aggregate planning & master production scheduling - e

Chapter2 1

Aggregate Planning Aggregate Planning & Master Production Scheduling& Master Production Scheduling

Chapter 2

Production Planning Production Planning & Control& Control

Chapter2 2


1 0

F u l ly lo a d f a c i l i t ie s a n d m in im iz e o v e r lo a d in g a n d F u l ly lo a d f a c i l i t ie s a n d m in im iz e o v e r lo a d in g a n d u n d e r lo a d in gu n d e r lo a d in gM a k e s u re e n o u g h c a p a c i ty a v a i la b le to s a t is fy M a k e s u re e n o u g h c a p a c i ty a v a i la b le to s a t is fy e x p e c te d d e m a n de x p e c te d d e m a n dP la n fo r th e o rd e r ly a n d s y s te m a tic c h a n g e o f P la n fo r th e o rd e r ly a n d s y s te m a tic c h a n g e o f p ro d u c t io n c a p a c i ty to m e e t th e p e a k s a n d v a l le y s o f p ro d u c t io n c a p a c i ty to m e e t th e p e a k s a n d v a l le y s o f e x p e c te d c u s to m e r d e m a n de x p e c te d c u s to m e r d e m a n dG e t th e m o s t o u tp u t fo r th e a m o u n t o f r e s o u rc e s G e t th e m o s t o u tp u t fo r th e a m o u n t o f r e s o u rc e s a v a i la b lea v a i la b le

W h y A g g r e g a t e P la n n in g I s N e c e s s a r yW h y A g g r e g a t e P la n n in g I s N e c e s s a r yW h y A g g r e g a t e P la n n in g I s N e c e s s a r y

Chapter2 3


3

P r o d u c t io n P la n n in g H ie r a r c h yP r o d u c t io n P la n n in g H ie r a r c h yP r o d u c t io n P la n n in g H ie r a r c h y

M a ste r P ro d u c tio n S c h e d u lin g M a s te r P ro d u c tio n S c h e d u lin g

P ro d u c tio n P la n n in g a n d C o n tro l S ys te m sP ro d u c tio n P la n n in g a n d C o n tro l S y s te m s

P o n d D ra in in gP o n d D ra in in gS y s te m sS y s te m s

A g g re g a te P la n n in gA g g re g a te P la n n in g

P u shP u shS y s te m s S y s te m s

P u llP u llS y s te m sS y s te m s

F o c u s in g o nF o c u s in g o nB o ttle n e c k sB o ttle n e c k s

L o n gL o n g -- R a n g e C a p a c ity P la n n in gR a n g e C a p a c ity P la n n in g

Chapter2 4


4

P r o d u c tio n P la n n in g H o r iz o n sP r o d u c tio n P la n n in g H o r iz o n sP r o d u c tio n P la n n in g H o r iz o n s

M a ste r P ro d u c tio n S c h e d u lin g M a ste r P ro d u c tio n S c h e d u lin g

P ro d u c tio n P la n n in g a n d C o n tro l S ys te m sP ro d u c tio n P la n n in g a n d C o n tro l S ys te m s

P o n d D ra in in gP o n d D ra in in gS y ste m sS y ste m s


P u shP u shS y ste m s S y ste m s

P u llP u llS y ste m sS y ste m s

F o c u s in g o nF o c u sin g o nB o ttle n ec k sB o ttle n ec k s

L o n gL o n g -- R a n g e C a p a c ity P la n n in gR a n g e C a p a c ity P la n n in g L o n gL o n g -- R a n g eR a n g e(ye a rs)(ye a rs)

M e d iu mM e d iu m -- R a n g eR a n g e(6(6 -- 1 8 m o n th s)1 8 m o n th s)

S h o r tS h o r t -- R a n g eR a n g e(w e e k s)(w e e k s)

V e r yV e r y -- S h o r tS h o r t -- R a n g eR a n g e(h o u rs (h o u rs -- d a y s)d a y s)

Chapter2 5


5

P r o d u c t io n P la n n in g : U n its o f M e a su r eP r o d u c t io n P la n n in g : U n its o f M e a su r eP r o d u c t io n P la n n in g : U n its o f M e a su r e

