Speaker 1: So, what is planning? You can look at planning from many different aspects, right? But a lot goes into planning and producing these products where all of these different aspects have to come together almost flawlessly just to get that product on the shelf for you. Think about everything that goes into planning for a sandwich, right, a burger, everything. You got the bread, the lettuce, the onions, the tomatoes, the meat. You have to get these from different suppliers in most cases, and you have to make sure that it's there on time so that you can serve your customer at your restaurant, and you don't want to ever be out of anything. Tough to do, but if you do it well, it's not tough to do, I guess. Anyway, that's essentially what planning is, but it's broken into what we call long-term aggregate planning and near-term master production scheduling. But first, I want to talk about independent demand. We want to look at demand. Remember we talked about it starts with consumer demand, but we have independent demand, right? These are items that are finished products, right? These are your final products. These are things that are on your master production schedule to produce, right? Your master production schedule brings these items that you're going to produce as finished goods. That's what your master production schedule is for. And then you have dependent demand, right? These are items that are not finished goods. They're raw material that will be used in some aspect of production to produce a finished good eventually. But when it comes to dependent demand items, items that depends on another item to become a finished goods, you look or you use material requirements planning or an MRP system to manage those products. And for deep independent demand, those items that can stand independently, those finished goods, you use your master production schedule. So the aggregate plan is just a combining of items into groups or families. This is all for planning purposes and that aggregate plan feeds into the master production schedule and the master production schedule. This aggregates the aggregate plan and make it all make sense. Now let's go over a few key terms when it comes to the master production schedule and planning and things that you need to know. First we have the planning horizon. Now the planning horizon is just the length of time it takes to plan, forecast, schedule to produce a product. That's your planning horizon. Medium range planning horizon is six to 18 months. That is standard and industry standard, but sometimes we have long term planning, which is around five to 10 years. But I mean, if a company is going to plan something, they just have to make sure that their planning horizon is long enough for them to actually produce the product. That is the one thing. But the general rule is medium range planning horizon is six to 18 months. Now when it comes to the master production schedule, we have a few things we want to know about. We have what we call time fences. Now a time fence is simply any boundary on the planning horizon. So if your planning horizon is six to 18 months, you produce in weekly buckets or quarterly buckets. However you produce, all of those boundaries are some type of time fence within your planning horizon. And then you have time buckets. These are usually one week, but again, can be as little as one hour just based on the company and what they're producing. So if you have your time buckets, those are the manners in which you're producing your products. Weekly basis, monthly basis, or hourly base. You're producing your time. Your time bucket is the manner in which you're producing your groups of products, right? And your lead time is the amount of time it takes to plan, produce, and deliver that product to the customer. This is when it comes to if you call a company and say, hey, I need a new computer, custom made, how long will it take to get to me? They're going to ask you what specs do you need on that computer, blah, blah, blah. And then they may tell you your lead time is 21 days because they have to build it, manufacture it, they have to ship it to you, right? That is going to be the lead time. Now their planning horizon could be much longer because they're considering different and other products that they have. But these are key products, I mean, key terms you want to remember when it comes to planning and the master production schedule. Now let's just talk about what goes into the master production schedule. There are some things that go in the master production schedule. Then that master production schedule in turn generates outputs or what we call outputs. Now think about it when you go into a restaurant, right? First the cashier has to know what it is you want to order. That's how the master production schedule works. What is it that you want to produce? Give me some information and these are your inputs. So when you go into that restaurant and tell them what you want to eat, they're putting things into the system that feeds into the kitchen, right? And that guy is in the back or that woman is in the back looking, right? Oh, they want this, they want that. They start producing what you're asking for. The master production schedule works the same way. Your inputs, what are your demand forecasts, right? How many customer orders do you have? Where are your inventory levels? How many do you want to produce? Those are things the master production schedule needs to know. Then once you feed that information to the master production schedule, it's going to generate some numbers for you. This is how much you're producing. This is how much you're going to have left over after these customer orders that you put in. This is how much you're going to, this is where your inventory levels are going to be week two, week three, the people you need. This is capacity. You need at least eight people working during this time in order to produce these products. There's also something called available to promise inventory. So we'll have, let's say a hundred units available, but 50 of those are going to be, let's say 50, 60 of those are going to be allocated to orders in the future that you've already received, but they're not needed, let's say for two weeks. Those 40 though, is you're available to promise inventory because you have inventory that is not associated with a customer order, right? And then it can give you projected inventory balances based on this week after we produce this amount of product and orders we currently have, this is the amount of inventory that we will be projected to have. So let's jump into Excel one more time and just take a look at what the master production schedule and the aggregate plan could look like. All right. So here's the aggregate plan. This is just for Q1 aggregate plan. You see the products. This lets us know what our demand forecast is, what regular production normally is, what our beginning and ending inventory will be for January, February, and March. And remember I said that the aggregate plan, it feeds into the master production schedule and it disaggregates that aggregate plan. So this is a detailed level of our master production schedule, right? It lets us know when we're going to have certain amounts of inventory available to promise our projected inventory levels. You see here in March, we have a few problems because we have negative numbers. This means that we have customer orders coming in, but we're not going to be able to fill those orders. So we can see in advance that there is going to be a problem in March and then we can plan around that. Then we have a simplified version of our master production schedule that shows us what is being produced during those months and weeks that falls up into these numbers up top. But this is generally the relationship between the aggregate plan, which is much simple as far as again, just numbers. And then when we look at the details of those numbers, we have different aspects that we can look at from a master production schedule. So key takeaways. Planning is very important. We have short term planning and long term planning. Short term, all about the master production schedule. Long term is all about the aggregate plan. The aggregate plan feeds into the master production schedule and the master production schedule does what? It disaggregates that aggregate plan. And remember those key terms that I went over, right? Remember we talked about planning horizon. There is no planning horizon specifically here, but we could say that the planning horizon is six to 18 months. As you can see, this is only three months, but planning horizon medium range is six to 18 months. All of these, these are your time buckets. Your weekly buckets are your time buckets. Every boundary you see here is considered your time fence and your lead time is not listed, but let's say your lead time can be three weeks or two weeks. It can be 200 days. I worked for a company. The lead time was 460, no, 400, no, 300 and no. It was about a year. The lead time in the park, $465,000, yeah. Airline industry. Anyway, that is all I have for planning and the master production schedule.