Planning in a Manufacturing Environment

Planning involves the management of demand and capacity over a longer horizon than for scheduling. The horizon can vary from months to years.

Demand is generally expressed in the form of a combination of forecast and actual (or “fixed”) orders. The forecast can even take the form of “feature mixes” or “equipment mixes”. For example:

  • SUV V6 to V8 engines will be in the proportion 80:20.s.
  • 25% of Cars require Panoramic Sunroofs.

In such cases the feature mixes have to be converted into forecast orders before planning can occur. In a configured product environment, like cars, the generated forecast orders have to be checked for validity of configuration, by applying configuration rules like:

Snow tires and Camper Package are an invalid combination.
“Tech” units must have Panoramic Sunroofs, GPS, Rear View Camera and Leather Seats.

An optimal plan must consider critical capacity constraints due to material, plant and labor (MPL)

  • Production capacities for product lines
  • In-house production capacities for critical commodities or components
  • External supplier or outsourced capacities for commodities or components
  • Logistics, transportation and warehousing rules

An optimal plan must also consider sales and marketing constraints, such as:

  • Regional allocations
  • Dealer / distributor allocation and draft rules
  • Dealer / distributor priorities assigned to certain types of orders

A wide variety of planning problems exist. Some of the typical planning problems in manufacturing industries are:

Multi-plant Planning / Slotting / Master Production Scheduling (MPS)

In a multi-plant environment, assign demand to individual plants / lines and daily / weekly / monthly bins. An optimal plan, again, must satisfy MPL and marketing constraints while ensuring that high priority / actual orders are planned to be delivered on time.

Demand – Capacity Matching

In a constrained environment, there is a need to align demand and capacity to ensure that the capacity system is put to the most effective use. This involves matching demand to the capacity system consisting of manufacturing plants, supply chain and related capacity limitations and a highly granular level.

Order Selection Problem

Given a set of actual and forecast orders, the planning system has to select a subset of orders to be assigned to the next few days / weeks / months, while satisfying the MPL and marketing constraints. An optimal plan would satisfy the constraints and select the highest possible proportion of actual or high priority orders.

Forecast order generation

Effective forecast order generation would combine the forecasted feature mixes with MPL and marketing constraints, so that demand forecasting rules and MPL and marketing constraints are concurrently satisfied.