Professional Documents
Culture Documents
Production-Planning Systems:
Aggregate Planning and
Master Production Scheduling
Slide 1 of 48
Overview
● Production-Planning Hierarchy
● Aggregate Planning
● Master Production Scheduling
● Types of Production-Planning and Control Systems
● Wrap-Up: What World-Class Producers Do
Slide 2 of 48
Capacity Planning, Aggregate Planning, Master Schedule, and Short-Term
Scheduling
Capacity Planning
1. Facility Size Long-term
2. Equipment Procurement
Aggregate Planning
1. Facility Utilization Intermediate-term
2. Personnel needs
3. Subcontracting
Master Schedule
1. MRP Intermediate-term
2. Disaggregation of master plan
Short-term Scheduling
1. Work center loading Short-term
2. Job sequencing
Slide 3 of 48
Overview
Process Planning
Long
Range Strategic Capacity Planning
Slide 4 of 48
Production Planning Hierarchy
Aggregate Planning
Long-Range
Long-Range Capacity Planning
(years)
Medium-Range
Aggregate Planning
(6-18 months)
Short-Range
Master Production Scheduling
(weeks)
Slide 6 of 48
Production Planning: Units of Measure
Entire
Long-Range Capacity Planning
Product Line
Product
Aggregate Planning
Family
Specific
Master Production Scheduling
Product Model
Slide 7 of 48
Hierarchical Production Planning
Product
Decisions Raw Materials
Available
Process
Planning & Inventory
Decisions On Hand
External
Demand Aggregate Capacity
Forecasts Plan for
, Production
orders Plant
Master Capacity
Detailed Work
Production Schedules Priority
Schedule Planning &
Scheduling
Slide 9 of 48
Aggregate Planning Strategies Pure Strategies
● Capacity Options --change capacity:
●
changing inventory levels
●
varying work force size by hiring or layoffs
●
varying production capacity through overtime or idle
time
●
subcontracting
●
using part-time workers
● Demand Options --change demand:
●
Influencing demand
●
backordering during high demand periods
●
counterseasonal product mixing
Slide 10 of 48
Comparison of Aggregate Planning Methods
Advantages Limitations
● Graphical Methods: ● Graphical Methods:
- Simple, easy to use and understand - Many solutions; solution need not be
● Linear Programming: optimal
● Linear Programming:
- Provides optimal solution
- Popular in some industries - Mathematical functions must be
linear, and deterministic -- not
- Sensitivity & dual analysis provide
necessarily realistic
useful information
● Linear Decision Rule:
- Constraints readily added.
● Linear Decision Rule
- Incorporates some non-standard costs.
Skilled personal required. Quadratic
- Provides optimal solution model not always realistic. Value of
- Handles non-deterministic demand variables unconstrained. Feasible
solution is optimal if it exists - not
guaranteed.
Slide 11 of 48
Comparison of Aggregate Planning Methods
Slide 12 of 48
Aggregate Planning
Slide 13 of 48
Why Aggregate Planning Is Necessary
Slide 14 of 48
Aggregate Planning
● Goal: Specify the optimal combination of
●
production rate
●
workforce level
●
inventory on hand
Slide 15 of 48 6
Aggregate Planning
Terminology
● Production Rate
● Workforce Level
● Inventory on Hand
Slide 16 of 48 7
Inputs
Slide 17 of 48
Outputs
Slide 18 of 48
Medium-Term Capacity Adjustments
● Workforce level
●
Hire or layoff full-time workers
●
Hire or layoff part-time workers
●
Hire or layoff contract workers
● Utilization of the work force
●
Overtime
●
Idle time (undertime)
●
Reduce hours worked
● . . . more
Slide 19 of 48
Medium-Term Capacity Adjustments
● Inventory level
●
Finished goods inventory
●
Backorders/lost sales
● Subcontract
Slide 20 of 48
Approaches
Slide 21 of 48
Pure Strategies for the Informal Approach
● Matching Demand
● Level Capacity
●
Buffering with inventory
●
Buffering with backlog
●
Buffering with overtime or subcontracting
● Hybrid strategies
Slide 22 of 48
Matching Demand Strategy
Slide 23 of 48
Matching Capacity & Demand
● Demand Management
●
Vary prices
●
change lead time
●
encourage/discourage business
● Capacity Management
●
adjust staffing
●
adjust equipment and processes
