S&O Planning translates strategic business plans into production rates to meet financial, customer service, and other goals. It continually updates production, financial, and sales plans through regular meetings with executives to resolve tradeoffs and validate resource availability. Production planning develops tactical plans based on setting overall manufacturing output levels to satisfy planned sales while meeting profitability and productivity goals. Aggregate planning focuses on product families or groups, maintaining inventory levels, determining resource needs, and comparing load to capacity. It aims to balance demand and capacity over time through strategies like leveling output or chasing demand, using options like inventory, overtime, hiring/layoffs, and subcontracting.
The Master Production Schedule (MPS) is a plan for the production of individual final items. The MPS breaks down the production plan to show, in each period, the quantity to produce of each final article.
#masterproduction #mps #mrp #erp #manufacturing #manufacturingsoftware #erpsoftware #mrpeasy
This presentation is originally created by me when I reported Aggregate Planning during my Production and Operations Management class. I hope this can help you. :))
Demand Forecasting: Forecasting as planning tool, Forecasting Time Horizon, Sources of Data for Forecasting, Accuracy of Forecast, Capacity Planning. Production Planning: Aggregate production Planning, Alternatives for Managing Demand & Supply, Mater Production Schedule, capacity Planning, Overview of MRP, CRP, DRP & MRP-II Production Control: Scheduling & Loading, Scheduling of Job Shops & Floor
Shops, Gantt Chart.
The Master Production Schedule (MPS) is a plan for the production of individual final items. The MPS breaks down the production plan to show, in each period, the quantity to produce of each final article.
#masterproduction #mps #mrp #erp #manufacturing #manufacturingsoftware #erpsoftware #mrpeasy
This presentation is originally created by me when I reported Aggregate Planning during my Production and Operations Management class. I hope this can help you. :))
Demand Forecasting: Forecasting as planning tool, Forecasting Time Horizon, Sources of Data for Forecasting, Accuracy of Forecast, Capacity Planning. Production Planning: Aggregate production Planning, Alternatives for Managing Demand & Supply, Mater Production Schedule, capacity Planning, Overview of MRP, CRP, DRP & MRP-II Production Control: Scheduling & Loading, Scheduling of Job Shops & Floor
Shops, Gantt Chart.
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Just a game Assignment 3
1. What has made Louis Vuitton's business model successful in the Japanese luxury market?
2. What are the opportunities and challenges for Louis Vuitton in Japan?
3. What are the specifics of the Japanese fashion luxury market?
4. How did Louis Vuitton enter into the Japanese market originally? What were the other entry strategies it adopted later to strengthen its presence?
5. Will Louis Vuitton have any new challenges arise due to the global financial crisis? How does it overcome the new challenges?Assignment 3
1. What has made Louis Vuitton's business model successful in the Japanese luxury market?
2. What are the opportunities and challenges for Louis Vuitton in Japan?
3. What are the specifics of the Japanese fashion luxury market?
4. How did Louis Vuitton enter into the Japanese market originally? What were the other entry strategies it adopted later to strengthen its presence?
5. Will Louis Vuitton have any new challenges arise due to the global financial crisis? How does it overcome the new challenges?Assignment 3
1. What has made Louis Vuitton's business model successful in the Japanese luxury market?
2. What are the opportunities and challenges for Louis Vuitton in Japan?
3. What are the specifics of the Japanese fashion luxury market?
4. How did Louis Vuitton enter into the Japanese market originally? What were the other entry strategies it adopted later to strengthen its presence?
5. Will Louis Vuitton have any new challenges arise due to the global financial crisis? How does it overcome the new challenges?
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4. S&OP
Master
Scheduling
MRP
Develop Priority and capacity Plans for
products at family level.
Develop Priority and capacity Plans for
products at end items level.
Takes Priority and capacity Plans down
to purchased and manufactured
components level.
MasterPlanning
5. S&OP translates the strategic business plan into production rates that meet
company financial, customer service, and other business goals.