M a ste r P ro d u c tio n S c h e d u lin gM a s te r P ro d u c tio n S c h e d u lin g

P ro d u c tio n P la n n in g a n d C o n tro l S y s te m sP ro d u c tio n P la n n in g a n d C o n tro l S y s te m s

P o n d D ra in in gP o n d D ra in in gS y s te m sS y s te m s


P u shP u shS y s te m s S y s te m s

P u llP u llS y s te m sS y s te m s

F o c u s in g o nF o c u s in g o nB o tt le n e c k sB o tt le n e c k s

L o n gL o n g -- R a n g e C a p a c ity P la n n in gR a n g e C a p a c ity P la n n in g E n tir e E n t ir e P r o d u c t L in eP r o d u c t L in e

P r o d u c tP r o d u c tF a m ilyF a m ily

S p e c if icS p e c if icP r o d u c t M o d e lP r o d u c t M o d e l

L a b o r , M a te r ia ls ,L a b o r , M a te r ia ls ,M a c h in e sM a c h in e s

Chapter2 6


6

C a p a c ity P la n n in g , A g g re g a te P la n n in g , M a s te r S c h e d u le , a n d S h o rC a p a c ity P la n n in g , A g g re g a te P la n n in g , M a s te r S c h e d u le , a n d S h o r tt -- T e r m T e r m S c h e d u lin gS c h e d u lin g

C a p a c ity P la n n in g1 . F a c il it y S iz e2 . E q u ip m e n t P ro c u re m e n t

A g g re g a te P la n n in g1 . F a c il it y U t il iz a t io n2 . P e rs o n n e l n e e d s3 . S u b c o n tra c t in g

M a s te r S c h e d u le1 . M R P2 . D is a g g re g a t io n o f m a s te r p la n

S h o r t - te rm S c h e d u lin g1 . W o rk c e n te r lo a d in g2 . J o b s e q u e n c in g

L o n g -te rm

In te r m e d ia te -te rm

In te r m e d ia te -te rm

S h o r t- te rm

Chapter2 7


7

R e la tio n sh ip s B e tw e e n O M E le m e n tsR e la tio n sh ip s B e tw e e n O M E le m e n ts

M a rk e tp la c ea n d D e m a n d

R e s e a rc h a n dT e c h n o lo g y

P ro d u c tD e c is io n s

P ro c e s sP la n n in g &D e c is io n s

A g g re g a teP la n fo rP ro d u c tio n

D e ta ile d W o rkS c h e d u le s

M a s te rP ro d u c tio nS c h e d u le

P rio rityP la n n in g &S c h e d u lin g

D e m a n d F o re c a s ts,

o rd e rs

E x te rn a lC a p a c ity

P la n tC a p a c ity

R a w M a te r ia lsA v a ila b le

In v e n to ryO n H a n d

W o rk F o rc e

Chapter2 8

Aggregate Planning Aggregate Planning InputsInputs

A forecast of aggregate demand covering the A forecast of aggregate demand covering the selected planning horizon (6selected planning horizon (6--18 months)18 months)The alternative means available to adjust shortThe alternative means available to adjust short--

to mediumto medium--term capacity, to what extent each term capacity, to what extent each alternative could impact capacity and the related alternative could impact capacity and the related costscostsThe current status of the system in terms of The current status of the system in terms of

workforce level, inventory level and production workforce level, inventory level and production raterate

Chapter2 9

Aggregate Planning Aggregate Planning OutputsOutputs

A production plan: aggregate decisions for each A production plan: aggregate decisions for each period in the planning horizon aboutperiod in the planning horizon about

workforce levelworkforce levelinventory levelinventory levelproduction rateproduction rate

Projected costs if the production plan was Projected costs if the production plan was implementedimplemented

Chapter2 10

Need for Aggregate Capacity Need for Aggregate Capacity PlanningPlanning

Workforce levelWorkforce levelHire or layoff fullHire or layoff full--time workerstime workersHire or layoff partHire or layoff part--time workerstime workersHire or layoff contract workers Hire or layoff contract workers

