Aggregate Planning, MRP, and Short Term Scheduling 9 Aug 2001

Introduction What – Determine the quantity and timing of production for the immediate future Where – To meet forecasted demand Why – Minimize costs

The Planning Process Aggregate planning ties strategic goals to production plans Medium range – 3 to 18 months Requires: Measure of sales and output Forecast of demand for the period Method of determining costs Model that combines forecasts and costs

Aggregate Plan Relationships Aggregate Production Plan Marketing Customer Demand Engineering Design Completion Management Return on Investment Capital Human Resources Manpower Planning Procurement Supplier Performance Finance Cash Flow Production Capacity Inventory

Capacity Options Change inventory levels Change workforce size Change production rates Subcontracting Using Part-Time Workers

Demand Options Influence demand Back order during high demand periods Counterseasonal product mix

Strategies Chase strategy Level strategy Mixed strategy

MRP Introduction What – Plan requirements for components Where – Where components of a product are known Why – Individual component needs are dependant on the aggregate plan

Dependant Inventory Model Requirements Master Production Schedule Bills of Material Modular bills Planning bills Phantom bills Accurate Inventory Records Purchase Orders Oustanding Lead Times for Each Component

Dealing With Changing Requirements System Nervousness Time fence Pegging

Lot Sizing Lot for Lot Economic Order Quantity Part Period Balancing

Extensions of MRP Closed Loop MRP Capacity Planning MRP II

Short Term Scheduling Introduction What – Scheduling or timing of operations Where – Timing of operations affects the overall strategy Why – Reduce costs, improve response

Scheduling Forward Scheduling Backward scheduling Scheduling criteria Minimize completion time Maximize utilization Minimize work-in-process Minimize customer waiting time Objective: Optimize resources so that production objectives are met

Scheduling in Process- Focused Work Centers Job shop, low volume, high variety Schedule incoming orders without violating capacity constraints Check availability of tools and materials before releasing an order Establish due dates and check progress Check work in progress Provide feedback Monitor work efficiency statistics

Loading Jobs in Work Centers Input-output control Gantt charts

Sequencing Jobs at Work Centers Priority Rules First Come, First Served Shortest Processing Time Earliest Due Date Longest Processing Time

Critical Ratio Time Remaining / Workdays Remaining Highest Critical Ratio is selected for processing next

Limitations of Rules Scheduling is dynamic Rules do not look upstream or downstream Rules do not look beyond due dates

Finite Scheduling Computerized Short Term Graphical Interactive

Constraints and Bottlenecks Limit output in the production sequence Increase capacity Reroute work Change lot size Change work sequence Accept idleness