Planning Systems PowerPoint 3- William McLaury Rutgers University
Discrete Availabe-to-Promise
(Period 1): Beginning Inventory + MPS - Committed Customer Orders (CCO's) up to but not including the period of the next scheduled MPS (Period 2): 1. If no MPS has been scheduled for the period, the ATP is zero -If an ATP for any period is negative, the negative must be subtracted from the most recent positive ATP
Master Production Scheduling (MPS)
- A detailed disaggregation of the aggregate production plan, listing the END EXACT ITEMS to be produced by a SPECIFIC PERIOD -More detailed than APP & easier to plan under stable demand. -Planning horizon is shorter than APP, but longer than the lead time to produce the item. -the production quantity to meet demand from all sources & is used for computing the requirements of all time-phased end items -Even small changes in the upper-level-production plan can cause major changes in the lower-level production plan, i.e., create "system nervousness" -Note: For the service industry, the master production schedule may just be the appointment log or book, where capacity (e.g., skilled labor or professional service) is balanced with demand.
Super Bill of Materials
-(AKA planning BOM, pseudo BOM, phantom BOM, or family BOM) enables the firm to forecast the total demand end products
Material Requirements Planning (MRP)
-A computer-based materials management system that calculates the exact quantities, need dates, & planned order releases for subassemblies, component parts & materials required to manufacture a final product.
Distribution Requirements Planning (DRP)
-A time-phased finished good inventory replenishment plan in a distribution network -is a logical extension of the MRP system & ties physical distribution to manufacturing planning and control system
Advantages of ERP Systems
-Added visibility leads to reduced supply chain inventories -Helps to standardize manufacturing processes -Measure performance & communicate via a standardized method
Aggregate Production Plan (Chase Strategy)
-Adjusts capacity to match demand. Firm hires and lays off workers to match finished output to demand. Finished goods inventory remains constant. Works well for make-to-order firms -Airplane companies do this since training takes time. Union employees are sent back to the union hall, waiting to be recalled. They collect unemployment. Another example are workers that harvest crops.
Computer based "push" resource systems
-Closed-loop MRP -Manufacturing Resource Planning (MRP II) -Enterprise Requirements Planning (ERP) -Distribution Requirement Planning (DRP)
Firmed Segment (AKA demand time fence)
-From the current period out several weeks into future. -The planning system is not allowed to automatically make changes, only recommend changes which must be reviewed by an authorized person(s) in the Planning function who will then initiate the appropriate action.
Aggregate Planning Strategies (Change Inventory Levels) supply options
-Increase inventories - build stock in advance of demand in order to use available capacity -Decrease inventories - temporarily reduce inventory below normal safety stock levels during peak demand periods to meet customer requirements.
Enterprise Resource Planning Systems (ERP)
-Information system connecting all functional areas & operations of an organization and in some cases, suppliers and customers via common software infrastructure and database -provides means for supply chain members to share information so that scarce resources can be fully utilized to meet demand, while minimizing supply chain inventories
Aggregate Production Plan (Level Strategy)
-Relies on a constant output rate while varying inventory & backlog according to fluctuating demand. Firm relies on fluctuating finished goods & backlogs to meet demand. Works well for make-to-stock firms -Plywood, steel, light bulbs, razors are examples. Maybe the changeover is long, or its inefficient to stop/ start.
Planning Goals and Objectives
-Setting Goals & Objectives -Determining Steps to Achieve Goals -Setting Start & Completion Dates -Assigning Responsibility
Intermediate Range Planning
-Shows the quantity & timing of end items (ref., Master Production Schedule - MPS) *Mid-level - Ford Motor Company wants to make 1,000 F-150 pick up trucks/week for the next 3-18 months.
Disadvantages of ERP Systems
-Substantial time & capital investment -Complexity -Firms adapt processes to meet ERP system
MRP requires:
-The independent demand information, i.e., finished product forecast -Parent-component relationships from the BOM -Inventory status of final product & each of the components and materials. -Planned order releases (the output of the MRP system)
Aggregate Planning Strategies (Change Capacity) supply options
-Vary production output through overtime or idle time -Vary work force size by hiring or layoff -Using part-time workers -Subcontracting
Short-Range Planning
-detailed planning process for components & parts to support the master production schedule (ref., Materials Requirement Planning - MRP) *Planner, 1st line Supervisor - 1,000 engines, 1,000 transmissions, seats, windows, etc. each week over the next 1-12 weeks.
