Lesson 16 – Aggregate Planning
The Production Plan
The aggregate plan shows the overall production by families of product.
The aggregate plan can not be used for production because it
. . . .
is at the group level rather than the individual product level.
-
Once the aggregate accepted, it is broken down into more details to give
Master Schedule (MS)
-
That is, the aggregate plan must be broken down into specific product
requirements.
. . . .
- .
Based on the specific products, then calculating detail of manpower,
material and inventory requirements.
The MS‘disaggregate’ the aggregate plan and specifies number of
individual products to be made in, typically, each week.
MS gives a detailed timetable of planned output for each product and
-
is the first time due-dates are associated with individual products.
- -
Disaggregation
The MS is constrained by the aggregate plan.
That is, the overall production in the MS must equal the production
specified in the aggregate plan.
There may be some differences to allow for short-term variations,
incorrect forecasts, capacity constraints, etc., but should be small.
Copyright – Harland E. Hodges, Ph.D 16-1
Lesson 16 – Aggregate Planning
Master Schedule (MS)
The overall objective of the MS is to devise a detailed timetable for
individual products, which allows the aggregate plan to be achieved as
efficient as possible.
The MS is a presentation of
the demand, including the forecast and the backlog (customer orders
received),
the MPS - master production schedule (the supply plan),
the projected on-hand (POH) inventory, and
the available-to-promise (ATP) quantity.
The MS shows quantity and period of specific products. It usually
-
covers 6 to 12 weeks.
The MS then is used as the basis for short term planning.
Relationship of Master Scheduling to other Manufacturing
Planning Control (MPC) activities
The master schedule (MS) is Creates demand Creates demand
Is the “key” in
developing the
a key link in the manufacturing requirements requirements master
schedule
planning and control chain.
The MS interfaces with
marketing, distribution
planning, production planning,
and capacity planning.
The MS drives the material
requirements planning (MRP)
system.
Master scheduling calculates Is the “key”
link
the quantity required to meet Calculates net
requirements
demand requirements from all
sources Input-Output Control &
Operation Scheduling
Copyright – Harland E. Hodges, Ph.D 16-2
Lesson 16 – Aggregate Planning
Master Production Schedule (MPS)
Master schedule states quantity and delivery time of specific
products. -
It says we need 100 push lawnmowers in January.
But it does not say how we get it - from production, or
from inventory.
The master production schedule (MPS) is the primary output of
the MS process. It is the “plan” for providing the supply to meet
the demand.
MPS: Quantity and period of planned production.
MPS determines
the Promised Inventory, and
the Production Requirements available to promise
inventory for each period.
5
What is the MPS?
• The MPS translates the Sales & Operations Plan
(SOP) into a plan for producing specific products in
the future.
• The MPS is the translation of the SOP into
producible products that make up the output.
At the operational level . .
• The MPS is developed to generate a sustainable
Materials Requirement Planning (MRP) system
and to provide the information for coordination
with sales.
• The MPS is a statement of planned future output.
Copyright – Harland E. Hodges, Ph.D 16-3
Lesson 16 – Aggregate Planning
As a statement of output, the MPS
• forms the basic communication between the
market and manufacturing.
• is stated in product specification terms (part
numbers) for which there are Bill of Materials
(BOM).
MPS can be stated in terms of
• End-item product designations
• Options or modules from which a variety of end
products could be assembled.
• Numbers of units of an “average” final product
Master Schedule : Inputs
• Inputs to the master schedule include
– The production plan
– The forecast
– Orders from customers
– Additional independent demand
– Inventory levels
– Capacity constraints
• As the forecasts are not totally accurate, MPS gives the first opportunity
to compare actual customer orders with forecast demand.
• Shortages should be usually avoided, so the demand is a set at the
maximum{Forecast , Actual Customer Orders}
• Demand can be met from stock, so current stock levels and production
capacities are compared, and a master production schedule designed to
make up any difference.
• MPS must keep within constraints (set by aggregate plan, the
available capacities, etc.).
Copyright – Harland E. Hodges, Ph.D 16-4
Lesson 16 – Aggregate Planning
Master Schedule : Outputs
• Outputs from the master schedule include
– The Projected Inventory
– The MPS
– The Available To Promise (ATP) (uncommitted inventory)
NOTE: As orders are received, they “consume” available
production and inventory
– Any part not consumed is available-to-promise
(ATP)
• In principle, designing a master schedule is like designing an
aggregate plan.
• It is matter of balancing supply and demand.
MPS : Available-to-Promise
Available-to-Promise is
– the uncommitted portion of a company’s inventory and
planned production, maintained in the master schedule to
support customer order promising.
– The ATP quantity is the uncommitted inventory balance in
the first period and is normally calculated for each period in
which an MPS receipt is scheduled.
– The ATP calculation assumes that the entire ATP will be sold/
consumed before the next scheduled receipt. When calculating
ATP, consider all orders until the next scheduled receipt.
10
Copyright – Harland E. Hodges, Ph.D 16-5
Lesson 16 – Aggregate Planning
Master Scheduling Process
Inputs Outputs
Projected
Beginning Inventory
Inventory
Master
Master
Forecast Production
scheduling
Schedule
Customer 3 inputs and 3 outputs
Orders Available To
Promise
(uncommitted
inventory)
The key idea is: we have a forecast, but it turns into an actual order when we
receive a customer order.
MPS starts with a preliminary calculation of projected inventory.
This reveals “when the production is needed” to get additional inventory.
11
Inputs To Master Scheduling
Projected demand is calculated based on the customer orders
and forecast.
