1. Copyright © 2011 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin Manufacturing Planning and Control MPC 6 th Edition Chapter 4a

2. 4a-2 Advanced Sales and Operations Planning Within the Sales and Operations Planning (SOP) process, modeling procedures can be used to establish overall production and inventory plans. The basic issue is what levels of resources should be provided in each period. Powerful and easily accessible tools are available for solving these models.

3. 4a-3 Agenda What is advanced SOP?Mathematical programmingLinear programmingMixed integer programmingLawn King examplePrinciples

4. 4a-4 Linear Programming -SOP Hiring CostsFiring CostsLabor Costs Overtime Costs Inventory Costs Idle Time Costs Inventory Constraints Regular Production Constraint Overtime Production Constraint Workforce Change Constraint Initializing Constraints

5. 4a-5 Example ItemValue Regular-time cost per employee per month$1,828 Overtime cost/unit$33.04 Inventory carrying cost per unit per month$1.77 Hiring cost/employee$800 Firing cost/employee$1,500 Regular-time productivity (units per month per employee) 83 Maximum overtime units/month17 Ending inventory≥ 2,000 units August inventory16,460 units August employees72

6. 4a-6 LP Model and Solution Changing cells (decision variables)

7. 4a-7 LP Settings and Options Constraints Ending workforce = actual (72) Reg. production <= capacity OT production <= capacity Monthly inventory >= 2,000 Ending inventory (August) = actual (16,460) Hires/Fires must be integers Minimize total costs

8. 4a-8 SOP – Using Product Families

9. 4a-9 SOP – Using Product Families

10. 4a-10 Disaggregation- Establishing MPS

11. 4a-11 Disaggregation- Establishing MPS

12. 4a-12 Disaggregation- Establishing MPS

13. 4a-13 Disaggregation- Establishing MPS

14. 4a-14 Disaggregation- Establishing MPS

15. 4a-15 Principles To ensure credibility, the match between the real world and the model should be as close as possible. Relatively homogeneous product lines (or portions of lines) allows for a closer match between model and reality. Before the potential of advance techniques can be realized, the firm must invest in training, enhance data, improve basic MPC practices, and determine clear objectives..

16. 4a-16 Principles Management must realize that significant efforts in model formulation, understanding, testing, and explanation are important to successful applications. Advance techniques must be built on a foundation of good basic practices. Spreadsheet-based models offer executives a better choice.

17. 4a-17 Quiz – Chapter 4a The objective of a Linear Programming planning approach is to ___________. Microsoft Excel has both Linear Programming and Mixed Integer Programming capabilities. (True/False) A key step in the modeling process is to identify assumptions. (True/False) Determination of inventory holding costs is generally a simple process with few assumptions. (True/False) The Advanced Sales and Operations process can be implemented as soon as a firm starts using Sales and Operations Planning. (True/False)