Operations Management 3

What is the definition of planning

Deciding the future course of action for the organization

What are the key elements of planning

What to do how and where who executes how results are evaluated

Why is planning important

It gives direction reduces waste and overlap establishes control standards reduces uncertainty encourages innovation

What are the levels of planning

Strategic tactical operational contingency

What is strategic planning

Planning done by top managers for long-term objectives

What is tactical planning

Planning done by middle managers for medium-term objectives

What is operational planning

Planning done by lower managers for daily or short-term objectives

What is contingency planning

Backup plans for unexpected events

What is S&OP

Sales and operations planning is a medium-term process aligning demand forecasts with resources to create a feasible aggregate production plan

What are the characteristics of S&OP

Cross-functional coordination ensures plan feasibility and respects constraints early warning system when demand differs from capacity produces an aggregate plan including production inventory and resources

What are the objectives of S&OP

Coordinate internal and external resources communicate and align plans with all departments

What are product families

Groups of related products sharing components or technologies

Why are product families used

To plan at an aggregated level before disaggregation into finished products

What are the key operational questions from forecast to production

Sales volume production capacity component needs inventory and safety stock levels distribution model costs and margins

What is the hierarchical planning model

An approach combining strategic S&OP and detailed planning to coordinate production and resources

What is included in strategic planning of the hierarchical model

Marketing strategy sales budget industrial plan

What is included in S&OP in the hierarchical planning model

Align forecasted demand with total capacity

What is included in detailed planning in the hierarchical planning model

MPS for finished goods MRP for components scheduling for daily or weekly resource allocation

What is the objective of balancing load and capacity

Match forecasted demand with production capacity

What happens if load exceeds capacity

Poor service level

What happens if load is less than capacity

Poor profitability

What are the two levers to adjust load and capacity

Manage supply and manage demand

What are supply management strategies

Capacity adjustments and inventory strategies

What are capacity adjustment methods

Flexible hours seasonal workforce dual facilities subcontracting

What are inventory strategies

Use common components build seasonal inventory

What is the trade-off between stable capacity and inventory

Stable capacity leads to high inventory low inventory requires variable or peak capacity

What are demand management strategies

Promotions price discounts shifting demand timing

Why does demand increase

Market growth stealing share from competitors forward buying

What factors determine promotion timing

Margins cost of capacity changes holding costs price elasticity

What is the goal of aggregate planning

Determine production inventory workforce and capacity levels for each period to maximize profit

What are the inputs to aggregate planning

Demand forecast labor and machine time regular overtime and subcontracting costs hiring and layoff costs inventory and shortage costs operational constraints

What are the outputs of aggregate planning

Production quantities including regular overtime and subcontracted inventory levels backlogs workforce changes capacity adjustments

How do you check if load matches capacity

Compare L (forecasted load) to C (production capacity) using L = C

What happens if L > C

Adjust supply or demand to avoid poor service

What happens if L < C

Adjust supply or demand to avoid poor profitability

What is the formula to calculate required production

Required Production = Forecasted Demand + Desired Ending Inventory - Beginning Inventory

What is the master production schedule (MPS)

Disaggregates the aggregate plan into specific finished product quantities over time

What are the characteristics of MPS

Product-specific near-term frozen for stability rolling schedule reflects firm orders and forecasts basis for MRP

How does MPS differ by production strategy

Make-to-Stock schedules finished products Assemble-to-Order schedules modules Make-to-Order schedules raw materials

What is MRP

Material requirements planning determines what how much and when components are needed based on the MPS

What are the inputs to MRP

BOM product structure inventory levels lead times MPS

What is the formula for net requirements in MRP

Net Requirement = Gross Requirement - On-Hand Inventory - Scheduled Receipts

What is the formula for planned order release in MRP

Planned Order Release = Net Requirement at time t - Lead Time

What are the outputs of MRP

Planned production orders purchase orders exception reports for late early or incorrect orders

What are the advantages of MRP

Lower inventory fewer shortages better scheduling

What are the disadvantages of MRP

Costly data-sensitive rigid

What is a BOM

Bills of Material is a hierarchical list of assemblies subassemblies and components

What does a BOM define

Parent-child relationships and total component requirements

How do you calculate total component requirements using BOM

Total Component Requirement = Quantity of Parent × Quantity of Child per Parent

How do you check MRP feasibility

Ensure Σ(Planned Orders + On-Hand Inventory) ≥ Forecasted Demand for all components

What is the algebraic expression to adjust capacity

Adjusted Capacity = Current Capacity + Flexible Hours + Subcontracted Capacity

What is the algebraic expression to adjust inventory

Adjusted Inventory = Expected Demand - Current Capacity