1. Introduction to Operations Management
Aggregate Production Planning (APP) (Ch. 13) and
Material Requirements Planning
(MRP) (Ch. 14)
Hansoo Kim (金翰秀)
Dept. of Management Information Systems, YUST

2. Schedule 11/25 – Inventory Management 12/2 – APP & MRP
12/9 – ERP & Review!
12/16 – 2nd Exam – Final Exam

3. X X X X X X X X X X X X X OM Overview Class Overview (Ch. 0)
Operations, Productivity,
and Strategy
(Ch. 1, 2) X
Project Management
(Ch. 17)
Strategic
Capacity
Planning
(Ch. 5, 5S)
Process
Selection/ Facility Layout; LP
(Ch. 6, 6S) X X X
Mgmt of Quality/ Six Sigma Quality
(Ch. 9, 10) X X
Queueing/
Simulation
(Ch. 18)
Supply Chain Management
(Ch 11) X
Location Planning
and Analysis
(Ch. 8) X
JIT &
Lean Mfg System
(Ch. 15) X X
Demand Mgmt Forecasting
(Ch 3) X
Aggregated Planning
(Ch. 13)
Inventory Management
(Ch. 12) X
MRP & ERP
(Ch 14)
Term Project

4. Today’s Outline
총괄생산계획 (APP)에 대하여..
자재소요계획 (MRP)에 대하여..

5. 어떻게 수요를 만족 시킬 것인가? Month Expected Demand Production Days
Demand per Day
Jan.
Feb.
Mar.
Apr.
May.
Jun.
900
700
800
1,200
1,500
1,100 22 18 21 20 41 39 38 57 68 55
Total
6,200
124
Inventory Carrying Cost (재고보관비)
Subcontracting cost per unit (단위 외주비용)
Average pay rate (평균 임금률)
Over time pay rate (잔업 임금률)
Labor-hours to produce a unit (단위 노동시간)
Cost of increasing production rate (생산률 증가비)
Cost of decreasing daily production rate (생산률 감소비)
$ 5 per unit per month
$ 10 per unit
$ 40 per day
$ 7 per hour (above 8hrs per day)
1.6 hr per unit
$300 per unit
$600 per unit

6. 첫번째 전략: 노동생산률을 일정하게 No Change Workforce
노동력에 변화를 주지 않는다. No change workforce (No Hire No Layoffs)
잔업과 외주를 사용하지 않는다. No Overtime or No subcontract
오직 재고를 사용하여 계획한다. Use inventory!

7. 노동력이 남아돌때 더 만들어 모자랄때 사용하자!!!
월별 수요 및 생산률
6200/124 = 50
노동력이 남아돌때 더 만들어 모자랄때 사용하자!!!

8. Inventory Carrying Cost (재고보관비)=
첫번째 전략 분석 using Excel
Inventory Carrying Cost (재고보관비)=
$ 5 per unit per month

9. 두번째 전략: 일정한 노동생산률 유지, 외주 활용
두번째 전략: 일정한 노동생산률 유지, 외주 활용
수요가 가장 낮은 달 (3월, 38개/월)의 생산률을 유지 시키며,
외주(Subcontract)를 적극 활용한다.

10. 두번째 전략 분석 Using Excel

11. 세번째 전략: 노동력을 증가 감소 시킨다 Jan. Feb. Mar. Apr. May. Jun. 900 700 800 1,200
Month`
Expected Demand
Demand per Day
Production Cost
Hire Cost
($300/unit)
Layoff Cost ($600/unit)
Total Cost
Jan.
Feb.
Mar.
Apr.
May.
Jun.
900
700
800
1,200
1,500
1,100 41 39 38 57 68 55
$7200
5600
6400
9600
12000
8800 -
$5700
$3300
$1200
$600
$7800
6800
7000
15300
16600
Total
6,200
$49600
$9000
$9600
$68200

12. 계획 기간 Planning Horizon Planning Horizon 1 year 5 years Today 3 Months
Short-range plans
Job assignments
Ordering
Job scheduling
Dispatching
Intermediate-range plans
Sales planning
Production planning and
budgeting
Setting employment, inventory,
subcontracting levels
Analyzing operating plans
Long-range plans
R&D
New product plans
Capital expenses
Facility location, expansion
Responsible: Operations managers, supervisors, foremen
Responsible: Operations managers
Responsible: Top executives

13. 총괄생산계획 (AP) 요건들 판매 생산 등을 통합적으로 측정할 단위가 있어야 한다.
Logical overall unit for measuring sales and outputs
중 단기 계획에 따른 통합된 (aggregated) 수요예측치가 있어야 한다.
Forecast of demand for intermediate planning period in these aggregate units
비용을 계산하는 방법이 있어야 한다.
Method for determining costs
최소의 비용의 방법을 결정하기 위해, 수요예측치와 비용을 결합하는 모델이 필요하다.
Model that combines forecasts and costs so that planning decisions can be made

