Managing Your Supply Chain Using Microsoft Axapta: A Book Excerpt Part Two: Understanding Planning Calculations

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Managing Your Supply Chain Using Microsoft Axapta: A Book Excerpt
Part Two: Understanding Planning Calculations

Featured Author - Dr. Scott Hamilton - March 24, 2004

Understanding Planning Calculations

The S&OP game plans can be expressed as master schedules for stocked items and a finishing (or final assembly) schedule for make-to-order manufactured items. These game plans drive coordination of supply chain activities based on planning calculations. The single term planning calculations refers to two major tasks termed the forecast scheduling task and the master scheduling task. Further explanation starts with the demands and supplies considered by the planning calculations. The separate tasks will then be explained, along with several guidelines for planning calculations.

Sources of Demand and Supply

The sources of demand and supply are summarized in figure 5.1. The previous section covered several sources of demand such as sales orders and sales forecasts, and how the system handles the combination of actual and estimated demand through forecast consumption logic.

Figure 5.1 Sources of Demand and Supply

Other sources of demand shown in figure 5.1 include un-posted inventory journals, component requirements stemming from production orders, and transfer order requirements. The sources of supply include on-hand inventory, quarantine inventory, and scheduled receipts reflecting purchase orders, production orders, transfer orders, and un-posted inventory journals. These sources of demand and supply are covered in future chapters, but are introduced now to understand the basics of planning calculations. Planning calculations can selectively include or exclude some of these sources of demand and supply.

Master Scheduling Task

The master scheduling task represents the primary engine for coordinating supply chain activities. As shown in figure 5.2, the master scheduling task uses information about demands and supplies and a set of master plan policies to calculate material and capacity requirements (termed a set of master plan data or requirements data). It also generates planned orders and action messages to synchronize supply chain activities.

Figure 5.2 Overview of Planning Calculations

The master scheduling task includes order point, MRP and DRP logic, finite and infinite scheduling logic for production orders, and vendor selection logic for planned purchase orders. It reflects the calendar of working hours assigned to each warehouse, customer, vendor, and work center. The master scheduling task employs a set of master plan policies to calculate a set of master plan data. For example, these policies specify the selective consideration of demands and supplies. They specify the scheduling method and use of finite scheduling logic for planned production orders. They also indicate the selected set of forecast plan data and the forecast consumption approach.

The system supports multiple sets of master plan data and associated master plan policies for simulation purposes. However, the displayed data reflects several company-wide policies such as the selected sets of data for the current master plan and forecast plan. Using this displayed data, the system helps coordinate supply chain activities through planned orders, suggested action messages, and capacity requirements planning.

Forecast Scheduling Task

The forecast scheduling task represents a second coordinating engine, as shown in figure 5.1 when forecasted demands are applicable. It calculates forecasted demand (termed a set of forecast plan data) based on a set of policies such as a time horizon and the relevant forecast identifier. Forecast scheduling must be performed after changing forecast information so that the master scheduling process recognizes forecasted demands. Multiple sets of forecast plan data can be calculated, typically to reflect various scenarios for simulation purposes. A set of forecast plan data represents gross requirements, whereas a set of master plan data represents net requirements.

Suggested Actions

The master scheduling task generates suggestions about planned orders and existing orders.

This is Part Two of a four-part excerpt from the book Managing Your Supply Chain Using Microsoft Axapta by Dr. Scott Hamilton.

The book can be ordered on

Part One began the discussion of "Sales and Operations Planning".

Part Three will present "Common Scenarios".

Part Four will propose "Guidelines and Case Studies".

Reprinted with permission from McGraw-Hill

Considerations about the Master Scheduling Task

Explanations about an item's planning data provided some baseline considerations. Additional considerations include the master plan policies, pegging information, realistic scheduling assumptions, vendor selection for planned purchases, and master scheduling with two sets of data.

Master Plan Policies. The master plan policies allow the selective consideration of demands—such as forecasts, sales order quotations, and CRM quotations—in planning calculations. Ignoring these demands provides one view of the minimally required activities to meet current sales orders. Other master plan policies ensure that the requirement dates associated with unrealistic sales order commitments are automatically updated based on projected completion dates. Another policy determines whether planning calculations are based on infinite or finite capacity planning.

Realistic Scheduling Assumptions for Planned Orders. Several policies ensure that the master scheduling task generates realistic suggestions about planned orders. A realistic planned order, for example, reflects the item's lead-time and a start date no earlier than today's date. A planned production order reflects variable lead-time and optional consideration about finite material and capacity. When a requirement date cannot be met, the system suggests a projected completion date.

Automatic Vendor Assignment for Planned Purchase Orders. The suggested vendor for a planned purchase order can be based on purchase price trade agreement information, using either the lowest price or delivery lead-time to suggest the vendor.

Pegging Information about the Source of Demands and Supplies. Analysis of planned orders and action messages typically requires pegging information about the source of demands and supplies. The system supports single-level pegging (via a Requirements Profile form) and multi-level-pegging (via an Explosion form).

Master Scheduling with Two Sets of Data. So far the explanations have focused on using a single set of data as the current master plan, since this is applicable to many environments. With the system's approach to sales order delivery promises, some environments are better served by two sets of master plan data, as described in the next section.

Considerations about Delivery Promises on Sales Orders

Realistic delivery promises for a sales order line item can be calculated, with optional updating of the sales order delivery date. The calculations represent a combination of available-to-promise (ATP) and capable-to-promise (CTP) logic. That is, the calculations consider on-hand inventory and scheduled receipts (ATP logic), and automatically consider the item's lead-time (CTP logic) when inventory and scheduled receipts are insufficient. These calculations apply to the multilevel product structure for a manufactured item. In addition, the planning calculations automatically update projected completion dates so that delivery promises can be kept up-to-date.

The system's approach to making sales order delivery promises involves the generation of planned orders that will be needed when inventory and scheduled receipts are insufficient. The system immediately communicates the need for planned orders so that planners and buyers can take the appropriate actions. Alternatively, the order entry person can immediately generate actual production and purchase orders from these planned orders.

Some sales order environments involve multiple checks of delivery promise information, and even deletion of the sales order when the customer finds them unacceptable. Since the system's approach to delivery promises involves the immediate generation of planned orders, buyers and planners can have difficulties in determining appropriate actions for planned orders, especially when planned orders are constantly changing. One approach to handling this problem involves two sets of data termed the static master plan and dynamic master plan. The static master plan contains the results of the previous master scheduling task that generated suggestions about planned orders. The dynamic master plan starts with the same set of data, but is continuously updated by new sales order commitments. This approach supports insulates buyers and planners from planned orders stemming from delivery promise simulations.

This concludes Part Two of a four-part excerpt from the book Managing Your Supply Chain Using Microsoft Axapta by Dr. Scott Hamilton.

The book can be ordered on

Part One began the discussion of "Sales and Operations Planning".

Part Three will present "Common Scenarios".

Part Four will propose "Guidelines and Case Studies".

Reprinted with permission from McGraw-Hill

About the Author

Dr. Scott Hamilton has specialized in information systems for manufacturing and distribution for three decades as a consultant, developer, user, and researcher. Hamilton has consulted worldwide with over a thousand firms, conducted several hundred executive seminars, and helped design several influential ERP packages. He previously co-authored the APICS CIRM textbook on How Information Systems Impact Organizational Strategy and recently authored Managing Your Supply Chain Using Microsoft Navision. Hamilton is currently working closely with Microsoft partners involved with manufacturing and distribution, and can be reached at or 612-963-1163.

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