The document discusses production planning processes including sales and operations planning (S&OP), master scheduling, and material requirements planning (MRP). S&OP translates strategic business plans into production rates to meet goals. Master scheduling develops priority and capacity plans for products at the end item level. It disaggregates aggregate production plans and provides data for rough cut capacity planning (RCCP) and material requirements planning (MRP). RCCP ensures master schedules are feasible by checking capacity against demand. [END SUMMARY]
Lectures on Production Planning and Control for B.Sc. Students - Industrial Engineering Branch -Department of Production Engineering and Metallurgy- University of Technology - Baghdad -Iraq
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Lectures on Production Planning and Control for B.Sc. Students - Industrial Engineering Branch -Department of Production Engineering and Metallurgy- University of Technology - Baghdad -Iraq
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Planning is an ongoing process that happens at different levels and different times dependent on resource availability and this is recognised by the 5 levels of Supply Chain Planning Horizon.
S&OP is a monthly global process to balance supply and demand, bringing all business operational plans into one integrated plan. All activities is based on a common Forecast data set. The ultimate target for S&OP therefore is to balance Supply and Demand.
In this presentation, we will discuss production planning system, factors determining production control procedure, role of production planning and control in operations management, scope of production planning and control, its phases and principles. We will also talk about framework for strategy formulations and task control, PPC limitations, effectiveness, PPC in different systems, requirement of an effective PPC in a system and make or buy analysis.
To know more about Welingkar School’s Distance Learning Program and courses offered, visit: http://www.welingkaronline.org/distance-learning/online-mba.html
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Material Requirement Planning (MRP),
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The ninth lesson of the course on Planning and Managing Software projects (http://emanueledellavalle.org/Teaching/PMSP-2011-12.html) that I give at Politecnico di Milano
A simple, straight forward set of 25 slides which provides the basics of S&OP (Sales & Operations Planning) from concept to implementation. (Used to introduce and discuss S&OP concepts with clients and prospective clients.) S&OP is also know as IBF or IBP (IBF = Integrated Business Forecasting; IBP = Integrated Business Planning)
Planning is an ongoing process that happens at different levels and different times dependent on resource availability and this is recognised by the 5 levels of Supply Chain Planning Horizon.
S&OP is a monthly global process to balance supply and demand, bringing all business operational plans into one integrated plan. All activities is based on a common Forecast data set. The ultimate target for S&OP therefore is to balance Supply and Demand.
In this presentation, we will discuss production planning system, factors determining production control procedure, role of production planning and control in operations management, scope of production planning and control, its phases and principles. We will also talk about framework for strategy formulations and task control, PPC limitations, effectiveness, PPC in different systems, requirement of an effective PPC in a system and make or buy analysis.
To know more about Welingkar School’s Distance Learning Program and courses offered, visit: http://www.welingkaronline.org/distance-learning/online-mba.html
MRP, MRP2 and ERP system in supply chainSaad Munami
Material Requirement Planning (MRP),
Manufacturing Resource Planning (MRP 2),
Enterprise resource planning (ERP)
Systems in SCM
Definations with explaination
The ninth lesson of the course on Planning and Managing Software projects (http://emanueledellavalle.org/Teaching/PMSP-2011-12.html) that I give at Politecnico di Milano
A simple, straight forward set of 25 slides which provides the basics of S&OP (Sales & Operations Planning) from concept to implementation. (Used to introduce and discuss S&OP concepts with clients and prospective clients.) S&OP is also know as IBF or IBP (IBF = Integrated Business Forecasting; IBP = Integrated Business Planning)
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Capacity planning is a tedious process for many manufacturing companies. This guide walks readers through a comprehensive, easy-to-follow process toward achieving a best-in-class capacity plan that aligns with S&OP and drives true business impact. Learn more about how River Logic tackles the toughest capacity planning challenges by visiting our website (https://www.riverlogic.com/) or viewing our case studies (https://www.riverlogic.com/resources/)
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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?
4. 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
5. 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
Top Down Planning approach
6. Sequences of Planning Processes
Market Demand
(forecast-orders-safety
stock)
Production strategy
chosen
Aggregate Planning
Production Plan
Determine the required
recourses for each
product family
(Resource bill)
Compare the required
resources with available
recourses and take
action
(Resource Planning)
Disaggregate into end
item level
Aggregate the master
schedule for all end
items
Perform RCCP
Resolve differences and
publish MPS
Drive the MRP
7. The process begins with an aggregation of demand from all sources (e.g., firm orders,
forecasts, safety stock requirements). Production, marketing, and finance personnel work
toward developing a master production schedule.
Although manufacturing people will have a major input in determining that schedule and
a major responsibility for making it work, marketing and finance will also have important
inputs and responsibilities. The rationale for having these
functional areas work together is the increased likelihood of developing a plan that works
and with which everyone can live.
9. ▪ Purpose of Production Planning
▪ Aggregate Planning
▪ Production Strategies
▪ Chase
▪ Level
▪ Resource Planning and Production Plan
Learning Objective
10. 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
• Maintaining desired inventory levels
• Determining resources required
• Comparing load with available resources
Source-APICS Dictionary
12. 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.
13. 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.
14. 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)
16. 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.
17. 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.
18. 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)
19. 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
20. Outputs
Total Cost of Plan
Projected levels of
Inventory
Outputs rate
Employment
Subcontract
backordering
23. 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.
24. 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.