Utilization of the work forceUtilization of the work forceOvertimeOvertimeIdle time (under time) Idle time (under time) Reduce hours workedReduce hours worked

Inventory levelInventory levelFinished goods inventoryFinished goods inventoryBackorders/lost salesBackorders/lost sales

SubcontractSubcontract

Chapter2 11

Approaches to Aggregate Approaches to Aggregate PlanningPlanning

Top down approachTop down approachBottom up approachBottom up approachInformal or TrialInformal or Trial--andand--Error ApproachError ApproachMathematically Optimal ApproachesMathematically Optimal Approaches

Linear ProgrammingLinear ProgrammingLinear Decision RulesLinear Decision Rules

Computer SearchComputer SearchHeuristicsHeuristics

Chapter2 12

Comparison of Aggregate Planning Comparison of Aggregate Planning MethodsMethods

MethodMethod AdvantagesAdvantages LimitationsLimitations

GraphicalGraphical Simple, easy to use and understand

Provides optimal solutionPopular in many industriesSensitivity & dual analysis provide useful informationSensitivity & dual analysis provide useful informationConstraints readily added

Linear Linear ProgrammingProgramming

Many solutions; solution need not be optimal

Mathematical functions must be linear, and deterministic -- not necessarily a realistic assumption

Chapter2 13



Linear Decision

Rules

Provide optimal solutionHandle non-deterministic demand

Simple, easy to use and understandAttempts to duplicate manager’s decision-making processSimplest, least disruptive, easiest to implement

Incorporates some non-standard costsSkilled personal requiredQuadratic model not always realisticValues of variables are unconstrainedFeasible solution is optimal if it exists - not guaranteed

Management Coefficients

Model

Solution need not be optimalAssumes past decisions are goodBuilt on individual’s invalidate model

Chapter2 14



SimulationPlaces no restrictions on mathematical structure or cost functionsCan test many relationships

No optimal solution guaranteedOften a long, costly, process

Chapter2 15

Aggregate Planning StrategiesAggregate Planning Strategies

Pure Strategies for the Informal Pure Strategies for the Informal ApproachApproach

Matching DemandMatching Demand

Level CapacityLevel Capacity

Buffering with inventoryBuffering with inventory

Buffering with backlogBuffering with backlog

Buffering with overtime or subcontractingBuffering with overtime or subcontracting

Chapter2 16

Aggregate Planning StrategiesAggregate Planning Strategies

Matching Demand StrategyMatching Demand Strategy

Capacity (Production) in each time period is Capacity (Production) in each time period is varied to exactly match the forecasted aggregate varied to exactly match the forecasted aggregate demand in that time perioddemand in that time period

Capacity is varied by changing the workforce Capacity is varied by changing the workforce levellevel

FinishedFinished--goods inventories are minimalgoods inventories are minimal

Labor and materials costs tend to be high due to Labor and materials costs tend to be high due to the frequent changesthe frequent changes

Chapter2 17

Developing and EvaluatingDeveloping and Evaluatingthe Matching Production Planthe Matching Production Plan

Production rate is dictated by the forecasted Production rate is dictated by the forecasted aggregate demandaggregate demand

Convert the forecasted aggregate demand into the Convert the forecasted aggregate demand into the required workforce level using production time required workforce level using production time informationinformation

The primary costs of this strategy are the costs of The primary costs of this strategy are the costs of changing workforce levels from period to period, changing workforce levels from period to period, i.e., hiring and layoffsi.e., hiring and layoffs

Chapter2 18

Level Capacity StrategyLevel Capacity Strategy

Capacity (production rate) is held level (constant) Capacity (production rate) is held level (constant) over the planning horizonover the planning horizonThe difference between the constant production The difference between the constant production

rate and the demand rate is made up (buffered) by rate and the demand rate is made up (buffered) by inventory, backlog, overtime, partinventory, backlog, overtime, part--time labor and/or time labor and/or subcontractingsubcontracting

