Manufacturing

Planning and Control

MPC 6th Edition

Chapter 4a

McGraw-Hill/Irwin Copyright © 2011 by The McGraw-Hill Companies, Inc. All rights reserved.
Advanced Sales and
Operations Planning
Within the Sales and Operations
Planning (SOP) process, modeling
procedures can be used to
establish overall production and
inventory plans.
The basic issue is what levels of
resources should be provided in
each period. Powerful and easily
accessible tools are available for
solving these models.
4a-2
Agenda

4a-3
 Linear Programming -SOP
Hiring Costs Firing Costs Labor Costs Overtime
Costs
m
Minimize  C
t 1
H H t  C F Ft  C R X t  CO Ot  C I I t  CU U t 
Inventory Idle Time
subject to Costs Costs
I t 1  X t  Ot  I t  Dt Inventory
Constraints
I t  Bt
X t  A1tWt  U t  0 Regular Production Constraint

Ot  A2tWt  St  0 Overtime Production Constraint

Wt  Wt 1  H t  Ft  0 Workforce Change Constraint

W0  A3
I 0  A4 Initializing
Constraints
Wm  A5
4a-4
Example
Item Value
Regular-time cost per employee per month $1,828
Overtime cost/unit $33.04
Inventory carrying cost per unit per month $1.77
Hiring cost/employee $800
Firing cost/employee $1,500
Regular-time productivity (units per month per 83
employee)
Maximum overtime units/month 17
Ending inventory ≥ 2,000 units
August inventory 16,460 units
August employees 72
4a-5
LP Model and Solution

Changing cells
(decision
variables)

4a-6
 LP Settings and Options
Minimize total costs

Constraints
•Ending workforce = actual (72)
•Reg. production <= capacity
•OT production <= capacity
•Monthly inventory >= 2,000
•Ending inventory (August) = actual (16,460)
•Hires/Fires must be integers
4a-7
SOP – Using Product Families

4a-8
SOP – Using Product Families

4a-9
Disaggregation-
Establishing MPS

4a-10
Disaggregation-
Establishing MPS

4a-11
Disaggregation-
Establishing MPS

4a-12
Disaggregation- Establishing MPS

4a-13
Disaggregation- Establishing MPS

4a-14
 Principles
 To ensure credibility, the match between the real world
and the model should be as close as possible.
 Relatively homogeneous product lines (or portions of
lines) allows for a closer match between model and
reality.
 Before the potential of advance techniques can be
realized, the firm must invest in training, enhance data,
improve basic MPC practices, and determine clear
objectives.
.

4a-15
 Principles
 Management must realize that significant efforts
in model formulation, understanding, testing,
and explanation are important to successful
applications.
 Advance techniques must be built on a
foundation of good basic practices.
 Spreadsheet-based models offer executives a
better choice.

4a-16
 Quiz – Chapter 4a
 The objective of a Linear Programming planning approach is
to ___________.
 Microsoft Excel has both Linear Programming and Mixed
Integer Programming capabilities. (True/False)
 A key step in the modeling process is to identify assumptions.
(True/False)
 Determination of inventory holding costs is generally a simple
process with few assumptions. (True/False)
 The Advanced Sales and Operations process can be
implemented as soon as a firm starts using Sales and
Operations Planning. (True/False)

4a-17