Microsoft PowerPoint - OM_Operations_Planning_2020.pptxAggregate plan Establishes operations capacity
Master schedule Establishes schedules for  specific products
Corporate strategies and policies
Aggregate demand forecasts
4500 5500
4500 5500
4500 4500
9000 8000
7000 6000
Demand Forecasts
Supply  Plan
planning: It takes time to implement plans
strategic: difficult to predict timing and volume of  demand for individual items.
It can help synchronize flow throughout the  supply chain 
It is connected to the budgeting process
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Overtime/slack time/
Total cost of a plan +
Projected levels of 
Forecasted demand Utilized time Inventory
https://www.youtube.com/watch?v=morDpfsSHWk
https://www.youtube.com/watch?v=Ah9FZ4Q1qe0
I Level strategy  Advantages Stable output rates and workforce
Disadvantages Greater inventory and backlogs Increased overtime or idle time
Chase strategy Advantages Investment in inventory is low Labor utilization is high
Disadvantages Cost of adjusting output rates and/or workforce levels
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Overtime
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Demand > Supply Overbooking;  Profit loss
Foregone profit; 
Consumer  dissatisfaction  
II. Matching Supply and Demand for Services
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Promoting OffPeak Demand/ Different sources of demand
Hotel: conventions for business or  professional groups during the offseason.
Differential Pricing Weekend rates for phone calls.
Summer pricing by utility companies.
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Reservations may benefit consumers by reducing waiting  and guarantee service availability.
Approximately 50% of reservations get cancelled.
Multiple reservations, late arrivals, noshows.
The company may fail to receive any revenue if a customer  cancels the reservation or does not show up.
Solution: Nonrefundable prepayment, overbooking 
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Too many walkin patients on Mondays at a health clinic.
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Before Smoothing
After Smoothing
Monday 84 Tuesday 89 Wednesday 124 Thursday 129 Friday 114
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Sharing Capacity
A service manager might consider sharing capacity with  another business to use required, expensive, but underused  resources jointly. 

The application of pricing strategies to allocate capacity  among various categories of demand.
The Park Hyatt Hotel has 118 King/Queen rooms.
$159 (low fare) discount fare targeting leisure travelers.
Regular fare is $225 targeting business travelers.
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1. 2.

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Master schedule: The result of  disaggregating an aggregate plan; shows  quantity and timing of specific end items  for a scheduled horizon.
Master Scheduler Evaluates impact of new orders Provides delivery dates for orders Deals with problems
Production delays Revising master schedule Insufficient capacity
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A 6500 3600 2800 1200
B 4500 3600 2100 1000
A 6500 4400 5600 6600
B 4500 4400 4200 4400
MPS 1 2 3 4 5 6 7 8
A 2400 0 2400 1700 1100 1100 1100 1100
B 0 2400 0 2100 1100 1100 1100 1100
RoughCut Capacity Planning
Available To Promise MPS
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Aggregate  Planning

IV. Material Requirements Planning

MRP Inputs: The Master Schedule
Week 1 2 3 4 5 6 7 8 9 10
MPS 150 150
1 Capacity Requirement Planning MRP
2 safety stock
Manufacturing Resource PlanningMRPII
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Enterprise Resource Planning Next step in an evolution that began with MRP and evolved into MRPII. Integration of financial, manufacturing, and human resources on a  single system.
One Nestle, One System
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2. Improve system integration.
Problems
1. ERP is an accounting system. It does not do planning.
2. ERP does not support the business process.
3. The organization could not make necessary changes.
4. ERP project may take one to three years to complete. 
5. High initial cost: average $15 million. 
6. High cost to maintain: future upgrades and training
Conclusion


MRP does a good job in computing the schedules and  amount of materials required. 
MRP has grown to become ERP, a fully integrated,  interactive, realtime systems capable of multisite  global application.
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