The planned sales quantities result from sales planning. Here, an example from the simulation model is used to show how the production- and purchasing plans are developed.
From Planned Sales to Production- and Purchase-Plans
Item number 101060 is a plastic-coated ring binder with a 4 cm spine width and a 4-ring mechanism. The sales plan envisages selling 82,688 units of these. The following formula is used to arrive at the calculated production quantity:
The multi-level bill of materials (BOM) shows how item 101060 is produced:
The production runs in three steps. to produce a 4-ring mechanism (item number 23), a base plate (item number 11) and four wire brackets (item number 14) are required. These articles are semi-finished products. They are not sold as such, but always go into higher level own products. As semi-finished products they are also kept in inventory. Item number 14 is produced in the cost centers Wire rolling and Wire bending & forming. The base plate (item 11) and the wire brackets are assembled in cost center 232 for the mechanism (item 23, production stage 2). The mechanisms are also kept in stock. In the film welding shop and in the assembly department, the mechanisms are then assembled with the ring binder cover (semi-finished product 32) together with further input material to form the final product 101060.
The production planner has the following data at his disposal to determine the planned production:
The data on the planned material requirements for setup and scrap as well as the number of lots to be produced is still missing. These are seized on the basis of measurements in the real production orders and then recorded in the article master as target consumption to be achieved.
The defined planned production quantity (in the example 85,800 units) becomes the quantitative basis for the plan-calculation of an item.
It should be noted that a fully automated simulation model can calculate correctly, but it cannot make management decisions itself. The example for determining the planned production shows that management decisions generate new initial values for the simulation. Therefore, it must be possible to capture such decisions in the model or to change the values. This insight also applies to the next stage, the derivation of the planned purchases.
Based on the planned production quantities determined by the production planner, it can be evaluated how much of which raw materials will have to be purchased. For merchandise, the starting point is the planned sales quantity. The table shows the planned requirements for raw materials and trading goods for the planned year, totaled for all items.
The purchasing officer also considers which order quantities he wants to place. This depends first on the planned requirements, but then also on the conditions of the suppliers, such as package sizes, quantity discounts, the most favorable delivery quantity, taking into account the transport equipment and containers of the suppliers and forwarding agents, as well as the company’s own storage capacities. The purchaser will take these factors into account when determining planned purchases. This leads to a break between planned production quantities and planned purchasing quantities, which in turn leads to a break that must be disclosed to the simulation model. To do this, the purchaser should enter his planned purchasing quantities. The planned purchase prices are entered in the article master, since this is accessed when purchase prices are called.
