CPIM-MPR

How to calculate cumulative ATP

ATP = MSP- (sum all orders up until the next MPS)

requisition/part requisition

An authorization that identifies the item and quantity required to be withdrawn from an inventory. Syn: requisition. See: purchase requisition. It is a manufacturing process

bill of resources

A listing of the required capacity and key resources needed to manufacture one unit of a selected item or family. Rough-cut capacity planning uses these bills to calculate the approximate capacity requirements of the master production schedule. Resource planning may use a form of this bill.

Resource requirements planning is a resource check that is usually looking into the future

12-18 months. Resource requirements planning is checking for high level capacity issues for the longest horizon; usually 12-18 months (some industries are longer if they require more lead time to add capacity or key resources).

MAD VS. confidence level

2.06 MAD (2.06 times the calculated MAD or variation from the mean), there would be a 95% probability that inventory would be available for the customer. At 3 MAD, the probability rises to 99%, at 4 MAD the probability is 99.99% and at 5 MAD the probability is 99.9999%.

discrete (离散的，不连续的) available-to-promise/ incremental available-to-promise

A calculation based on the available-to-promise figure in the master schedule. For the first period, the ATP is the sum of the beginning inventory plus the MPS quantity minus backlog for all periods until the item is master scheduled again. For all other periods, if a quantity has been scheduled for that time period then the ATP is this quantity minus all customer commitments for this and other periods until another quantity is scheduled in the MPS. For those periods where the quantity scheduled is zero, the ATP is zero (even if deliveries have been promised). The promised customer commitments are accumulated and shown in the period where the item was most recently scheduled.

demand management process

A process that weighs both customer demand and a firm's output capabilities, and tries to balance the two. Demand management is made up of planning demand, communicating demand, influencing demand, and prioritizing demand

production forecast

A projected level of customer demand for a feature (option, accessory, etc.) of a make-to-order or an assemble-to-order product. Used in two-level master scheduling, it is calculated by netting customer backlog against an overall family or product line master production schedule and then factoring this product's available-to-promise by the option percentage in a planning bill of material. See: assemble-to-order, planning bill of material, two-level master schedule.

what group should be responsible for demand planning

Marketing should be responsible for demand planning. They are responsible for identifying the products and services needed by the business to satisfy the customers. They are also responsible for generating the sales leads. They are the group closest to the customer.

Resourcing Planning/resource requirements planning

Capacity planning conducted at the business plan level. The process of establishing, measuring, and adjusting limits or levels of long-range capacity. Resource planning is normally based on the production plan but may be driven by higher level plans beyond the time horizon for the production plan, e.g., the business plan. It addresses those resources that take long periods of time to acquire. Resource planning decisions always require top management approval. Syn: resource requirements planning. See: capacity planning, long-term planning.

Which data should be used to express the sales plan?

Customer requested dates For sales planning purposes, it would be best to use the customer requested dates to plan operations. This would provide a more accurate picture of when the production output would be necessary to meet demand.

Which of the following will most impact the master production schedule if inaccurate? A) Bill of material structures B) Lead times of raw materials C) Operation sequencing D) Inventory balances

D.

exponential smoothing

Fcst/new = Fcst/old + alpha (Demand-fcst/old)

available to promise

In the first period, ATP includes on-hand inventory less customer orders that are due and overdue. Three methods of calculation are used: discrete ATP, cumulative ATP with lookahead, and cumulative ATP without lookahead. See: discrete available-to-promise, cumulative available-to-promise.

what defines "true demand"

Original quantity and requested shipping date True demand results from the original quantity and requested shipping date. By using this data, stockouts and late deliveries will not distort the data.

The person responsible for driving the sales and operations process should be the:

President.

In order to properly test the validity of the production plan resulting from sales and operations planning, and prior to submitting the plan for execution, which of the following should be used?

Rough-Cut Capacity Planning (RCCP) is used to quickly test the capacity at bottleneck work centers. If the plan can be completed through the bottleneck work centers, then the rest of the scheduling should work, as well. This process allows the plan to be checked quickly, prior to submitting to scheduling, material planning, and capacity planning.

Rough cut capacity plans VS. resource plans

Rough-cut capacity plans are more detailed than resource plans and consider more production resources. Rough-cut plans are disaggregated to days or weeks while resource plans are in months or quarters.

how to prevent shortage gaming

The key to reducing or preventing shortage gaming is to communicate frequently with your customers. Allow them access to your systems so they can have as much information as you do. They start to over order because they fear their business will be negatively impacted.

The master scheduler should adjust load profile by:

The master scheduler should adjust the load by shifting resources to work centers, moving requirements to different time periods, or outsourcing production.

tactical plan(s)

The set of functional plans (e.g., production plan, sales plan, marketing plan) synchronizing activities across functions that specify production levels, capacity levels, staffing levels, funding levels, and so on, for achieving the intermediate goals and objectives to support the organization's strategic plan.

why type of demand should be included in Distribution Requirements Planning (DRP)

Warehouse demand & Interplant demand of finished goods

pyramid forecast

a technique that enables management to review and adjust forecasts at the highest aggregate level while keeping lower level forecasts in balance. For example, suppose Product A and Product B both sell $1 million each for a total of $2 million. If management changes the sales forecast to $4 million, the lower level forecast will change to Product A selling $2 million and Product B selling $2 million. Each will maintain the same ratio at the higher sales level.

