The Magnets Situation

Lecture 11
Planning
Course: Supply Chain Management
Lecturer: Dalia Lases Figueroa EngD

Magnetic resonance imaging (MRI)

The Magnets Situation AGENDA for Lecture 11 PART A

• SALES AND OPERATIONS PLANNING

• Definition
• Overview
• Aggregate plan: production plan
• Strategies and relevant Costs
• AGGREGATE PLANNING TECHNIQUES
Source:
https://www.philips.com/a-
w/about/news/archive/blogs/innovation-
matters/behind-the-factory-doors.html
SALES AND OPERATIONS PLANNING SALES AND OPERATIONS PLANNING
Definition Overview
Design of
Suppliers, processes,
S&OP : process designed to coordinate key business activities: specific
warehouse
- Marketing and sales & operations and supply chain location, technologies
transportation
- Process designed to keep demand & supply in balance over time
- Aggregate level -> intermediate term (3-18 months)
It looks like MEETINGS!

SALES AND OPERATIONS PLANNING SALES AND OPERATIONS PLANNING

Aggregate operations plan Production planning:
• Set production rates by product group (aggregation), workforce level and costs
inventory… WHAT ARE THE TRADEOFFS? • Basic production costs: fixed and variable
• Changes in production rate
Production planning: • Inventory holding
strategies • Backordering

With
variable How to consider them?
or stable
workforce
 AGGREGATE PLANNING TECHNIQUES AGGREGATE PLANNING TECHNIQUES

• Cut- and – try: lower cost of different options requirements

REQUIREMENTS Plan1: exact

production,
vary workforce

AGGREGATE PLANNING TECHNIQUES The Magnets Situation.. Continues

Plan 2: vary
inventory,
Customer order
constant “Frozen period”:
workforce 1 week
requirements

requirements Factory: Level Transport:

capacity strategy 3 weeks
AGENDA for Lecture 11 PART B YIELD MANAGEMENT

Allocating limited capacity to the customer at the right price and time to maximize profit.
Most effective when:
• YIELD MANAGEMENT
- Customer segmentation
• MRP - Fixed costs high
• MRP STRUCTURE AND EXAMPLE - Inventory perishable
• The end (for me) of the magnets situation. - Product available in advance
- Demand variable

Examples?

MATERIAL REQUIREMENTS PLANING MATERIAL REQUIREMENTS PLANING (real screen)

• ERP: integrates all functions, database shared by all applications

MATERIAL REQUIREMENTS PLANING (real screen) MATERIAL REQUIREMENTS PLANING (real screen)

MATERIAL REQUIREMENTS PLANING (real screen) MATERIAL REQUIREMENTS PLANING STRUCTURE

 MATERIAL REQUIREMENTS PLANING STRUCTURE MATERIAL REQUIREMENTS PLANING STRUCTURE
Refer to the bill of materials for product A shown below.
MRP Explosion
BOM If there is no existing inventory and no scheduled receipts, how many
calculations
units of items G, E, and D must be purchased to produce 5 units of
end item A?
A

B (3) C (1)

D (1) E (2) F (1) D (1)

G (1)

MATERIAL REQUIREMENTS PLANING STRUCTURE The end

MRP Explosion
• What happened to the magnets?
calculations • Independent/ dependent demand: MPS MRP
• Forecasting: Input from project plan
• Frozen period shorter than transport time: Flexibility created