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S&OP vs MPS
The role of the sales and operations plan is to balance supply and demand volume, while the MPS specifies the mix and volume of the output MPS shows when products will be available in future Planned production, not forecast
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
Figure 6.2
Figure 6.3
Figure 6.3 1 2 Forecast 5 5 Available (Ending) 25 30 MPS 10 10 On hand (starting) 20
3 5 35 10
4 5 40 10
5 5 45 10
6 5 50 10
7 15 45 10
8 15 40 10
9 15 35 10
10 15 30 10
11 15 25 10
12 15 20 10
Different sales forecast Same total: 120 units, starts lower, goes higher Level production plan
Figure 6.4
Forecast Available (Ending) MPS On hand (starting)
1 2 3 4 5 6 7 8 9 10 5 5 5 5 5 5 15 15 15 15 20 20 20 20 20 20 20 20 20 20 5 5 5 5 5 5 15 15 15 15 20
11 15 20 15
12 15 20 15
Same demand as 6.3 Production adjusts to meet demand Chase production strategy
Figure 6.5
Forecast Available (Ending) MPS On hand (starting)
1 2 5 5 15 10 0 0 20
3 4 5 6 7 8 9 10 11 12 5 5 5 5 15 15 15 15 15 15 5 30 25 20 5 20 5 20 5 20 0 30 0 0 0 30 0 30 0 30
Lot size of 30 units Produce if projected balance falls below 5 units Extra on-hand inventory is cycle stock 5 unit trigger is safety stock
Demand in week 1 was 10 Marketing decides forecast was incorrect Raise forecasts to 10 for weeks 2-6 Ending Available for wk 2 projected to be 0
Need to produce in week 2.
Figure 6.6
Forecast Available (Ending) MPS On hand (starting) 2 3 4 5 6 7 8 9 10 11 12 13 10 10 10 10 10 15 15 15 15 15 15 15 0 -10 10 0 -10 -25 -10 -25 -10 -25 -10 -25 0 0 30 0 0 0 30 0 30 0 30 0 10
Figure 6.7
Forecast Available (Ending) MPS On hand (starting)
2 3 4 5 6 7 8 9 10 11 12 10 10 10 10 10 15 15 15 15 15 15 30 20 10 30 20 5 20 5 20 5 20 30 0 0 30 0 0 30 0 30 0 30 10
Production planned for week 4 moved to 2 can we do it? Planned to do 4 batches in 12 weeks, now need 5 feasible? Changing schedule is expensive, maybe very expensive
Track # units ordered for each period More orders expected for periods 2,3 From on-hand, how many units not yet spoken for?
1 2 5 5 5 3 15 10 10 0 0 20 3 4 5 6 7 8 9 10 11 12 5 5 5 5 15 15 15 15 15 15 2 5 30 25 20 5 20 5 20 5 20 30 30 30 30 0 30 0 0 0 30 0 30 0 30
ATP = 20 (5+3+2) = 10
20 units on hand. 10 units are available to promise 20 units on hand have to cover all demands until next production
Week 1 Demand is 10
Increase forecasts of future week shipments. Started period 1 with 20, demand was 10, ended with 10.
Received more orders for periods 2-4 Period 2 ending inventory would be 0, so have to produce in week 2. (10+30) (5+5+2)=28 Order backlog went from 10 to 12- factor in revising forecasts?
2 3 4 5 6 7 8 9 10 11 12 13 Forecast 10 10 10 10 10 15 15 15 15 15 15 15 Orders 5 5 2 Available (Ending) 30 20 10 30 20 5 20 5 20 5 20 5 ATP 28 30 30 30 30 MPS 30 0 0 30 0 0 30 0 30 0 30 0 On hand (starting) 10 Starting inventory plus production is 10+30 = 40. We have orders for 5 in period 2 It looks like we could accept orders for up to 35 more units in week 2. But we cant. Weve promised 7 of those units to weeks 3&4. Selling more would mean we have to expedite another shipment, like we just did, but which we really, really dont want to have to do. So, not safe to assume we can easily expedite in short term
Calculating Available
Current batch plus on hand Minus the greater of Forecast and confirmed orders Previous available + MPS (greater of forecast or orders)
Calculating ATP
Order for 35 in week 10. Wk 10 ATP goes to 0, 5 additional units need to come from ATP for previous MPS Week 8 MPS goes to 25 Set MPS for 11? We need to do something.
