In order to extend the capability of ERP system, some ERP packages offer finite loading to overcome the obsolete notion of “Infinite Loading” assumption. In order to cope with planning difficulty, most factory planners use Excel to do planning. Even some very large MNC corporations still rely solely on spreadsheet to do planning. As we all know, spreadsheet has become more powerful and it does have optimization capabilities. At M-Focus we have done several planning projects using spreadsheet technology. However, we have found many weaknesses when using spreadsheet. We found that
Traditional MRP logic does not consider capacity constraints
Purchase plan of raw materials does not match production plan
Planner wants to find feasible Detailed Plan/Schedule
Too many demands over existing production capacity
Too many demands over supply of raw materials.
How to decide on the best production and purchase plan of actions?
… Find the best Master Production Schedule
… Run MRP
… Perform Detailed Scheduling
How MPO obtains optimized production plan?
LP Objective: Minimize production and inventory carrying cost over the planning horizon
Subject to: 1) Production capacity used <= Capacity at each machine
2) Demand must be met
Output: Production Plan, i.e. Optimal Quantities to be produced on each machine in each time bucket. Bucket size can be fixed or variable.