Disaggregation

Working with

aggregate units

facilitates intermediate planning.

But to put this plan into action we should translate it,

decompose it

,

disaggregate it

and state it in terms of actual units of products and for a shorter period Aggregate planning was for

12 or more months

. Now we should break it down into shorter periods, say

2-3 months.

Disaggregation:

Breaking down the aggregate plan into specific products -

from aggregate product to real specific products

- based on the specific products, then calculating detail of manpower, material and inventory requirements.

Disaggregation

Aggregate Plan

Month Lawn Mower Jan 200 Feb Mar 300 400

Master Schedule

Push Self-propelled 100 75 100 100 150 200 Riding Total 25 200 50 Total of aggregate and disaggregate products are

not

necessarily equal 100 300 400

Master Schedule

The result of disaggregation is a master schedule.

The Master Schedule shows

quantity and timing

It usually covers

6 to 12 weeks

.

of

specific products

.

After preparing a tentative Master Schedule, a planner can do

Rough-cut Capacity Planning .

Rough-cut capacity planning

is to check the feasibility of the Master Schedule with respect to available storage spaces, and vendor manpower capabilities. and machinery capacities, It is just a rough check to ensure that the master schedule is achievable .

The master schedule then is used as the basis for short term planning.

Master Schedule

Aggregate plan: 12 months. Master schedule: 12 weeks.

Master schedule is updated every 2 weeks.

Therefore, it is on a rolling basis, always we have a disaggregated plan for the next 12 weeks.

Master Production Schedule (MPS)

Master schedule

specific products.

states

quantity

and

delivery time

of It says we need 75 push lawnmowers in January. But it does not say how we get it - from

production,

or from

inventory

.

Master Production Schedule

based on

Master Schedule.

(MPS)

is developed MPS: Quantity and timing of planned production.

MPS determines the

Promised Inventory,

and the

Production Requirements available

to promise inventory for each period.

Master Scheduling Process

Inputs Beginning inventory Forecast Customer orders Master scheduling Outputs Master production schedule Projected inventory Uncommitted inventory (Available to Promise)

The key idea is: we have a forecast, but it turns into and actual order when we receive a customer order.

MPS starts with a preliminary calculation of projected inventory.

This reveals when we need production to get additional inventory.

Example; Projected on-hand Inventory

Beginning Inventory 64 Forecast

Customer Orders (committed) Projected on-hand inventory

1

30 33 31

JUNE 2

30

3

30 20 1 10 -29

4

30

5

40 4 2

6 JULY

40

7

40

8

40

Forecast is larger than Customer orders in week 3 Customer orders are larger than forecast in week 1 Forecast is larger than Customer orders in week 2

Master Production Scheduling Process

Negative projected on-hand inventory is the signal for production. Suppose the economic production lot size for this product is 70 units.

Whenever production is called, 70 units are produced. The negative projected inventory of -29 in period 3 calls for production, 70 units are produced, the projected inventory becomes 41.

The same calculation continues across the whole planning horizon.

Example; Projected on-hand Inventory

64

Forecast Customer Orders (committed) Projected on hand inventory MPS 1 30

33

31 2

30

June 3

30

20 10 1 41 70 4

30

4 11 5

40

2 41 70 6

40

July 7

40

1 31 70 8

40

61 70

Example; Projected on-hand Inventory

64

Forecast Customer Orders (committed) Projected on hand inventory MPS 1 30

33

31 2

30

June 3

30

20 10 1 41 70 4

30

4 11 5

40

2 41 70 6

40

July 7

40

1 31 70 8

40

61 70

Available To Promise (ATP)

Forecast Customer Orders (committed) Projected on hand inventory MPS

64

1 30

33

31 2

30

20 1 June 3

30

10 41 70 4

30

4 11 5

40

2 41 70 6

40

July 7

40

1 31 70 Now we can determine available to promise at each period. We use a look ahead procedure.

Sum booked customer orders week by week up to (not including) the next week of production. This is booked orders.

