Aggregate Production Planning

Aggregate production planning that is abbreviated as APP, is an essential tool for

managing various operations. It includes inventory, production, and performance of the
employees.

Aggregate planning is a strategy that is used to utilize the resources of the company and assess the
future demand of the consumer. It is used to create an appropriate production schedule for an
organization. The requirements to deliver uninterrupted production needs to be listed at the first step.
The period of the strategy usually stretches around 6 months to 1 year. It helps in maximizing the
opportunities within the workforce to increase productivity rate and plays a vital role in operation
management. It facilitates the synchronization of demand of the market and supply of the raw
material to maintain a certain balance.

Financial planning of aggregate

production
Basic production cost
 It includes the cost of labor, material, and overhead. It is essential to divide this segment into fixed
costs and variable costs.

Cost regarding the fluctuation of production rate

It consists of a certain amount of money that is spent on hiring new employees and training the new
and existing employees. The cost of overtime and layoffs of the employees are also included in this
segment.

The cost associated with inventory

The models for aggregate production planning are supportive tools for the decision-making process
and to evaluate various proposals in union negotiation.

Techniques of the production method

Several techniques are used in these methods such as mathematical techniques and “Informal trial
and error” techniques. Most of the time, informal techniques are used to form a plan. On the other
hand, Mathematical techniques are not used frequently and various researches have been done on
this method. It is generally used in comparing various plans in aggregate production.

The general process for forming aggregate production plan:

 Determining the requirements and demands of the market for various periods.
 Evaluation of capacities for overtime, subcontracting, and regular time.
 Identifying the policies of the department and the company that is associated with maintaining
adequate stock to meet market demand.
 Determining the cost of inventories, regular time, backorder, layoffs, subcontracting, overtime, and
other costs.
 Formation of alternative strategy and determining the cost of each plan.
 The appropriate strategy needs to be chosen that addresses the objectives of the company.

The procedure of aggregate production

The planning process can be made easier by summarizing the capacity, demand, and cost for each
segment of the execution process. On the other hand, alternative plans are needed to be formed
and graphs can be a useful method in this process. The approach of spreadsheet solver is one of
the most efficient processes for industries as software for this process is readily available. The
model of APP is easy to develop in a spreadsheet process and the results are easily
comprehended.
 There are significant rules informing the optimal aggregate production process, such as-

1. The collection of relevant data needs to be done in order to form an appropriate strategy.
2. The APP model needs to be created in a spreadsheet.
3. The strategies need to be evaluated to form a suitable plan

The evaluation process can be done by presenting the model of aggregate production to each
department of the company. The feedback of various departments such as warehouse, production,
marketing, planning, and sales are important in assessing the alternative plans. The comparison
between the existing plans of the organizations and the new plan needs to be evaluated regarding
the financial aspects of the company. In case the plan is not optimal, some valuable input or
parameters needs to be added to modify the plan. The implementation of the strategy is the last step
of the process and the market demand is assessed in this step.

Importance of developing appropriate

planning
The formation of the strategy covers some important elements such as financial planning, supply of
raw materials, marketing, distribution of products, operations, human resources, and engineering. It
is an important tool in improving the production process of the company. The procedure needs to be
aligned with the long-term goal and objective of the company to form a suitable strategy.

 It has been proved to be essential in the completion of the long-term achievements of an

organization.
 It is useful in reducing the production cost that in turn gives the opportunity to achieve financial
goals.
 It is efficient in decreasing the cost of inventory.
 This method helps in utilizing the maximum productivity to increase the rate of production.
 It is a useful tool in meeting the demand of the market on time and the waiting time for the consumer
can be effectively reduced by using this method.

It assists the organization in achieving goals and also gives satisfactory experience for the
employees.

Inventory Management 101 – The Master

Production Schedule (MPS) Explained
 Master production scheduling is the process that helps manufacturers plan which products and
related quantities to produce during certain periods. It is proactive, driving the production process by
determining what should be manufactured and what materials should be purchased.