Chapter2 19

Developing and EvaluatingDeveloping and Evaluatingthe Level Production Planthe Level Production Plan

Assume that the amount produced each period is constant, Assume that the amount produced each period is constant, no hiring or layoffsno hiring or layoffsThe gap between the amount planned to be produced and The gap between the amount planned to be produced and

the forecasted demand is filled with either inventory or the forecasted demand is filled with either inventory or backorders, i.e., no overtime, no idle time, no subcontracting backorders, i.e., no overtime, no idle time, no subcontracting The primary costs of this strategy are inventory carrying The primary costs of this strategy are inventory carrying

and backlogging costsand backlogging costsPeriodPeriod--ending inventories or backlogs are determined using ending inventories or backlogs are determined using

the inventory balance equation:the inventory balance equation:EIEItt = EI= EItt--11 + (P+ (Ptt -- DDt t ))

Chapter2 20

Aggregate Plans for ServicesAggregate Plans for Services

For standardized services, aggregate planning may For standardized services, aggregate planning may be simpler than in systems that produce productsbe simpler than in systems that produce productsFor customized services,For customized services,

there may be difficulty in specifying the nature there may be difficulty in specifying the nature and extent of services to be performed for each and extent of services to be performed for each customercustomercustomer may be an integral part of the customer may be an integral part of the

production systemproduction systemAbsence of finishedAbsence of finished--goods inventories as a buffer goods inventories as a buffer

between system capacity and customer demandbetween system capacity and customer demand

Chapter2 21

Rough Cut capacity planningRough Cut capacity planning

This done in conjunction with the tentative master production schedule to test the feasibility in terms of capacity before the master production schedule is finalized

This ensures that a proposed MPS does not overload any key department,work center or machine.

It is typically applied to critical work centers that are most likely to bottleneck

Chapter2 22

Flow chart forFlow chart for Rough Cut capacity planningRough Cut capacity planningProduction Plan

Load profiles

Rough Cut CapacityRequirement PlanBill of labor file

Master Schedule

Is capacityadequate

Are loadProfiles

desirable

Management Decisions

Feasibility ?

Optimality?

No

NoYES

YES

Chapter2 23

Types of Capacity Types of Capacity

Fixed capacity

Adjustable capacity

Design capacity

Systems capacity

Potential capacity

Immediate capacity

Actual or utilized capacityNormal or rated capacity

Effective capacity

Chapter2 24

Relation between Design , System Relation between Design , System Capacity and actual outputCapacity and actual output

Design CapacityDesign Capacity

actual outputactual output

System CapacitySystem Capacity

Say 1500 tonnes of steel

Reduced by long range effects



Reduced by Short range effects

Chapter2 25

Factors affecting determination Factors affecting determination of plant Capacity of plant Capacity

Market demand for a product/service

The amount of capital that can be invested

Degree of automation desired

Flexibility for capacity addition

Types of technology selected

Difficulty in forecasting

Obsolescence of product

Level of integration

Chapter2 26

Capacity PlanningCapacity Planning

Capacity planning is concerned with defining long term & short term capacity needs of a firm and determine how these needs will be met

Capacity planning decisionsCapacity planning decisions

Assessing existing Capacity

Forecasting future capacity

Identifying alternative ways

Evaluating financial,economical,and technological alternatives

Chapter2 27

The need for Capacity PlanningThe need for Capacity Planning

Capacity planning is necessary when the organization decides to increase its production or introduce new production to the market.

Once the capacity is evaluated and a need for new or expanded facilities is determined ,decisions regarding facility location and process technology selections are taken

Chapter2 28

Capacity Planning DecisionsCapacity Planning Decisions

Market Considerations Resource Available

Capacity Decisions

Chapter2 29

A small manufacturing company with 200 employees produces umbrellas. The company produces the following three product lines: 1) the Executive Line, 2) the Durable Line and 3) the Compact line, as shown in the below

