RESOURCE PLANNING AND

SCHEDULING
Module - 1
INTRODUCTION
 The process of making anything starts when you decide what to make,
how much to make, and when to make it.

 In a manufacturing company, this process is (conveniently) called 

production planning and scheduling. 

 Before production planning , lot of factors need to be taken care of -

1. Determine when customers need the product and whether they’re
waiting for it now.
2. Determine how long it’ll take you to make the product.
3. Determine the capacity of your manufacturing process.
4. Determine the setup time required to make the product and whether
that time will affect the setup time for other products.
 Determine how to prioritize the order in which you’ll make products.

 Determine what parts, components, or supplies you need to have on hand so

that you can make a particular product.

 Determine whether you already have the parts you need or have to order
them.

 If you must order parts, determine the supplier’s lead time and the shelf life
of the products.

 Identify risks that could disrupt production.

 Determine whether you need to schedule time for breaks, holidays,

changeovers, and equipment maintenance.
Resource Planning

 As part of the production-planning process, firms must ensure that

the resources needed for production—such as raw materials, parts,
equipment, and labor—will be available at strategic moments in the
production process. This can be a huge challenge. 

 Resource planning is therefore a big part of any firm’s production

strategy.

 The process of establishing, measuring, and adjusting limits or

levels of long-range capacity.
 Resource Planning is normally based on the production plan but may
be driven by higher-level plans beyond the time horizon for the
production plan (e.g., the business plan). It addresses those resources
that take long periods of time to acquire.

 Resource planning decisions always require top management approval.

 Resource planning begins by specifying which raw materials, parts,

and components will be required, and when, to produce finished
goods. To determine the amount of each item needed, the expected
quantity of finished goods must be forecast.

 A bill of material is then drawn up that lists the items and the number
of each required to make the product. Purchasing, or procurement, is
the process of buying production inputs from various sources.
 The firm must decide whether to make its own production materials
or buy them from outside sources. This is the make-or-buy decision
(bases on the cost – benefit analysis)

 In deciding whether to make or buy, a firm must also consider

whether outside sources can provide the high-quality supplies it
needs in a reliable manner.

 Many manufacturing companies have adopted computerized

systems to control the flow of resources and inventory. 

 Materials requirement planning (MRP)

 Manufacturing resource planning II (MRPII) – In late 1980’s
 Enterprise resource planning (ERP) 
 In the past, the relationship between purchasers and suppliers was often
competitive and antagonistic. Businesses used many suppliers and
switched among them frequently. During contract negotiations, each side
would try to get better terms at the expense of the other. Communication
between purchasers and suppliers was often limited to purchase orders
and billing statements.

 Today, however, many firms are moving toward a new concept in

supplier relationships. The emphasis is increasingly on developing a
strong supply chain. The supply chain can be thought of as the entire
sequence of securing inputs, producing goods, and delivering goods to
customers.

 If any links in this process are weak, chances are customers—the end
point of the supply chain—will end up dissatisfied.
SCHEDULING
  A plan that authorizes the factory to manufacture a certain quantity
of a specific item. It is usually initiated by the production planning
department.

 Scheduling involves taking decisions regarding the allocation of

available capacity or resources (equipment, labor and space) to jobs,
activities, tasks or customers over time. Scheduling thus results in a
time-phased plan, or schedule of activities. The schedule indicates
what is to be done, when, by whom and with what equipment.

 Scheduling seeks to achieve several conflicting objectives: high

efficiency, low inventories and good customer service. Scheduling
can be classified by the type of process: line, batch and project.
 Scheduling captures a number of variables from different elements of
the organization such as customer demand, capacity, inventory levels,
material flows etc. It describes which parts the organization will
manufacture and at what frequency.

 Supply chain scheduling, as an important aspect of supply chain

management, highly emphasizes on minimizing stock costs and
delivery costs.
 Sales and Operations Planning (S&OP)
 The key processes initiate , monitor , and measure activities
required to fulfill customer and replenishment orders.

