CORE MRP II

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CORE MRP II
MANUFACTURING RESOURCE PLANNING
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SALES OPERATIONS PLANNING

• The Aggregate Production Plan
• Costs Of Changing Production
• Costs Of Not Changing Production
• Chase Versus Level Plans

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SALES OPERATIONS PLANNING

• Relatively "long-range" for planning
• 1 - 5 years into the future
• Balancing supply and demand
• Focus on long-range decisions not dependent on
  product mix
• Facility capacity
• Inventory levels
• Labor requirements
• Subcontracting and purchasing

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THE AGGREGATE PRODUCTION PLAN

• Expressed in units of aggregate production or
  aggregate capacity for a product family
• Direct labor hours
• Direct machine hours
• Standard units
• Plan product family production using long-term
  forecasts
• Work out detailed individual product schedules
  later using more recent and accurate short-term
  forecasts

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FORMING PRODUCT FAMILIES

• How many product families can be formed out of
  the following three products?
• Standard Tricycle
• Jumbo Jet
• Deluxe Tricycle
• Look for similarity of both demand supply
• The planning factors used for the Tricycle
  Product Family would be a demand-weighted average
  of the factors for each product

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PRODUCT FAMILY PLANNING FACTORS

• Consider the following information for each trike

• For aggregate planning, a standard trike would
  sell for 100 and take 5 hours to make.

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COSTS OF PRODUCTION

• Objective minimize total cost over the planning
  horizon in the face of changing demand
• Some typical costs of not changing production
  levels
• Ch -- holding cost ( / aggregate unit /
  period)
• CB -- backorder cost ( / backordered aggregate
  unit / period)
• Some typical costs of changing production levels
• CO -- overtime costs ( / DLH) DLH Direct
  Labor Hour
• CH -- hiring cost ( / worker)
• CF -- firing cost ( / worker)
• CU -- undertime cost ( / DLH)

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CHASE VERSUS LEVEL PLANS

• Two "pure" strategies
• Chase strategy make only as much as you can
  sell
• Maximizes change costs
• Minimizes level costs
•  
• Level strategy maintain a steady production
  rate
• Maximizes level costs
• Minimizes change costs
•  
•  A more-likely mixed strategy combines the two

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PRODUCTION PLANNING EXAMPLE

• Cost Information
• Ch - 3/DLH/Period
• CB - 15/DLH/Period
• CH - 3,000/Worker
• CF - 1,250/Worker
• CR - 10/DLH
• CO - 5/DLH
• Additional Information
• DLH required to generate 1 of sales 0.05
• Beginning inventory (DLH) 0
• Beginning number of workers - 10

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EXAMPLE CHASE PLAN
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EXAMPLE CHASE PLAN
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EXAMPLE CHASE PLAN
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EXAMPLE CHASE PLAN
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EXAMPLE CHASE PLAN
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EXAMPLE CHASE PLAN
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EXAMPLE CHASE PLAN
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EXAMPLE CHASE PLAN
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EXAMPLE CHASE PLAN
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EXAMPLE CHASE PLAN
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EXAMPLE CHASE PLAN
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EXAMPLE LEVEL PLAN
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EXAMPLE LEVEL PLAN
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EXAMPLE LEVEL PLAN
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EXAMPLE LEVEL PLAN
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EXAMPLE LEVEL PLAN
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EXAMPLE LEVEL PLAN
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EXAMPLE MIXED PLAN