Four Tips on Advanced Planning

This white paper is by Alejandro Lorefice of S&T – Servicio y Tecnología. Based in Buenos Aires,
Argentina, S&T is a JDE business partner providing Advanced Planning consulting services in Latin
America.

1. Using emulators for modeling in Production Scheduling Process

Introduction
A model represents the most relevant aspects of production reality. The model should be as
simple as possible. Technical restrictions, stock policies, and different kinds of demands are
examples of restrictions and variables to be taken in account. The model should be simple, but
modeling is not.
We can identify both soft restrictions and hard restrictions. Hard restrictions are those that can
never be violated, for example, the manner in which activities are assigned to each resource.
On the other hand, soft restrictions allow violations. Breaking a safety stock level policy, could
be allowed, but also could result in cost penalties.
The purpose of this white paper is to explain how to create a hard technical restriction within a
process in which two lines simultaneously feed a kiln. In order to make the model respect this
reality, inventory and resource emulators are created.

Description of the process

The process consists of two stages: in the first, two machines (that work in parallel) give shape
and color to the WIPs; this output is then fired in a kiln (second stage of the process)
transforming it into final product. There are two alternative formats, 2020 and 2525, each of
them with 20 possible colors, giving a total of 40 finished products. Demand for each product is
defined by color and format; for example "30 units of 2020 yellow" and "40 units of 2525 blue".
Both lines of the first stage feed the kiln simultaneously, but the WIP should be of the same
format, i.e. color s may vary but format cannot. For this reason, lines 1 and 2 are required to
process identical formats all the time. If the format varies in one of the lines then the other one
must shift to make formats match. Certainly this is a hard technical restriction, and should be
modeled as such within PS.

Exhibit 1

Format and color Firing

Line
Line 11

Kiln
Kiln
Line
Line 22

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 Four Tips on Advanced Planning

In this process, the kiln is the bottleneck, what means that is the resource that establishes the
maximum production rate. Thus, lines and kiln are taken as a continuous process that produces
at the speed of the kiln. Line speeds are identical and, aggregated, equal the speed of the kiln.
At this stage, it is not necessary to include the kiln in the model, just the two lines are
represented.

Exhibit 2
Format and color Firing

Line
Line 11
2020
Identical formats (not colors) or Kiln
Kiln
2525
Line
Line 22

Lines 1 and 2 now become the relevant resources and main elements of the PS model. From a
model-building point of view, matching formats in both lines for each period of time is not an
easy job. Nevertheless, resource and activity emulators bring a solution to this problem. The
final objective of this paper is to show how to create those emulators and describe how they
overcome such problem.

Building the model

In order to make both lines produce at the same time identical formats (without considering
coloration) two inventories and one additional resource were created. One of the inventories
represents format 2020 and the other one format 2525; the new resource produces both
inventories at the speed of the kiln. These new elements were called inventory and resource
emulators.
The emulated inventories will be produced at the emulated resource and will be input of the two
production lines (Line 1 and 2).
As the new resource produces only one format at a time, then Lines 1 and 2 are fed with
identical raw materials (in terms of format, not of color). This guarantees that the kiln is fed with
identical formats, and constitutes the core of the solution.
The process is continuous and synchronous: represents adequately the reality of the tile
industry process, i.e. there are no stocks between operations.

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 Four Tips on Advanced Planning

Due to the characteristics of the process, PACK algorithm was chosen.

Exhibit 3

Resource Inventory Format and Firing

emulator emulators color
2020
Line
Line 11
Kiln
Kiln 2525
2020
sequence
sequence Identical formats (not colors) or Kiln
Kiln
emulator
emulator 2020 2525
2525 Line
Line 22

Specifications
The following elements were configured
1. Two inventory emulators (one for each format, 2020 and 2525)
One resource for producing these two inventories
2. Tables
INV: for incorporating the new inventories
ACT: for incorporating activities
INCI: for routing new activities
RATE: for establishing production rates of the new resource
FPCK and the other tables required by the PACK algorithm
3. Algorithm used: PACK for synchronous processes

Conclusion
The purpose of this section was to show that technical restrictions can affect model building,
and to explain how to overcome this issue. Resource and Inventory emulators that do not exist
in the real process are configured; process bottleneck shift from the real resource to the
emulator in which emulated inventories are produced.
To sum up, one problem or reality does not have to be necessarily represented by a unique
model. Practice and experience in model building give the PS-P user flexibility to creatively
propose new solutions.

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2. Cost traceability using the PS-P and MS Excel

Introduction
The output of a PS run is the schedule; an optimal production program that satisfies
demand/inventories at the time that takes into account costs and constraints.
Usually, the user of the tool makes changes to the first schedule that PS proposes, for example
by testing different improvement algorithms or by manually modifying the solution. The latter can
happen when Commercial Dept. requests the plant to move forward certain orders so as to
immediately fulfill it (even if it means incurring additional production costs).
Production people, aware of manufacturing restrictions and dynamics, are usually reluctant to
accept such requests. One useful way for maki ng evident that ad-hoc decisions cost too much
is to compare incurred costs before and after the change. It is valuable to verify not only the
overall cost of each solution ("the new schedule costs x% more than the original), but also
where they directly impact -- in which inventories, activities or resources.
The List Cost report is the basic element for making the analysis. This report combined with
the export function of PS makes possible a user-friendly comparison of results in a standard
spreadsheet.

