AGGREGATE PLANNING & MASTER PRODUCTION SCHEDULING

Submitted To:Dr. SUMEET SINGH JASIAL

Submitted By: Kakul Jain (16) Sahiba Singh (20) Ravi Malik (37) Piyush Dwivedi (47)

DEFINITION
Aggregate planning is the process of developing, analyzing, and maintaining a preliminary, approximate schedule of the overall operations of an organization.

Determine the resource capacity needed to meet demand over an intermediate time horizon
Aggregate

refers to product lines or families Aggregate planning matches supply and demand

Objectives
Establish

a company wide game plan for allocating resources Develop an economic strategy for meeting demand

FLOW CHART OF AP

AGGREGATE PLANNING STRATEGIES

CHASE STRATEGY

Capacities (workforce levels, output rates, etc.) are adjusted to match demand requirements over the planning horizon. Advantages: Investment in inventory is low, Labor utilization is kept high Disadvantage: The cost of adjusting output rates and/or workforce levels

LEVEL STRATEGY

Capacities (workforce levels, output rates, etc.) are kept constant over the planning horizon.
Advantage: Stable output rates and workforce levels Disadvantages: Greater inventory costs, Increased overtime and idle time, Resource utilizations that vary over time

A General procedure for aggregate planning consists of the following steps:

2.
3.

4.

5.
6.

Determine demand for each period. Determine capacities (regular time, overtime, subcontracting) for each period. Identify company or departmental policies that are pertinent (e.g., maintain a safety stock of 5 percent of demand, maintain a reasonably stable workforce). Determine unit costs for regular time, overtime, subcontracting, holding inventories, back orders, layoffs, and other relevant costs. Develop alternative plans and compute the cost for each. If satisfactory plans emerge, select the one that best satisfies objectives. Otherwise, return to step 5.

LINEAR APPROACH TO AGGREGATE PLANNING

AGGREGATE PLANNING USING LEVEL STRATEGY

Planners for a company that makes several models of skateboards are about to prepare the aggregate plan that will cover six periods. They have assembled the following information: They now want to evaluate a plan that calls for a steady rate of regulartime output, mainly using inventory to absorb the uneven demand but allowing some backlog. Overtime and subcontracting are not used because they want steady output. They intend to start with zero inventory on hand in the first period. Prepare an aggregate plan and determine its cost using the preceding information. Assume a level output rate of 300 units (skateboards) per period with regular time (i.e., 1,8006 = 300). Note that the planned ending inventory is zero. There are 15 workers, and each can produce 20 skateboards per period.

AGGREGATE PLANNING USING CHASE STRATEGY

After reviewing the plan developed in the preceding example, planners have decided to develop an alternative plan. They have learned that one person is about to retire from the company. Rather than replace that person, they would like to stay with the smaller workforce and use overtime to make up for the lost output. The reduced regular-time output is 280 units per period. The maximum amount of overtime output per period is 40 units. Develop a plan and compare it to the previous one.

TRANSPORTATION NOTATION FOR AGGREGATE PLANNING

DISAGGREGATING THE AGGREGATE PLAN Moving from the aggregate plan to a master schedule

WHAT IS MASTER PRODUCTION SCHEDULING?

Aggregate Sales Output level designed to meet targets

Disaggregates Converts into specific schedule for each item

MASTER PRODUCTION SCHEDULE

Provides basis for:

good use of manufacturing resources Making customer delivery promises Resolving tradeoffs between sales and manufacturing Attaining strategic objectives in the sales and operations plan

THE MASTER SCHEDULING PROCESS

MPS TIME FENCES

6+ weeks

1-2 weeks
No Change

2-4 weeks
+/- 5% Change

+/- 20% Change

Frozen

Firm Full Open

MASTER PRODUCTION SCHEDULING TECHNIQUES

Available = inventory position at end of week = starting inventory + MPS forecast Plan to have positive inventory level

Buffer in case production below plan Or demand higher than anticipated

MPS row is amount to make, MRP system has to figure out how to make it

Available: Period 1: 20+10-5 = 25 Period 2: 25+10-5 = 30 etc.

MPS TECHNIQUES EXAMPLE

production MPS:
2 3 4 5 Week 6 7 8 9 10 11 12

Forecast 5 5 5 5 5 5 15 15 15 15 15 15 Available 25 30 35 40 45 50 45 40 35 30 25 20 MPS 10 10 10 10 10 10 10 10 10 10 10 10 On hand 20 Lot size Q = 10; OH1 = 20 is from previous periods
MPS is constant

Available: Period 1: 20+5-5 = 20 Period 2: 20+5-5 = 20 etc.