Executive Line

Durable Line

Compact Line

Aggregate Planning ExampleAggregate Planning Example

Chapter2 30

0

2000

4000

6000

8000

10000

J a n Fe b Ma r Apr Ma y J un

45005500

7000

10000

8000

6000

Number of working days:Jan: 22Feb: 19Mar: 21Apr: 21May: 22Jun: 20

Aggregate Planning Example: Aggregate Planning Example: Demand for Executive UmbrellasDemand for Executive Umbrellas

Chapter2 31

Aggregate Planning Example: Aggregate Planning Example: Cost Information for Executive Cost Information for Executive

UmbrellasUmbrellasMaterials $5.00 /unitHolding costs $1.00 /unit/monthMarginal cost of stockout $1.25 /unit/monthHiring & training cost $200.00 /workerLayoff costs $250.00 /workerLabor hours required 0.15 hrs/unit

Straight time labor cost $8.00 /hrBeginning inventory 250 unitsProductive hours 7.25 hrs/worker/dayPaid straight hours 8 hrs/dayBeginning # of workers 7 workers

Chapter2 32

Aggregate Planning Example: Aggregate Planning Example: Determining Straight Labor Costs and Output Determining Straight Labor Costs and Output

for Executive Umbrellasfor Executive UmbrellasJan Feb Mar Apr May Jun

Days/mo 22 19 21 21 22 20Hrs/worker/mo 159.5 137.75 152.25 152.25 159.5 145Units/worker 1063.33 918.33 1015 1015 1063.33 966.67$/worker $1,408 1,216 1,344 1,344 1,408 1,280

January159.5 = 22 [days/month] * 7.25 [productive hrs/worker]1063.33 = 159.5 [hrs/worker/month] / .15 [hrs/unit]$1,408 = 8 [$/hr] * 8 [paid hrs/day] * 22 [days/month]

Chapter2 33

Aggregate Planning Example: Aggregate Planning Example: Determining Straight Labor Costs and Output Determining Straight Labor Costs and Output

for Executive Umbrellasfor Executive Umbrellas

Aggregate Planning ProblemJan Feb Mar Apr May Jun

Days/month 22 19 21 21 22 20Hrs/worker/month 160 138 152 152 160 145Units/worker 1,063 918 1,015 1,015 1,063 967Labor cost/worker $1,408.00 $1,216.00 $1,344.00 $1,344.00 $1,408.00 $1,280.00

Chapter2 34

• 4,500 units is the demand in January (any combination of firm orders and forecast

• 250 is the starting inventory position• 4,250 = 4,500 – 250• 3.997 = 4,250 / 1,063.33• 7 = workforce level at the beginning of

January• 3 = 7 – 4 = workers fired• 4 = workforce level at end of January• 0 = ending inventory level

JanDays/mo 22Hrs/worker/mo 159 .5Units/worker 1 ,063 .33$ /worker $1 ,408

JanDemand 4 ,500Beg. inv. 250Net req. 4 ,250Req. workers 3 .997HiredFired 3W orkforce 4Ending invento ry 0

Aggregate Planning ExampleAggregate Planning ExampleChase Strategy for Executive Chase Strategy for Executive

UmbrellasUmbrellas• Objective: Adjust workforce level so as to eliminate the need to carry inventory from period to period

Chapter2 35


UmbrellasUmbrellasChase Strategy

Jan Feb Mar Apr May JunDemand 4,500 5,500 7,000 10,000 8,000 6,000Beginning inventory 250 0 0 0 0 0Net requirements 4,250 5,500 7,000 10,000 8,000 6,000Beginning # of workers 7 4 6 7 10 8Required workers 4 6 7 10 8 6Workforce adjustment -3 2 1 3 -2 -1Production quantity 4,250 5,500 7,000 10,000 8,000 6,000Ending inventory 0 0 0 0 0 0

Chapter2 36


UmbrellasUmbrellas

January costs: $21,250.00 = 4,250 [units] * $5 [$/unit]$ 5,627.59 = 3.997 [workers] * 1,408 [$/worker]$ 750.00 = 3 [workers fired] * 250 [$/worker fired]

