1. Advanced Concepts in Sales & Operations Planning Chapter 12 MPC – 5 th Edition

2. Topics Mathematical programming approaches Other approaches The “Disaggregation” concept Example “Lawn King”. Application potential

3. Mathematical Programming Approaches Linear Programming (p. 413) Features of this model Aggregate production and demand is in hours. Captures hiring and firing each period (but not integer). Allows idle time. Mixed Integer Programming (p. 415) Features of this model Product family – setup required to produce in a period. Otherwise similar to the first model.

4. Disaggregation – the concept The idea is to link the aggregate plan to the master schedule and possibly even to lower level plans in a direct manner. Hierarchical Production Planning This gets at the concept of disaggregation in a very high level and comprehensive manner. See next slide…

5. Disaggregation through Mathematical Programming The Chung and Krajewski Model Features An input to this model is the solution to their mixed integer programming aggregate planning model. This model tries to hit the production and inventory levels established by the aggregate planning model. The result is a detailed master schedule that specifies lot size and timing for individual end products.

6. Hierarchical Planning Organizational LevelPlanning Detail Top corporate management Assign product family groups to factories Plant and division management Aggregate plan for each factory Plant and department management Schedule family groupings Department management and master scheduler Schedule items MRP planners and purchasing personnel Component-part scheduling

7. A Sequential Production Planning Process Long-term capacity planning Demand forecasts Aggregate production planning Master production scheduling Resource requirements planning Detailed planning and Scheduling (MRP) Implementation Necessary modifications Necessary modifications

8. Concluding Principles Guarded optimization that more advanced models will be used in the future. Tools are now becoming available that are powerful enough to handle real industrial sized problems.