MPS TECHNIQUES EXAMPLE

production MPS:
3 4 5 Week 6 7 8 9 10 11 12

Forecast 5 5 5 5 5 5 15 15 15 15 Available 20 20 20 20 20 20 20 20 20 20 MPS 5 5 5 5 5 5 15 15 15 15 On hand 20 Lot size Q = variable; OH1 = 20 is from previous periods
MPS is variable

15 15 20 20 15 15

Consider the following MPS. Forecasts for weeks 1 6 were estimated to be 5 units

Available: Period 1: 20-5 = 15 Period 2: 15-5 = 10 Period 3: 10-5 = 5 Period 4: 5-5+30 = 30 5 Week 6 7 5 20 8 9 10 11 12

Week 1

3 5 5

4 5

Forecast 5 5 Available 15 10 MPS

5 30 25 30

15 15 15 15 15 15 5 20 5 20 5 20 30 30 30

On hand 20 Lot size Q = 30; OH1 = 20 is from previous periods

In week 2, forecasts for weeks 2 6 were revised from 5 to 10 units. Actual demand in period 1 was 10 units. As the Available row indicates, unless MPS is revised, demand from period 3 on will not be met, except for period 5

Week 2
Forecast Available

2 3 4 5 6 10 10 10 10 10
0 -10 10 0 -10

Available: Period 1: 20-10 = 10 Period 2: 10-10 = 0 Period 3: 0-10 = -10 Period 4: -10-10+30 = 10 etc. Week 7 8 9 10 11 12 13 15 15 15 15 15 15 15
-25 -10 -25 -10 -25 -10 -25

MPS 30 On hand 10 Lot size Q = 30; OH2 = AV1 = 10

30

30

30

Available: Period 1: 20-10 = 10 Period 2: 10+30-10 = 30 Period 3: 30-10 = 20 Period 4: 20-10 = 10 Revised MPS meets increased demands in periods 1 6. All Period 5: 10+30-10 =quantities are nonnegative Available 30 etc. Week Week 2 2 3 4 5 6 7 8 9 10 11 12 13

Forecast 10 10 10 10 10 Available 30 20 10 30 20 MPS 30 30 On hand 10 Lot size Q = 30; OH2 = AV1 = 10

15 5

15 15 15 15 15 15 20 5 20 5 20 5 30 30 30

AVAILABLE-TO-PROMISE (ATP)
Quantity of items that can be promised to the customer Difference between planned production and customer orders already received

AT in period 1 = (On-hand quantity + MPS in period 1) - (CO until the next period of planned production) ATP in period n = (MPS in period n) - (CO until the next period of planned production)

AV1 = OH1-max(F1,O1) = 20-max(5,5) = 15 OH2 = AV1 = 15 AV2 = OH2-max(F2,O2) = 15-max(5,3) = 10 OH3 = AV2 = 10 AV3 = OH3-max(F3,O3) = 10-max(5,2) = 5 Consider the following MPS and determine ATP1. Forecasts for OH4 = AV3 = 5 weeks 1 6 were estimated to be 5 units ATP1 = OH1-(O1+O2+O3) = 20-(5+3+2) = 10

Week 1
Forecast Orders Available ATP MPS On hand

1
5 5 15 10 20

2
5 3 10

3
5 2 5

4
5 30 30 30

5
5 25

Week 6 7
5 20 15 5

8
15 20 30 30

9
15 5

10 11 12
15 20 30 30 15 5 15 20 30 30

OH1 = 20 is from previous periods

ROUGH-CUT CAPACITY PLANNING

Feasibility check of master production schedule Historical ratios of loads placed on work centers used Workloads assumed to fall in period and items demanded

MANUFACTURING ENVIRONMENTS
How to manage the increasing level of Assemble-to-Order (ATO)- Eg. Fast food complexity and restaurants uncertainty?

Production-to-Stock (PTS) Eg.- Motorcycles

Make-to-Order (MTO) Eg. Restaurants

MARUTI SUZUKI ALTO

Maruti Suzuki produces Alto on a production-to-stock basis. The demand is shown as:

The

safety stock for the inventory is not

fixed. The fixed lot size is 8000. The beginning inventory is 400. The final assembly line has a weekly capacity of 99 hours available. Each Alto car requires 22 seconds of final assembly.

ROUGH- CUT CAPACITY PLANNING

As the plant is already under-loaded, there can be more number of cars that can be manufactured during the weeks.

CONCLUSION

The MPS unit should reflect the companys approach to the business environment in which it operates. Available-to-promise information should be derived from the MPS and provided to the sales department. A final assembly schedule should be used to convert the anticipated build schedule into the final build schedule.

The MPS activity & the role of the master production scheduler must be clearly defined organizationally. The MPS can be usefully considered as a set of firm planned orders. The MPS should be evaluated with a formal performance measurement system.