Basic equation of manufacturing value

Wealth comes from natural resources, manufacturing and services.

Raw natural resources are less valuable or useless, and services must be linked to manufacturing to increase wealth.

Manufacturing is a central means of increasing wealth.

ERP Enterprise Resources Planning Resource planning-is the management concept and tools.

The question of manufacturing to answer:

1) What products to manufacture? (Master production plan)

2) What raw materials or components are used to make these products? (BOM)

3) What raw materials or parts are in hand? (Inventory record)

4) What other raw materials or components should be prepared? (Reasonable material demand plan)

To create the basic equation, if the 4 questions are represented by a, B, C, D, the equation formula: a X b–c = d

Basic logic: Each item is calculated according to the Master Production plan, Bill of materials (i.e. product structure file) and inventory record,

Indicate when the material shortage will occur, and give recommendations to meet the requirements with minimum inventory and avoid material shortages, thus obtaining a reasonable material demand plan.

The idea that fully embodies the balance of supply and demand is MRP, which improves the management level of enterprises.

Basic equation of manufacturing value