Projected Demand = max (forecast, orders)
12
Copyright – Harland E. Hodges, Ph.D 16-6
Lesson 16 – Aggregate Planning
Outputs of Master Scheduling
Therefore, the Projected Inventory Position (previous inventory position - projected
demand) without any production can be calculated and is shown below:
Customer orders are larger Forecast is larger than
than forecast in week 1 Customer orders in week 2
Forecast is larger than
Customer orders in week 3
13
Master Production Scheduling Process
Negative projected on-hand inventory is the signal for
production.
Policy/Strategy: Suppose the economic production lot size
for this product is 70 units. Then, whenever production is
called, 70 units are produced.
The negative projected inventory of -29 in period 3 calls for
production, 70 units are produced, the projected inventory
becomes 41.
The same calculation continues across the whole planning
horizon.
14
Copyright – Harland E. Hodges, Ph.D 16-7
Lesson 16 – Aggregate Planning
Outputs Of Master Scheduling
If the lot size for this item is 70 units, we can now build the Master Production
Schedule. We add our first lot in week/day 3 because this is the first negative
inventory position. We then update our Projected Inventory Position.
15
Outputs Of Master Scheduling
We add our next lot in week/day 5 because this is the next negative inventory position.
We then update our Projected Inventory Position.
16
Copyright – Harland E. Hodges, Ph.D 16-8
Lesson 16 – Aggregate Planning
Outputs Of Master Scheduling
We add our next lot in week/day 7 because this is the next negative inventory position.
We then update our Projected Inventory Position.
17
Outputs of Master Scheduling
We add our next lot in week/day 9 because this is the next negative
inventory position. We then update our Projected Inventory Position,
and have completed the second output of the master scheduling
process, the Master Production Schedule.
18
Copyright – Harland E. Hodges, Ph.D 16-9
Lesson 16 – Aggregate Planning
Outputs of Master Scheduling
We are now ready to compute our final output of the master scheduling
process, the Available to Promise (ATP) or uncommitted inventory. This is
inventory which is available to sell and is extremely important to customer
service. The ATP is calculated for week/day 1, 3, 6, 7 and 8.
19
Outputs Of Master Scheduling
The ATP is calculated for week/day 1 by the following:
Week 1 ATP = Beginning inventory - sum of committed
inventory (customer orders) until the first master
scheduled lot
= 64 - (33 + 20) = 11
20
Copyright – Harland E. Hodges,↑ Ph.D 16-10
Lesson 16 – Aggregate Planning
can e
Acne Outputs Of Master Scheduling
The ATP is calculated for week/day 3 by the following:
Week 3 ATP = MPS for week/day 3 (that is 70 units) - sum of
committed inventory (customer
-
orders)until the next
master scheduled lot = 70 - (10 + 4) = 56
up to
2
- in God we have to
sum of
order
Cryto
0000
21
Outputs Of Master Scheduling
The ATP is calculated for week/day 5 by the following:
Week 5 ATP = MPS for week/day 5 - sum of committed
inventory (customer orders)until the next master
scheduled lot
= 70 - 2 = 68
22
Copyright – Harland E. Hodges, Ph.D 16-11
Lesson 16 – Aggregate Planning
Outputs Of Master Scheduling
The ATP is calculated for week/day 7 by the following:
Week 7 ATP = MPS for week/day 7 - sum of committed
inventory (customer orders)until the next master
scheduled lot
= 70 - 0 = 70
23
Outputs Of Master Scheduling
The ATP is calculated for week/day 8 by the following:
Week 8 ATP = MPS for week/day 8 - sum of committed
inventory (customer orders)until the next master
scheduled lot
= 70 - 0 = 70
24
Copyright – Harland E. Hodges, Ph.D 16-12
Lesson 16 – Aggregate Planning
Updating MPS
Changing to a master production schedule can be disruptive.
Particularly changes in the immediate periods of the schedule
Aggregate Plan is developed for say 1 year
Master Production Schedule is developed for a period of say
12 weeks.
MPS is updated say every 2 weeks, it is on a rolling basis.
25
26
Copyright – Harland E. Hodges, Ph.D 16-13
Lesson 16 – Aggregate Planning
Master Production Schedule
27
Master Production Schedule
⑭Mr Orodiroecei28
Copyright – Harland E. Hodges, Ph.D 16-14
Lesson 16 – Aggregate Planning
Stabilizing The Master Schedule
You can see by these calculations that changes to a Master Schedule
can be disruptive, particularly those in the first few weeks/days of a
schedule.
It is difficult to rearrange schedules, materials plans, and labor plans on
a short notice.
For these reasons, many schedules have varying degrees of changes
that are allowed. Time fences are created to indicate the level of
-
change if any that will be considered .
Frozen Firm Full Open
29
Master Production Schedule
Specifies what is to be made and when
Must be in accordance with the aggregate production plan
Inputs from financial plans, customer demand, engineering,
supplier performance
As the process moves from planning to execution, each step must
be tested for feasibility
The MPS is the result of the production planning process
MPS is established in terms of specific products
Schedule must be followed for a reasonable length of time
The MPS is quite often fixed or frozen in the near term part of the
plan
The MPS is a rolling schedule
The MPS is a statement of what is to be produced, not a forecast
of demand
30
Copyright – Harland E. Hodges, Ph.D 16-15
Lesson 16 – Aggregate Planning
Hierarchical Planning Process
Items Production Planning Capacity Planning Resource level
Product lines Aggregate Resource
or families Production Plan Requirements Plan Plants
Individual Master Production Rough-Cut Critical work
products Schedule Capacity Plan centers
Material Capacity All work
Components Requirements Plan Requirements Plan centers
Manufacturing Shop Floor Input/Output Individual
operations Schedule Control machines
31
N
we
and
Copyright – Harland E. Hodges, Ph.D 16-16
