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Mps vs aggregate planning



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Mps vs aggregate planning

  1. 1. Aggregate planning and MPS
  2. 2. Aggregate planning
  3. 3. It may be defined as an intermediate production plan which has a range of 2 to 18 months to give an idea to management as to what quantity of materials and other resources are to be procured and when, so that the total cost of operations of the organization is kept to the minimum over that period.. It has different approaches strategies and objectives which will be discussed next. . . . . . . . Definition
  4. 4.  There are certain inputs of aggregate planning that is to say the factors which should be kept in mind while planning for aggregate production;  These are Inputs of aggregate planning
  5. 5. Workforce Facilities Demand forecasts Policies Costs Inputs of aggregate planning
  6. 6.  Total cost of a plan  Projected levels of inventory  Inventory  Output  Employment  Subcontracting  Backordering Outputs of aggregate planning
  7. 7.  Proactive  Alter demand to match capacity  Reactive  Alter capacity to match demand  Mixed  Some of each Aggregate Planning Strategies
  8. 8.  In a proactive strategy a firm plans to change the demand by means of advertisements or by means of offering benefits for a specific product. Proactive strategy
  9. 9.  A reactive planning strategy has two parts which are;  Level strategy  Chase strategy Reactive strategy
  10. 10.  A level strategy seeks to produce an aggregate plan that maintains a steady production rate and/or a steady employment level. In order to satisfy changes in customer demand, the firm must raise or lower inventory levels in anticipation of increased or decreased levels of forecast demand. The firm maintains a level workforce and a steady rate of output when demand is somewhat low. This allows the firm to establish higher inventory levels than are currently needed. As demand increases, the firm is able to continue a steady production rate/steady employment level, while allowing the inventory surplus to absorb the increased demand Level strategy
  11. 11.  A chase strategy implies matching demand and capacity period by period. This could result in a considerable amount of hiring, firing or laying off of employees; insecure and unhappy employees; increased inventory carrying costs; problems with labor unions; and erratic utilization of plant and equipment. It also implies a great deal of flexibility on the firm's part. The major advantage of a chase strategy is that it allows inventory to be held to the lowest level possible, and for some firms this is a considerable savings. Most firms embracing the just-in- time production concept utilize a chase strategy approach to aggregate planning. Chase strategy
  12. 12. Level strategy  ADVANTAGES - Stable output rates and workforce  DISADVANTAGES  -greater inventory costs  -increased over time and idle time  -resource utilizations vary over time
  13. 13.  ADVANTAGES  -Investment in inventory is low  -Labor utilization in high  DISADVANTAGES  -The cost of fluctuating work force  -potential damage to employee morale Chase strategy
  14. 14.  Linear programming model  Linear decision rule  Simulation Techniques
  15. 15.  Master Production Schedule  Lists the products to be manufactured, when they should be completed, and in what quantities  It is the conversion of the aggregate schedule into a very specific schedule of individual  products  Products listed in the master schedule generally divide into three categories:  1. Firm customer orders  2. Forecasted demand  3. Spare parts Master production schedule
  16. 16.  Aggregate planning is a relatively longer term planning that spans over a period of around 18months on the other hand MPS is the putting of AP action i.e. planning individual products for a shorter time span.  Time unit for aggregate planning is one month while the time unit for MPS is a week. Relationship between MPS and aggregate planning
  17. 17. That’s all what we have today for you we could have explained it in more detail but time constraint didn’t allow us !!!!!!!!
  18. 18. Credits  This is a joint effort of UMAR YAZDANI (D 11 IN 05) AFSAAR ALI ( D 11 IN 27) HANIF HAZARA (D 11 IN 39) TAUQIR HAIDER ( D 11 IN 33)