Focus Forecasting

is based on an approach that the forecasting method that worked best the last time, will work best again for the next forecast. The focus forecasting method tests various models to see how they worked in the past and uses the most accurate method to forecast the future. The mean absolute percentage error is the criteria for choosing the best model. The mean absolute error is defined as the absolute error divided by the actual demand.

Rough-cut capacity planning is used because:

it provides an early warning for schedule problems. Rough-cut capacity planning RCCP) is completed at a macro level after MPS is completed but not committed to. It provides a check that the MPS is realistic. Rough-cut capacity planning represents the high level resource load on a critical work center.

single exponential smoothing

last period forecast+alpha* (last period actual-last period forecast)

primary role for demand management

link the marketplace activities with the production plan. This ensures that manufacturing will have the capability to meet the market demands. Demand management encompasses forecasting, order entry, order delivery date promising, customer order service, and physical distribution.

In which of the following environments will the final assembly schedule normally correspond to the MPS? I.Make-to-stock II.Make-to-order III.Assemble-to-order

make to stock. In a make-to-stock company, there is no need for a separate final assembly schedule because products are stocked in their final assembled form for delivery to the customer.

production plan

management's authorization for the master scheduler to convert it into a more detailed plan, that is, the master production schedule.

How often should the forecast be updated in the sales and operations process?

monthly

how often people meet for S&OP

monthly

4 key elements for demand management

predict, communicate, influence and manage

rolling up

refers to a process in pyramid forecasting in which detailed forecast numbers are aggregated at each higher level until a total sales number is forecasted. Creating detailed forecasts which are aggregated to a total sales figure

forcing down

refers to the pyramid forecasting in which the detailed forecast may be rolled up to an aggregate sales number for the organization. However, senior management may increase the number and the aggregate sales number is then forced down through the detailed forecast. The detailed product line numbers are kept consistent to each other but the numbers are changed based on the aggregate forecast change.

A key output from the sales and operations planning process is the production plan. However, the production plan must be validated to ensure that it is feasible. This validation occurs when the production plan is compared to the:

resource requirements plan.

production network

the complete set of work centers, processes and inventory points from raw materials to finished goods. It represents the logical system that provides the framework to attain the strategic objectives of the firm based on its resources and the products' volumes and processes.

Master production schedule decisions directly evaluate:

the need and feasibility of requirements and resource availability.

The inventory levels are the responsibility of

the sales/marketing teams. This responsibility is based on the forecast responsibility for sales developed in the sales and operations planning process. If the forecast is too optimistic and does not develop, the excess inventory is the result of the optimism. This assumes that manufacturing is manufacturing to a schedule tied to the sales and operations planning.

decomposition

time series data being separated into trend, seasonality, and cyclic data.

second order smoothing.

uses single smoothing with a trend correction

shortage gaming

when suppliers ration 定量；口粮；配给量 or apportion supplies, and buyers, in response, inflate their orders in an attempt to receive what they actually need

demand time fence (DTF)

1) That point in time inside of which the forecast is no longer included in total demand and projected available inventory calculations; inside this point, only customer orders are considered. Beyond this point, total demand is a combination of actual orders and forecasts, depending on the forecast consumption technique chosen. 2) In some contexts, the demand time fence may correspond to that point in the future inside which changes to the master schedule must be approved by an authority higher than the master scheduler. Note, however, that customer orders may still be promised inside the demand time fence without higher authority approval if there are quantities available-to-promise (ATP). Beyond the demand time fence, the master scheduler may change the MPS within the limits of established rescheduling rules, without the approval of higher authority. See: option overplanning, planning time fence, time fence.

Distribution Requirements planning

1) The function of determining the need to replenish inventory at branch warehouses. A time-phased order point approach is used where the planned orders at the branch warehouse level are "exploded" via MRP logic to become gross requirements on the supplying source. In the case of multilevel distribution networks, this explosion process can continue down through the various levels of regional warehouses (master warehouse, factory warehouse, etc.) and become input to the master production schedule. Demand on the supplying sources is recognized as dependent, and standard MRP logic applies. 2) More generally, replenishment inventory calculations, which may be based on other planning approaches such as period order quantities or "replace exactly what was used," rather than being limited to the time-phased order point approach.

