Aggregate Planning, MRP, and Short Term Scheduling

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

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

3. 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

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

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

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

7. Strategies • Chase strategy • Level strategy • Mixed strategy

8. 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

9. 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

10. Dealing With Changing Requirements • System Nervousness • Time fence • Pegging

11. Lot Sizing • Lot for Lot • Economic Order Quantity • Part Period Balancing

12. Extensions of MRP • Closed Loop MRP • Capacity Planning • MRP II

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

14. 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

15.  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

16. Loading Jobs in Work Centers • Input-output control • Gantt charts

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

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

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

20. Finite Scheduling • Computerized • Short Term • Graphical • Interactive

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