1. Rough-Cut Capacity Planning in SCM EIN 5346 Logistics Engineering Fall, 2015

2. Rough-Cut Capacity Planning in SCM Theories & Concepts

3. APICS-Standard Planning Framework
APICS - American Production and Inventory Control Society

4. Production Process (review)
Requirements for Production Planning:
to meet the demand,
to consider the resource capacities and the material availabilities,
to improve utilisation of the resources,
to lower the setup time,
to minimize the inventory levels,
to minimize the work in process (WIP), and
to improve stability of the plan.

5. SOP and Production Plan in SAP

6. Rough-cut Capacity Planning
Main goal in rough-cut capacity planning is to identify where overloading or under-loading of production capacity occurs and revise the MPS as required.
Overloading means that too much production of products has been planned in the facility and insufficient capacity exists to produce planned quantities of products required in MPS.
Under-loading means that not enough production of products has been planned to fully load the facility.

7. Rough-Cut Capacity Planning in APO-SNP

8. Order Life Cycle for Make-to-Stock
DEMANDS
Original
Revised
SUPPLIES

9. Order Life Cycle for Make-to-Order

10. Forecast Consumption Mode and Horizon
(Backword consumption of 4 days and a forward consumption of 3 days)

11. Forecast Consumption Mode and Horizon
(Backword consumption of 4 days and a forward consumption of 3 days)

12. Forecast Consumption Mode and Horizon
Order 70
(Backword consumption of 4 days and a forward consumption of 3 days)

13. Forecast Consumption Mode and Horizon
Order 70
(Backword consumption of 4 days and a forward consumption of 3 days)

14. Transactional Data for Transferring
Starting from a demand plan, SNP checks the resource capacities and delivers a medium/long-term plan for the estimated sales volumes.
The plan includes 1) quantities to be transported between locations (e.g., DC-customer, or plant-DC) and 2) quantities to be produced (and procured), taking available capacity into consideration.
SNP creates planned orders, purchase requisitions, and stock transfers that can be transferred directly to the connected OLTP systems.
OLTP – Online transaction processing

15. Capacity Levelling
Capacity leveling supports the following resource categories:
Production resources in APO (Work centers in ERP)
Transportation resources

16. Capacity Levelling Profile
The main settings in the capacity leveling profile are scheduling direction, prioritization, and method.
Scheduling Direction controls whether Forward, Backward or Combined scheduling is used.
Prioritization for the heuristic run defines how leveling determines the sequence of orders. The two possible choices for prioritization (to be sorted by ascending or descending order) are
by order size or
by product priority.
Three Method choices are
Heuristic,
Optimizer or
Badi (Business Aided-in).

17. Time-based Capacity Levelling

18. Capacity Levelling

19. Heuristics-based Capacity Levelling
Heuristic-based capacity leveling compares, period by period, the capacity load on a resource with the requested load, either from the beginning or from the end of the planning horizon – depending on which scheduling direction is selected (forward or backward scheduling).
If the resource is found overloaded, the system first selects all the activities or orders that cause the overload in this period. It then sorts these orders according to the priority that is defined and shifts orders or partial orders, one by one into subsequent or previous periods until the required maximum resource utilization is reached.

20. SNP Heuristic as Location, Network, and Multi-Level Heuristic

21. SNP Heuristic as Location, Network, and Multi-Level Heuristic

22. Scheduling in CTM

23. Operation Research (OR)
Operation research refers to the application of quantitative methods and techniques to business problems in order to best utilize a company’s resources.
OR is used by many leading companies in recent years to optimize their limited resources in order to maximize their profits or minimize their costs.
Linear programming (LP) is one of the most important tools of operation research.

