Single-Level Versus Multilevel Planning

Single-level planning is the balance of supply and demand of an end item at the sales and operations planning level. The planning system does not explode down to the lower-level components in the bill of material.

Both manufacturing and distribution companies use single-level planning, depending on their process flows. Single-level planning is performed for Master Production Scheduling (MPS) and Distribution Requirements Planning (DRP) to plan end items or families of end items. Single-level planning at the DRP and MPS levels provides flexibility to manage inventory by specific time buckets, which can be monthly, weekly, or daily.

DRP focuses on processing end items through the planning system. DRP develops messages only for the purchase of end items; no parent/component relationships exist.

For example, a distribution company that sells material building supplies forecasts faucets as a demand and purchases what is needed to meet the forecast. The company then sells the faucets to home builders.

MPS uses single-level planning to focus on the end item. It is run prior to Material Requirements Planning (MRP) to stabilize and firm up the schedule. Thus, single-level MPS does not explode down to lower-level components in the bill of material. MPS can develop both purchase order and work order messages.

For example, a manufacturer of building materials might buy bathtubs and then sell these end items to distributors. The manufacturer uses forecast as demand and purchases bathtubs to meet that demand. They then sell the bathtubs to a distributor. For end items that the manufacturer builds itself, such as faucets, the company runs single-level MPS to produce work-order messages for the faucets. By running single-level MPS, the manufacturer has the flexibility to change quantities and dates of the end items before sending the demand to lower-level components such as O-rings, washers, handles, and bolts.

Pegging records do not exist at the highest level of the bill of material structure because that is where the demand originates.

MRP is multilevel planning. The planning system explodes parent demand from end items down to lower level components in a bill of material. MRP creates messages for both purchased and lower-level manufactured items.

Pegging can be done to determine the parent source of demand.