Chase Strategy CostsJan Feb Mar Apr May Jun

Material cost $21,250.00 $27,500.00 $35,000.00 $50,000.00 $40,000.00 $30,000.00 $203,750.00Labor cost $5,628.00 $7,283.00 $9,269.00 $13,242.00 $10,594.00 $7,945.00 $53,961.00Hiring cost $0.00 $400.00 $200.00 $600.00 $0.00 $0.00 $1,200.00Firing cost $750.00 $0.00 $0.00 $0.00 $500.00 $250.00 $1,500.00Inventory holding cost $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00Inventory stockout cost $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00

TOTAL: $260,411.00

Chapter2 37

Aggregate Planning ExampleAggregate Planning ExampleLevel Strategy for Executive UmbrellasLevel Strategy for Executive Umbrellas

JanDemand 4,500Beg. inv. 250Net req. 4,250Workers 6Production 6,380Ending inventory 2,130Surplus 2,130Shortage

• Objective: Adjust inventory level so as to eliminate the need to hire or fire workers from period to period

• Assume that January is started with 6 employees

• 6,380 = 6 [employees] * 1,063.33 [units/worker]

• 2,130 = 6,380 – 4,250 (surplus)

Chapter2 38

Aggregate Planning ExampleAggregate Planning ExampleLevel Strategy for Executive UmbrellasLevel Strategy for Executive UmbrellasLevel Capacity Strategy

Jan Feb Mar Apr May JunDemand 4,500 5,500 7,000 10,000 8,000 6,000Beginning inventory 250 2,130 2,140 1,230 -2,680 -4,300Net requirements 4,250 3,370 4,860 8,770 10,680 10,300Beginning # of workers 6 6 6 6 6 6Required workers 4 4 5 9 10 11Workforce adjustment 0 0 0 0 0 0Production quantity 6,380 5,510 6,090 6,090 6,380 5,800Ending inventory 2,130 2,140 1,230 -2,680 -4,300 -4,500

Chapter2 39

Aggregate Planning ExampleAggregate Planning ExampleLevel Strategy for Executive UmbrellasLevel Strategy for Executive Umbrellas

January costs: $8,448 = 6 [workers] * $1,408 [$/worker]$ 31,900 = 6,380 [units] * $5 [$/unit]$ 2,130 = 2,130 [surplus units] * $1 [$/unit held/month]

Level Capacity Strategy CostsJan Feb Mar Apr May Jun Total

Material cost $31,900.00 $27,550.00 $30,450.00 $30,450.00 $31,900.00 $29,000.00 $181,250.00Labor cost $8,448.00 $7,296.00 $8,064.00 $8,064.00 $8,448.00 $7,680.00 $48,000.00Hiring cost $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00Firing cost $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00Inventory holding cost $2,130.00 $2,140.00 $1,230.00 $0.00 $0.00 $0.00 $5,500.00Inventory stockout cost $0.00 $0.00 $0.00 $3,350.00 $5,375.00 $5,625.00 $14,350.00

TOTAL: $249,100.00

Chapter2 40

Aggregate Planning ExampleAggregate Planning ExampleWhich Plan is Cheaper?Which Plan is Cheaper?

Level CapacityLevel Capacity ChaseChase

$249,100.00 $260,411.00

Clearly, the level capacity plan is cheaper over the selected time horizon

Note: Be cautious in using the chase strategy as many intangibles, such as employee loyalty and commitment to the organization are adversely affected

Chapter2 41

Production Plan ExampleProduction Plan Example

110

400

1500 —

1250 —

1000 —

750 —

500 —

250 —

0 — | | | |1 2 3 4

Quarter

Pain

t (th

ousa

nds

of g

allo

ns)

510

300

Inventoryconsumption

Production plan

Requirements

Inventoryaccumulation

Chapter2 42

Staffing Strategies in Services: Staffing Strategies in Services: Level StrategyLevel Strategy

Chapter2 43

Staffing Strategies in Services: Staffing Strategies in Services: Chase StrategyChase Strategy

