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Aggregate Production Planning

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Manufacturing. Human Resources. Anticipation Inventory. Pure APP Planning Strategies ... each employee can manufacture 50 units per month ... – PowerPoint PPT presentation

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Title: Aggregate Production Planning


1
Aggregate Production Planning
Finance
Vendor
Operations
Sales
Marketing
Engineering
2
Aggregate Production Planning (APP)
A macro approach to operational planning that
focuses on overall capacity. APP links
higher-level facility planning to lower level
scheduling decisions within a medium-term
planning horizon (2 to 18 months).
Aggregate Production Planning
Demand Planning
Master Production Scheduling
Capacity Planning
Material Requirements and Capacity Planning
Shop Floor Control
Purchasing
3
APP
  • Role of Aggregate Planning
  • Long-term planning function
  • Strategic preparation for tactical actions
  • Aggregate Planning Issues
  • Staffing -hiring, firing, training
  • Procurement - supplier contracts for materials,
    components
  • Sub-Contracting - capacity vendoring
  • Marketing - promotional activities

4
Basic Aggregation
Cotton Shirts
Mens
Womens
Boys
Girls
Style B
Style C
Style A
Week1
Week2
Week3
Week4
Week5
5
APP Inputs
  • Problem project production of single product
    over planning horizon.
  • Inputs

6
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7
Pure APP Planning Strategies
Demand
Production
Units
Time
8
Pure APP Planning Strategies
Demand Production
Units
Time
9
Example
  • Bob and Company would like to project the firms
    aggregate needs over the next 5 months. Expected
    demand follows
  • Month 1 1400 units
  • Month 2 1600 units
  • Month 3 1800 units
  • Month 4 2200 units
  • Month 5 1500 units
  • Beginning inventory is 200 units, backorder cost
    50 per unit per month
  • inventory holding cost 20 per unit per month
  • Currently Bob has 25 employees
  • each employee can manufacture 50 units per month
  • fire cost is 2000 per employee and hire cost is
    1000 per employee
  • Which is a better plan for Bob, level or chase?

10
Developing a Master Production Schedule
  • Step 1 Disaggregate the production plan into sku
    by sku forecasts corresponding to a manageable
    unit of time.
  • Step 2 Record customer orders accepted to date.
  • Step 3 Project on hand inventory as follows
  • It It-1 MPSt - max(Ft or COt)
  • where It projected inventory balance at the
    end of period t.
  • MPSt production quantity due in period t
  • Ft forecast of demand in period t
  • COt customer orders booked for shipment in
    period t

11
MPS (cont.)
  • Step 4 Calculate production quantity (MPS)
    required to maintain inventory at or above
    safety stock levels
  • Step 5 Calculate the quantity of end-items
    marketing has Available to Promise (ATP)
    potential customers.
  • ATP1 I0 MPS1 - CCO
  • ATPt MPSt - CCO
  • where ATPt available to promise in week t
  • I0 current on-hand inventory
  • MPSt MPS quantity in week t
  • CCO cumulative customer orders until next
    MPS

12
MPS Numerical Example
Factory lot size for this sku 75 units Safety
stock required 0 units Time bucket 1 week
1
2
3
4
5
6
7
8
Forecast
30
30
40
40
50
50
60
20
Customer orders
45
20
12
10
0
0
0
0
Projected on-hand
50
5
50
10
45
70
20
35
15
MPS quantity
75
75
75
75
Available to promise
5
43
65
75
75
Average Inventory 250/8 31.25 Orders Placed
4
13
MPS Numerical Example
Factory lot size for this sku 100 units Safety
stock required 0 units Time bucket 1 week
1
2
3
4
5
6
7
8
Forecast
30
30
40
40
50
50
60
20
Customer orders
45
20
12
10
0
0
0
0
Projected on-hand
50
5
75
35
95
45
95
35
15
MPS quantity
100
100
100
Available to promise
5
68
90
100
Average Inventory 400/8 50 Orders Placed 3
14
Rough Cut Capacity Planning (RCCP)
  • Quick check on capacity of key resources
  • Use Bill of Resource (BOR) for each item in MPS
  • Infeasibilities addressed by altering MPS or
    adding capacity (e.g., overtime)

total load on the facility
15
MPS requirements
Total capacity required
Allocated to workcenters
16
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17
Rough Cut Capacity Planning Using Overall Factors
MPS
Capacity
Allocated
WW1 DK5011550 Z101.4910 364
SK60 6360 Z105.3910 273
Critical 910
Z107.3910 273
18
Change MPS requirements of SK to 30 per week
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