Intended learning outcomes: Describe the third task for establishing a master production schedule, which is the process of rough-cut capacity planning (RCCP).
Continuation from previous subsection (5.2.3b)
Third task: Verify the feasibility of the MPS by rough-cut capacity planning.
Rough-cut capacity planning (RCCP) is the process of converting the master production schedule into required capacity, that is, capacity of (key) resources to produce the desired output in the particular periods. Comparison to available or demonstrated capacity (with regard to feasibility) is usually done for each key resource ([ASCM22]).
As the planning is more detailed, RCCP yields more precise information on the work centers and the capacities to be used than does resource requirements planning (RRP). It therefore allows more precise control of the feasibility of the production plan. Figure 5.2.3.5 shows the (average) load of the MPS in comparison to the weekly (average) capacity of a work center called WC-A.
Fig. 5.2.3.5 RCCP on the level of assemblies V1, V2, and V3: load and capacity on work center WC-A.
For balancing load with capacity, the following strategies are possible:
- The chase production method maintains a stable inventory level that corresponds to load. To do this, flexible capacity — as is the case in Figure 5.2.3.5 — is a must.
- The level production method maintains a level schedule (a master production schedule that generates a load that is spread out more evenly over the time period) corresponding to capacity. This can go as a far as requiring linearity, or the production of a constant quantity (or the consumption of a constant quantity of resources) in every period (such as daily). Figure 5.2.3.6 shows a possible solution.
Fig. 5.2.3.6 RCCP on the level of assemblies V1, V2, and V3: load and capacity on work center WC-A, load leveled.
- Hybrid production method: Companies can combine chase and level production methods.
- It is a question of an overstated master production schedule. The quantities are greater than the ability to produce, given current capacity and material availability (cf. [ASCM22]). The MPS has to be modified.
Figure 5.2.3.6 shows that load leveling is a time-consuming procedure even for just one work center. Finite loading algorithms, often developed within operations research (such as linear programming), have to be used. In the face of the degree of uncertainty of the (mostly forecast-based) production plan as well as of the demand breakdown from the family level to the level of individual products, it is often not worth putting too much effort into more detailed calculation. If there is (as in our example) a 20 % uncertainty in the distribution of the demand of the family among the single products or assemblies, a deviation of 10 % of the average capacity (as in Figure 5.2.3.5) is probably precise enough. Investing great efforts in detailed calculation will often be useless at this level of planning. In contrast, the importance of investing in flexible capacities increases with a growing degree of variability of the product concept.
In more complicated cases, the MPS must divide the production plan into individual production or procurement lots. Then, just as in medium-term planning, net requirements planning over the time axis, rather than gross requirements planning, is needed. An example of this is long-term planning that aims explicitly to achieve high-capacity utilization, particularly in the process industry. In that case, RCCP (rough-cut capacity planning) seems to be a good solution:
- Quick calculation of alternative order quantities or subdivisions in part orders with shifted completion dates is possible.
- The number of planning variables is small, and sometimes the whole plan can be displayed on a large monitor. This provides excellent support to the human ability to make situation-appropriate decisions intuitively even when the data are incomplete and imprecise. These intuitive decisions take into account a multitude of nonquantifiable factors and implicit knowledge. This is a very important aspect of future-oriented forecasting techniques. Knowledge about the development of a forecast can influence our evaluation of planning results, particularly interpretations of capacity overload and underload.
See Section 14.4 for a detailed description of rough-cut capacity planning techniques.
Course section 5.2: Subsections and their intended learning outcomes
5.2 Master Planning — Long-Term Planning
Intended learning outcomes: Describe demand management, sales and operations planning as well as resource requirements planning. Explain master scheduling and rough-cut capacity planning. Disclose supplier scheduling: blanket order processing, release, and coordination.
5.2.1 Demand Management: Bid and Customer Blanket Order Processing and Demand Forecasting
Intended learning outcomes:: Describe demand management, customer bid, order success probability and customer blanket order. Present some aspects of demand forecasting.
5.2.2 Sales and Operations Planning
Intended learning outcomes: Present the concepts of sales plan, production plan, procurement plan, inventory policy, and inventory plan.
5.2.2b Resource Requirements Planning (RRP) and Iterative Master Planning
Intended learning outcomes: Present the concepts resource requirements planning (RRP) and aggregate plan. Explain sales and operations planning as an iterative master planning process.
5.2.2c Iterative Master Planning — an Example of Integrated Resource Management
Intended learning outcomes: Disclose an example of iterative master planning by comparing three production plans, with zero, two or four changes in production rhythm per year.
5.2.3 Master Scheduling — The Master Production Schedule (MPS)
Intended learning outcomes: Produce an overview on master scheduling and planning time fence. Present in detail the master production schedule (MPS) as a disaggregated version of the production plan. Explain the first task for establishing a master production schedule, which is the selection of the master schedule items.
5.2.3b Master Scheduling — Break Down the Production Plan Quantity for a Product Family into Quantity for Each Product of the Family.
Intended learning outcomes: Explain the second task for establishing a master production schedule, which is the break down the production plan quantity for a product family into quantity for each product of the family.
5.2.3c Rough-Cut Capacity Planning (RCCP)
Intended learning outcomes: Describe the third task for establishing a master production schedule, which is the process of rough-cut capacity planning (RCCP).
5.2.4 Supplier Scheduling: Blanket Order Processing and Blanket Release
Intended learning outcomes: Produce an overview on supplier scheduling. Explain the systematics of blanket orders and blanket releases with quantities and time periods.