●
change methods to facilitate production
●
redesign the product to facilitate production
Slide 24 of 48
Developing and Evaluating
the Matching Production Plan
● Production rate is dictated by the forecasted
aggregate demand
● Convert the forecasted aggregate demand into the
required workforce level using production time
information
● The primary costs of this strategy are the costs of
changing workforce levels from period to period, i.e.,
hirings and layoffs
Slide 25 of 48
Level Capacity Strategy
Slide 26 of 48
Developing and Evaluating
the Level Production Plan
● Assume that the amount produced each period is
constant, no hirings or layoffs
● The gap between the amount planned to be produced
and the forecasted demand is filled with either
inventory or backorders, i.e., no overtime, no idle
time, no subcontracting
● . . . more
Slide 27 of 48
Developing and Evaluating
the Level Production Plan
● The primary costs of this strategy are inventory
carrying and backlogging costs
● Period-ending inventories or backlogs are determined
using the inventory balance equation:
Slide 28 of 48
Aggregate Plans for Services
Slide 29 of 48
Preemptive Tactics
Slide 30 of 48
Aggregate Planning Example
Slide 31 of 48
Aggregate Planning Example
Slide 32 of 48
Aggregate Planning Example
Slide 33 of 48
Aggregate Planning Example
Compact
Line
Executive Durable
Line Line
Slide 34 of 48 8
Aggregate Demand
(Executive Line)
10000
10000
8000 Number of working days:
8000 7000 Jan 22
6000
6000 5500 Feb 19
4500 Mar 21
4000 Apr 21
May 22
2000
Jun 20
0
Jan Fe b Ma r Apr Ma y J un
Slide 35 of 48 9
Examples
Cost Information
Materials $5/unit
Holding costs $1/unit per mo.
Marginal cost of stockout $1.25/unit per mo.
Hiring and training cost $200/worker
Layoff costs $250/worker
Labor hours required .15 hrs/unit
Straight time labor cost $8/hour
Beginning inventory 250 units
Productive hours/worker/day 7.25
Paid straight hrs/day 8
Slide 36 of 48 11
Determining Straight Labor Costs and Output
Slide 37 of 48 12
Chase Strategy
(Hiring & Firing--meet demand)
Jan
Days/mo 22
Hrs/wo rker/mo 1 5 9 .5
Units/worker 1 ,0 6 3.3 3
$ /wo rker $1 ,4 0 8 Beginning workforce level: 7 employees
Jan
Demand 4 ,5 00
Beg. inv. 250
Net req. 4 ,2 50
Req. wo rkers 3 .9 97
Hired
Fired 3
W o rkfo rce 4
Ending inventory 0
Slide 38 of 48 13
Jan Feb M ar Apr M ay Jun
Days/mo 22 19 21 21 22 20
Hrs/worker/mo 159.5 137.75 152.25 152.25 159.5 145
Units/worker 1,063 918 1,015 1,015 1,063 967
$/worker $1,408 1,216 1,344 1,344 1,408 1,280
$260,408.62
15
Irwin/McGraw-Hill © The McGraw-Hill Companies, Inc., 1998
Level Workforce
(Surplus and Shortage Allowed)
$239,690.00
Slide 44 of 48
Objectives of MPS
Slide 45 of 48
Time Fences
Slide 47 of 48
Developing an MPS
Slide 48 of 48
Developing an MPS
● Schedulers must:
●
estimate the total demand for products from all
sources
●
assign orders to production slots
●
make delivery promises to customers, and
●
make the detailed calculations for the MPS
● As orders are slotted in the MPS, the effects on the
production work centers are checked
●
Rough cut planning - identify underloading or
overloading of capacity
Slide 49 of 48
Demand Management
Slide 50 of 48
Types of
Production-Planning
and Control Systems
Slide 51 of 48
Types of Production-Planning
and Control Systems
● Pond-Draining Systems
● Push Systems
● Pull Systems
● Focusing on Bottlenecks
Slide 52 of 48
Pond-Draining Systems [Chapter 10]
Slide 53 of 48
Push Systems [Chapter 11]
Slide 54 of 48
Pull Systems [Chapter 14]
Slide 55 of 48
Focusing on Bottlenecks
● Bottleneck Operations
●
Impede production because they have less capacity
than upstream or downstream stages
●
Work arrives faster than it can be completed
●
Binding capacity constraints that control the
capacity of the system
● Optimized Production Technology (OPT)
● Synchronous Manufacturing
Slide 56 of 48
Synchronous Manufacturing
Slide 57 of 48
Synchronous Manufacturing
Slide 58 of 48
Wrap-Up: World-Class Practice
Slide 59 of 48