▪ Translates the strategic business plan into production rates that meet business
goals
▪ Continually updates the production, financial, and sales plan
▪ Seeks input from various functions
▪ Regular (such as monthly) meeting with senior executives to resolve tradeoffs
▪ Checks availability of resources to validate the production plan
7. ▪ Purpose of Production Planning
▪ Aggregate Planning
▪ Production Strategies
▪ Chase
▪ Level
▪ Resource Planning and Production Plan
Learning Objective
8. Purpose of Production Planning
Production Planning : A Process to develop tactical plans based on setting the overall
level of manufacturing output and the activity to best satisfy the current planned
levels of sales, while meeting general business objectives of profitability, productivity
and so on as expressed in the overall business plan.
Production planning is a major output of S&OP concerned with:
• Planning for each product family or group of products
• Maintaining desired inventory levels
• Determining resources required
• Comparing load with available resources
Source-APICS Dictionary
10. Concept of aggregation
Aggregate planning is essentially a “big-picture” approach to planning.
focus on a group of similar products or services, or sometimes an entire product or
service line not on individual products or services.
Aggregate planning often convenient to think of capacity in terms of
labor hours or machine hours per period, or output rates (barrels per period, units per
period), without worrying about how much of a particular item will actually be
involved.
11. Why Aggregation in important!
Aggregate planning translates needs of planning actions that will take time. (e.g. Hiring)
Aggregate planning frees planners to make general decisions about the use of resources
without having to get into the complexities of individual product or service requirements
It is not possible to predict with any degree of accuracy the timing and volume
of demand for individual items
Most organizations plan their financial requirements annually on a department-by-
department basis.
Aggregate planning affects costs, equipment utilization, employment levels, and customer
satisfaction.
12. Aggregate Planning and Production Planning
The production plan is essentially the output of aggregate planning.
Using the concept of aggregation to translate demand into production rates plan
include consideration of demand requirements by setting output, employment, and
finished-goods inventory levels or service capacities.
In aggregate, Planner consider a number of plans, each of which must be examined in
light of feasibility and cost. But not just constrain of cost! .(I will discuss it in details in
the next slides)
14. Demand and Capacity in aggregate planning
Demand Capacity
Aggregate Planner always have a task which is to achieve rough equality of demand
and capacity/supply over the entire planning horizon.
In this case Planner will be faced with the
problem of dealing with uneven demand.
In this cases the major approach of planners will be to try to
achieve a balance by altering capacity, demand, or both!
So what planner should do?
To Make demand and capacity rough equal within the constraints imposed on them by
policies or agreements and at minimum cost.
15. Aggregate Planning strategy is mix of two strategies ( Proactive – Reactive).
❖ Proactive is related to demand to match capacity.
❖ Reactive related to capacity to match demand.
SO, Lets explain this Game.
16. At The Beginning we should answer to the following questions
What do we know ? (Inputs)
What do we want ? (outputs)
What are our options ? (demand and supply options)
What are strategies of the game? ( Production strategies)
What strategy should we consider ? (consideration factors)
17. Inputs
Resources
Workforce/production rates
Facilities and Equipment's
Demand
Policies of workforce changes
Subcontracting
Over time
Inventory Levels/changes
Back orders
Costs
Inventory carrying cost
Back orders
Hiring/firing
Overtime
Inventory changes
Subcontracting
18. Outputs
Total Cost of Plan
Projected levels of
Inventory
Outputs rate
Employment
Subcontract
backordering
21. Production strategies
Aggregate Planning is mixed strategy and we have demand and supply options. we
shall concentrate on the supply options, which are in the realm of operations but
include the use of back orders.
To answer the question of what strategy should we
consider, lets discuss each approach individually.
22. level capacity strategy
Description:
Maintaining a steady rate of regular-time output while meeting variations in demand by
a combination of options (inventories, overtime, part-time workers, subcontracting, and
back orders).
Advantage:
Stable output rates and workforce levels.
fewer morale problems
stable use of equipment and facilities
Disadvantages:
Greater inventory costs.
Increased overtime and idle time.
Resource utilizations that vary over time.
23. Chase demand strategy
Description:
Matching capacity to demand the planned output for a period is set at the expected
demand for that period.
Advantages:
Investment in inventory is low.
Labor utilization is kept high.