In previous articles, we introduced Bills of Materials (BOM) and Material Requirements

Planning (MRP), two legs of the inventory planning tripod. The third is the Master Production
Schedule (MPS).

What Is a Master Production Schedule?

As the name implies, a master production schedule determines what products are manufactured,
when they are produced, and in what quantities. The required raw materials are identified by the
finished goods BOM, the data from which is integrated with current inventory data to create the MRP
for raw materials procurement. The master production schedule forms the basis of communication
between sales and manufacturing. The MPS becomes a contract between sales and production,
allowing sales to make promises that production can keep. A master production schedule is a
dynamic plan and can be adjusted when there are changes in demand or capacity.

So, when should you create a master production schedule? It is usually made anywhere from three
months to two years out. It takes into account the following factors for each product:

 What is the starting inventory, or inventory in stock?

 How many orders are expected for the time period based on the sales forecast?
 How many orders are already planned?
 How much must be produced to balance supply and demand?
 How much do you want to keep for safety stock to ensure you don’t run out of inventory?

Master Production Scheduling is included in modern Advanced Planning and Scheduling

software (APS) that is part of a manufacturing ERP system. APS uses the master production
schedule to help evaluate the best options for production considering available stock and capacity. It
is a huge time saver, reducing the time it takes to manage your production flow.

Why Master Production Scheduling Is a Crucial Planning Function?

As part of a fully integrated ERP system, master production scheduling is a crucial planning function
that uses current supply and demand data, as well as forecasts, to deliver accurate and timely
production plans that help manufacturers achieve their production objectives and minimize
procurement costs.

A master production schedule also includes manufacturing capacity in its calculations. Once
production orders have been analyzed and approved, the MRP process is initiated and purchase
orders are generated. A master production schedule also makes allowances for shortages,
unexpected master scheduling mistakes, and other unforeseen problems.
 What Are the Functions of a Master Production Scheduling Software?

A master production schedule helps you form a detailed plan that fulfills the following objectives:

 Keeps production flowing smoothly

 Reduces the lead time for products
 Improves communication within your organization
 Helps you establish priorities and adhere to them
 Helps you create a manufacturing plan that makes sense
 Enables you to achieve desired customer service levels
 Makes the most efficient use of resources
 Maintains an effective level of inventory

The MPS in operations management must balance the demand identified by sales and marketing
with the availability of resources.

What Are the Parts of a Master Production Schedule?

Before a master production schedule can be produced, you need to create a demand plan. This
uses historical data from sales to forecast customer orders over the coming months or years. The
demand plan must also include a set amount of safety stock – in case an unexpectedly large order is
generated – to protect against stock outs.

Product List – A product list consists of all the types of products you manufacture. The products
that are most frequently ordered should be at the top.
Product Sub Lists – Include a field for each product variation or SKU. For example, if you
manufacture chairs, you can separate them out by stain color, leg type, fabric, etc.
 Time Frames – Have your schedule broken into months and weeks. You should schedule at least
a few months out and check to see if any changes are needed every so often. If demand changes
beforehand, you can adjust it as needed.
Production Quantities – You’ll need to determine raw material consumption based on the
quantities of each type of product, including variations or SKUs.

What Does the Master Production Schedule Help to Identify?

The master product schedule improves operations by helping to identify the following:

 The quantity of each product to manufacture

 The production staff needed to stay on schedule
 How many of each product can be promised to customers
 The projected product balance after order fulfillment
 How to better control manufacturing operations
 How to better tie business planning with manufacturing operations
 How to increase production efficiency and minimize errors

What Are the Different Master Production Scheduling Techniques?

The master production schedule needs to be detailed, yet focused. If the plan is not detailed enough,
production will suffer. On the other hand, if the MPS covers too many items, it will be difficult to
implement the plan effectively. As a general rule, master production scheduling works best with the
smallest number of product alternatives possible.