24. Linear Programming (LP)

25. Linear Programming (LP)
Five common types of LP problems:
Product mixed
Ingredient mix
Transportation
Production plan
Assignment

26. Five common types of LP problems

27. Five common types of LP problems

28. Steps in Formulating LP Problems
Define the objective
Define the decision variables
Write the mathematical function for the objective (objective function)
Write a one- or two-word description of each constraints
Write the right-hand side (RHS) of each constraint, including the unit of measure.
Write<=, =, or >= for each equation
Write all the decision variables on the left-hand side of each constraints
Write the coefficient for each decision variable in each constraint.

29. Formulating LP

30. Formulating LP

31. Formulation LP

32. Formulation of Problem

33. Objective and Constraints

34. Steps in Graphical Solution Method

35. Graphical Solution

36. Graphical Solution

37. Graphical Solution

38. Graphical Solution

39. Transportation (Network) Problem

40. Requirement Assumption

41. Feasible Solutions Property

42. Cost Assumption

43. Parameter Table for Transportation Problem
Supply S1 S2 . Sm

44. Transportation Problem Modeling
Any problems (whether involving transportation or not) fits the model for a transportation problem if it can be described completely in term of a parameter table like Table 8.5 and it satisfies both the requirements assumption and cost assumption.
The objective is to minimize the total cost of distributing the units. All the parameters of the model are included in this parameter table.

45. Objective Function & Constraints

46. Software for Solving LP Programs
Lingo: to download software and access user menu at
2. Excel with Add-ins

47. Solving LP Models with Lingo – Download software for free

48. Solving LP Models with Lingo
- Modeling LP Example 1:

49. Solving LP Models with Lingo - Solution to LP example 1:

50. Solving LP Models with Excel - to include Solver Addin

51. Solving LP Models with Excel - Solver Addin included

52. Solving LP Models with Excel
- Modeling LP Example 1 in Excel Sheet

53. Solving LP Models with Excel
- Modeling LP Example 1 in Solver Addin

54. Solving LP Models with Excel
- Solutions to LP Example 1 using Excel Add-Ins X1 X2
Optimal solution:
1,000
2,000 Z:
2,100,000
900
600
4000 2 1
5000
3000
3500

55. Lab 5: Exercises: (Due date: 10/8/15) Questions 1 and 5 by team, Questions 6 and 7 for LP problem by individual.
Create transportation lanes in SCM system
Create transportation lane from plant to DCs and assign materials
Mass generate transportation lanes with start locations for plant and DCs and destination locations for customers
Create transportation lane from MI## to SD##
Assign materials to transportation lanes
Assign materials for transportation lanes from plant to customers
Assign materials for transportation lanes from DCs to customers
Assign materials for transportation lane from MI## to SD##
Create quota arrangement in SCM system
Create inbound quota arrangement for vendor
Create inbound quota arrangement for vendor
Master Product settings
Model Consistency check

56. Questions 6 and 7 by individual
6. Please solve the following LP problem.
Objective: Min Z = 10,000 X1 + 15,000 X2
S.T. X X2 >= 4
X X2 >= 2.5
  X 1, X 2 >= 0
1) Draw a graph
2) Plot the constraint function
3) Outline the feasible solution
4) Circle the optimal solution point.

57. Questions 6 and 7 by individual
7. The Green Up Fertilizer Company ships fertilizer from three manufacturing plants to four distribution centers (DC). The shipping cost per truckload of fertilizer from each plant to each DC is:
Plant Distribution Center (DC)
A B C D
1 $464 $513 $654 $867
2 $352 $416 $690 $791
3 $995 $682 $388 $685
Plant 1 has a monthly capacity of 75 truckload, Plant 2 has a monthly capacity of 125 truckload, and the Plant 3 has a monthly capacity of 100 truckload. The monthly DC demand is A = 80 truckload, B = 65 truckload, C = 70 truckload, and D = 85 truckload. Please formulate an LP problem to determine how much truckload of fertilizer should be shipped from each plant to each DC per month to minimize monthly shipping cost.
1) Define the objective.
2) Define the decision variables.
3) Write the mathematical function for the objective.
4) Write the constraints.
5) Solve the LP problem using Lingo or Excel Addin.