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Planning Levels
Long-range plans
(over one year)
Top
executiv
es
Operatio
ns
manager
s
Operation
s
managers
,
superviso
rs,
Responsibility
foremen
Intermediate-range plans
(3 to 18 months)
Sales planning
Production planning and budgeting
Setting employment, inventory,
subcontracting levels
Analyzing operating plans
Short-range
plans
(up to 3 months)
Job assignments
Ordering
Job scheduling
Dispatching
Overtime
Part-time help
Short-range plans
Job assignments
Ordering
Job scheduling
Intermediate-range plans
Dispatching
Sales planning
Responsible:
Top
Production planning and
executives
budgeting
Setting employment, inventory,Long-range plans
Responsibl
subcontracting levels
e:
R&D
Operations
Analyzing operating plans
New product plans
managers,
supervisors
, foremen
Today
3 Months
Capital expenses
Facility location, expansio
1 year
Planning Horizon
5 years
Aggregate Planning
Provides the quantity and timing of
production for intermediate future
Usually 3 to 18 months into future
Goals of Aggregate
Planning
Meet demand
Use capacity efficiently
Meet inventory policy
Minimize cost
Labor
Inventory
Plant & equipment
Subcontract
Advantages
Disadvantages
Changing
inventory
levels
Changes in
human
resources are
gradual or
none; no
abrupt
production
changes.
Inventory
holding cost
may increase.
Shortages may
result in lost
sales.
Varying
workforce
size by
hiring or
layoffs
Some Comments
Applies mainly
to production,
not service,
operations.
Advantages
Disadvantages
Comments
Varying
Matches
production seasonal
rates
fluctuations
through
without hiring/
overtime or training costs.
idle time
Overtime
premiums; tired
workers; may
not meet
demand.
Allows
flexibility within
the aggregate
plan.
SubPermits
contracting flexibility and
smoothing of
Or
the firms
Outsourcing output.
Loss of quality
Applies mainly
control;
in production
reduced profits; settings.
loss of future
business.
Table 13.1
Advantages
Disadvantages
Some Comments
High turnover/
training costs;
quality suffers;
scheduling
difficult.
Good for
unskilled jobs in
areas with large
temporary labor
pools.
Using parttime
workers
Is less costly
and more
flexible than
full-time
workers.
Influencing
demand
Tries to use
Uncertainty in
excess
demand. Hard
capacity.
to match
Discounts draw demand to
new
supply exactly.
customers.
Creates
marketing
ideas.
Overbooking
used in some
businesses.
Table 13.1
Advantages
Disadvantages
Some Comments
Back
ordering
during highdemand
periods
May avoid
Customer must
overtime.
be willing to
Keeps capacity wait, but
constant.
goodwill is lost.
Many companies
back order.
Counterseasonal
product and
service
mixing
Fully utilizes
resources;
allows stable
workforce.
Risky finding
products or
services with
opposite
demand
patterns.
May require
skills or
equipment
outside the
firms areas of
expertise.
Table 13.1
..Meeting Uneven
demands
..Meeting Uneven
demands
MRP-Material
Requirements Planning
Materials Requirement Planning is a
technique
for
determining
the
quantity
and
timing
for
the
acquisition of dependent demand
items needed to satisfy master
production schedule requirements.
MRP-Material
Requirements Planning
Refers to the basic calculations used
to determine component
requirements from end item
requirements.
Also refers to the system that uses
the dependence relationship to plan
and control the manufacturing
operations.
Benefits of MRP
1. Better response to customer orders
2. Faster response to market changes
3. Improved utilization of facilities and
labor
4. Reduced inventory levels
Dependent Demand
Effective use of dependent demand
inventory models requires the following
1.
2.
3.
4.
5.
Marketing
Customer
demand
Procurement
Supplier
performance
Management
Return on
investment
Capital
Finance
Cash flow
Human resources
Manpower
planning
Aggregate
production
plan
Master production
schedule
Engineering
Design
completion
Change
production
plan?
Figure 14.1
The Planning
Process
Master production
schedule
Change
requirements?
Change
master
production
schedule?
Material
requirements plan
Change
capacity?
Capacity
requirements plan
No
Realistic?
Yes
Is capacity
plan being
met?
Is execution
meeting the
plan?
Execute capacity
plans
Execute
material plans
Figure 14.1
Bills of Material
List of components, ingredients, and
materials needed to make product
Provides product structure
Items above given level are called
parents
Items below given level are called
children
JOB SCHEDULING
Short term decision
Derives its input from Master
Production Schedule.
Scheduling deals with the timing of
operations
The task is the allocation and
prioritization of demand
Strategic Importance of
Short-Term Scheduling
Effective and efficient scheduling can
be a competitive advantage
Faster movement of goods through a
facility means better use of assets and
lower costs
Additional capacity resulting from faster
throughput improves customer service
through faster delivery
Good schedules result in more
dependable deliveries
Scheduling Criteria
1. Minimize completion time
2. Maximize utilization of facilities
3. Minimize work-in-process (WIP)
inventory
4. Minimize customer waiting time
Optimize the use of resources so that
production objectives are met
1) Priority Rules
Priority rules are used to dispatch or
sequence jobs
FCFS: First come, first served
SPT: Shortest processing time
EDD: Earliest due date
LPT: Longest processing time
Comparison of
Sequencing Rules
No one sequencing rule excels on all criteria
SPT does well on minimizing flow time and
number of jobs in the system
But SPT moves long jobs to the end which
may result in dissatisfied customers
FCFS does not do especially well (or poorly)
on any
criteria but is perceived as fair by customers
EDD minimizes lateness, ensures on-time
delivery
Time remaining
Workdays remaining =
Due
Date
Workdays
Remaining
Critical Ratio
Priority
Order
30
28
27
With CR < 1, Job B is late. Job C is just on schedule and Job A has some
slack time.
Steps of Algorithm
1. List all jobs and times for each work center
2. Choose the job with the shortest activity time.
If that time is in the first work center,
schedule the job first. If it is in the second
work center, schedule the job last.
3. Once a job is scheduled, it is eliminated from
the list
4. Repeat steps 2 and 3 working toward the
center of the sequence
Work Center 1
(Drill Press)
Work Center 2
(Lathe)
10
12
Work Center 1
(Drill Press)
Work Center 2
(Lathe)
10
12
Work Center 1
(Drill Press)
Work Center 2
(Lathe)
10
12
Time
WC
1
WC
2
10
20
28
33
Time
WC
1
10
WC
2
Time 0
35
20
B
1
28
7 9 10 11 12 13
C
E
D
17 19 21 22 2325
B
Job Sequence: B, E, D, C, A
Total Completion Time: 35 hours
Idle Time: 4 hours for work-centre 2
33
C
27
29 31 33
C A