 In make-to-stock environments, a limited number of items are assembled from a larger number of
components, for example, video recorders or computers. The MPS should in this case be a schedule
of finished goods items.
 In a make-to-order environment, many different finished goods can be produced from a relatively
small number of raw materials. A great example of this process would be how cars are
manufactured. The sub assemblies for many cars will be the same but the different models of cars
manufactured differ in specific options such as color, stereo, sunroof, and electric windows. The
MPS in a make-to-order environment is a schedule of the actual customer orders.
 Assemble-to-order environments make use of raw materials to form basic components and
complete sub assemblies. These components and sub assemblies make up a variety of finished
products. The master production schedule should therefore take place at the subassembly level.

A master production schedule requires a slightly different focus for each of these options. In each
case, it will base the schedule on the smallest number of product options, as illustrated below:
What Is the Relationship Between MPS and MRP?

The master production schedule is the main driver of the material requirements plan. Along with the
BOM, MPS can determine what components are needed from manufacturing and what components
need to be purchased. The MPS is a priority plan for manufacturing.

While MPS and MRP have some similarities – including the ability to produce a list of planned
manufactured items and generate purchase and transfer orders – there are a few characteristics that
set them apart. For example, unlike MRP, MPS tends to focus its planning capabilities on the
production of finished goods, components, or parts that generate the greatest profitability for the
manufacturer and are therefore likely to constitute the lion’s share of the resources needed for
production.

Another difference is that the MPS operates only within one level of an item’s BOM, while MRP can
be utilized at every level. MRP focuses its planning capabilities more on meeting the demand for
component parts or sub assemblies, while MPS focuses more on establishing production plans to
satisfy the actual demand for finished products, as well as to meet projected customer delivery
dates.

MPS plans are typically based upon input such as actual sales orders, service orders, available
resources, inventory levels, and capacity constraints or forecasts. These forecasts give
manufacturers the ability to anticipate product demand and the flexibility to adjust production plans
based on seasons, promotions, and fluctuating demand for particular items and/or finished products.
The output from MPS includes quantities of an item to be produced, due dates, and quantities
available to promise.
 How Does Rough Cut Capacity Planning Relate to an MPS?

Rough Cut Capacity Planning (RCCP) is a long-term planning tool that looks at the production
capacity that is needed versus what is available. If there is a lack of capacity available for planned
production, it will either need to be increased or the master production schedule will need to be
adjusted. Rough cut capacity planning and the master production schedule work together, and if
either one has any changes, the other also needs to be corrected.

What Are the Benefits of a Master Production Schedule?

 Ability to make adjustments to fluctuations in demand while minimizing waste

 Prevents shortages and scheduling mishaps
 Improves efficiency in the location of production resources
 Provides more effective cost controls and more accurate estimates of material requirements and
delivery dates
 Reduces lead times throughout the year
 Provides an effective communication conduit with the sales team for planning purposes
 Helps Human Resources better plan for hiring based on the projected labor needed

MPS Is at the Heart of a Manufacturing ERP System

A master production schedule is the link between planning and manufacturing, being used as the
basis for calculating the capacity and resources required to fulfill production plans. An MPS lies at
the heart of a manufacturing ERP system and connects to multiple modules including
Accounting, Customer Relationship Management (CRM), Inventory, Purchasing, and more.
If you’re using Excel to manage production, it is very difficult to update your schedule since it isn’t
dynamic. It can’t connect to other parts of the organization to easily obtain the sales forecast or raw
materials availability. It also doesn’t present the data in a way that is easy to visualize. Master
production scheduling software produces a schedule that is easy to follow.

What Are Common MPS Output Reports?

Some of the standard reports created by a MPS include:

 Available-to-Promise – Presents the available-to-promise quantities for each MPS line item. The
report is time-phased, usually into weekly or monthly “buckets.”
 Demand Tracking Report – Provides historical data on actual shipments and order bookings as
compared to management forecasts.
 Forecast Data Report – Summary of historical demand activity, which indicates the margin of error
between forecast and actual and provides a statistical summary.
 Period Summary Forecast – Forecast by line item within a product group for each period through
the future 12 periods, with summaries by period for the group and by year for line items.
 Item Demand and Forecast – Presents historical data for a user-specified span of time along with
the next 12 months of forecasted demand for each item. Typical data elements can include YTD
totals, and total yearly demand and quarterly totals, with percentage comparisons of items and their
product group total.
 Build Schedule Report – Reports the build schedule for one or all assemblies.
 Schedule vs. Actual Output – Reports the actual output compared with the scheduled output at a
particular work center.