 These processes take two forms – Firstly, planning and

coordination processes to produce and deploy the inventory.

 Second, are the operating processes to receive, process , ship,

and invoice customer orders.

 Planning and coordination includes the processes necessary to

schedule and coordinate procurement, production, logistics
resource allocation throughout the enterprise.
 Supply chain system planning/coordination components form the
information system foundation for the manufacturers and
merchandisers. These components define core activities that guide
enterprise resource allocation and performance from procurement
to product delivery. Supply Chain System Architecture
Sales and
Capacity Logistics Manufacturing Procurement
operations
Management Constraint requirement requirements requirement

Inventory
deployment
Forecasting Inventory
Management

Order Order Distribution Transportation

Procurement
Processing Assignment Operations and shipping
 In the figure - planning/ coordination includes the resource/
material planning process both with in the enterprise and between
the supply chain partners.

 Sales & Operations Plans (S&OP)- Is one of the major enterprise

integrators of sales , marketing and finance goals. These strategic
objectives are typically developed for a multilayer planning
horizon that often includes quarterly updates.

 Sales and marketing’s strategic objective define target markets,

product development, promotions and the role of logistics value-
added activities.

 The objectives includes customer scope, breadth of products and

services, planned promotions and desired performance levels.
 But now, the major focus of the supply chain operations is to take
advantage of manufacturing, transportation, and handling economies
of scale.

 Sales and marketing goals are the customer service policies and the
objectives that defines logistics and supply chain activity and
performance targets( service availability, capability and quality).

 Financial strategic objectives define revenue, financial levels and

corresponding expenses.

 The combination of sales, marketing and financial objectives defines

the scope of markets, products, services, and activity level that
logistics and supply chain managers must accommodate during the
planning horizon.
 S&OP process is increasingly necessary for effective supply chain
operations.

 It is not just an information application rather it is a combination of

information systems, with significant elements of financial,
marketing and supply chain planning elements, integrated with
organizational processes, responsibility, and accountability to
develop consensus and execute collaborative plan.

 It is a blending of process and technology together.

 Traditionally, firms have sequentially and often independently

developed financial , sales and operations plans which created the
conflicts.
 Business Planning
(Budget/financial forecast)
Volume

Unconstrained marketing plan

Sale and Operations
•Orders on hand Planning
•Current customers

Resource plan
•New Customers •Inventory
Operations
•Competition Sales Plan •Replenishment
Plan •Capacity constraints
•Margin analysis
•New Products •Material
•Pricing •Transportation and
•Economy storage

Detailed Planning and

Execution Systems
APS, production planning, plant
scheduling, Supplier scheduling
 The first component of the S&OP process is the business plan in
terms of a financial forecast and a corresponding budget. This plan
is used to guide activity levels and determine aggregate volume and
resource requirements.

 The second component is the sales plan , which is developed from

the unconstrained marketing plan.

 The unconstrained marketing plan determines the max sales and

profitability level that could be achieved if there were no supply
chain operating constraints.

 The final component of the S&OP is the resource plan which is

developed from the firm’s internal and partner resource constraint.
The operation plan synthesizes the resource demands and
constraints to identify and evaluate potential trade- offs.
 The process requires a combination of technology to identify and
evaluate the binding constraints as well as managerial inputs to
determine which constraints might be released in the form of
prioritizing customer shipments, changes in marketing plan,
overtime operations, or outsourcing production.

 Once the whole process is done, it becomes basis of more

detailed supply chain planning application systems.

