Agriculture Reference
In-Depth Information
The aggregate production plan does not specify the exact quantities of specifi c fl avors or
types of cereal bars that are going to be required. Rather, it estimates the rough quantities of
total product types that are going to be needed, so that approximate quantities of raw materi-
als, labor, and equipment can be determined. The exact quantities of individual stocking
keeping units (SKUs) demanded are determined from sales forecasts (provided by sales
representatives) and actual orders. These two items form the basis for the next step, the
detailed master production schedule.
Master production scheduling
The master production schedule (MPS) is created once specifi c orders for products have
been received and/or short-range sales forecasts have been determined. The MPS details the
fi nal quantities of SKUs that are to be made in specifi c blocks of time. The MPS typically
provides weekly product requirements for a six-to-12-month time horizon. In the average
production plant, the next six weeks of production are not changed to allow purchasing
and production control time to fi nalize their purchases and plans (note this can vary dra-
matically with the product being produced). Beyond the approximate six-week time frame,
the quantities of specifi c products have not been determined, but will fi rm up as the time
span to production shortens. The master scheduler must consider the total demand on the
resources and capacities of the agribusiness as well as the supplier's capacities. Figure 15.2
displays a simplifi ed MPS process.
There are three basic MPS strategies. A make-to-stock strategy means the fi rm is pro-
ducing for inventory, and the production occurs before the actual sale is made. Examples
here would be the production of agricultural chemicals, seed, and many food products.
Step 1
Calculate projected, on-hand inventory at end of this week
Inventory on-hand at end of last week
+ New production due at start of this week
- Projected requirements this week (Forecast, Sales, Bookings)
= Projected inventory at end of this week
Step 2
Is projected inventory at end of this week negative?
If no:
Start process over
for next week
If yes:
Increase production
due at start of this week
Figure 15.2 Simplifi ed master production schedule process
 
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