14. Schedule, and MRP systems
총괄생산계획과 관련 있는 항목들…
Aggregate
Plan for
Production
Demand
Forecasts,
orders
Master
Schedule, and MRP systems
Detailed Work
Schedules
External
Capacity
Subcontractors
Inventory On
Hand
Raw Materials
Available
Work Force
Marketplace
and Demand
Research and
Technology
Product
Decisions
Process
Planning & Capacity

15. 총괄생산계획 APP, or AP (Aggregate Production Planning)
회사의 자원을 이용하여 시장의 수요를 충족시키는 계획
Matches market demand to company resources
계획기간은 보통 3개월에서 12개월 정도
Plans production 3 months to 12 months in advance
단일 품목에 대한 계획이 아닌, 관련 제품군에 대한 계획
Combines (‘aggregates’) production
주로, 수요(demand) 자원(Resources), 그리고 생산능력 (capacity)의 용어로 표현된다.
Expresses demand, resources, and capacity in general terms
경제적으로 수요를 만족시키기 위한 전략을 개발한다.
Develops a strategy for economically meeting demand
회사의 자원을 어떻게 배치해야 하는가 하는 계획을 수립한다.
Establishes a company-wide game plan for allocating resources

16. AP의 목표 수요 충족 생산능력의 효율적 사용 재고정책에 부합 비용의 최소화 Meet demand
Use capacity efficiently
재고정책에 부합
Meet inventory policy
비용의 최소화
Minimize cost
노동비 (Labor cost)
재고비 (Inventory)
설비비 (Plant & equipment)
외주비 (Subcontract)

17. AP전략: 순수전략 (Pure Strategy)
생산능력 변화 전략 Capacity Options — change capacity:
재고 수준의 변화, changing inventory levels
고용/해고를 통한 작업자의 수의 변화, varying work force size by hiring or layoffs
잔업 및 휴가등을 통한 생산 능력의 변화, varying production capacity through overtime or idle time
외주, subcontracting
비정규직 사원 활용, using part-time workers

18. AP전략: 순수전략 (Pure Strategy)
수요변화 전략, Demand Options — change demand:
수요에 영향을 줌, influencing demand
부재고(Back-order) 발생 시킴, backordering during high demand periods
계절적 변동을 최소화 시키는 혼합생산, counter-seasonal product mixing

19. 두 극단적 전략
Level Strategy
Chase Strategy
수요의 변동에 따른 생산의 변동
생산률 고정

20. AP 전략들… 혼합전략, Mixed strategy 고정생산 전략, Level scheduling strategy
2개 이상의 AP전략을 함께 사용하는 복합적인 전략Combines 2 or more aggregate scheduling options
고정생산 전략, Level scheduling strategy
고정된 생산, Produce same amount every day
노동생산 수준을 일정하게 고정, Keep work force level constant
노동생산 수준 이외의 다른 대안을 활용, Vary non-work force capacity or demand options
생산비 최소화 추구하는 경우, Often results in lowest production costs
Students might be asked to suggest what problem level-scheduling enables one to avoid. Why would level-scheduling result in the lowest production costs?

21. AP Using Pure Strategies
QUARTER SALES FORECAST (LB)
Spring 80,000
Summer 50,000
Fall 120,000
Winter 150,000
Hiring cost = $100 per worker
Firing cost = $500 per worker
Inventory carrying cost = $0.50 pound per quarter
Production per employee = 1,000 pounds per quarter
Beginning work force = 100 workers

22. AP Using Pure Strategies
QUARTER SALES FORECAST (LB)
Spring 80,000
Summer 50,000
Fall 120,000
Winter 150,000
Hiring cost = $100 per worker
Firing cost = $500 per worker
Inventory carrying cost = $0.50 pound per quarter
Production per employee = 1,000 pounds per quarter
Beginning work force = 100 workers
Level production
= 100,000 pounds
(50, , , ,000) 4
Example 9.1

23. Level Production Strategy
Spring 80, ,000 20,000
Summer 50, ,000 70,000
Fall 120, ,000 50,000
Winter 150, ,000 0
400, ,000
Cost = 140,000 pounds x 0.50 per pound = $70,000
SALES PRODUCTION
QUARTER FORECAST PLAN INVENTORY
Example 9.1

24. Chase Demand Strategy Spring 80,000 80,000 80 0 20
Summer 50,000 50,
Fall 120, ,
Winter 150, ,
100 50
SALES PRODUCTION WORKERS WORKERS WORKERS
QUARTER FORECAST PLAN NEEDED HIRED FIRED
Cost = (100 workers hired x $100) + (50 workers fired x $500)
= $10, ,000 = $35,000

