RESOURSCE PLANNING

SYSTEM
Described
 Resource Planning System Introduction
 Operations Planning
 The Aggregate Production Plan
 Master Production Scheduling
 The Bill of Materials
 NEXT DISCUSSION
RESOURCE PLANNING SYSTEMS
Resource planning is the process of determining the production
capacity required to meet demand. In the context of resource planning,
capacity refers to the maximum workload that an organization is
capable of completing in a given period of time.

a discrepancy between an organization’s capacity and

demand results in an inefficiency

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Operation Planning
Operations planning is usually hierarchical and can be divided into three broad
categories:
(1) long-range,
While the distinctions among the three can be vague, long-range plans usually cover a year or more, tend to be more
general, and specify resources and outputs in terms of aggregate hours and units.

(2) intermediate or medium-range

Medium-range plans normally span six to eighteen months, whereas short-range plans usually cover a few days
to a few weeks depending on the type and size of the firm

(3) short-range planning horizons

short-range plans are the most detailed and specify the exact end items and quantities to make on a weekly, daily
or hourly basis.
MANUFACTURING PLANNING AND CONTROL SYSTEM.
The Aggregate Planning
 IMPLEMENTING AGGREGATE PLANNING IN PRACTICE
- Think beyond the enterprise to the entire supply chain
- Make plans flexible, because forecasts are always inaccurate.
- Rerun the aggregate plan as new data emerge
- Use aggregate planning as capacity utilization increases.
 The Aggregate Production Plan
 Aggregate production planning is a hierarchical planning process that
translates annual business plans and demand forecasts into a
production plan for all products.
Parameters
The pure chase production
Production Rate: the number of units to be completed per unit time (such as
strategy adjusts capacity to
per week or per month)
match the demand pattern.
Workforce: the number of workers/units of capacity needed for production
Using this strategy, the firm
Overtime: the amount of overtime production planned
will hire and lay off workers
Machine Capacity Level: the number of units of machine capacity needed for
to match its production rate
production
to demand. The workforce
Subcontracting: the subcontracted capacity required over the planning horizon
fluctuates from month to
Backlog: demand not satisfied in the period in which it arises but carried over to
month, but finished goods
future periods
inventory remains
Inventory on Hand: the planned inventory carried over the various periods in
constant.
the planning horizon
 The Aggregate Production Plan
On Hand Inventory : 100

This strategy works well for make-to-order manufacturing firms since they cannot rely on finished goods inventory to satisfy the fluctuating demand pattern. Make-to-order firms
generally produce one-of-a-kind, specialty products based on customer specifications. Make-to-order firms cannot build ahead of orders since they do not know the actual specifications of the
finished goods. However, make-to-order products generally require highly skilled labor, capable of producing unique products using general-purpose equipment. Although a chase production
strategy works well when unskilled labor is required, the strategy can be problematic when highly skilled workers are needed, especially in a tight labor market.
The Aggregate Production Plan
The Level production strategy relies on a constant output rate and capacity while varying
inventory and backlog levels to handle the fluctuating demand pattern. Using this strategy,
the firm keeps its workforce levels constant and relies on fluctuating finished goods
inventories and backlogs to meet demand. Since the level production strategy keeps a
constant output rate and capacity, it is more suited for firms that require
highly skilled labor
 monthly production rate of 420 units ([5,000 units annual demand + 40
units additional ending inventory] ÷ 12 months). Thus, this strategy
requires a constant workforce of twenty-one workers.

On Hand Inventory : 100

This strategy works well for make-to-stock manufacturing firms, which typically
emphasize immediate delivery of off-the-shelf, standard goods at relatively low
prices. Firms whose trading partners seek the lowest prices of stock items might
select the level production strategy. Besides, this strategy works well in a situation
where highly skilled workers are needed in a tight labor market
The Mixed Production Strategy
Instead of using either the pure chase or level production strategy,
many firms use a mixed production strategy that strives to maintain a
stable core workforce while using other short-term means such as
overtime, an additional shift, subcontracting or the hiring of part-time
and temporary workers to manage short-term high demand. Usually,
these firms will then schedule preventive maintenance, produce
complementary products that require similar resources but different
demand cycles, or continue to produce the end items, holding these as
finished goods inventory during the off-peak demand periods.
Master Production Scheduling
The master production schedule is a time-phased, detailed
disaggregation of the aggregate production plan, listing the exact end
items to be produced. It is more detailed than the aggregate production
plan. The MPS planning horizon is shorter than the aggregate
production plan’s, but must be longer than the production lead time to
ensure the end item can be completed within the planning horizon
 (80, 80 and 60 units for the three models) equal the monthly APP
quantities of 120 and 100 units, respectively. The master production
schedule provides more detail by breaking down the aggregate
production plan into specific weekly demand for Model A, Model B
and Model C.

Master Production Schedule Time Fence

Master Production Scheduling
 Available-to-Promise Quantities
In addition to providing time-phased production quantities of specific
end items, the MPS also provides vital information on whether
additional orders can be accepted for delivery in specific periods. This
information is particularly important when customers are relying on the
firm to deliver the right quantity of products purchased on the desired
delivery date. This information is the available-to-promise (ATP)
quantity, or the uncommitted portion of the firm’s planned production
(or scheduled MPS).
Available-to-Promise Quantities
1. ATP1 = BI + MPS1 − CCO1 = 30 +
10 − 10 = 30
2. ATP2 = MPS2 − CCO2 = 10 − 0 =
10
3. ATP3 = MPS3 − CCO3 − CCO4 =
20 − 28 − 0 = −8 (use 8 units
from ATP2) Revising: ATP2 = 10 −
8 = 2 and ATP3 = −8+8=0
4. ATP4 = 0 (no scheduled MPS)
5. ATP5 = MPS5 − CCO5 − CCO6 −
CCO7 = 20 − 0 − 20 − 0=0
6. ATP6 = 0 (no scheduled MPS)
7. ATP7 = 0 (no scheduled MPS)
8. ATP8 = MPS8 − CCO8 = 20 − 10 =
10
Bill Of Material Super Bill Of Material
 NEXT DISCUSSION

MRP ERP
REFERENCE
 Wisner D., Tan., & Leong (2012). Principle of Supply Chain
Management. 37–70. ISBN 13: 978-0-538-47546-4
 Chopra S., & Meindl P (2013). Supply Chain Management