Aggregate planning

Aggregate planningmanagementmanagementPresentations By Rajendran Ananda Krishnan, https://www.facebook.com/ialwaysthinkprettythings

1. Aggregate planning Rajendran Ananda Krishnan https://www.facebook.com/ialwaysthinkprettythings

2. Aggregate planning Aggregate planning involves planning the best quantity to produce in the intermediate-range horizon (3 months to one year) and planning the lowest cost method of providing the adjustable capacity to accommodate the production requirements. For Example At the end of the aggregate production planning exercise , a garments manufacturer may arrive at the following plan Produce at the rate of 9000 meters of cloth everyday during the months of January to march Increase it to 11000 meters during April to august and change the production rate 10,000 meters during September to December Carry 10% of monthly production as inventory during the first nine months of production Work on a one-shift basis throughout the year with 20% overtime during July to October https://www.facebook.com/ialwaysthinkprettythings

3. Model Type(bicycle) Machine Hrs Required Monthly Demand Basic 30 1000 Deluxe 60 500 Sports 90 250 Aggregate units for production planning Sl.No Product Aggregate unit of Capacity 1 Phenyl Acetic acid Metric tonnes 2 Data entry system Numbers 3 Mini Computer Value in Rs 4 Printed circuit board Square meters 5 Alloy iron casing Metric tonnes 6 Cement Metric tonnes https://www.facebook.com/ialwaysthinkprettythings

4. Inputs to and Outputs from Aggregate Production Planning https://www.facebook.com/ialwaysthinkprettythings

5. Necessary Demand fluctuation Ex- Demands for garments in India-high ( aug-sept ) –festive season Capacity fluctuations Capacity available- 10% lower in the month of Feb Difficulty level in altering production rates Ex- manufacturing Diesel gen sets at the rate of 4000- 5000 Benefits of multi-period planning Supply and demand not match exactly on a period by period basis in an organization https://www.facebook.com/ialwaysthinkprettythings

6. A framework for aggregate production planning Alternatives for modifying supply Alternatives for modifying demand Targeted demand to be fulfilled Arriving at effective period by period demand to be met Actual period-by-period supply schedules Arriving at period-by-period supply schedules Forecasting https://www.facebook.com/ialwaysthinkprettythings

7. Alternatives for managing demand Reservations of capacity Shifting the demand from one period to another Ex- Multi specialty health care unit-appointment system Electronic equipment 2 . Influencing demand Influence the demand during a particular period through some mechanisms and induce the customers to voluntarily shift the demand to other periods when there is a low demand Differential tariffs- telecommunication co’s Special off-season discounts Videocon and BPL – Wait-buy-save scheme https://www.facebook.com/ialwaysthinkprettythings

8. Alternatives for managing Supply Modifying supply can be done in one of the following ways Inventory based alternatives Ex- Arvind Mills- forecast demand for denim April-june-35000 mts / mnt , july-sept - 55000, Avg production capacity-45000 Fast food restaurant Back ordering- is a method of pushing an order to future period on account of insufficient inventory or capacity to supply during the current period Stock out – inability to supply Ex - watch manufacturing company October actual demand- 40000, capacity- 30,000 , on hand inventory- 5000. https://www.facebook.com/ialwaysthinkprettythings

9. Capacity Adjustment Alternatives Two factors affect capacity in any organization The number of working hours The number of people employed Hiring/layoff workers Varying Shifts Varying working hours- OT 3. Capacity augmented alternatives Subcontracting- ITI –PCB boards Rescheduling maintenance New capacity https://www.facebook.com/ialwaysthinkprettythings

10. Strategies for aggregate planning APP Strategy APP alternatives applicable Level Strategy Inventory based alternatives Build inventory Back order Chase Strategy Capacity augmentation alternatives Over time/ under time Vary no. of shifts Hire/layoff workers Capacity augmentation alternatives Subcontract/ outsource Add a new capacity https://www.facebook.com/ialwaysthinkprettythings

11. Master Production Scheduling MPS sets the quantity of each end item to be completed in each time period ( week /month/quarter) of the short-range planning horizon Objectives of Master Production Scheduling To schedule end items to be completed promptly and when promised to customers. To avoid overloading or under loading the production facility so that production capacity is efficiently utilized and low production costs result. Functions of MPS: Translating aggregate plans Evaluating alternative master schedules Generating material and capacity requirements Facilitating information processing Maintaining priorities Utilizing the capacity effectively https://www.facebook.com/ialwaysthinkprettythings