MRP II WITH JUST IN TIME

Materials Requirements Planning (MRP) is the process concerned with ordering raw
materials and planning their allocation to the appropriate resources based on sales
forecasts and the overall master production schedule.

In the case where materials needed for certain products are produced in the facility, MRP
can create work orders to ensure that enough materials will be available to meet
production demands.

Advanced Planning and Scheduling programs make MRP easy as it is able to pull the
material requirements from the master schedule and then compare those needs to the on-
hand inventory. Purchase orders or work orders are then generated to supply material
requirements.

Overall, MRP ensures that all required materials are available at the correct resources
when they are needed and allows manufacturers to handle complex processes, multi-
component products, and variability within the manufacturing process.

Just-in-Time
Just-In-Time (JIT) is a manufacturing strategy that was designed to help manufacturers
reduce inventory-related costs by receiving materials and producing goods only when
they are needed.

Just-In-Time scheduling is used to accommodate last-minute changes to orders and

prevent damage or spoilage of inventory by preventing jobs from starting too early.

This scheduling technique prevents jobs from scheduling too early to avoid keeping
work-in-process items in inventory. In addition, materials are ordered so that they arrive
at the production facility only when they are needed.

There are many benefits associated with Just-In-Time production, but the main goal of
this method is to increase the efficiency of production while decreasing waste to
ultimately lower the production costs and increase profits. On the flip side, implementing
JIT methodology requires producers to be able to accurately forecast their demand to
avoid running into material shortages. Balancing the two goals of avoiding material
shortages and reducing inventory costs is key to JIT processing.
Where MRP and JIT Meet
Just-In-Time manufacturing strategies heavily rely on stable and reliable suppliers since
they become a sort of remote storage facility for raw materials. Keeping inventory lean
means a greater risk to production flow.

If an unexpected event, such as a storm, arises and raw materials cannot be delivered to
the manufacturing plant in a timely fashion, Just-In-Time methods may not be able to
respond quickly enough. Unexpected increases in demand can also present challenges if
you do not have enough raw materials to supply the increase in demand. However, MRP
is a helpful tool in inventory control and proactively address potential stock and materials
shortages.

Both JIT and MRP attempt to limit waste and downtime during the production process to
minimize waste and maximize your output. MRP is more agile when unexpected orders
are received or when schedule adjustments are needed. This type of system does depend
on accurate data entry, material tracking, and analysis. When utilized properly, the
advantages of JIT and MRP include reduced production costs, improved capacity
allocation, and a better response to rapidly changing market demand.

With PlanetTogether Advanced Planning and Scheduling, we’re able to make

strategic decisions that improve operations. We can proactively prepare for
anticipated increases or slowdowns in demand.
DICK MARX, MATERIALS MANAGER, KNAPHEIDE TRUCK EQUIPMENT
 Simplifying Production Planning with MRP and JIT using Advanced Planning and Scheduling

An Advanced Planning and Scheduling system that supports both MRP and JIT
functionalities results in the most optimal material planning process flow.
PlanetTogether’s Advanced Planning and Scheduling software plans and schedules
operations concurrently, which means that the resulting production schedule takes into
account the available materials and resource capacity.

The additional forecasting and “What-If” scenario functionalities of PlanetTogether APS

allow manufacturers to forecast future demand and create realistic contingency plans so
that the firm can remain proactive rather than reactive when problematic situations
develop.

Advanced Planning and Scheduling software has become a must for operations that are
seeking to take their production to the next level and can easily aid with efficiency
increase, inventory control, waste elimination, and cost reduction. PlanetTogether’s APS
software will take your production facility to the next level and turn your shop floor into a
goldmine.