25. AP Using Mixed Strategies
January 1000 July 500
February 400 August 500
March 400 September 1000
April 400 October 1500
May 400 November 2500
June 400 December 3000
MONTH DEMAND (CASES) MONTH DEMAND (CASES)
Production per employee = 100 cases per month
Wage rate = $10 per case for regular production
= $15 per case for overtime
= $25 for subcontracting
Hiring cost = $100 per worker
Firing cost = $500 per worker
Inventory carrying cost = $1.00 case per month
Beginning work force = 10 workers

26. AP by Linear Programming
Minimize Z = $100 (H1 + H2 + H3 + H4)
+ $500 (F1 + F2 + F3 + F4)
+ $0.50 (I1 + I2 + I3 + I4)
Subject to
P1 - I1 = 80,000 (1)
Demand I1 + P2 - I2 = 50,000 (2)
constraints I2 + P3 - I3 = 120,000 (3)
I3 + P4 - I4 = 150,000 (4)
Production W1 = P1 (5)
constraints W2 = P2 (6)
1000 W3 = P3 (7)
1000 W4 = P4 (8)
100 + H1 - F1 = W1 (9)
Work force W1 + H2 - F2 = W2 (10)
constraints W2 + H3 - F3 = W3 (11)
W3 + H4 - F4 = W4 (12)
where
Ht = # hired for period t
Ft = # fired for period t
It = inventory at end
of period t
Pt = units produced
in period t
Wt = workforce size
for period t

27. Material Requirement Planning
MRP
Material Requirement Planning

28. Aggregate Production Plan
AP의 입력정보들..
Aggregate Production Plan
Marketing
Customer
Demand
Engineering
Design
Completion
Management
Return on
Investment
Capital
Human
Resources
Manpower
Planning
Procurement
Supplier
Performance
Finance
Cash Flow
Production
Capacity
Inventory

29. Material Requirements Plan
생산계획 수립과정
Change master production schedule?
Execute material plans
Execute capacity plans
Detail capacity plan
Material Requirements Plan
Master production schedule (MPS)
Aggregate production plan
Change requirements?
Change capacity?
Realistic No
Yes
Change production plan?
Is capacity plan being met?
Is execution meeting the plan?

30. AP->MPS 8 240 watt amplifier 150 watt amplifier 75 watt amplifier
1,200
1,500
Aggregate Production Plan (shows the total quantity of amplifiers)
100
300
75 watt amplifier
450
500
150 watt amplifier
240 watt amplifier
Master Production Schedule (Shows the specific type and quantity of amplifier to be produced) 8 7 6 5 4 3 2 1
Weeks
February
January
Months

31. Bill-of-Material (BOM)
제품을 만드는데 필요한 부품의 종류와 수량을 기록한 자료구조
제품의 구조를 Tree 형식으로 나타낸다
Parents: 상위 레벨 제품들
Items above given level
Children: 하위 레벨 제품들
Items below given level
표현 규칙
최 하위 레벨에 맞춘다 (Shows low-level coding)
Lowest level in structure item occurs
Top level is 0; next level is 1 etc.
A bicycle provides a good example for deriving a bill-of-material. Most students remember enough of the parts of a bicycle to develop several levels.

32. 예) BOM for “Awesome” A
You might ask students to develop a similar product for a product with which they are familiar. Possibly a ball-point pen?

33. 예) BOM for Bicycle Bicycle(1) P/N 1000 Handle Bars (1)
Frame Assembly (1)
P/N 1001
P/N 1002
Wheels (2)
Frame (1)
P/N 1003
P/N 1004

34. Time-Phased Product Structure1 2 3 4 5 6 7 8
3 weeks F
2 weeks E A
1 week C G D
Start production of D B
2 weeks to produce
Must have D and E completed here so production can begin on B
This slide has been animated to demonstrate backward scheduling - item A is scheduled first, then the remaining items are scheduled so as to produce A at the proper time.

35. 예) BOM for Stool (의자) Stool Base (1) Seat (1) Legs (4) Bolts (4)
Indented BOM Graphical BOM
Stool
Base (1)
Legs (4)
Bolts (2)
Seat (1)
Stool
Level 0
Base (1)
Seat (1)
Level 1
Legs (4)
Bolts (4)
Bolts (2)
Level 2
Note: bolts are treated at lowest level in which they occur for MRP calcs. Actually, they might be left off BOM altogether in practice. (Low Level Coding)

36. 예) MRP 계산 (1/2)

37. 예) MRP 계산 (2/2)
BOM explosion

38. 자재소요계획 Material Requirements Planning (MRP)
Manufacturing computer information system
Determines quantity & timing of dependent demand items
A point to stress here is that while MRP is heavily computer-based, it is more than simply a computer program.
© 1995 Corel Corp.