2 3 4 5 6 7 8 9 10 11 12 13 10 10 10 10 10 15 15 15 15 15 15 15 5 5 2 35 30 20 10 30 20 5 20 5 0 -15 0 -15 28 30 25 0 30 30 0 0 30 0 0 30 0 30 0 30 0 10
5 in week 2?
Forecast Orders Available (Ending) ATP MPS On hand (starting)
2 3 4 5 6 7 8 9 10 11 12 13 10 10 10 10 10 15 15 15 15 15 15 15 5 5 2 30 20 10 30 20 5 20 5 20 5 20 5 28 30 30 30 30 30 0 0 30 0 0 30 0 30 0 30 0 10
5 in week 2 must come from ATP in week 2. ATP in 2 is 28, so it works. Reduce ATP to 23, add order
5 in week 2? OK
Forecast Orders Available (Ending) ATP MPS On hand (starting) 2 3 4 5 6 7 8 9 10 11 12 13 10 10 10 10 10 15 15 15 15 15 15 15 10 5 2 30 20 10 30 20 5 20 5 20 5 20 5 23 30 30 30 30 30 0 0 30 0 0 30 0 30 0 30 0 10
15 in week 3?
Forecast Orders Available (Ending) ATP MPS On hand (starting)
2 3 4 5 6 7 8 9 10 11 12 13 10 10 10 10 10 15 15 15 15 15 15 15 10 5 2 30 20 10 30 20 5 20 5 20 5 20 5 23 30 30 30 30 30 0 0 30 0 0 30 0 30 0 30 0 10
15 in week 3? OK
Forecast Orders Available (Ending) ATP MPS On hand (starting)
2 3 4 5 6 7 8 9 10 11 12 13 10 10 10 10 10 15 15 15 15 15 15 15 10 20 2 30 10 0 20 10 -5 10 -5 10 -5 10 -5 8 30 30 30 30 30 0 0 30 0 0 30 0 30 0 30 0 10
Reduced ATP to 8, added 15 to Orders Notice all future ending levels went down by 10 Consider moving MPS from 5 to 4.
Depends on marketings beliefs about 4. If no more than 10 will come, we might be OK.
35 in week 6?
Forecast Orders Available (Ending) ATP MPS On hand (starting) 2 3 4 5 6 7 8 9 10 11 12 13 10 10 10 10 10 15 15 15 15 15 15 15 10 20 2 30 10 0 20 10 -5 10 -5 10 -5 10 -5 8 30 30 30 30 30 0 0 30 0 0 30 0 30 0 30 0 10
35 in week 6? OK
Forecast Orders Available (Ending) ATP MPS On hand (starting)
30 from ATP in week 5, which goes to 0. Need 5 more ATP from week 2, ATP in 2 goes down to 3. But it would only be prudent to approve it if: You think this 35 represents all the demand youll see (Those forecasted other orders are not coming), OR You can adjust the MPS to meet forecasted demand No room to accommodate 10 in w 5, could do in week 8
Fig. 6.10
Forecast Orders Available (Ending) ATP MPS On hand (starting)
Bill of Materials
Bill of Materials Parent-child diagram that shows what goes into what.
Components
Frame
Used to make sure enough parts for production plan Each part has LT, ordering policy One BOM for every end product
BOM formats
Wheel Assembly
Tires
Lowest level in structure item occurs Top level is 0; next level is 1 etc. Process 0s first, then 1s Know all demand for an item Where should blue be?
LLC 0 1 2 3 4
LLC Drawing
Item only appears in one level of LLC drawing Easier to understand Simplifies calculations
LLC 0 1 2 3 4
Master Production schedule is anticipated build schedule FAS is actual build schedule
Exact end-item configurations
Schedule Stability
Stable schedule means stable component schedules, more efficient No changes means lost sales Frozen zone- no changes at all Time fences
>24 wks, all changes allowed (water) 16-23 wks substitutions, if parts there (slush) 8-16 minor changes only (slush) < 8 no changes (ice)
HW