12. Master Production Schedule - Flow Chart https://www.facebook.com/ialwaysthinkprettythings

13. Material Requirements Planning Material Requirements Planning is a computerized information system that aids the planning of materials in manufacturing organizations. MRP is a computer based system in which the given MPS is exploded in to the required amounts of raw materials, parts and sub assemblies ,needed to produce the end items in each time period (week or month) of the planning horizon Objectives of MRP 1. To improve customer service by meeting delivery schedules promised and shortening delivery lead times. 2. To reduce inventory costs by reducing inventory levels. To improve plant operating efficiency by better use of productive resources. Three main purposes of a basic MRP system are to: Control inventory levels Assign operating priorities Assign capacity to load production systems. https://www.facebook.com/ialwaysthinkprettythings

14. Operation of MRP System https://www.facebook.com/ialwaysthinkprettythings

15. Bills of material or product structure file This file provides the information regarding all the materials, parts and sub-assemblies that go in to the end of the product. Is having series of levels each of which represents a stage in the manufacture of the end product The product structure graphically depicts the dependency relationships among various items that make up the end product https://www.facebook.com/ialwaysthinkprettythings

16. Level Connecting Table 1 Telephone Base Unit 1 B.Cover plate 1 Speaker 1 Panel Board 1 Operating Unit 1 Screw 4 Screw 4 Control Panel 1 Button Assy 1 Dial 3 Screw 12 Button 12 Screw 3 Connecting jack 2 Hand Set 1 Microphone 1 H.Cover plate 2 Level-0 L-1 L-2 L-3 L-4 https://www.facebook.com/ialwaysthinkprettythings

17. Inventory status file The inventory status file gives the complete and up- tp -date information on the on-hand quantities, gross requirements, scheduled receipts and planned order releases for the item. It also includes other information such as lot sizes, lead times, safety stock levels and scrap allowances etc… Net requirement for a period = Gross requirement for the period – Scheduled receipt for the period + on hand inventory at the end of the period https://www.facebook.com/ialwaysthinkprettythings

18. MRP -Outputs Primary Planned orders- A schedule indicating the amount and timing of future orders Order Release- authorizing the execution of planned orders Changes- to planned orders , revision of due dates, order quantities, cancellation of orders. Secondary Performance control reports- evaluation of system operations Planning Reports- data useful for assessing future MRP Exception reports- any major discrepancies encountered , late and over due orders, excessive scraps https://www.facebook.com/ialwaysthinkprettythings

19. Capacity Requirement Planning It is a technique for determining what labor /personnel equipment capacities are needed to meet the production objectives symbolized in the master production schedule and MRP The process of determining the short range capacity requirements https://www.facebook.com/ialwaysthinkprettythings

20. Capacity Requirement Planning https://www.facebook.com/ialwaysthinkprettythings

21. CRP CRP Inputs Planned orders and Released orders from the MRP System Loading information from the work centre status file Routing information from the shop routing file Changes with modify capacity, give alternative routings or alterd planned orders CRP Outputs Rescheduling information which call for capacity modifications or revisions of MPS Verification of planned orders for MRP system Load Reports https://www.facebook.com/ialwaysthinkprettythings

22. Automobile factory- no of vehicles Steel mill- tonnes of steel Airlines- no of seats Hospitals- no of beds University- no of students https://www.facebook.com/ialwaysthinkprettythings

23. Hierarchical Approach ton planning Business Plan Marketing Plan Financil plan Production plan ( Capacity) CRP MPS MRP Shop floor Control Detail Scheduling https://www.facebook.com/ialwaysthinkprettythings

24. Capacity Planning Production capacity is defined as the maximum production rate of a facility or a plant Measurement of Capacity Capacity of a plant can be expressed as the rate of output, units per day or per week or per month, tonnes per month, gallons per hour, labor hour per day Capacity may be measured in terms of inputs or output of the conversion process https://www.facebook.com/ialwaysthinkprettythings

25. Capacity Decisions Major considerations in capacity decisions are What size of plant? How much capacity to install? When capacity is needed? When to phase-in capacity or phase-out capacity? At what cost? How to budget for the cost? Factors Affecting Determination of Plant Capacity Market demand for a product/service. The amount of capital that can be invested. Degree of automation desired. Level of integration ( i.e., vertical integration). Type of technology selected. Flexibility for capacity addition https://www.facebook.com/ialwaysthinkprettythings

26. Capacity planning involves activities such as: Assessing existing capacity Forecasting future capacity needs Identifying alternative ways to modify capacity Evaluating financial, economical and technological capacity alternatives Selecting a capacity alternative most suited to achieve the strategic mission of the firm. Capacity planning involves capacity decisions that must merge consumer demands with human, material and financial resources of the organization. https://www.facebook.com/ialwaysthinkprettythings

27. Types of capacity 1. Fixed capacity Adjustable Capacity Design Capacity System Capacity Potential Capacity Immediate capacity Effective Capacity Normal Capacity Actual Capacity https://www.facebook.com/ialwaysthinkprettythings