Chapter 7 Production Planning

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1 Production Planning and Control Chapter 7 Production Planning Professor JIANG Zhibin Dr GRANG Na Department of Industrial Engineering & Management Shanghai Jiao Tong University

2 Contents Introduction Master Production Scheduling (MPS) Material Requirement Planning (MRP) Capacity Planning Improvement in MRP

3 Overview of Production Planning Activities Process Planning Production Planning: Long Range Strategic capacity Planning Given specific process planning, process technologies, and production conditions, production planning predetermine varieties, quantities, quality, and schedules of products to be produced according to market demand of products. Demand Forecast Medium Order Range Management Short range Aggregate Planning Master Production Scheduling (MPS) Material Requirement Planning (MRP) Operations Scheduling (Shop floor Scheduling & Control) Rough-cut capacity Planning Capacity Req. Planning Figure 4.1 Framework of Production Planning Activities

4 Long Range Medium Range Short range Demand Forecast Order Management Overview of Production Planning Activities Process Planning Strategic capacity Planning Aggregate Planning Master Production Scheduling (MPS) Material Requirement Planning (MRP) Operations Scheduling (Shop floor Scheduling & Control) Rough-cut capacity Planning Capacity Req. Planning Figure 4.1 Framework of Production Planning Activities Time Dimensions: Long-range planning is done annually and focus on a planning horizon greater than one year; Medium-range planning usually covers a period from 6 months to 18 months, with monthly or sometimes quarterly time increments; Short-range planning covers a period from one day or less to six months, with weekly time increment usually.

5 Overview of Production Planning Activities Long Range Medium Range Short range Demand Forecast Order Management Process Planning Strategic capacity Planning Aggregate Planning Master Production Scheduling (MPS) Material Requirement Planning (MRP) Operations Scheduling (Shop floor Scheduling & Control) Rough-cut capacity Planning Capacity Req. Planning Figure 4.1 Framework of Production Planning Activities Process Planning determines the specific technologies and procedures required to produce a product a service. Strategic capacity planning determines long-term capabilities (e. g. size and scope) Aggregate planning concerns with setting up production rate by product family or other categories for intermediate term (6-18 months).

6 Overview of Production Planning Activities Long Range Medium Range Short range Demand Forecast Order Management Process Planning Strategic capacity Planning Aggregate Planning Master Production Scheduling (MPS) Material Requirement Planning (MRP) Operations Scheduling (Shop floor Scheduling & Control) Rough-cut capacity Planning Capacity Req. Planning Figure 4.1 Framework of Production Planning Activities Master production scheduling generates the amounts and dates of specific items required by orders. The inputs into MPS are arrived orders and AP results. Rough-cut capacity planning is used to verify that the production and warehouse facilities, equipment, and labor are available, and the key suppliers have allocated sufficient capacity to provide materials when needed.

7 Overview of Production Planning Activities Long Range Medium Range Short range Demand Forecast Order Management Process Planning Strategic capacity Planning Aggregate Planning Master Production Scheduling (MPS) Material Requirement Planning (MRP) Operations Scheduling (Shop floor Scheduling & Control) Rough-cut capacity Planning Capacity Req. Planning Figure 4.1 Framework of Production Planning Activities Material requirement planning takes the end product requirements from MPS and breaks them down into their components and subassemblies to create a material plan (production orders and purchase order). Capacity requirement planning (CAP) allocate production resources to each production order. Operations scheduling allocates jobs to specific machines, production lines or work centers.

8 Chapter 7 Production Planning Contents Introduction Master Production Scheduling (MPS) Material Requirement Planning (MRP) Capacity Planning Improvement in MRP

9 Mater Production Scheduling Month 1 2 Mattress production Aggregate production plan for mattress Week Model Model Model MPS for mattress models Aggregate production plan for mattress specifies the total number of mattress planned per month, without regard of mattress types; MPS specifies the exact types of mattress and quantities planned for production by week.

10 Mater Production Scheduling Aggregate planning specifies product groups, rather than exact items; As the next level down in the planning process, MPS is time phased plan that specifies how many and when a firm to build each end item. In the case of the furniture company Its AP may specify the total volume of mattress it plan to produce over next month, e. g. 900 for the next 1 month; Its MPS identifies period by period ( usually weekly) which mattress styles and how many of these mattress styles are needed, 200 Model 200 for Wk 1, 100 Model 538 for both Wks 2 and 3 respectively, and 100 Model 749 for Wk 3... Week Model Model Model

11 Mater Production Scheduling Could a MPS be changed?-flexibility of MPS MPS needs the continuous revisions: Production lead time; The cycle of demand forecasting; The change of orders When updated? New order arrives; Unfinished orders when the products are delayed; Some work center becomes bottleneck; There are shortage of raw material Other reasons.

12 Mater Production Scheduling MPS needs continuous revisions in order to meet the needs of customers by reducing the inventory, on time delivering, and improving the production efficiency. Rolling production plan is used to make MPS. Rolling production plan is to update the production plan over a predetermined horizon based on the planned production.

13 Key problems when making MPS The connection with APP APP considers the production level and workforce level; Production level in APP is broken down into the demand in every period with respect to each end product; Combining with the initial inventory, the broken production level is the forecasted demand in MPS.

14 Key problems when making MPS The frozen period of MPS : MPS is the basis of MRP. The revision of MPS, especially that has been implemented, impacts MRP, which leads to the increase of the cost. The way to deal with this problem is to set different time fences during which MPS can t be revised or easily revised: demand frozen time fence and planning frozen time fence.

15 Key problems when making MPS The frozen period of MPS : Demand frozen time fence: During the period from now to demand frozen time fence, MPS can t be revised without the permit of managing executives. Planning frozen time fence: it is longer than demand frozen time fence. During the period from demand frozen time fence to planning frozen time fence, the application software can t revise MPS, but the planner can revise it.

16 Key problems when making MPS Figure 4.2 MPS Time Fences Each company may have its own time fences and operating rules Frozen: absolutely no change could be made in a firm, or the most minor changes may be allowed in another. Moderately firm: some changes to specific products within a products group so long as parts are available; Flexible: almostanvariations in products are allowable, providing that capacity remains about the same and that there are no long lead time items involved.

17 Alternatives of MPS in different production types MPS is to determine the quantity of each end product in every period. For MTS, end product is the finished product. For ATO, end products are the components and parts. For MTO, end products are raw materials and basic parts.

18 In-class Quiz What kinds of constraints should be considered when making MPS? Meet the needs of demands The constraints of capacity

19 The End!

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