2. A Good Planning System Must Answer
These Questions
What are we going to make?
What does it take to make it?
What do we have?
What do we need?
These are the questions of priority and capacity.
3. Operations Planning Overview
Long-range planning
Greater than one year planning horizon
Intermediate-range planning
Six to nine months
Short-range planning
One day to less than six months
4. Production Planning - Inputs
Quantities of each product group that must be
produced in each period.
Desired inventory levels.
Resources of equipment, labor, and material
needed in each period.
Availability of resources.
5. Inputs and Outputs For Production
Planning
Production
Planning
Company
Policies
Financial
Constraints
Strategic
Objectives
Units or dollars
subcontracted,
backordered, or
lost
Capacity
Constraints
Size of
Workforce
Production
per month
(in units or $)
Inventory
Levels
Demand
Forecasts
External/Internal to firm : Economy,Political situation,Natural/manmade
calamities,unions, Multi-skills,Vendor capacity,Raw material availability, Competitors
plans…
6. Product Structure – Bill of Material
Standard tree (more subassemblies than
products and more components than
subassemblies, large BOM).
Modular (Fewer subassemblies or
modules than final products, small BOM).
Inverted (Process industries).
7. BILL OF MATERIAL STRUCTURE
A
B(4) C(2)
D(2) E(1) D(3) F(2)
Independent Demand
Dependent Demand
Independent demand is uncertain. Dependent demand is certain.
ASSEMBLY
SUB-ASSLY
COMPONENTS
8. Type of Demand Response
Make-to-Stock (MTS)
Assemble-to-Order (ATO)
Make-to-Order (MTO)
9. Lead Time
Engineering Procurement Fabrication Assembly Delivery
Make
to Stock
Assemble
to Order
Make
to Order
Engineer
to Order
Inventory
Investment
Low
High
11. Hierarchical Production Planning
Annual demand by
item and by region
Monthly demand
for 15 months by
product type
Monthly demand
for 5 months by
item
Forecasts needed
Allocates
production
among plants
Determines
seasonal plan by
product type
Determines monthly
item production
schedules
Decision ProcessDecision Level
Corporate
Plant manager
Shop
superintendent
12. Hierarchical Planning Process
Items
Product lines
or families
Individual
products
Components
Manufacturin
g operations
Resource level
Plants
Individual
machines
Critical work
centers
Production Planning Capacity Planning
Resource
Requirements Plan
Rough-Cut
Capacity Plan
Capacity
Requirements Plan
Input/Output
Control
Aggregate
Production Plan
Master Production
Schedule
Material
Requirements Plan
Shop Floor
Schedule
All work
centers
14. Output of Planning Process
Production schedule for a family of
products
Master Production Schedule (MPS).
It specifies
the sizing and timing of specific item
production quantities.
the sizing and timing of manufactured or
purchased components.
allocation of resources to individual
operations.
15. Master Production Schedule (MPS)
Time-phased plan specifying how many and
when the firm plans to build each end item
Aggregate Plan
(Product Groups)
MPS
(Specific End Items)
