Operations Planning and Control
Hierarchy of plans
Aggregate planning sets output, workforce and inventory over 3-18 months; the master production schedule (MPS) disaggregates it into end items by period; MRP explodes the MPS through the bill of materials (BOM) using inventory records and lead times; capacity requirements planning checks feasibility. Exam questions test MRP netting and scheduling rules.
- Net requirement = gross requirement + safety stock - projected on-hand - scheduled receipts.
- Planned order release = planned order receipt offset by lead time.
- Scheduling rules: SPT minimises average flow time and work-in-progress; EDD minimises maximum lateness; critical ratio prioritises urgency.
Worked example
Week 5 gross requirement for a bracket is 100 units; on-hand 20; safety stock 10; no scheduled receipts; lead time 2 weeks; lot-for-lot. Net = 100 + 10 - 20 = 90. The planned order receipt is 90 in week 5, so release 90 in week 3. If lot size were fixed at 50, you would need two lots of 50 (100 units), producing 10 units of excess inventory, a lot-sizing consequence worth stating.
Traps
Students net requirements without adding safety stock, or offset by lead time in the wrong direction. Do not confuse the MPS (end items) with MRP (components). SPT is poor at meeting due dates; EDD ignores processing time. In chase demand the workforce varies; in level capacity inventory absorbs demand.