Aggregate Planning

AP is intermediate – range capacity planning that is

typically spanned over 12 to 18 M

A big picture approach to planning

Avoids focusing on individuals products or services

Focus on a group of products or product family

Lumps all models together deals with them as a single

products
 Steps for AP
• 1. Determine demand for each period ( Month wise )

• 2. Determine capacities ( regular time , overtime ,

subcontracting )
for each period

• 3. Determine company or departmental policies that are pertinent

• 4. Determine unit cost for regular time. Overtime, subcontracting,

back orders, layoffs et

• 5. Develop alternative plans and compute cost for each

• Techniques used :

• Trial and error using graphs and spread sheets

• Mathematical Techniques : Linear

programming
• Simulation models
 Master Schedule
Gives a detailed time table for making individuals products

Indicates the quantity and timing of planned production

Taking in to account desired delivery quantity and timing as well
as on hand delivery

This schedule achieves the production specified in the aggregate

plan as efficiently as possible.

Master schedule scheduled disaggregates the aggregate plan and

shows the number of individuals product to be made typically each

week
• Master schedule is the heart of PPC

• Drives the MRP system

•
• Master schedules are designed close to start of production so
that we can take into account ;
• Production specified by the Aggregate plan
•
• Updated figure from recent forecasts

• Actual customer orders booked for the period

•
•
•
• Material Requirement Planning ( MRP ) is a
computerized based information system that
translates the finished product requirements of
the master schedule into time phased
requirements for subassembly , components
parts and raw material working backward from
the due date using lead time and other
information to determine when and how
• much to order
 Input to MRP

• Master schedule

• Bill of Material

• Inventory records
• Starts with Master schedule ( no. of every
product to made every period )

• MRP explodes this Master schedule using a bill

of material to give details to material needed

• Calculation for MRP :

Net Requirements
= gross requirements – current stock – stock on
order
 Bill of Material
• BOM is an ordered list of all parts that are needed
to make a particular product
• It shows the material and parts and component
needed and the order in which they are needed
• Every item has a level number that shows where it
fits into the process and show the number needed
to make each unit
• The finished product is level 0 ; level 1 items are
used are used directly to make level 0 item
• Every product has a bill of material that is prepared
at the design stage
 Bill of Materials

Back slats Seat cushion

Leg supports Seat-

frame
boards
Back Front
legs legs A
Ladder-back
chair
 Bill of Materials

A Ladder-back
chair

B (1) C (1) D (2) E (4)

Ladder-back Seat Front Leg
subassembly subassembly legs supports

F (2) G (4) H (1) I (1)

Back legs Back slats Seat frame Seat cushion

J (4)
Seat-frame boards
 Master
Production Schedule
•Master production schedule (MPS): A part of the material
requirements plan that details how many end items will be
produced within specified periods of time.
MPS for a Family of chairs
April May

1 2 3 4 5 6 7 8

Ladder-back chair 150 150

Kitchen chair 120 120

Desk chair 200 200 200 200

Aggregate
production plan 670 670
for chair family
 Resource Planning and
ERP
• Resource planning: A process that takes sales and
operations plans; processes information in the way of time
standards, routings, and other information on how the firm
produces its services or products; and then plans the input
requirements.
• Enterprise process: A companywide process that cuts
across functional areas, business units, geographical
regions, and product lines.
• Enterprise resource planning (ERP) systems: Large,
integrated information systems that support many
enterprise processes and data storage needs.
 Extension of MRP : MRP II
• MRP systems are computerized programs that have
evolved over the last 30 years into advance systems known
as Enterprise Resource Planning ( ERP ) systems.

• In the original form of MRP system comprised of software

programs that designed timetable for ordering materials .
Production schedule revisions due to capacity

• Considerations were done external to the program. Closed

loop MRP took this one step further and made sure that
there was enough capacity in operation to actually supply
these materials . Closed loop MRP systems have
information feedback loops necessary for frequent plan
revisions.
Manufacturing Resources Planning
II
• But materials are only one resource, and
organizations have to schedule several

• we can use the same approach to consider

other resources including people, equipments,
facilities, finances, logistics

• This thinking lead to a major extension of MRP

to Manufacturing Resources Planning or MRP
II.
 MRP II
• schedule arrival of materials but also to schedule
• Jobs needed to make these materials
• schedule the equipment needed.
• schedule people needed.
• schedule other facilities.
• We can go step further and include transport
operations, distribution and consider
• The associated finance, marketing and human
resource management etc.
• Continuing in this fashion we could eventually build
up integrated system that would explode the master
schedule to timetable for all the jobs, equipment,,
operators, machines, facilities and so on.
 MRP II
• MRP II gives an integrated system for
synchronizing all functions within the
organization . It connects schedules for all
functions back to master schedule.

• Today, MRP II systems simulates the entire

manufacturing system where customers,
marketing staff, production and accounting
interact to achieve common business goals.
 Example of MRP II
• An example of MRP II is IBM’s MAPICS ( Manufacturing ,
Accounting and Production Control System) .

It comprises of nineteen interrelated module

• Such as account payable, account receivable, MRP, data
collection support System, cross application system ,
financial analysis, forecasting, general ledger, inventory
management, location management, master production
Schedule, MRP, order entry and invoicing , payroll,
product data management , production control &
costing , purchasing and sales analysis.
 Enterprise Resource Planning
System
MRP systems are all used within an organization,

Extend MRP to cover the entre Supply chain improves the overall
• Performance by cooperating , exchanging information, and
coordinating
all operations.

We now have the next extension of MRP which coordinated

Operations of different organizations within the supply chain. This is
the basis for ERP.

ERP focuses on the whole supply chain extending MRP to include

Suppliers, multi plants , wide global product demand, varying
currency
Markets and international subcontracting etc.
•
 ERP Design

• ERP revolves around a single comprehensive

database that can be made available across the
entire organization (or enterprise).
• The database collects data and feeds them into the
various modular applications (or suites).
– As new information is entered as a transaction in one
application, related information is automatically updated in
the other applications.
– The ERP system streamlines the data flows throughout the
organization and provides employees with direct access to
a wealth of real-time operating information.
– ERP eliminates many of the cross-functional coordination
problems older nonintegrated systems suffered from.
 ERP Application Modules

© 2007 Pearson Education