Professional Documents
Culture Documents
Resource Management: deals with the planning, execution and control of all the resources that are
used to produce goods or provide services in a value chain
Level 1: Aggregate Planning: is the development of a long-term output and resource plan in
aggregate units of measure
Aggregate plans define output levels over a planning horizon of one to two years, usually in monthly
or quarterly time buckets. They normally focus on product families or total capacity requirements
rather than individual products or specific capacity allocations. Aggregate plans also help to define
budget allocations and associated resource requirements. Aggregate planning is driven by demand
forecast and that planning would then translate into monthly or quarterly production plans
STRATEGIES FOR AGGREGATE PLANNING
Level production strategy: plans for the same production rate in each time period. A level
strategy avoids changes in the production rate, working within normal capacity restrictions.
Labor and equipment schedules are stable and repetitive, making it easier to execute the plan
Chase demand strategy: sets the production rate equal to the demand in each time period.
Although inventories will be reduced and lost sales will be eliminated, many production rate
changes will dramatically change resource levels
DISAGGREGATION IN MANUFACTURING
Master Production Schedule (MPS): is a statement of how many finished items are to be produced
and when they are to be produced
The purpose of the master schedule is to translate the aggregate plan into a separate plan for
individual finished goods. It also provides a means for evaluating alternative schedules in terms of
capacity requirements, provides input to the MRP system and helps managers generate priorities for
scheduling by setting due dates for the production of individual items
Final Assembly Schedule (FAS): defines the quantity and timing for assembling sub-assemblies and
component parts into a final finished good
Materials Requirements Planning (MRP): is a forward looking, demand-based approach for
planning the production of manufactured goods and ordering materials and components to minimize
unnecessary inventories and reduce costs
MRP projects the requirements for the individual parts or sub-assemblies based on the demand for
the finished goods as specified by the MPS. The primary output of an MRP system is a time-phased
report that gives:
- The purchasing department a schedule for obtaining raw materials and purchased parts
- The production managers a detailed schedule for manufacturing the product and controlling
manufacturing inventories
- Accounting and financial functions production information that drives cash flow, budgets and
financial needs
MRP depends on understanding three basic concepts:
- Concept of dependent demand: is demand that is directly related to the demand of other SKUs
and can be calculated without needing to be forecasted
- Concept of time phasing
- Lot sizing to gain EOS: affect not only the planned order releases for the particular items
under consideration but also the gross requirements of all lower-level component items. Three
common lot sizing methods: lot-for-lot (LFL), fixed-order quantity (FOQ) and periodic-order-
quantity (POQ)
The concept of dependent demand is best understood by examining the Bill-of-materials (BOM).
Because of the hierarchy of BOM there is no reason to order something until it is required to produce
a parent item. Thus, all dependent demand requirements do not need to be ordered at the same time
but rather are time phased as necessary. In addition, orders might be consolidated to take advantage
of ordering EOS
Level 3: Execution
refers to moving work from on workstation to another, assigning people to taks, setting priorities for
jobs, scheduling equipment and controlling processes // focuses on executing the detailed plans made
at Level 2 creating detailed resource schedules and job sequences. Level 3 planning and execution in
manufacturing is sometimes called ‘shop floor control’
Resource management for most service-providing organizations generally does not require as many
intermediate levels of planning as it does for manufacturing
For service-providing organizations: does not require as many intermediate levels of planning as
manufacturing, because:
Services are mostly instantaneous or continuous instead of being discrete no need for
multiple levels of planning
Services do not have the advantage of physical inventory to buffer demand and supply
uncertainty so they must have sufficient service capacity on duty, making short-term demand
forecasting and resource scheduling absolutely critical