Rough-Cut Capacity Planning Rough-Cut Capacity Planning in SCMin SCM

EIN 5346 Logistics Engineering EIN 5346 Logistics Engineering

(MSEM, Professional)(MSEM, Professional)Fall, 2013 Fall, 2013

Rough-Cut Capacity Planning Rough-Cut Capacity Planning in SCMin SCM

Theories & ConceptsTheories & Concepts

Hierarchical Planning Framework Hierarchical Planning Framework (review)(review)

Long term-Material programs- Supplier selection- Cooperation

- Plant location- Production systems- Subcontractors

- Physical distribution structure- Transportation strategy

- Product program- Strategic sales planning

-- Personnel training-- Contracts-- Material Requirements Planning

-- Master production Scheduling-- Capacity planning -- Distribution planning -- Mid-term sales planning

Mid term

-- Personnel scheduling-- Material ordering

-- lot-sizing- operations scheduling- shop floor control

- Warehouse replenishment- Transportation planning -- Mid-term sales planning

Short term

EXECUTION

Information FeedbackFlow of goods

The APICS-Standard Planning The APICS-Standard Planning Framework (review)Framework (review)

Production Process (review)Production Process (review)

Requirements for Production Planning:• to meet the demand• to consider the resource capacities and the

material availabilities• to improve utilisation of the resources• to lower the setup time• to minimize the stock, and• to minimize the work in process (WIP)• to improve stability of the plan

Rough-cut Capacity PlanningRough-cut Capacity PlanningThe main goal in rough-cut capacity planning is to identify where overloading or under-loading of production capacity occurs and revise the MPS as required.

•Overloading means that too much production of products has been planned in the facility and insufficient capacity exists to produce planned quantities of products required in MPS.

•Under-loading means that not enough production of products has been planned to fully load the facility.

Rough-Cut Capacity Planning in Rough-Cut Capacity Planning in APO-SNPAPO-SNP

Order Life Cycle for Make-to-StockOrder Life Cycle for Make-to-Stock

Order Life Cycle for Make-to-OrderOrder Life Cycle for Make-to-Order

Forecast Consumption Mode and Forecast Consumption Mode and HorizonHorizon

(Backword consumption of 4 days and a forward consumption of 3 days)

Transactional Data for Transactional Data for TransferringTransferring• Starting from a demand plan, SNP checks the resource

capacities and delivers a medium/long-term plan for the estimated sales volumes.

• The plan includes the quantities to be transported between locations (e.g., DC-customer, or plant-DC) and the quantities to be produced (and procured), taking available capacity into consideration.

• SNP creates planned orders, purchase requisitions, and stock transfers that can be transferred directly to the connected OLTP systems.

Capacity LevellingCapacity LevellingCapacity leveling supports the following resource categories:

• Production resources• Transportation resources

Capacity levelling supports the following resource types:• Bucket resources• Single-mixed resources• Multi-mixed resources• Transportation resources

Capacity LevellingCapacity Levelling

The planner can use the following methods to adjust the plan:•Backward scheduling of the capacity load to fulfill demand using high priorities without due date violations. This rescheduling does not create any orders in the production horizon.•Forward scheduling of the capacity load for lower priority demand and use of demand priorities to minimize due date violations •A combination of backward and forward scheduling of the capacity load.

Capacity Levelling ProfileCapacity Levelling ProfileThe main settings in the capacity leveling profile are scheduling direction, prioritization, and method.

•Scheduling Direction controls whether Forward, Backward or Combined scheduling is used. •Prioritization for the heuristic run defines how leveling determines the sequence of orders. The two possible choices for prioritization (to be sorted by ascending or descending order) are

• by order size or • by product priority.

•The three Method choices are • Heuristic, • Optimizer or • Badi (Business Aided-in).

Time-based Capacity Time-based Capacity LevellingLevelling

Capacity LevellingCapacity Levelling

Heuristics-based Capacity LevellingHeuristics-based Capacity Levelling

• Heuristic-based capacity leveling compares, period by period, the capacity load on a resource with the requested load, either from the beginning or from the end of the planning horizon – depending on which scheduling direction is selected (forward or backward scheduling).

• If the resource is found overloaded, the system first selects all the activities or orders that cause the overload in this period. It then sorts these orders according to the priority that is defined and shifts orders or partial orders, one by one into subsequent or previous periods until the required maximum resource utilization is reached.

Heuristics-based Capacity LevellingHeuristics-based Capacity Levelling

• For forward scheduling, the system moves the orders so far that the first activity using the resource to be leveled only begins after the overloaded period.

• For backward scheduling, the system moves the orders so far that the last activity using the resource to be leveled actually ends before the overloaded period.

• The system takes the lot sizes and rounding values defined in the master data into account when moving the orders.

SNP Heuristic as Location, Network, SNP Heuristic as Location, Network, and Multi-Level Heuristicand Multi-Level Heuristic

Scheduling in SNP HeuristicScheduling in SNP Heuristic

Period FactorPeriod Factor

Production Scheduling for Production Scheduling for Multiple BOM LevelsMultiple BOM Levels

Scheduling in CTMScheduling in CTM

Heuristics-based Capacity LevellingHeuristics-based Capacity Levelling

• Only orders that cause overloads are changed.

• This proves advantageous when a lot of orders exist but only some of them overload the resource.