PlanetTogether’s Advanced Planning and Scheduling (APS) Software

Advanced Planning and Scheduling Softwares have become a must for modern-day
manufacturing operations as customer demand for increased product assortment, fast
delivery, and downward cost pressures become prevalent. These systems help planners
save time while providing greater agility in updating ever-changing priorities, production
schedules, and inventory plans. APS Systems can be quickly integrated with an ERP/MRP
software to fill the gaps where these systems lack planning and scheduling flexibility,
accuracy, and efficiency.

With PlanetTogether APS you can:

 Create optimized schedules that balance production efficiency and delivery performance

 Maximize throughput on bottleneck resources to increase revenue

 Synchronize supply with demand to reduce inventories

 Provide company-wide visibility to resource capacity

 Enable scenario data-driven decision making

The implementation of an Advanced Planning and Scheduling (APS) Software will take your
manufacturing operations to the next level of production efficiency by taking advantage
of the operational data you already possess in your ERP system.
Manufacturing Resource Planning Software
What Is Manufacturing Resource Planning?

Manufacturing resource planning (MRP II) software can provide critical insight into the
requirements, availability, and usage of resources during complex manufacturing
processes. This software can automate common scheduling and reporting activities,
freeing you and your team to focus more on the task at hand. It also provides more
advanced analytic and forecasting tools that can drive long-term cost savings and more
competitive delivery timelines, whether implemented on its own or as part of an
enterprise resource planning (ERP) software suite.

How can Manufacturing Resource Planning help you?

Manufacturing resource planning is a set of tools and techniques used to manage,
monitor, and control resources used in manufacturing processes. Also known as
manufacturing requirements planning, MRP II emerged in the 1980s, growing out of
earlier material resource planning (MRP) methodologies.

As its name implies, MRP focused primarily on material resources (e.g., equipment,
ingredients, and physical components); by contrast, MRP II takes advantage of
improved computing power and database systems to track different kinds of resources
and provide better tools for production managers to schedule, forecast, budget, and
review the production process.

Features of Manufacturing Resource Planning Software

Track material resources

Support master production schedule development
Generate reports, dashboards, and summaries
Track material resources

Incorporate earlier MRP functionality, including aggregation of bill of materials

(BOM) requirements and tracking of material inventories, supporting more efficient
planning, purchasing, and production activities.

Who Should Use Manufacturing Resource Planning Software?

While any company can benefit from improved material requirement planning
processes, a robust approach to resource planning based on MRP II principles is
especially important for production engineers who are working on highly complex
manufacturing processes that incorporate multiple subassemblies, components, and bill
of materials (BOM) requirements.

Organizations who are required to follow legal regulations and industry-specific current
good practices (cGxP) will benefit from manufacturing resource planning software that
streamlines or automates common forecasting, scheduling, and purchasing activities.
MasterControl’s Solution
MasterControl’s Manufacturing Excellence solutions are ideal for companies who are
beginning their smart manufacturing and digital transformation journeys. Our solutions
easily integrate with your company’s existing ERP, MES, or MOM, providing critical
benefits not found in existing systems, including :

 Easy-to-use UI
Other solutions may provide MRP II tools, but gate this functionality behind an arcane user
interface that limits adoption and effectiveness. We offer products with a modern, streamlined
interface that’s easy to use and master.

 Adaptable MaaS Implementation

We provide a cloud-based, management as a service (MaaS) solution that’s easy to implement
as a standalone or add-on solution. MasterControl’s Integration Services team can help you
create the reports, forms, and tracking protocols best-suited to your company and industry
requirements.

 Integrated QEM
Often, companies use separate systems for quality event management (QEM) and production.
This disconnect can make it hard for the QA team to communicate quality issues to the
production team and, conversely, can also limit production’s ability to inform QA when they’ve
taken necessary corrective or preventive actions (CAPAs). Manufacturing Excellence solutions
 can integrate with MasterControl CAPA™, making communication easier and strengthening both
your QEM and production processes.

 Electronic documents
Compared to manual resource tracking and validation processes, which are time-
consuming and error-prone, our manufacturing resource planning solutions give you the
power to create electronic forms that can be filled out and reviewed on mobile and
desktop devices.