Real-world profit maximization occurs when the total cost of production,
distribution, and transportation are minimized, while all product demand is satisfied. MRP and MRPII are supply chain management tools -- not end-item optimization models. For years production planners and logistician have assumed that through judicious management of the supply chain, profits would automatically be maximized. Unfortunately, there is nothing inherent in the MRP or MRPII processes which would cause profits to be maximized naturally. Efficient supply chain management is a requisite for profit enhancement; but, maximum profitability depends not as much on supply chain management as it does on selecting the optimal combination of manufacturing source, distribution channel, and transportation mode for each product over a period of time. The "optimal combination" of these discrete, but interdependent functions will result in the greatest profitability at a given sales volume. Profit maximization therefore requires end-item modeling, not just supply chain management. is a planning and decision support tool which operates either as a stand-alone end- item model, or as an adjunct to an existing MRP/MRPII program. neither competes with, nor replaces traditional MRP in the area of tactical supply chain management. The objective of is to maximize enterprise-wide profitability. |
Production to Retail Optimization