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 Four Tips on Advanced Planning
Scenario

Setup costs
per
Scheduled resource
position ac-
tivity GR08

Inventory
GR08
penalizatio

Global cost
541.99

Sample case
We will name Scenario1 the first output of a certain PS run; in this case an 8 week program for
a bottling plant that operates three lines. The main variables to be analyzed in the model are the
following:
• Setup costs
• Inventory carrying costs
• Penalization for violating min./max. or safety stock levels
• Activity costs, i.e. changeovers

The overall cost for the first run was 541.99 using Add algorithm.
Soon after, a manual change is introduced. Specifically the user moves activity GR08 to the
beginning of the horizon. As aforementioned, this could be the way to answer a rush order or a
special request coming from an important customer. We will call it Scenario 2.

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Typically such movement modifies the global cost of the solution, likely increasing the value.

Scenario 2

Setup costs
New position per resource
of activity
GR08

Inventory
GR08
penalty

Global Cost
563.50

Presenting results
Not only is a global cost value is useful for evaluating the impact of the decision but also a
detailed analysis of its origin. The information given in the Main Screen is insufficient for these
purposes. On the one side are inventory & setup costs, penalties and activity costs appear as
aggregated values; on the other, it is not possible to compare these figures with those of the
previous run.
Using both a List Cost report and a spreadsheet (eg. Excel) is a powerful way to overcome the
data aggregation and comparison restrictions described above. The procedure follows:

1. Generate a List Cost report for Scenario 1

2. Export the report with flat file format (.txt)
3. Open this file from Excel
4. Repeat steps 1-3 for Scenario 2
5. In a new spreadsheet bring data corresponding Scenarios 1 and 2

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6. Customize adequately for making the analysis (i.e. by activity, by resource, etc.)

Inventories
affected by the
manual change

§ Line where the

change took place
§ Setup costs

Scenario 2 has a
~4% total
penalty, mainly
caused by
inventory costs

Conclusion
Now the user is able to better manage information provided by the PS report. The user can
make data aggregation/splitting visible and easily visualize the results of different decisions.
This provides an effective tool for supporting the recommendations.

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3. Obtaining the cost of activities in Production Scheduling Process

The Main Screen "MS" of the PS-P shows, in the upper sector, a Gantt chart with a schedule of
the activities for each production line. These activities include work orders, set-ups, idle time
and stops. The lower sector of the screen shows the evolution of the different inventor ies
represented in the model.

Activity costs in PS-P, including set-ups and work, are crucial for the solution that the algorithm
provides. To check if a given solution is accurate, it is important to verify if those costs have
been input correctly; and this check must be done monitoring the costs of the activities one by
one.

But when PS-P presents the costs of the activities in the costs window, it aggregates, for each
resource, the costs of all the activities of the same kind that are being shown in the MS. For
example, if the MS is showing a time frame of four weeks, and if one selects an activity that is
repeated 10 times in that period and goes to the costs window, this report will show the “add up”
cost of these 10 activities.

Resource

Activity selected
to see its costs

Add up costs of
the activities

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To see the cost of only one of these activities, select the activity and reduce the time frame so
that in the MS appears this activity without any other of the same kind. Thereafter, the costs
screen will be showing only the values associated to the activity that is being displayed.

With this functionality the modeler is able to manage activity cost aggregation, on each
resource, according to his different needs, i.e. in one moment may want to see aggregated
costs and split values in another.

Resource

Activity selected
to see its costs

Costs of the
activity selected

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4. Replicating information for different nodes in a Supply Chain

network

One of the main utilities of SNO is inventory monitoring. Stocks are visualized at each Storage
node by attaching a Monitor node to it. However, sometimes this information needs to be
vizuali zed not only at the corresponding node but also in relation with other nodes or across the
entire supply chain.
That is the case of beverage companies that work with returnables (glass bottles): it is
necessary to know inventory levels per plant and DC but, at the same time, is mandatory to
recognize the stock of returnables along the entire network. This information is critical because
beverage should not be produced if there are no empty bottles to fill.
Under this scenario, inventory management requires setting maximum storage capacities on
two dimensions: per plant and per SKU (product + bottle size), and for these purposes
information on inventory at a given Storage node needs to be reported to multiple sites in the
network. The problem is that a Storage node can accept many Monitor nodes but it only
channels information to just one of them. Thereafter part of the information is lost and either
capacity per plant or per SKU can not be measured.
If the modeler faces a situation like the aforementioned, a Replicator node must be used in
connection with Storage and Monitor nodes. The Replicator will get information from the
Storage node and will deliver the information to as many Monitor nodes as modeled.

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