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

EGN 5623 Enterprise Systems Optimization EGN 5623 Enterprise Systems Optimization

(Professional MSEM)(Professional MSEM)Fall, 2011 Fall, 2011

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

Theories & ConceptsTheories & Concepts

EGN 5623 Enterprise Systems Optimization EGN 5623 Enterprise Systems Optimization(Professional MSEM)(Professional MSEM)

Fall, 2011 Fall, 2011

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 LevellingThe 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)

EGN 5623 Enterprise Systems Optimization EGN 5623 Enterprise Systems Optimization(Professional MSEM)(Professional MSEM)

Fall, 2011 Fall, 2011

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 ModelAny 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

EGN 5623 Enterprise Systems Optimization EGN 5623 Enterprise Systems Optimization(Professional MSEM)(Professional MSEM)

Fall, 2011 Fall, 2011

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.

Capacity LevellingCapacity LevellingScroll over to the next capacity usage. We are also overloaded in thoseperiods. Multilevel Heuristic does not take capacity into consideration. Select

Key Figures and Categories in Key Figures and Categories in SNP Standard Planning BookSNP Standard Planning Book

HW 4: Exercises:HW 4: Exercises:1. Module 5 (Section 2)

Work centersCreate integration model for work centers in SAP ERP systemActivate integration model for work centers in SAP ERP systemConfirm data transfer for work centers in SCM system

Purchasing Info Records (PIR)Create integration model for PIR in SAP ERP systemActivate integration model for PIR in SAP ERP systemConfirm data transfer in SCM system

2. Model 6 (Section 2)Production process model (PPM)Production data structure (PDS)Setting for PDS in SCM systemCreate integration model for PDS in SAP ERP system

HW 4: Exercises:HW 4: Exercises:Activate integration model for PDS in SAP ERP systemConfirm data of PDS transfer in SCM systemCreate integration model for PDS SNP transferActivate integration model for PDS SNP transferConfirm data transfer (PDS SNP) in SCM system

3. Model 7 (Section 2)Transactional data in SAP ERP system

Create integration model for Planned Independent Requirement (PIR) in SAP ERP system

Activate integration model for PIRConfirm data transfer (PIR) in SCM system