Disadvantage:
lack of stability in operations
The cost of adjusting output rates and/or workforce levels.
when forecast and reality differ, morale can suffer (to workers and managers )
24. Choosing a strategy
To choose the suitable strategy, this decision is based on the consideration factors of an
organization under their conditions in terms of three important factors are company
policy, flexibility, and costs.
Policy: For instance, (Hiring and Sub contracting).
Flexibility: some approach is suitable for particular plants such as refineries and
auto assembly plants.
Costs: As a rule, aggregate planners seek to match supply and demand within the
constraints imposed on them by policies or agreements and at minimum cost.
It’s our constrains when game is starting
25. Hiring/firing
• company may discourage layoffs except under extreme conditions.
• They have major impact on the lives and morale of employees addition to the risk of
appropriate skills
• Some organization tend to favor a level workforce because the freedom to hire and lay
off workers diminishes union strengths.
So, you want to maintain constant level of output and still satisfy varying demand by
combination of options of subcontracting, backlogging, and use of inventories to
absorb fluctuations ?....... Lets think together
26. Subcontracting
Requires an investment in evaluating sources of supply as well as possible increased costs,
less control over output, and perhaps quality considerations additional to secure Issues.
Backlogging
Planner here will face risk of how customer willing to wait.it can lead to lost sales,
increased record keeping, and lower levels of customer service.
Inventories
Allowing inventories to absorb fluctuations can entail substantial costs by having money
tied up in inventories.
Having to maintain relatively large storage facilities incur other costs related to inventories
27. Finally, we can figure out the best suitable approach by the following:
A chase strategy works best when inventory carrying costs are high and
costs of changing capacity are low.
A level strategy works best when inventory carrying costs and backlog costs are
relatively low.
28. TECHNIQUES FOR AGGREGATE PLANNING
Informal trial-and-error techniques
• Consist of developing simple tables (Worksheet/spreadsheet) or graphs.
• more frequently used because its visually east to compare demand requirements
with existing capacity.
• Alternatives are usually evaluated in terms of their overall costs.
• Do not necessarily result in the optimal aggregate plan.
• We often use Cumulative charts to compare between alternatives plans.
Numerous techniques are available to help with the task of aggregate planning.
Informal trial-and-error techniques and mathematical techniques
29. mathematical techniques
• It’s range from mathematical programming models to heuristic and computer search
models.
• Often serve as a basis for comparing the effectiveness of alternative techniques for
aggregate planning.
• Linear programming (LP) models are methods for obtaining optimal solutions to
problems involving allocation of recourses in terms of cost minimization or profit
maximization.
• Must identify capacity (supply) of regular time, overtime, subcontracting, and inventory
• on a period-by-period basis, as well as related costs of each variable.
30. Determine demand for each period.
Determine capacities
Identify company or departmental policies
Determine unit costs
Develop alternative plans
Found satisfactory plan
Select as best satisfies objectives
General procedure
No
Yes
31. Instructions and Recommendations
• Using Worksheet/spreadsheet tables to set data.
• Some Planner prefer to use cumulative charts to guide the development of
alternatives
• We should using only one option of hiring and laying off at the same period.
32. ❖ To calculate inventory at the end of a period
Inventory
at the end of
a period
Inventory
at end of the
previous period
=
Production
in the current
period
Amount used to
satisfy demand in
the current period
-+
❖ To Calculate number of workers
Number of
workers in
a period
Number of workers
at end of
the previous period
=
Number of new
workers at start of
the period
Number of laid-off
workers at start of
the period
-+
33. ❖ To calculate cost for a period
Cost for
a period
output cost
(Reg OT Subcontract)
= Hire/lay-off
cost
Inventory
cost++
Back-order
cost+
Cost $
Output
Regular Regular cost per unit × Quantity of regular output
Over time Overtime cost per unit × Overtime quantity
Subcontract Subcontract cost per unit × Subcontract quantity
Hire/Lay off
Hire Cost per hire × Number hired
Lay off Cost per layoff × Number laid off
Inventory Carrying cost per unit × Average inventory
Back orders Back-order cost per unit × Number of back-order units
34. We usually calculate
inventory cost at the
total average amount
Total Output
Cumulativeoutput/demand(aggregateunits)
Period
Assume/ Level regular out put
Demand exceeds output
Surplus