Mastering Aggregate Planning and Master Scheduling for Efficient Production

Understanding Aggregate Planning and Master Scheduling

Aggregate planning is a pivotal process in operations management, bridging the gap between long-term strategic planning and short-term operational decisions. It serves as an intermediate-range capacity planning tool, typically spanning a timeframe of 2 to 18 months. This process is particularly beneficial for organizations encountering seasonal fluctuations or varying demand patterns. The primary ambition of aggregate planning is to implement a production strategy that maximizes the use of an organization's resources to meet customer demand efficiently.

The Planning Sequence

The journey of aggregate planning begins with a comprehensive review of corporate strategies and policies. An organization must consider the broader economic, competitive, and political conditions. This information, coupled with aggregated demand forecasts, feeds into the business plan, setting the stage for establishing operations and capacity strategies. Subsequently, these strategies inform the aggregate plan, which outlines operations capacity, and is further refined into a master schedule detailing schedules for specific products.

Key Inputs for Aggregate Planning

When devising an aggregate plan, several critical inputs must be considered:

• Resources: Assess the workforce, production rates, facilities, and equipment available.
• Demand Forecast: Determine the expected demand over specific periods (monthly or weekly).
• Policies: Establish policies regarding workforce changes, subcontracting, overtime, inventory levels, and back orders.
• Costs: Evaluate the costs associated with inventory carrying, back orders, hiring and firing, overtime, inventory changes, and subcontracting.

Analyzing Cumulative Graphs

Cumulative graphs play a vital role in aggregate planning by illustrating the relationship between cumulative output and cumulative demand over time. These graphs help identify periods of surplus where production exceeds demand and can inform decisions on inventory management.

Time Fences in Planning

Time fences segment the planning timeline into distinct categories:

1. Frozen (First three periods): Plans are set and will not change.
2. Slushy (Next two periods): Plans are tentative and may be adjusted.
3. Liquid (Periods six to nine): Plans are flexible and open to significant alterations.

The Master Scheduling Process

The master scheduling process commences with specific inputs:

• Beginning Inventory: The amount of product on hand at the start.
• Forecast: Predicted customer orders.
• Customer Orders: Confirmed orders that need fulfillment.

Master scheduling involves determining what will be produced and when. The outputs from this process include projected inventory, a master production schedule, and uncommitted inventory. The uncommitted inventory is particularly important as it addresses future demand forecasts.

Conclusion

In summary, aggregate planning and master scheduling are crucial components of effective production management. They ensure that an organization can meet demand while efficiently utilizing resources. By understanding the planning sequence, recognizing the importance of time fences, and effectively managing the master scheduling process, businesses can create a harmonious balance between supply and capacity, leading to overall operational success.

Watch the full explanation of aggregate planning and master scheduling in this informative video: Mastering Aggregate Planning and Master Scheduling.