Orientation Strategic
Short Range
LONG RANGE - products - processes
Operations Decisions
Operational
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- plant location - plant layout INTERMEDIATE RANGE (Aggregates) - output rates - employment levels - inventory - subcontracting SHORT RANGE - job assignments - machine loading - job sequencing - lot sizes
Marketing Planning
Financial Planning
MPC boundary
Resource planning
Production Planning
Demand Management
Production Planning
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Long Range
Strategic Planning Aggregate Planning Master Production Scheduling Material Requirements Planning (MRP) Detailed Scheduling (Shop Floor Control)
Short Range Fig. 3 Top-Down Planning The planning performed in other MPC system modules is necessarily detailed, and the language is quite different from that required for production planning The production plan might be stated in rupees or aggregate units of output per month while the MPS could be in end product units per week MPS might be stated in units that use special bills of materials to manage complicated options
Aggregate Plan
G1
G2
G3
Gn
product groups
P2 C1
P3
P4 C2
P5
products
components
C3
C4
C5
C6
Fig. 4 Planning Stages The production plan needs to be expressed in meaningful units, but it also needs to be expressed in manageable number of units
Production Planning
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Experience indicates that 5 to 15 family groups seems to be about right for a top management group to handle Production plan is not a forecast of demand It is the planned production, stated on an aggregate basis, for which manufacturing management is to be held responsible Organisations attempt to satisfy variations in demand by manipulating the variables (size and combination) in its control Pure and mixed strategies can be used to indicate the variables in its control
Pure strategy Output is changed by varying only one of the variables under managements control Mixed Strategy Output is changed by varying two or more of the variables at a time Potential responses to demand fluctuations Vary workforce size Carry product inventory Use overtime Extra shifts Vary load via product mix Subcontract Vary customer service (backlogs) Add contracyclical products Vary marketing (price, advertising)
Production Planning
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Jan Feb Mar Apr May JuneJuly Aug Sep Oct Nov Dec
Fig. 5 Demand Effect: Contracyclical Products
Current Status
production rates work force size inventory levels
Aggregate Plan
production rates work force size inventory levels
Production Planning
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Wt =
Production Planning
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Production planning under varying average demand in periods of planning horizon The complexity in the aggregate planning problem, arises from the fact that in most situations demand per period is not constant but varies from period to period Under such situations the following questions are raised: Should inventory investment be used to absorb the fluctuation in demand over the planning period by accumulating inventories during slack periods to meet demand in peak periods? Why not the fluctuations in demand be absorbed by varying the size of the work force by hiring or laying off workers? Why not keep the size of the work force constant and absorb fluctuations in demand by changing the rate of production per period by working shorter or longer hours as necessary, including the payment of overtime? In process industries and where capacity exceeds average demand over a long period, should periodic shutdowns be used or should the plant be throttled? Why not keep the size of the work force constant and meet the fluctuations in demand through planned backlogs or by subcontracting excess demand? Is it always profitable to meet all fluctuations in demand or should some orders not be accepted
Production Planning
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