 While not every firm uses an integrated and coordinated S&OP

process, virtually all firms develop business, marketing and
operational plans.
Capacity Constraints
 These are the logistics and manufacturing capacity limitations
imposed by internal and external manufacturing, warehousing,
and transportation resources constraints.
 On the basis of the activity levels defines by S&OP, these
constraints determine material bottlenecks and guide resource
allocation to meet market demand.
 For each product, capacity constraint influence the where,
when, and how much for production , storage and movement.
 Capacity problems can be resolved by resource acquisition or
speculation/postponement of production or delivery.
Logistics Requirement
 This includes time phased facility, equipments, labor and
inventory resources necessary to accomplish the logistics
mission.
 For example : the logistics requirement component schedules
shipment of finished product from manufacturing plant to
warehouses and ultimately to the retailers.
 The shipment quantity is calculated as the difference between
customer requirements and inventory level.
 Logistics requirement is often implemented by using
Distribution requirement planning (DRP), which is a process
control tool.
 Logistics Requirement - Forecast + customer orders
Promotions=Period demand – Inventory on hand- Planned
receipts  Period logistics requirement.
Manufacturing Requirement

 It schedules production resources and attempt to resolve day-to-

day capacity bottlenecks within the material management system.

 Primary bottlenecks results from raw material shortages or daily

capacity limitations.

 Manufacturing requirement determines the Master Production

Schedule(MPS) and Material Requirement Planning(MRP-II).

 MPS defines weekly or daily production and machine schedules.

Procurement Requirements

 Procurement requirement modules schedule material purchase

order releases, shipments, and receipts.

 This is build on capacity constraints, logistics requirements,

and manufacturing requirement, to determine long term-
material requirements and release schedules.
 Operations
 Coordinated, integrated operations information system are
also essential for supply chain competitiveness.

 Coordination and integration facilitate smooth and consistent

customer and replenishment order information flow
throughout the enterprise and offer current order status
visibility.
 Integrated information sharing reduces delays, errors, and
resource requirements.
 The operations processes required for customer order
fulfillment and to coordinate the receipt of purchase orders
are  Order Processing, Order assignment, warehouse
operations, transportation, procurement.
 Decision Support System/Tools
 Decision Supports Systems (DSS) are computer-based information systems
designed in such a way that help managers to select one of the many
alternative solutions to a problem.
 It is possible to automate some of the decision-making processes in a large,
computer-based DSS which is sophisticated and analyze huge amount of
information fast.
 It helps corporate to increase market share, reduce costs, increase
profitability and enhance quality.
 The nature of problem itself plays the main role in a process of decision
making.
 A DSS is an interactive computer based information system with an
organized collection of models, people, procedures, software, databases,
telecommunication, and devices, which helps decision makers to solve
unstructured or semi-structured business problems. When decision support
is packaged as an interoperable system with interchangeable parts, it is a
DSS.
 A decision-support system (DSS) is a special kind of computer-
aided automated tool for decision-making processes. In DSS a
decision process consists of four stages: problem input, analysis,
solving and output of results.
 Situation assessment, information fusion, and alternatives
generation are the three important functions in any decision
support system.
 One of the first definitions of decision support system came from
Little (1970), when he defined decision calculus as “a model-
based set of procedures for processing data and judgments to
assist a manager in his decision making”.
 DSS is about pairing the best characteristics of man and machine
to improve the quality of decisions
 Components of DSS
 Data Management subsystem:
The database management subsystem includes a database, which contains
relevant data for the situation and is managed by software called the
database management system (DBMS). The database management
subsystem can be interconnected with the corporate data warehouse, a
repository for corporate relevant decision-making data.
 Model Management subsystem:
The model base gives decision makers access to a variety of models and
assist them in decision making. The model base can include the model base
management software (MBMS) that coordinates the use of models in a
DSS. This component can be connected to external storage of data.
 Knowledge-based Management subsystem:
This subsystem can support any of the other subsystem or act as an
independent component. It provides intelligence to augment the decision
maker’s own. It can be interconnected with the organization’s knowledge
repository, which is called the organizational knowledge base.
 User Interface subsystem:

The user interface, also called the dialog management facility, it

allows users to interact with the DSS to obtain information. The user
interface requires two capabilities; the action language that tells the
DSS what is required and passes the data to the DSS and the
presentation language that transfers and presents the user results.
The DSS generator acts as a buffer between the user and the other
DSS components, interacting with the database, the model base and
the user interface.