CPIM Basics of Supply Chain Management Session 3

Sales & Operations Planning

Develops plans for products at the family level

Master Scheduling
Develops due dates and quantities at the end-item level

An agreed upon plan between production and marketing and sales

Determines the Priority Plan and Due Dates for Components and Subassemblies
Available for Use
Material or component has been completed and is ready for use by the next operation, or is available as an end item to be delivered or stocked
Due Date
The date when purchased material or production material is due to be available for use
Priority Planning
The setting and maintaining of time-phased due dates

The function of determining what material is needed and when

Production Planning
A process to develop tactical plans based on setting the overall level of manufacturing output to best satisfy the current planned levels of sales
Production Plan factors
Quantities demanded of each product family or product line in each period

Desired inventory levels

Resources of equipment, labor, and material needed in each period

Availability of needed resources

Production Plan Strategies
Chase or Demand Matching
Level Production
Chase Strategy
Produce inventory at the time of demand

Maintains a stable inventory level

Inventories do not build up

Level Production Strategy
Set production rate to match the average demand over a given period of time

Build up of inventory and carrying costs

Subcontracting Strategy
Level the production at a rate equal to the minimum demand and meet all additional demand through subcontracting
Hybrid Strategy
An attempt to combine Chase and Level strategies to balance inventory and production costs
Bill of Resources (BOM) (Resource Bill)
A list of resources required to make ONE AVERAGE UNIT of an assembly
Master Scheduling Objectives
Maintain the desired level of customer service

Make the best use of resources

Keep inventories at the desired level

Master Scheduling Inputs
The production plan

Forecasts for individual end items

Orders from customers

Additional independent demand

Inventory levels

Capacity constraints

Rough Cut Capacity Planning
Projected Available Balance

Ending PAB = beginning PAB + scheduled MPS receipt – forecast

Planning Horizon
The amount of time a plan extends into the future
Anything that adds value to a good or service in its creation, production, or delivery
Master Production
A type of schedule; a line on the master schedule grid that reflects the anticipated build schedule for those items assigned to the master scheduler
Scheduled Receipt
An open order that has an assigned due date
Resource Planning
Capacity planning conducted at the business plan level; the process of establishing, measuring, and adjusting limits or levels of long-range capacity
Master Planning
A group of business processes that includes the following activities:

Demand Management

Production and Resource Planning

Master Scheduling

Rough Cut Capacity Planning
The process of converting the MPS into requirements for key resources, often including labor, machinery, warehouse space, suppliers’ capabilities, and, in some cases, money; based on the required quantities to make one unit of the end item
Available to Promise

The portion of inventory or production not committed to customer orders

Time Fences and Zones
used to manage the master schedule and to deal with changes that occur
Liquid Zone
Beyond the planning time fence

Changes are easily accommodated

Demand usually consists of forecasts and not actual orders

Slushy Zone
Between the Demand time fence and the planning time fence

Priorities are not that easy to change

Demand consists of forecasts and orders

Frozen Zone
Inside the demand time fence

Demand is based on customer orders

Capacity and materials have been committed to specific orders

Changes are very difficult to accommodate and would cause other orders to be late

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