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Forecasting, Planning and SchedulingForecasting, Planning and Scheduling

http://http://www.managementsupport.comwww.managementsupport.com

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OutlineOutline

Forecasting Planning Scheduling MRP & ERP

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Strategy and Issues During a Product’s Strategy and Issues During a Product’s LifeLife

Introduction Growth Maturity Decline

Standardization

Less rapid product changes - more minor changes

Optimum capacity

Increasing stability of process

Long production runs

Product improvement and cost cutting

Little product differentiation

Cost minimization

Over capacity in the industry

Prune line to eliminate items not returning good margin

Reduce capacity

Forecasting critical

Product and process reliability

Competitive product improvements and options

Increase capacity

Shift toward product focused

Enhance distribution

Product design and development critical

Frequent product and process design changes

Short production runs

High production costs

Limited models

Attention to quality

Best period to increase market share

R&D product engineering critical

Practical to change price or quality image

Strengthen niche

Cost control critical

Poor time to change image, price, or quality

Competitive costs become critical

Defend market position

OM

Str

ateg

y/Is

sues

Com

pany

Str

ateg

y/Is

sues

HDTV

CD-ROM

Color copiers

Drive-thru restaurants Fax machines

Station wagons

Sales

3 1/2” Floppy disks

Internet

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Forecasting ApproachesForecasting Approaches

Used when situation is Used when situation is ‘stable’ & historical data exist‘stable’ & historical data exist Existing productsExisting products Current technologyCurrent technology

Involves mathematical Involves mathematical techniquestechniques e.g., forecasting sales of e.g., forecasting sales of

color televisionscolor televisions

Quantitative Methods Used when situation is vague Used when situation is vague

& little data exist& little data exist New productsNew products New technologyNew technology

Involves intuition, experienceInvolves intuition, experience e.g., forecasting sales on e.g., forecasting sales on

InternetInternet

Qualitative Methods

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Overview of Qualitative MethodsOverview of Qualitative Methods

Jury of executive opinionJury of executive opinion Pool opinions of high-level executives, sometimes augment Pool opinions of high-level executives, sometimes augment

by statistical modelsby statistical models Delphi methodDelphi method

Panel of experts, queried iterativelyPanel of experts, queried iteratively Sales force compositeSales force composite

Estimates from individual salespersons are reviewed for Estimates from individual salespersons are reviewed for reasonableness, then aggregated reasonableness, then aggregated

Consumer Market SurveyConsumer Market Survey Ask the customerAsk the customer

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Relationships of the Aggregate PlanRelationships of the Aggregate Plan

AggregatePlan for

Production

DemandForecasts,

orders

MasterProduction

Schedule, and MRP systems

Detailed WorkSchedules

ExternalCapacity

Subcontractors

Inventory OnHand

Raw MaterialsAvailable

Work Force

Marketplaceand Demand

Research andTechnology

ProductDecisions

ProcessPlanning & Capacity

Decisions

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Qualitative factorsQualitative factors Number and variety of jobsNumber and variety of jobs Complexity of jobsComplexity of jobs Nature of operationsNature of operations

Quantitative criteriaQuantitative criteria Average completion timeAverage completion time Utilization (% of time facility is used)Utilization (% of time facility is used) WIP inventory (average # jobs in system)WIP inventory (average # jobs in system) Customer waiting time (average lateness)Customer waiting time (average lateness)

Choosing a Scheduling MethodChoosing a Scheduling Method

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Priority Rules for Dispatching JobsPriority Rules for Dispatching Jobs

First come, first servedFirst come, first served The first job to arrive at a work center is processed firstThe first job to arrive at a work center is processed first Earliest due dateEarliest due date The job with the earliest due date is processed firstThe job with the earliest due date is processed first

Shortest processing timeShortest processing time The job with the shortest processing time is processed firstThe job with the shortest processing time is processed first

Longest processing timeLongest processing time The job with the longest processing time is processed firstThe job with the longest processing time is processed first Critical ratioCritical ratio The ratio of time remaining to required work time remaining is The ratio of time remaining to required work time remaining is

calculated, and jobs are scheduled in order of increasing ratio.calculated, and jobs are scheduled in order of increasing ratio.

FCFS

EDD

SPT

LPT

CR

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Inputs to theInputs to the Production Plan Production Plan

Aggregate Production Plan

MarketingCustomerDemand

EngineeringDesign

Completion

ManagementReturn on

InvestmentCapital

HumanResourcesManpowerPlanning

ProcurementSupplier

Performance

FinanceCash Flow

ProductionCapacityInventory

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Increased customer satisfaction due to meeting delivery Increased customer satisfaction due to meeting delivery schedules schedules

Faster response to market changesFaster response to market changes Improved labor & equipment utilizationImproved labor & equipment utilization Better inventory planning & schedulingBetter inventory planning & scheduling Reduced inventory levels without reduced customer Reduced inventory levels without reduced customer

serviceservice

MRP BenefitsMRP Benefits

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Distribution Resource PlanningDistribution Resource Planning

DRP requires:DRP requires: Gross requirements, which are the same as expected Gross requirements, which are the same as expected

demand or sales forecastsdemand or sales forecasts Minimum levels of inventory to meet customer Minimum levels of inventory to meet customer

service levelsservice levels Accurate lead timesAccurate lead times Definition of the distribution structureDefinition of the distribution structure