Chapter2 44

Aggregate Planning Example via Aggregate Planning Example via ExcelExcel

Chapter2 45

Aggregate Planning Example via Aggregate Planning Example via LPLP

�

Alternatives

I0

1

2

2 3 4 5 6Unused�Capacity

Total�Capacity

Time Period

0 60 120 180 240 300

0 2

R1 48��

� 171,000 1,060 1,120 1,180 1,240 1,300

0 65

R11,150 1,210 1,270 1,330 1,390 1,450

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0 65

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0 16

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1070 80

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D 50 60 90 120 70 44 132 566 �

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Chapter2 46

Aggregate Planning ExampleAggregate Planning ExampleComputer ApplicationComputer Application

Chapter2 47

Aggregate Planning ExampleAggregate Planning ExampleComputer ApplicationComputer Application

Chapter2 48

Aggregate Planning ExampleAggregate Planning Example

Chapter2 49

Is constraint by and Is constraint by and supports the production supports the production planplanDevelopment of Development of anticipated build anticipated build schedules for specific schedules for specific productsproductsMix, no volumeMix, no volumeProjected inventory Projected inventory levelslevelsProjected backlog Projected backlog levelslevelsAvailable to promiseAvailable to promiseOrder promising Order promising informationinformation““DisaggregatesDisaggregates”” the the production planproduction plan

MASTER PRODUCTION MASTER PRODUCTION SCHEDULINGSCHEDULING

PLANNING

STRATEGIC BUSINESS PLAN

PRODUCTION PLAN

MASTER PRODUCTION

SCHEDULE

MASTER PLAN

RESOURCE REQUIREMENT

PLAN

ROUGH-CUT CAPACITY PLAN

LONG-RANGE

MEDIUM-RANGE

PRIORITY

CAPACITY

Chapter2 50

Provide a realistic Provide a realistic schedulescheduleMaintain desired Maintain desired level of customer level of customer serviceserviceMake best use of Make best use of resourcesresourcesAvoid backordersAvoid backordersTo make the best To make the best use of material, use of material, labor, and labor, and equipmentequipmentKey input to Key input to purchasingpurchasingProduct launchProduct launch

MASTER PRODUCTION MASTER PRODUCTION SCHEDULINGSCHEDULING

PLANNING


PRODUCTION PLAN

MASTER PRODUCTION

SCHEDULE

MASTER PLAN


PLAN


LONG-RANGE

MEDIUM-RANGE

PRIORITY

CAPACITY

Chapter2 51

Constraint by the Constraint by the master production master production schedulescheduleTo determine the To determine the materials requiredmaterials required–– What is requiredWhat is required–– How much is How much is

requiredrequired–– When it is requiredWhen it is required

To establish and To establish and maintain prioritiesmaintain prioritiesTo avoid To avoid production production stoppagesstoppagesDrive the Drive the purchasing processpurchasing process

MASTER REQUIREMENT PLANNINGMASTER REQUIREMENT PLANNING

PLANNING


PRODUCTION PLAN

MASTER PRODUCTION

SCHEDULE

MATERIAL REQUIREMENTS

PLAN

MASTER PLAN


PLAN


CAPACITY REQUIREMENTS

PLAN

IMPLEMENTATION

LONG-RANGE

MEDIUM-RANGE

SHORT-RANGE

PRIORITY

CAPACITY

Chapter2 52

Guidelines For master SchedulingGuidelines For master Scheduling

1. Work from an aggregate Production plan2. Schedule common Modules when possible3. Load facilities realistically4. Release orders on timely basis5. Monitor inventory levels Closely6. Reschedule as required

Chapter2 53

Guidelines For master SchedulingGuidelines For master Scheduling

Symptoms of a poorly designed MPS

1. Overloaded facilities2. Under loaded facilities3. Excessive inventory levels on some end items

and frequent stock outs on others4. Unrealistic schedules that production

personnoel do not follow5. Excessive expediting or follow up

Chapter2 54

Solved problemsSolved problemsProblem 1A firm has 4 work centers ,a,b,c,d in series with

individual capacities in units per day shown in figure below. The actual output is also shown in the figure

A430

C350

B380

D410

Actual output

1 What is systems capacity ?2 What is systems efficiency ?

Chapter2 55Chapter2 55

Solved problemsSolved problemsSolutionSystem capacity is the capacity of bottleneck center(i.e. center

having minimum capacity)1. System capacity=350 units/day2. System efficiency = Actual Output

System capacity=310/350=88.57%

Problem 2A work center operates 5 days a week on a 2 shifts per day basis each shift of 8 hours duration .There are five machines of the same capacity in this work center.What is rated output in standard hours per week ?