The four objectives of production planning are:

1) To integrate business planning to detailed operation planning activities 2) To ensure top management involvement 3) To communicate the production plan 4) To drive the master schedule

components of an effective measurement process

1.Agreed upon, aligned, and shared metrics for all functions involved 2.Industry/competitive benchmarks 3.Agreed upon targets for all metrics and criteria for trend identification 4.A scorecard that is used to guide the process during each period 5.Continuous auditing of the process to determine if all key steps are followed or needed as the process is continuously refined.

closed loop MRP system

A system built around material requirements planning that includes the additional planning processes of production planning (sales and operations planning), master production scheduling, and capacity requirements planning. Once this planning phase is complete and the plans have been accepted as realistic and attainable, the execution processes come into play. These processes include the manufacturing control processes of input-output (capacity) measurement, detailed scheduling and dispatching, as well as anticipated delay reports from both the plant and suppliers, supplier scheduling, and so on. The term closed loop implies not only that each of these processes is included in the overall system, but also that feedback is provided by the execution processes so that the planning can be kept valid at all times.

super bill of material

A type of planning bill, located at the top level in the structure, that ties together various modular bills (and possibly a common parts bill) to define an entire product or product family. The quantity per relationship of the super bill to its modules represents the forecasted percentage of demand of each module. The master-scheduled quantities of the super bill explode to create requirements for the modules that also are master scheduled.

Which of the following should occur if a sales and operations process is working properly?

B) Middle managers will have solved the issues before the meeting.

The major advantage of a two level MPS process is which of the following?

B) Products are planned as the market place demands. A two-level MPS approach allows assemble-to-order firms to plan products based on percentages to be sold without forecasting all possible end item configurations. This allows the planning to mirror the market place demand.

Which of the following would be the best way to cope with the uncertainty of demand?

B) Reduce all the lead times in the company.

For each of the environments, make-to-order, make-to-stock and assemble-to-order, Which of the following statements is true regarding all three environments? Forecasts are consumed over time by actual customer orders.

Each environment will manage demand and schedule differently. However, each will provide a consumption of the forecast by actual customer orders. In the make-to-stock environment, the actual demand may consume the forecast for subassemblies or raw materials.

The S&OP process, in large companies, is usually conducted by director level managers as delegates of senior managers. In order to be effective, which of the following is necessary?

Empowered managers; no senior manager approval It is absolutely necessary that the people meeting during the sales and operations planning (S&OP) process be completely empowered to make decisions for the company. They need to be responsible for the demand and supply aspects of the business without second-guessing. Otherwise, the process will breakdown.

Forecast bias formula

Forecast bias = the sum of the (actual demand - forecast demand)/the number of occurrences.

Which of the following environments would have the lowest production volume of each sales unit? A) Make-to-order B) Make-to-stock C) Assemble-to-order D) Configure-to-order

Generally, make-to-order companies are engineering products in low volume to meet specific customer applications.

3 piece of information in order to prepare a realistic MPS

I. Knowledge of all production requirements II. Available capacity III. Load profile of each MPS item

alpha factor used in the exponential smoothing forecast formula

I. Larger values of alpha give more weight to recent demands II. Smaller values of alpha utilize older data more Larger values of alpha provide for a more responsive forecast based on more recent demands.

When the planning horizon is too short, orders will be released without enough lead time visibility. what problems will occur?

I. Order releases for the supplier are created without enough lead-time. II. Constant expediting of orders is occurring. III. Manufacturing is reprioritizing orders on a regular basis.

3 principles of production planning

I.Production planning is a top management responsibility. II.The master production schedule requirements should equal the production plan. III.Facility requirements are planned using the production plan.

forecast bias

Tendency of a forecast to systematically miss the actual demand (consistently either high or low). Forecast bias = the sum of the (actual demand - forecast demand)/the number of occurrences

business plan include what?

The business plan contains the long term strategies that guide the tactical plans for producing and selling products and services. Long-term strategies might include what new markets to enter, the need for different distribution channels, the need for a new mass market product, etc.

Forecast consumption

The process of reducing the forecast by customer orders or other types of actual demands as they are received. The adjustments yield the value of the remaining forecast for each period. Forecast consumption is the process of replacing the forecast with actual orders as they are received. This allows the demand to be properly calculated. If forecast consumption did not occur, the demand for a part would be doubled.

When setting up the Rough-Cut Capacity Plan, key resources need to be identified. The best way to identify the key resources is to:

ask the manufacturing employees on the floor.

When establishing an S&OP process, one of the key measures is the customer service level (fill rate, on-time delivery rate). The customer service level goal should be set by senior management based on the:

competitions' rate.

he most critical problem for management is to

control bias

There are five steps to the sales and operations planning (S&OP) process. The five steps are

data gathering, forecasting, capacity planning (high level) review, a pre-executive meeting to reconcile plans, finalize the plan and release it.

Before developing a "full blown" sales and operation planning process, it is best to

develop a pilot program using a few test product families. This would allow any problems to surface before involving the whole business.

n a Just-in-Time environment, the master production schedule should be:

end items; units per day.

The production plan needs to be expressed in meaningful units that everyone understands. It also needs to be expressed in a manageable number of units. The best number of product groups or families would be:

five to fifteen.

The production forecast

forecasts the group available-to-promise multiplied by option percentages. It is used with two level master scheduling and represents the available-to-promise at the group level multiplied by the option percentage.

what should be forecast

independent demand

Hedge Stock

inventory to protect against the uncertainty of demand.