• Prioritization is done by product or by product quantity.

• Select “Capacity Leveling” from the menu to balance the required work loads.

Benefits of SNP with SCMBenefits of SNP with SCMThe benefits of Supply Network Planning with SAP SCM are as follows:1.Cross-plant medium-term rough-cut planning2.Cross-plant optimization of resource utilization

• Simultaneous planning of procurement, production and distribution

• Simultaneous material planning and finite capacity scheduling of production, storage, and transportation resources

3.Planning of critical components and bottleneck resources4.Prioritization of demands and receipts5.Collaborative supply planning over the Internet

Linear Programming (LP) Linear Programming (LP)

Operation Research (OR)Operation Research (OR)Operation research refers to the application of quantitative methods and techniques to business problems in order to best utilize a company’s resources.

OR is used by many leading companies in recent years to optimize their limited resources in order to maximize their profits or minimize their costs.

Linear programming (LP) is one of the most important tools of operation research.

Linear Programming (LP)Linear Programming (LP)

Five common types of LP problems:

•Product mixed•Ingredient mix•Transportation•Production plan•Assignment

Five common types of LP problemsFive common types of LP problems

Five common types of LP problemsFive common types of LP problems

Steps in Formulating LP ProblemsSteps in Formulating LP Problems1. Define the objective2. Define the decision variables3. Write the mathematical function for the objective

(objective function)4. Write a one- or two-word description of each constraints5. Write the right-hand side (RHS) of each constraint,

including the unit of measure.6. Write<=, =, or >= for each equation7. Write all the decision variables on the left-hand side of

each constraints8. Write the coefficient for each decision variable in each

constraint.

Formulating LPFormulating LP

Formulating LPFormulating LP

Formulation LPFormulation LP

Formulation of ProblemFormulation of Problem

Objective and ConstraintsObjective and Constraints

Steps in Graphical Solution Steps in Graphical Solution MethodMethod

Graphical SolutionGraphical Solution

Graphical SolutionGraphical Solution

Graphical SolutionGraphical Solution

Graphical SolutionGraphical Solution

Transportation (Network) ProblemTransportation (Network) Problem

Requirement Assumption Requirement Assumption

Feasible Solutions PropertyFeasible Solutions Property

Cost AssumptionCost Assumption

Parameter Table for Parameter Table for Transportation ProblemTransportation Problem

Supply

S1

S2

.Sm

Transportation Problem ModelTransportation Problem Model

Any problems (whether involving transportation or not) fits the model for a transportation problem if it can be described completely in term of a parameter table like Table 8.5 and it satisfies both the requirements assumption and cost assumption.

The objective is to minimize the total cost of distributing the units. All the parameters of the model are included in this parameter table.

Objective Function & ConstraintsObjective Function & Constraints

Rough-Cut Planning in SCM Rough-Cut Planning in SCM

SAP Implementation SAP Implementation

Planning Book and ViewsPlanning Book and Views

Capacity Check viewCapacity Check viewNow switch to the CAPACITY CHECK view. In the Selection profile section double click on ## RESOURCES. Double click on the work center (plant ##A1). Switch the TB Profile to 12MONTH. We appear to have enough capacity in the work center at the aggregated monthly level.

Now change the TB Profile to 180 DAYS. We are overloaded in the first couple days as SCM has tried to produce all that is needed to satisfy safety stock in those days.

Key Figures and Category Group Key Figures and Category Group in SNP Standard Planning Bookin SNP Standard Planning Book

HW 6: Exercises: HW 6: Exercises: (Due date: 11/30/13)(Due date: 11/30/13)1 Setup Transactional Data Transfer between SCM and ERP

1) Maintain integration settings in SCM system Maintain distribution definitions in SCM system Maintain Objects specifics settings in SCM system Define transfer of SNP orders in SCM system

2) Create integration model for transactional data in SAP ERP system Create and activate integration model for planned orders and production orders in SAP ERP system Create and activate integration model for purchase orders and purchase requisitions in SAP ERP

system Define transfer of SNP orders in SCM system

2. Supply Chain Modeling 1) Global Bike Company (GBC) Supply Chain2) Transactional data used in supply chain planning

Interactive SNP planning Selection profile Review forecast values for production

2. Please solve the following LP problem. 

Objective: Min Z = 10,000 X1 + 15,000 X2

S.T. X1 + 2X2 >= 4

X 1+ X2 >= 2.5

 1) Draw a graph2) Plot the constraint function3) Outline the feasible solution4) Circle the optimal solution point.

3. The Green Up Fertilizer Company ships fertilizer from three manufacturing plants to four distribution centers (DC). The shipping cost per truckload of fertilizer from each plant to each DC is:

Plant Distribution Center (DC)A B C D

1 $464 $513 $654 $8672 $352 $416 $690 $7913 $995 $682 $388 $685

Plant 1 has a monthly capacity of 75 truckload, Plant 2 has a monthly capacity of 125 truckload, and the Plant 3 has a monthly capacity of 100 truckload. The monthly DC demand is A = 80 truckload, B = 65 truckload, C = 70 truckload, and D = 85 truckload. Please formulate an LP problem to determine how much truckload of fertilizer should be shipped from each plant to each DC per month to minimize monthly shipping cost.

1) Define the objective.2) Define the decision variables.3) Write the mathematical function for the objective.4) Write the constraints.5) Solve the LP problem