Aggregate Planning, MRP, and Short Term Scheduling

9 Aug 2001

Introduction What – Determine the quantity and

timing of production for the immediate future

Where – To meet forecasted demand

Why – Minimize costs

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

Aggregate Plan Relationships

Aggregate Production Plan

MarketingCustomerDemand

EngineeringDesign

Completion

ManagementReturn onInvestment

Capital

HumanResourcesManpowerPlanning

ProcurementSupplier

Performance

FinanceCash Flow

ProductionCapacityInventory

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

Demand Options Influence demand Back order during high demand

periods Counterseasonal product mix 

Strategies Chase strategy Level strategy Mixed strategy

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

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

Dealing With Changing Requirements System Nervousness Time fence Pegging

Lot Sizing Lot for Lot Economic Order Quantity Part Period Balancing

Extensions of MRP Closed Loop MRP Capacity Planning MRP II

Short Term Scheduling Introduction What – Scheduling or timing of

operations Where – Timing of operations

affects the overall strategy Why – Reduce costs, improve

response

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

 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

Loading Jobs in Work Centers Input-output control Gantt charts

Sequencing Jobs at Work Centers Priority Rules

First Come, First Served Shortest Processing Time Earliest Due Date Longest Processing Time

 Critical Ratio Time Remaining / Workdays

Remaining Highest Critical Ratio is selected

for processing next

Limitations of Rules Scheduling is dynamic Rules do not look upstream or

downstream Rules do not look beyond due

dates 

Finite Scheduling Computerized Short Term Graphical Interactive

Constraints and Bottlenecks Limit output in the production

sequence Increase capacity Reroute work Change lot size Change work sequence Accept idleness