Figure showing the operations planning and scheduling systems.
Aggregate Production (Output) Planning
This plan is the production portion of the business plan and addresses the
of the firm's activities by showing the outputs it will produce, expressed in numbers of unitsof its product groups or families. Since various product groups may be produced atdiverse plants, facilities, or divisions, each of them needs its own production plan. Thedivision's aggregate output plan covers the coming 6 to 18 months on a weekly or monthly basis. Planning at this level ignores such details as how many of each individual product, style, color option, or model to produce. The plan recognizes the division'sexisting fixed capacity and the - company's overall policies for maintaining inventoriesand backlogs, employment stability, and subcontracting.
Aggregate Capacity Planning
A statement of desired output is useful only if it isfeasible. This is the role of aggregate capacity planning-to keep capacity Utilization atdesired levels and to test the feasibility of planned output against existing capacity.Thus it addresses the
of the firm's ability to meet the demand. As for aggregate output plans, each plant, facility, or division requires its own aggregatecapacity plan. Capacity and output must be in balance, as indicated by the arrow betweenthem in Figure. A capacity plan translates an output plan into
how much of the division's capacity will be consumed. A product group, for example,usually consumes predictable amounts of capacity such as labor hours of assembly or machine hours for fabrication. Although these basic capacities are fixed, management canmanipulate the short-term capacities by the ways they deploy their work force, bysubcontracting, or by using multiple work shifts to adjust the timing of overall outputs.As a result, the aggregate planning process balances output levels, capacity constraints,and temporary capacity adjustments to meet demand and utilize capacity at desired levelsduring the coming months. The resulting plan sets limits on the master productionschedule.
Master Production Scheduling (MPS)
The purpose of
master production scheduling
isto meet the demand for individual products in the product group. This more detailed levelof planning
the product groups into individual products and indicates whenthey will be produced. The MPS is an important link between marketing and production.It shows when incoming sales orders can be scheduled into production, and when eachshipment can be scheduled for delivery. It also fakes into account current backlogs so that production and delivery schedules are realistic.
Rough-Cut Capacity Planning
Rough-cut capacity planning
is done in conjunction with the tentative master productionschedule to test its feasibility in terms of capacity before the MPS is finally settled. This