Solved problemsSolved problemsSolutionRated capacity =(No of Machines)*(M/c hrs)* (percentage )* (System

per week per week of utilization ) Efficiency)

Rated capacity = (5)*(8*2*5)*( 0.80)*( 0.90)Per week =288 Standard hours

Q3 The following is a tentative master schedule for four weeks

ProductProduct Week1Week1 Week2Week2 Week3Week3 Week4Week4

AABBCC

300030002000200012001200

400040001500150018001800

120012003000300025002500

250025003500350020002000


Solved problemsSolved problems

DepartmentDepartment Product AProduct AHrsHrs

Product BProduct BHrsHrs

Product CProduct C

XXYYZZ

0.200.200.080.080.110.11

0.050.050.150.150.080.08

0.100.100.200.200.050.05

The Bill of labor in key work centers for companies 3 major products is as followsDetermine the Load on department X,Y,Z over next 4 weeks


Solved problemsSolved problemsCalculation of load on department “X”

For week1: (3000*0.20)+(2000*0.65)+(1200*0.10)= 600+100+120=820 Hrs

For week2: (4000*0.20)+(1500*0.05)+(1800*0.10)= 800+75+180=1055 Hrs.

For week3: (1200*0.20)+(3000*0.05)+(2500*0.10)= 240+150+250=640 Hrs.

For week4: (2500*0.20)+(3500*0.05)+(2000*0.10)= 500+175+200=875 Hrs.


Solved problemsSolved problemsSimilar calculation of Y & Z Calculation of load are carried out.Department YWeek1………… 780 HrsWeek2………… 905 HrsWeek3…………1046 HrsWeek4…………1125 HrsDepartment ZWeek1………… 550 HrsWeek2………… 650 HrsWeek3…………497 HrsWeek4…………655 Hrs


Solved problemsSolved problemsProblem4: A firm produces two products P & Q on a produce to stock basis.The demand for the products come from several sources.The estimated demand for the product for the two products over next 5 weeks are given below.

Product P Product QWeekWeek WeekWeek

11 22 33 44 55 22 33 44 55

1010

--

1010

2525 2020

2020

1010

2525

--

--

2525

--

--

--

3030

1010

--

--

2020

1010

--

--

2020

--

1010

2020

--

2020

1010

2525

11

IntraIntra company orderscompany orders -- --Warehouse ordersWarehouse orders -- --R&D ordersR&D orders -- --Customer demandCustomer demand 2525 3030

Sources ofSources ofDemandDemand


Solved problemsSolved problemsThe safety stock for the products P is 25 and for Q is 30 .The lot size for P is 60 and for Q is 70.The beginning inventory for P is 50 and for Q is 60.Prepare a master production schedule

ProductProduct Data

WeekWeek““PP””(lot size=60)(lot size=60)

(Safety Stock =25)(Safety Stock =25)11 22 33 44 55

3535 3030

6565--

3535

404060606565

5050

303060604040

5555

252560603030

Total DemandTotal Demand 2525

Beginning InventoryBeginning Inventory 5050Required productionRequired production --

Ending InventoryEnding Inventory 2525


Solved problemsSolved problems

ProductProduct Data

WeekWeek““QQ””(lot size=70)(lot size=70)(Safety Stock (Safety Stock

=30)=30)

11 22 33 44 55

5555 4040

5050

7070

8080

3535

7070

5050

3535

7070

--

3535

3030

3030

7070

7070

Total DemandTotal Demand 3030

Beginning InventoryBeginning Inventory 6060

Required productionRequired production --

Ending InventoryEnding Inventory 3030

Chapter2 63


End Of

Chapter 2

aggregate planning & master production scheduling - e

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