25. 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 )
26. 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
27. 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
28. 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
29. 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.
30. 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
31. 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.
32. 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
33. 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.
34. ❖ 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
-+
35. ❖ 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
36. 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
38. 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
39. The master schedule is the heart of production planning and control, it is the next step of
master planning after Production Planning.
Master Schedule showing the quantity and timing of specific end items for a scheduled
Horizon rather than an entire product group, along with the timing
of production.
Master Schedule doesn't show planned production, rather achieve planned production
or demand from all sources.
40. Purpose of master schedule
• Disaggregate Production Planning at product family level into end-item level.
• Create Priority plan, including quantities and due dates for end item manufacturing.
• Provide data used for calculation the rough cut capacity planning.
• Drive the material requirement plan which takes priority plan to component level.
Why ?
Master schedule main objective:
• To maintain the desired level of customer service.
• To maintain the desired level of inventory.
• Make the best use of resource.
41. Master Scheduling starts with disaggregation
break down the aggregate plan into specific product requirement to Create meaningful
of production for each product type by Priority planning (quantity and due dates) in
order to :
• Scheduling operations and planning inventory requirement.
• Labor requirement ( work force size-level of skills).
• Purchase material and Parts.
• Dealing with problems or capacity shortage.
The master schedule interfaces with marketing, capacity planning, production planning,
and distribution planning
42. With Marketing
- It reveals when orders are scheduled for production and when completed orders are to
be shipped.
- Enables marketing to make valid delivery commitments to warehouses and final
customers
With Capacity Planning and Production
- Enables production to evaluate capacity requirements; it provides the necessary met by
information for production and marketing to negotiate when customer requests
cannot be normal capacity.
With distribution
- Reveals when finished Products are to be shipped
Master Schedule help managers to evaluate and control existing and new orders, How ?
43. Master Scheduler also the following responsibilities :
1. Evaluating the impact of new orders.
2. Providing delivery dates for orders.
3. Dealing with problems:
a. Evaluating the impact of production delays or late deliveries of purchased
goods.
b. Revising the master schedule when necessary because of insufficient supplies or
capacity.
c. Bringing instances of insufficient capacity to the attention of production and
marketing personnel so that they can participate in resolving conflicts.
4. the master schedule may be updated monthly to include any revisions in planned
output
44. Development of Master Schedule
Inputs
Beginning Inventory
Forecast
Customer Orders
Other Factors to be taken into considerations
Any hiring/firing
Limited level of inventory
Skill levels
Capacity constrains
Market considerations (such as seasonality)
Production Plan
45. Development of Master Schedule
Output
Un Committed inventory (ATP)
Master Production Schedule (MPS)
Projected inventory
Master Scheduling Steps
• Disaggregate the Production Plan on a weekly basis to the end-item level
• Preliminary calculation of Projected available balance (PAB)
• Calculation and Available to promise value (ATP)
• Aggregate the master schedule for all end items
• Perform Rough Cut Capacity Planning
• Resolve differences and publish the MPS
46. Projected available balance (PAB)/Or projected on-hand inventory.
Tells us when additional inventory (i.e., production) will be needed.
If the balance is high enough to cover the demand, then no MSP receipt necessary.
Projected on-hand inventory = Inventory from previous week - Current week’s
requirements
Available To Promise(ATP)
Knowledge of the uncommitted inventory that can enable marketing to make realistic
promises to customers about deliveries of new orders.
The ATP quantity is the uncommitted inventory balance in the first period and is normally
calculated for each period in which an MPS is scheduled.
ATP at first Period = beginning inventory + MPS - Customer orders
ATP at Period which an MPS is scheduled = MPS – Customer orders
47. Rough Cut Capacity Planning(RCCP)
Approximate balancing of capacity and demand to test the feasibility of a master
schedule.
Ensure that the master schedule is workable by checking capacities of production and
warehouse facilities, labor, and vendors to ensure that no gross deficiencies exist
Note / The capacities used for master scheduling are based on decisions made during
aggregate planning.
48. PAB at first week = 64-33=31 ( We Usually take the larger number of forecast and
customer order )
PAB at week 2 = inventory from previous week +MPS- larger number of forecast and
customer order = 31+0 - 30 = 1 Nonnegative So No MPS (Production) is needed
PAB at week 3 = 1 + 0(before MPS) - 30 = -29 Negative So addition inventory or
production(MPS) is needed.
After adding MPS based on the lot size (70 in this example), PAB will became (41)
49. AS Mentioned ATP is normally calculated the first period and each period in which an
MPS is scheduled.
ATP at first week = bingeing inventory + MPS – customer orders up to first MPS receipt.
= 64+ 0 - 30 - 20 = 11
ATP at Week 3 = MPS –Customer orders
= 70 - 10 - 4 = 56
50. Aggregate the master schedule for all end items
Aggregate all MPSs which have been established for individual end items.
Aggregation into master schedule for all end items of particular group of products or
product family along Planning Horizon.
Provide the total order quantity for all end items in each week
Used in RCCP to determine if production recourses will be adequate during the planning
period.
51. In addition to the obvious manufacturing resources needed to support the plan:
Financing resources will be needed and must be planned for, both in amount and
timing.
Marketing resources also will be needed in varying degrees throughout the process. In
order for the plan to work.
An initial plan must be revised based on an assessment of the availability of various
resources. Once these have been decided, the master production schedule can be
firmed up.
Other Resources to be consider