Bibliografía

Description

The Master Production Schedule is an agreement between Production and Sales about the quantities to sell and to produce for the next period(s). The decision setting the Master Production Schedule is thus concerned with production (and sales) planning. Production planning is defined as ‘the process of determining a tentative plan for how much production will occur in the next several time periods, during an interval of time called the planning horizon.’ Production planning also determines expected inventory levels, as well as the workforce, and other resources necessary to implement the production plans. Production planning is done by using an aggregated view of the production facility, the demands for products, and even of time (Thomas and McClain 1993).

The objective of the decision setting the MPS is twofold (Giesberts 1993): ❑ Volume co-ordination.

❑ Mix co-ordination.

The objective of volume co-ordination is to absorb medium-term fluctuations in the market demand. This objective is realised by setting the available capacity level and determining the production volume (in hours) for specified capacity types in the production process, specified per period. Volume co-ordination focuses on medium-term and short-term fluctuations in the demand. For this reason, capacity is controlled by means of working overtime, changing number of shifts, hiring and firing temporary personnel, or subcontracting (see also Theeuwes and De Vos 1991).

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Chapter 2

Accounting information

• Cash outflow resulting from acquisition of materials.

• Cash outflow resulting from acquisition of capacity.

• Cash inflow resulting from sales.

• Cash outflow resulting from acquisition of materials.

• Cash outflow resulting from acquisition of capacity.

• Cash inflow resulting from sales.

• Missed cash inflow resulting from cancelling forecasted orders.

• Financial target information.

• Cash outflow due to acquisition of resources needed for setup activities.

• Cash outflow due to acquisition of resources needed for start- up activities.

• Cash outflow due to acquisition of storage capacity.

• Cash outflow due to replenishment of obsolete stock.

• Cash (in / out) flow resulting from removal of obsolete stock.

• Missed cash inflow of missed sales.

• Opportunity cash flow of capital.

• Cash outflow resulting from acquisition of capacity.

• Missed cash inflow due to missed sales.

• Opportunity cash flow of capital.

• Cash outflow due to acquisition of storage capacity.

• Cash outflow due to replenishment of obsolete stock.

• Cash (in / out) flow resulting from removal of obsolete stock. Control variables

• Acceptance of demand.

• Acquisition and employment of resources.

• Acceptance of demand.

• Acquisition and employment of resources.

• Order quantity.

• Number of setups / deliveries.

• Acquisition of resources (e.g., human labour, machinery, materials).

• Increase / decrease stock of intermediate or end products. Decision

Setting the MPS

Order acceptance

Determining lot sizes

Capacity expansion

Determining safety stock levels

Functional requirements 33 The objective of mix co-ordination is to obtain the required service level and possibly the required delivery times of individual end products. This objective is realised by determining the production of end products and intermediate products in the production process.

Accounting information

In a specific time frame, the MPS decision determines the output of the system and thus the operations cash inflow. The cash inflow can be influenced by a trade-off of which products to produce when. At the same time this trade-off involves materials to purchase and to use, and production capacity to purchase and to consume. This will result in an operations cash outflow (see also Figure 2-1).

The ex ante accounting information for this decision presents the result of a specific course of action, instead of including the information in some kind of financial goal function. The reason for this is that due to the complexity of this decision, accounting information can only serve as one type of information on which the decision is based. When several feasible MPS scenarios are possible the cash flow of each plan can be compared with one other.

Requirements

The basic accounting requirement to evaluate the decision ‘setting the MPS’ is the measurement of the cash inflows and cash outflows involved, meaning cash flows that differ between alternative courses of action. This implies that in a MPS simulation these cash flows have to be identified. Using cash flows instead of costs would resolve one of the major problems for using ex ante accounting information in information systems: the operational use of incremental costs. Here, incremental costs are not indirectly measured via resource consumption, but directly via resource transition.

Cash inflow is caused by resource transition (e.g., sales items) from the company to its sales markets. Cash outflow is caused by resource transition (e.g., raw material, human labour, or capacity) from the procurement markets. This implies that ex ante information is needed about the relationships with the outside world (customers and suppliers) and ex ante information is needed on how resource outflow results in resource inflow. The relationship with the outside world must be described in terms of ‘resources for money’.

34 Chapter 2 Ex ante contracts could be used here. Company rules should give information on how external demand is satisfied: by purchases or by production processes. If the demand is satisfied by purchases the ex ante contracts can be used, if the demand is satisfied by production processes additional information is needed. This additional information concerns on knowledge about the production processes. This knowledge consists of descriptions how specific output resources lead to demand for specific input resources. This knowledge can be incorporated by means of so-called recipes. These recipes represent the normative resource consumption for specific output (required input for specific output). In most ERP systems this type of information is included by means of bill of materials and routings.

With the help of the information requirements described above the resource transition patterns can be revealed. The resource transition patterns can easily be converted to cash flow patterns. This would result, then, in the ex ante accounting information. In Section 2.3, the requirements stated above are generalised in into the (generic) requirements ‘resource consumption’, ‘resource transition’, and ‘cash transition’.