Aggregate Production Planning
Tactical
-Medium term, utilization of existing resources. -1-5 years Eg: Assembly plant; workforce commitments -What are we going to do with what we got
Nature of APP
1) It is aggregate 2) Plan with the longest time horizon 3) Nature of business 4) Rolling horizon basis
Master Production Scheduling (MPS)
1st Level of Disaggregation of the aggregate plan, meaning we begin to 'break down' the products into more real end product items. -Product families (grouping products together) -Typically have shorter time horizons and time buckets. -Also rolling horizon
Aggregate Production Planning (APP)
A managerial statement of time-phased production rates, work-force levels, and inventory investment, which takes into account customer requirements and capacity limitations. -Helps us attain our goals -Tactical
Level Strategy Without Backorders
Average production over all months leading up to, and including, the month with the highest demand. -Will result in an ending inventory of 'zero' for the month with the highest demand; the rest will have an ending inventory greater than 'zero' -Still trying to have minimum inventory
Level Strategy With Backorders
Average production over all months, which can lead to having back orders. -Back orders will come in the months with the highest demand
Level Strategy
Constant workforce and production level. The inventory levels fluctuate. -Use when it is reasonable to store things.
General Strategic Plans
Level, Chase, Stable Workforce -No one approach is better; they are better in different situations
Lower Levels of Planning
Master Production Scheduling, Material Requirements Planning, Shop Floor Planning
Aggregate
Products or labor is lumped together so that only a small number of 'products' (usually only 1) needs to be considered.
Stable Workforce Strategy
Size of workforce is constant, but the number of hours worked fluctuates. -Employees run under/over time. -Least expensive plan of all, but sort of flawed because the assumption is made that the workers are only paid for the hours of production. -Can be bad because of labor laws and general employee unhappiness of fluctuating hours: Some weeks they work 13 hours and others 60, for example.
Time Horizon
The length of a plan and a way to evaluate performance and goals. For APP, actual length varies on the nature of business. Broken down into time buckets. -Industry with rapid new product development and high variability will typically have a shorter horizon. -Industry with long lead times and stable products will often have longer planning horizons. -APP is the plan with the longest time horizon.
Material Requirements Planning (MRP) and Shop Floor Planning (SFP)
The next stages of disaggregation/specificity, don't do these in this class. -Level of detail is fairly precise, and no product is aggregated, or grouped together.
Time Buckets
The time horizon broken down into smaller parts. Size depends on the nature of the business. -Length has a direct relationship with the length of the time horizon for the same plan. -Once one of these ends, we add another onto the end of the time horizon.
Rolling Horizon Basis
We don't wait for the entire plan to have been executed to develop a new one. Once a time bucket is completed, the other ones are reevaluated and another bucket is added to the end.
Backorders
When demand is greater than the production/beginning inventory for a period, resulting in a negative ending inventory (technically).
Chase Strategy
Workforce and production level fluctuate. Hire and fire each week to meet the demand/production. -Only produce the amount demanded for each month. -Less expensive than the level plan (by about 10%) -Is cost the only consideration? -Can create problems especially if it is trained labor, and you are constantly bringing in temporary workers and firing others.