The stocks are usually managed by a rule called the min-max rule. In this rule production only starts when the stocks are below the minimum or are approaching the minimum and will continue until they reach the maximum level. Therefore production is triggered by stock levels rather than customer orders (Portougal 1-9). EA wanted MTS over MTO for a number of reasons. The first reason is that it allowed for expansion of the market by attracting new customers and by taking advantage of unexpected opportunities. The second reason is that it allowed for the use of capacity more efficiently through the use of inventory cushions rather than capacity cushions (Portougal 1-9). I agree with EA’s decision to employ the MTS strategy because it minimizes opportunity lose and therefore the company is able to get new customers and take advantage of other unexpected opportunities thus expanding the market. The only problem that the company will encounter is the ability to make accurate predictions about demand of their products. If this is not done they may undergo losses as a result of the nature of their products. Aggregate Capacity planning (ACP) refers to the attempt to balance capacity and demand in order to minimize costs. It starts with the development of the sales budget that predicts the amount of products to be sold in the future and directs the sales and marketing efforts of the company. This plan should be realistic and should be able to meet the business and financial objectives of the
company. Master production scheduling is a tool that ensures that the available capacity is allocated by concentering on customer service. The tool is used to identify the areas where capacity is lacking for meeting the schedule or where the capacity utilization is inadequate within the schedule. Shop floor scheduling refers to the actual arrangement for a given week with a daily subdivision that is specified by production lines and products (Portougal 1-9). The production staff views SAP negatively as they think that the modules are irrelevant to their business processes. Their opinion was that SAP just like most ERP systems still focus on specific functions such as production, accounting and inventory among others. Therefore they were of the view that I order to use the ERP systems businesses have to modify their activities which they were not ready to do. They insist that they made the current system and it is effective compared to what the management wants to introduce (Portougal 1-9).