Bill of Materials (BOM)
-document that shows an inclusive listing of all component parts & assemblies making up the final product
Demand Options for Aggregate Planning Strategies-
-influencing demand -back ordering during high demand periods -counter- seasonal product mixing
Long Range planning
-involves planning for actions such as the construction of facilities & major equipment purchase (ref., Aggregate Production Plan - APP) . *Executive position
Three basic production strategies
-level strategy -chase strategy -mixed production strategy
Dependent Demand
-the internal demand for PARTS (i.e., the items that are assembled or combined to make up the final product) based on the demand of the final product in which the parts are used (e.g., raw materials, component parts, packaging materials, subassemblies, etc.) - Not forecasting amount, know an actual amount going in
2 Types of Implementation
1. Best-of-breed 2. Single integrator solution
3 Major Capacity Planning Tools
1. Resource Requirement Planning (RRP) 2. Rough Cut Capacity Plan (RCCP) 3. Capacity Requirement Planning (CRP)
3 major ERP providers
1. SAP 2. Oracle 3. Microsoft -Other small software firms provide applications (e.g., Sage's MAS 90) as well as full ERP solutions, but lack applistructure
Scheduled Receipt
A committed order awaiting delivery for a specific period, order placed in the past that is scheduled to come in, placed and confirmed
Firmed Planned Order
A planned order that the MRP computer logic cannot automatically change when conditions change. Established by the planner or Supply Chain manager to prevent system nervousness
Major ERP Applications
Accounting and Finance Customer Relationship Management Human Resource Management Manufacturing Supplier Relationship Management Supply Chain Management
One of the most critical activities of an organization is to
Balance the production plan with capacity
Safety Stock
inventory held to protect against uncertainties or variability in demand or supply (including quality defects and exceeding planned lead time)
Enterprise Requirements Planning (ERP)
is an extension of MRP-II
Single Integrator solution
pick all the desired applications from a single vendor (all modules within 1 large package)
Best of breed
pick the best application for each individual function. Disadvantage - software may not integrate well but this may not be a major issue in future (each function (marketing, operations, accounting, etc.) may be looking at specific types of software package that suits their needs best)
Rough-Cut Capacity Plan (RCCP)
or medium-range capacity planning, used to check the feasibility of the Master Production Schedule (MPS). Converts MPS from the production needed to the capacity required, then compares it to capacity available
Lot Size
order size for MRP logic
Components
parts that go into parent, demanded by a parent
Time Bucket
period used on the MRP. Days, weeks, or months, whatever period of time you want to use
Most importantand method calculating the ATP quantities
Discrete Available-to-Promise (planned - ordered = ATP for each time period)
1. Firmed segment (demand time fence) 2. Tentative segment (planning time fence)
Firms use a time fence to deal with nervousness by separating the planning horizon into:
Tentative Segment (AKA Planning Time Fence)
From the end of the Firmed Segment all the way to the end of the planning horizon. The planning system automatically creates or makes changes to planned orders based on the data and planning logic determined by the company
Aggregate Production Plan (APP)
Hierarchical planning process that translates annual business & marketing plans & demand forecasts into a production plan for a product family (products that share similar characteristics) in a plant or facility -Planning horizon is at least one year & is usually rolled forward by three months every quarter. -Includes those costs relevant to aggregate planning decisions i.e., inventory, setup, machine operation, hiring, firing, training, & overtime costs.
Planning Tasks and Horizons for Operations Management
Intermediate-Range (3-18 Months) - Sales Planning - Production Planning - Setting employment, inventory, and subcontracting levels - Analyzing operating plans
APP (Mixed Production Strategy)
Maintains stable core workforce while using other short-term means, such as overtime, subcontracting & part time helpers to manage short-term demand. -Construction co., retail stores at holiday season.
Aggregate Planning Goals
Meet demand Use capacity efficiently Meet inventory policy Minimize cost: -Labor -Inventory -Plant & equipment -Subcontract
Pegging
Relates gross requirements for a component part to the planned order releases of the parent item -Looking back at BOM and seeing where a product goes where, trying to figure out where the component goes into a finished product
Planning Tasks and Horizons for Operations Managers, Supervisor, Foreman, etc.
Short-Range (up to 3 months) - Job assignments - Ordering - Job scheduling - Dispatching
Resource Requirement Planning (RRP)
a long-range capacity planning module, checks whether aggregate resources are capable of satisfying the Aggregate Production Plan (APP). (include gross labor hours & machine hours)
Capacity Requirement Planning (CRP)
a short-range capacity planning technique that is used to check the feasibility of the Material Requirements Plan (MRP)
Net Requirement
The unsatisfied item requirement for a specific time period. Gross requirement minus current on hand inventory
Bill of Materials Independent Demand
demand for FINAL products affected by trends, seasonal patterns, & general market conditions
Distribution Requirement Planning (DRP)
describes the time-phased net requirements from warehouses -distribution centers customer demand minus any on hand in-transit inventories.
Parent
end item, finished product. Item generating demand for lower-level components.
Closed-loop MRP
incorporates the aggregate production plan, the master production schedule, material requirements plan, & the capacity requirements plan.
Manufacturing Resource Planning (MRP II)
incorporates the business & sales plans with the closed-loop MRP system.
Multilevel Bill of Materials
shows the parent-component relationships & the specific units of components known as the PLANNING FACTOR. Often presented as an indented bill of materials
Planned Order Release
specific order to be released to the shop or the supplier, planning to order, has not been scheduled, placed, or confirmed yet
Gross Requirement
total amount one needs regardless of what is in inventory or coming/ordered. -A time phased requirement prior to netting out on hand inventory and lead time
Disadvantage of MRP
LOSS OF VISIBILITY (especially acute for products with a deep BOM), ignores capacity and ignores shop floor conditions.
Implementation Problems
Lack of top management commitment Lack of adequate resources Lack of proper training Lack of communication Incompatible system environment
Planning Tasks and Horizons for Top Management
Long Range (over 1 year) - R&D - New product plans - Capital expenses - Facility expansion
Projected On Hand Inventory
Projected closing inventory at end of period. Ending inventory= Beg Inv - Gross Requirements + Scheduled Receipts + Planned Receipts
Advantage of MRP
Provides planning information
Excess of insufficient capacity
prevents a firm from taking advantage of the efficiency or manufacturing planning and control system
Explosion
process of converting a parent item's planned order releases into component gross requirements
Planning factor
the number of each component or material needed to produce a unit of the parent item
Available-to-Promise Quantity (ATP)
what we planned to make verses what our customers have actually ordered. -Represents the remaining open slots that customers can still order
