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Production Planning (Aggregate Planning)

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Production Planning (Aggregate Planning) SOM 464: Manufacturing Resource Planning Study of the efficient allocation of resources (material, equipment ... – PowerPoint PPT presentation

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Title: Production Planning (Aggregate Planning)


1
Production Planning(Aggregate Planning)
2
SOM 464 Manufacturing Resource
Planning
  • Study of the efficient allocation of resources
    (material, equipment, people, money) in
    manufacturing and some service operations
  • How many items should be ordered or made at a
    given time?
  • Who is assigned which job?
  • How do jobs flow through the firm?
  • How is inventory maintained?

3
Manufacturing Resource Planning Flow of Materials
  • Raw Materials Flow into Manufacturing/Service
    Company.
  • Finished Goods/Services Distributed to End
    Customers.
  • Supply Chain Management (SCM) is the Study of
    this Linked Chain of Activities.
  • Manufacturing Resource Planning (or Materials
    Management) is the Study of the Planning and
    Materials Flow.

4
Manufacturing Resource Planning Flow of Materials
  • Supply Chain Diagram
  • Supplier ? Manufacturer ? Distribution ?
    Customer
    System

5
Manufacturing Resource Planning Criteria
  • High Customer Service (Probability of Meeting
    Demand)
  • Minimize Production Costs
  • Minimize Inventory Holding Costs and Other
    Inventory Investment Costs Avoid Shortages
  • Minimize Distribution Costs
  • These Objectives Often Conflict with Objectives
    of Marketing and Finance.

6
Production Planning
  • There are Five Major Levels in Planning and
    Control
  • Strategic Business Plan
  • Production Plan (Example is Tuffy Case)
  • Master Production Schedule (MPS)
  • Material Requirements Plan (MRP) Can Also
    Include Manufacturing Resource Planning (MRP II)
    and Enterprise Resource Planning (ERP)
  • Purchasing and Production Activity Scheduling and
    Control (Also Known as Shop Floor Control)

7
Production Planning
  • Also Known as Aggregate Planning
  • Problem in Tuffy Case Set Production Every
    Period, Allocate Resources, Meet Demand
  • Set Pt Production for t
  • Wt Workforce for t

8
Production Planning
  • Inputs Resources (Rough-Cut Capacity Planning),
    Forecast, Inventory, Policies, Costs
  • Demand Options Pricing, Promotion, Markets
    for New Demand, Allowing Back Orders (Shortages)
  • Supply (Capacity) Options Hiring/Layoff,
    Overtime, Temporary Workers, Inventories,
    Subcontracting, Expediting

9
Relevant Costs
  • 1. Change in Production (E.g. Hire/Layoff) Costs
  • 2. Inventory Holding Costs
  • 3. Shortage Costs
  • 4. Payroll Costs
  • 5. Subcontracting Costs
  • 6. Expediting Costs

10
Scheduling Strategies
  • Chase (Demand Matching)
  • Production Leveling
  • Level Workforce
  • Subcontracting (Outsourcing)
  • Hybrid or Mixed (Probably Used in Game)
  • Given Beginning Inv. Demand Pt End Inv.

11
Scheduling Techniques (1)
Heuristics
  • Informal Rules that Appear to Work.
  • Rules are Developed (Often by Trial and Error)
    and Tested in Real World or Computer Simulation.
  • Advantage Rules Can Be Realistic.
    Disadvantage Not Optimum.

12
Scheduling Techniques (2) Linear
Decision Rule
  • Economic Order Quantity (Remember EOQ from SOM
    306?) Type of Approach
  • TRC Payroll Holding Shortage Change in
    Pt f(Pt, Wt)
  • Calculus Used to Find Best Pt and Wt
  • E.g. Pt .2Ft .1Ft1 .05Ft2 -.1It .1Wt-1
  • Advantage Optimum Given that Equations Fit.
    Disadvantage Cost

13
Scheduling Techniques (3) Search
Rules
  • Used with Simulation
  • Educated, Computer-Driven, Trial Error
  • Advantage Realistic Costs, Not Optimum but
    Close. Disadvantage Uses Lots of Computer Time.

14
Master Production Schedule (MPS)
  • Similar to Production Plan
  • Time Periods or Buckets are Smaller
  • Multiple Products are Shown Disaggregating
    Done by Heuristics or Linear Programming

15
Tuffy Teddy Bear Case
  • Case Introduced You to Course Material. Case
    Involved Production Planning, Inventory Control,
    and Forecasting.
  • Most Successful Strategies are Hybrid or Mixed
    Reduce Production ASAP to Lower Inventories and
    Increase Production Just After Vacation.

16
2008 Best Answer 41,960
17
2009 Best Answer 45,731
18
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