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Production Planning


SOP for MTS & MTO

For a MTS product group the difference bet’n a supply & demand results in a change of inventory. For a MTS product group the difference bet’n supply demand results in change in backlog.

SOP : Volume, Mix , Supply & Demand

SOP is not a scheduling tool! It is not an inventory replenishment tool! It is, however, a top level planning technique to provide overall rates of sales and production, and backlog and finished goods inventory positions. In a cellular or flow-line based operation, SOP provides the daily run rates for these product families.

Resource planning

Once the preliminary production plan is established, it must be compared to the existing resources of the company. This step is called resource requirements planning or resource planning. 2 questions must be answered:

- Are the resources available to meet the PP?
- If not, how will the difference be reconciled?

Developing a Production Plan

Make-to-stock

Generally firms make to stock when:

- Demand is fairly constant and predictable,
- There are few product options,
- Delivery times demanded by marketplace are much shorter than the time needed to make the product,
- Product has a long shelf life.

Production Strategies

There are 3 basic strategies that can be used in developing a production plan: subcontracting, a level strategy and a chase strategy. Firms may choose to utilize one of the pure strategies in isolation, or they may opt for a strategy that combines the three.

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