Overview

The main purpose of Master Planning is to synchronize the flow of materials along the entire supply chain. Master Planning supports mid-term decisions on the efficient utilization of production, transport, supply capacities, seasonal stock as well as on the balancing of supply and demand. As a result of this synchronization, production and distribution entities are able to reduce their inventory levels. Without centralized Master Planning, larger buffers are required in order to ensure a continuous flow of material. Coordinated master plans provide the ability to reduce these safety buffers by decreasing the variance of production and distribution quantities.

To synchronize the flow of materials effectively it is important to decide how available capacities of each entity of the supply chain will be used. As Master Planning covers mid-term decisions (see Chap. 4), it is necessary to consider at least one seasonal cycle to be able to balance all demand peaks. The decisions on production and transport quantities need to be addressed simultaneously while minimizing total costs for inventory, overtime, production and transportation.

The results of Master Planning are targets/instructions for Production Planning and Scheduling, Distribution and Transport Planning as well as Purchasing and Material Requirements Planning. For example, the Production Planning and Scheduling module has to consider the amount of planned stock at the end of each master planning period and the reserved capacity up to the planning horizon. The use of specific transportation lines and capacities are examples of instructions...