Learning Block 1: Demand Planning Overview

Lead Time

Average time it takes from placing orders with suppliers to receiving the goods.

ERP System

The system that integrates the individual demand forecasts and plans

Master Production System (MPS)

Created from the demand forecast and alerts the factory as to how many end products are needed within a certain time frame

Materials Requirement Plan (MRP)

Calculate what is needed for manufacturing operations: consumables (rags, shop supplies, chemicals), raw materials, semi-finished goods, and any other items needed to complete the finished product; uses specialized software like Oracle, SAP, and i-2

CPFR

A process of sharing visibility, information, and resources that facilitates planning to satisfy customer demands

Raw Materials

Crude or processed material that can be converted by manufacturing, processing, or both into new and useful products

Quantitative Forecasting

Forecasting based on numbers or historical data

Qualitative Forecasting

Using intuition or expert judgement because little to no historical data exists

Growth

Product sales are expanding

Decline

Demand drops

Trend

Predictable growth or decline

Seasonal

Patterns of increase and decline that repeat cycle after cycle

Cyclical

Patterns influenced by external factors like the broader economy or customer preference changes 

Trend with Seasonality

Predictable growth or decline based on cycles

Independent Demand

Finished goods that are sold to customers

Dependent Demand

Demand for one good or service occurs as a result for demand for another