The remaining inventory is ATP.

ATP is only calculated for the first week and for weeks in which there is a MPS quantity. (In this example: weeks 1, 3, 5, 7, 8) 8

40

61 70

Available To Promise (ATP); First week

Forecast Customer Orders (committed) Projected on hand inventory MPS ATP

64

1 30

33

31

11

2 30

20

1 June 3 30 10 41 70 56 4 30 4 11 5 40 2 41 70 68 6 40 July 7 40 1 31 70 70 8 40 61 70 70 Available to promise in week 1 = Inventory in week 0 + Production in week 1 - Customer Orders at week 1 - Customer Orders at week 2 ATP(1) = I(0)+ P(1) - CO(1) - CO(2) ATP(1) = 64 +0 -33 -20 = 11 This is an uncommitted inventory. It can be assigned to week 1, week 2, or both.

Available To Promise (ATP); Other weeks

For other weeks, beginning inventory is removed from the formula: ATP(3) = P(3)-CO(3)-CO(4) ATP(3)= 70-10-4= 56 Forecast Customer Orders (committed) Projected on hand inventory MPS ATP 64 1 30 33 31 11 2 30 20 1 June 3 30

10

41

70

56 4 30

4

11 5 40 2 41 70 68 6 40 July 7 40 1 31 70 70 8 40 61 70 70 Forecast Customer Orders (committed) Projected on hand inventory MPS ATP 64 1 30 33 31 11 2 30 20 1 June 3 30 10 41 70 56 4 30 4 11 For weeks 7 and 8, no CO, therefore ATP = MPS 5 40

2

41

70

68 6 40 July 7 40 1 31 70 70 8 40 61 70 70

Updating ATP

As additional orders are booked, they would be entered into the schedule.

ATP would be updated to reflect new booked orders.

Marketing can use updated ATP amounts to provide realistic delivery dates to customers

Updating MPS

Changing to a master production schedule can be disruptive.

Particularly changes in the immediate periods of the schedule Aggregate Plan is developed for say 1 year Master Production Schedule is developed for a period of say 12 weeks.

MPS is updated say every 2 weeks, it is on a rolling basis.

1 2 3 4 5 6 7 8 9 10 11 12 Frozen Firm Full Open

Assignment

Problem 1. Book Page 627.

Forecast of demand for the next four months is 70 units per month Committed customer orders for the next four months are 80, 50, 30, and 10, respectively. Order size is 100 units. Beginning inventory is 0.

Prepare MPS Prepare ATP

Solution to Problem 1 Forecast Customer Orders Inventory on hand MPS ATP 1 70 2 70 Month 3 70 4 70 Forecast Customer Orders Inventory on hand MPS ATP 1 70 80 2 70 50 Month 3 70 30 4 70 10

Solution to Problem 1 Forecast Customer Orders Inventory on hand MPS ATP 1 70 80 20 100 Forecast Customer Orders Inventory on hand MPS ATP 1 70 80 20 100 2 70 50 Month 3 70 30 2 70 50 50 100 Month 3 70 30 4 70 10 4 70 10

Solution to Problem 1 Forecast Customer Orders Inventory on hand MPS ATP 1 70 80 20 100 2 70 50 50 100 Month 3 70 30 80 100 4 70 10 Forecast Customer Orders Inventory on hand MPS ATP 1 70 80 20 100 2 70 50 50 100 Month 3 70 30 80 100 4 70 10 10

Solution to Problem 1 Forecast Customer Orders Inventory on hand MPS ATP 1 70 80 20 100 20 2 70 50 50 100 Month 3 70 30 80 100 4 70 10 10 Forecast Customer Orders Inventory on hand MPS ATP 1 70 80 20 100 20 Forecast Customer Orders Inventory on hand MPS ATP 1 70 80 20 100 20 2 70 50 50 100 50 Month 3 70 30 80 100 2 70 50 50 100 50 Month 3 70 30 80 100 60 4 70 10 10 4 70 10 10