39. MRP Requirements Computer system Mainly discrete products
Accurate bill-of-material
Accurate inventory status
99% inventory accuracy
Stable lead times
It is important to emphasize the need for accurate records - both bill-of-material and inventory.
© T/Maker Co.

40. MRP 유익들… 고객만족도 증대 시장의 변화에 빠른 대응 노동/설비 가동률 향상 보다 효율적인 재고 계획 및 관리 방법
Increased customer satisfaction due to meeting delivery schedules
시장의 변화에 빠른 대응
Faster response to market changes
노동/설비 가동률 향상
Improved labor & equipment utilization
보다 효율적인 재고 계획 및 관리 방법
Better inventory planning & scheduling
고객 만족도의 손해 없이, 재고 수준을 낮춤
Reduced inventory levels without reduced customer service
While MRP certainly can produce these benefits, it is useful to discuss the problems faced in establishing an MRP system. A number of companies have given up on the task - the necessary transformation of old processes has simply proven too difficult.

41. MRP planning programs (computer and software)
MRP System의 구조
Master Production
Schedule
BOM
Lead Times
(Item Master File)
Inventory Data
Purchasing data
MRP planning programs (computer and software)
MRP by Period Report
MRP by date report
Planned order report
Purchase advice
Exception report
Emphasize that this slide illustrates the overall technological structure of MRP - people and process are also extremely important in its actual success.

42. BOM for “Awesome” A
You might ask students to develop a similar product for a product with which they are familiar. Possibly a ball-point pen?

43. Gross Material Requirements Plan for 50 “Awesome A” Speaker Kits

44. Derivation of Master Schedule40 50 15 A C B 5 6 7 8 9 10 11
Lead time = 4 for A
Master schedule for A 40 20 30 S B C 8 9 10 12 11 13
Lead time = 6 for S
Master schedule for S 10 1 2 3
Master schedule for B sold directly
Periods
This slide is also animated in an attempt to demonstrate the “building” of the master schedule. 10
40+10
= 50 40 50 20
15+30
= 45
Periods
Gross requirements: B
Therefore, these are the gross requirements for B

45. Lot-Sizing Techniques
Lot-for-lot
Economic Order Quantity
Part Period Balancing
Fixed Order Period

46. MRP Lot-Sizing Problem: Lot-for-Lot Techniques
Total Cost = 100 * 7 = $700

47. MRP Lot-Sizing Problem: EOQ Technique
Total Cost

48. Part Period Balancing Tech. Calculation
Holding Cost = $1/unit,week, Setup Cost = $100, Lead Time = 1 week
Economic Part Period (EPP) = Setup Cost  Holding Cost = 100/1 = 100 unit 1 2 3 4 5 6 7 8 9 10 35 30 40 55
Demand
Periods Combined
Cumulative Net Reqmt
Part Period
Cost
Setup
Holding
Total 2
2,3
2,3,4
2,3,4,5
2,3,4,5,6 6
6,7
6,7,8
6,7,8,9 10 30 70 80
120
---- 40
100 55
40 = 40*1
70 = 40*1 + 10*3
230 = 40*1 + 10*3 + 40*4
30 = 30*1
30 = 30*1+0*2
120 = 30*1 + 30*3
--- --
170
220
300
190
$490

49. MRP Lot-Sizing Problem: PPB Technique

50. Fixed Order Period (FOP): 3 periods1 2 3 4 5 6 7 8 9 10
Gross Req. 35 30 40 55
Sched. Receipt
Projt on Hand (35)
Net Requirement.
Planed order Receipt
70 = 80 85
Planed Order
Release 70
Holding Cost = $1/unit week, Setup Cost = $100
Lead Time = 1week
Total Cost = 100*3 + 40*1 + 40*1 + 30* = $495

51. Total Cost Comparison Total cost comparison by Lot sizing Techniques
L4L = $700
EOQ = $735
PPB = $490 **
FOP = $495

52. MRP and ERP Information Flows, Integrated with Other Systems

53. MRP in Services
Can be used when demand for service or service items is directly related to or derived from demand for other services
restaurant - rolls required for each meal
hospitals - implements for surgery
etc.
Have the students consider what modifications may be necessary for MRP to be valuable in services.

54. Product Structure, Bill of Materials, Bill of Labor for Veal Picante

55. Announcement HW 다음주에 ERP & Review 시간입니다 Ch.14 Ch. 13 Example 1, 2
Solved Problem 1, 2
Ch. 13
다음주에 ERP & Review 시간입니다