• Disadvantage of JIT

  • A business may fail to meet customer demand from a lack of reserves stock which may cause damage to a business’s reputation.
  • There may be less time to check the quality of stock as it must be used as soon as it arrives, which could result in errors in products.
  • If suppliers are unreliable and fail to deliver the correct materials at the right time, production may be brought to a halt.
  • Discounts from bulk buying supplies may be reduced.
  • Delivery costs may increase due to more frequent deliveries.