Search Results for: supply-planning

  • How to Use The Simplex Method and Dual Simplex Method with CPLEX and Frontline

    ByPrimary Researcher

    Executive Summary

    There are several ways of solving a supply chain optimization problem with CPLEX.
    These settings are made in both supply planning applications as well as off-the-shelf optimizers.
    There is both a simplex method and a duplex method.

    Introduction
    The solution procedure is the optimization method that is applied. I often describe and differentiate optimizers based upon their objective function. Therefore, optimizers with an objective function of minimizing costs, I call cost optimizers. Those that attempt to reduce inventory at a set service level or maximize service level at a set inventory level are called inventory optimizers …

  • A Sensitivity Analysis Approach for Supply Chain Optimization

    ByPrimary Researcher

    … where the solution is “sensitive” to changes in the variables – which is not often performed in supply chain optimization.
    Instead, companies show a strong preference for using optimizers by feeding them unchanging constraints. Sensitivity analysis is one of the major benefits of optimization, but it is not part of the supply planning process. Instead, it is part of the S&OP process. Supply planning plans within the constraints, while S&OP and strategic planning generally plan for demand, observe limitations, and then determine if it is profitable to increase the system’s capacity through investment.
    Production Systems Versus Strategic Systems …

  • How to Understand Redeployment for Slow Moving Inventory

    ByPrimary Researcher

    Executive Summary

    Redeployment is a planning thread that repositions inventory to locations where it has a higher likelihood of being consumed.
    Redeployment applies to more to slow-moving inventor and can be considered a form of inventory analysis and a way of reducing obsolete inventory.
    Redeployment differs by product type.

    Introduction to Redeployment
    Redeployement is the least used, but still quite important supply planning runs. You will learn the reason for redeployment and how rededployment can be activated.
    See our references for this article and related articles at this link.
    What is Redeployment?
    Redeployment is the redistribution of stock that …

  • The Types of Problem Segmentation in the SAP SNP Optimizer

    ByPrimary Researcher

    … optimization decisions.
    Single Location Optimization in the SNP Optimizer
    One fascinating question is whether the SNP optimizer should be run interactively and for one “sub-problem.” (you can read about sub-problems and decomposition in this article.) Companies that migrate to cost optimization do so most frequently from MRP or supply planning heuristics. However, both of these methods can be run interactively. This can be accomplished without negatively affecting the rest of the product locations in the supply network. I explain this in my Supply Planning with MRP, DRP, and APS Software.
    However, cost optimization works differently. The CPLEX optimizer …

  • Was the SAP MRP Type Field Named Correctly?

    ByPrimary Researcher

    … have never heard someone bring this up is strange because it is obviously the case. A simple example can prove this point.
    For instance, Time-phased planning and Manual reorder point planning, two of the MRP Types listed below, are not “types of MRP”; they are planning methods. Reorder point planning is designed for specific situations where demand is very simple or tough to forecast. I describe reorder point planning in detail in this article. I also give this extensive coverage in my book on supply planning software.
    MRP Type Listing
    Therefore calling the field MRP Type makes little …

  • Setting the Right Inventory Carry Cost Percentage

    ByPrimary Researcher

    … wide inventory can have an inventory value, or the inventory value can be just of the materials kept at a particular distribution center.
    Most companies try to cap the overall inventory value at a specific number. Such as no more than $100 million in inventory.
    How Should EOQ and Other Supply Planning Parameters be Calculated?
    One would be able to, for example:
    Item #1: Simulation
    Set the supply planning parameters in a way that one can simulate the impact on the overall supply plan. When using supply planning systems, inventory parameters are typically managed on a “one by one” basis …

  • How to Understand Supply Prioritization in CTM

    ByPrimary Researcher

    … match). This highlights that while CTM can provide sophisticated demand prioritization, its order based approach does not consider the global view of how resources are used. This, of course, relates to supply prioritization. CTM can be considered to control both supply prioritization and demand prioritization. CTM is an order based supply planning process. The supply plan is created by layer after layer of orders until either all the orders are processed, or all inventory or capacity is allocated.
    What is Supply Prioritization in SAP APO SNP CTM?
    An excellent point is brought up by Kallrath and Maindl concerning supply prioritization …

  • How to Understand The Safety Stock Calculation in SAP SNP

    ByPrimary Researcher

    … is generally not predictable. Safety stock is greatly misunderstood and misused in the industry, where the failures concerning safety stock settings are multi-dimensional. The initial calculations are often of quite poor quality, but the initially calculated values are often managed in a highly capricious manner.
    The service level is essentially the attempt to match demand with a certain capacity at a certain level. Most software, even inventory management or supply planning software, assumes that the service level is known and is simply an input, when in fact, companies themselves, while desiring a “high” service level, do not know …

  • Why MPS is Misnamed in SAP ERP and APO

    ByPrimary Researcher

    … lie for personal benefit. Furthermore, SAP pays off all IT analysts — who have the same concern for accuracy as SAP. Not one of these entities will disclose their pro-SAP financial bias to their readers. 

    How the MPS is Used
    On several occasions, I hear the MRP run, the initial supply planning run, or the network supply planning run referred to as the MPS (Master Production Schedule). Upon inquiring, I often learn that the MPS is run for all products or a single product. I have had several discussions with different people where I state that the MPS is not …

  • How to Use Forecast Consumption Settings in SAP APO

    ByPrimary Researcher

    … disallowing backward or forwards consumption. While sales orders higher than forecasts are considered in the total demand calculation, sales orders lower than the forecast are not considered in total demand. Therefore a forward or backward consumption setting (or both, as both backward and forwards consumption can be configured in most supply planning systems) allows sales orders in one period to search and consume forecasts that have not yet been consumed in other periods. Products that are ordered more frequently tend to be given shorter backward/forward consumption durations, while products that are ordered less frequently tend to be given longer …