Production Planning, Scheduling and Control by Ed Red

1. Production Planning, Scheduling and Control by Ed Red

2. INMASS/MRP Modules • MRP (Materials Requirements Planning) • Inventory Control • Bill of Materials • Job Cost/Work in Process • Purchasing • Sales Order Entry • General Ledger • Accounts Receivable • Accounts Payable • Payroll • Shop Floor Control • Bar Coding • Forecasting • StarShip Shipping Module • Customer Histories • Vendor Histories • Each module includes built-in reports and the INQUIRE Report Generator allows you to create customized reports and forms. • Objectives • To review modern production control technologies - MRP - JIT - Shop floor control - Inventory control • To study costs and complexity of manufacturing systems • To consider application conditions (student presentations) • To test understanding of the material presented

3. 6 or more months 1 - 2 months • Production planning, scheduling, and control • Objective – “...managing the details of what and how many products to produce and when, and obtaining the raw materials, parts, and resources to produce those products.” (Groover) • Four activities of production planning: • Aggregate production planning – enterprise level planning for product lines and output levels. • Master production planning - Breaking down the enterprise product plans into a master production schedule (MPS) for producing models within each product line. • Material requirements planning (MRP) – computer plan to convert MPS into a schedule of raw materials and parts used in the end products. • Capacity planning – determine labor and equipment needed to achieve master schedule.

4. Production planning, scheduling, and control • Four production activities: • Shop floor control – compare progress and status of production orders to production plans (MPS) and release production orders to the factory as needed. • Inventory control - techniques for managing inventory. • Manufacturing resource planning (MRP II) – integrates MRP, capacity planning, shop floor control and other production functions. • Just-in-time production systems (JIT) – scheduling discipline in which materials and parts are delivered to the next production station (cell, FMS, etc.) just prior to their being used.

5. Shop floor control • Three phases: • Order release – soft (modern factory) and/or hard (manual factory) documentation needed to process a production order through the factory. • Order scheduling - assigns production orders to the plant work centers...often referred to as a dispatch list. • Order progress – monitors the status of the orders in the plant, WIP (work-in-progress), and any other characteristics which can be used to measure progress and performance. May depend on a factory data collection system for information.

6. Shop floor control – order release • Documentation consists of: • Route sheet – documents process plan for part to be produced. • Material requisition - draw necessary materials from inventory. • Job cards – report labor required to produce part . • Move tickets – authorize parts to be transported between work centers. • Parts list – needed if the product requires an assembly of component parts

7. Shop floor control – order scheduling • Concerned with machine loading and job sequencing: • Machine loading – allocating orders to work centers. • Job sequencing - determining the order in which parts are processed through a given work center. • Priority control – maintains the proper priority for the production orders under the dispatching rules:first-come-first-serve– jobs are processed in order received earliest due date– orders with earlier due dates have higher priorityshortest processing time– those finished faster have higher priorityleast slack time– jobs with least slack time have higher prioritycritical ratio– ratio of time remaining until due date divided by remaining process time. Orders with lowest ratio given higher priority.

8. Shop floor control – order progress • Concerned with progress reports: • Work order status reports – status of production orders. • Progress reports - report performance of shop during a time period, including orders completed, orders not completed, etc. • Exception reports – deviations from the production schedule and other exceptions.

9. Shop floor control – software

10. Shop floor control software

11. Shop floor control – software

12. Inventory control • Concerned with minimizing cost of holding inventory and maximizing customer service. These seem to conflict. • Types of inventory: • Raw materials • WIP • Components • Finished products • Inventory costs: • Investment costs • Storage costs • Possible obsolescence costs • Spoilage costs • Inventory as a function of demand: • Independent demand (order point inventory method) – demand for a product is unrelated to demand for other items (e.g., final product and spareparts) • Dependent demand (MRP method) – demand for an item is directly related to demand for some other item (e.g., product component, raw material)

13. Order Point Inventory Analysis • Answer 2 questions: • How many units to order? (uses formulas) • When to place the order? • Economic order quantity formula for “make to stock”: • 1. Demand fairly constant or 2. order produce >> demand rate Max inventory level Q Orderquantity Q Demand rate Avg. inventory level = Q/2 Time

14. Order Point Inventory Analysis Annual inventory costs (TIC): TIC = ChQ/2 + CsuDa/Q (Ch = holding costs; Csu = setup and/or ordering costsDa = annual demand for an item) TC = TIC + DaCpc (TC = total costs; Cpc = costs per item) To minimize Q (EOQ) take derivative of TC, set to 0 and get:Q = sqrt( 2 DaCsu/Ch) Max inventory level Q Orderquantity Q Demand rate Avg. inventory level = Q/2 Time

15. WIP inventory costs • Concerned with minimizing costs of processing materials before the final product can be released to the consumer. • Costs considerations: • Production consists of a series of operations • Time is consumed in each operation (and time is cost) • Time and costs are consumed between each operation (e.g., material handling with no value added) • WIP represents money expended for material and processing, still considered inventory because goods are not yet delivered to the customer!

16. WIP inventory cost analysis - terms Cm – material cost Tp – average production time (setup plus operation time) Tpk – production time for process k (setup plus operation time) Tsu – average machine setup time for a batch process Tno – average non-operation time for a machine Tc – average operation cycle time for a machine Ta – average operation cycle time for a machine including setup and non-operation times Q – average batch quantity for batches of parts being processed

17. WIP inventory cost analysis - terms Co – production costs rate Cok – operational costs for process k Cno – average non-operational costs (material handling, inspection, etc.) Cnok – non-operational costs for process k (material handling, inspection, etc.) Csu = setup costs and/or ordering costs for an order($/setup or $/order)

18. WIP inventory cost analysis - terms Cpc – part costs accumulated through all processes, inspections, and material handling no – total number of operations/processes MLT – manufacturing lead time(the longer the MLT, the greater the WIP) t – time of part spent in process sequence h – holding cost rate Ch = holding costs HCpc – holding cost per part TCpc – total cost per part including WIP carrying costs

19. WIP inventory cost analysis graphs Linear approximation of part costs as function of time in factory Part/product costs as function of time in factory

20. WIP inventory cost analysis graphs Linear approximation with WIP holding costs

21. WIP inventory cost analysis Equations: avg batch operation cycle timeTa= Tsu + Q Tc + Tno MLT(batch process)MLT = no Ta cost per operationCok = Co Tpk + Cnok total cost after all operationsCpc = Cm + Sk Cok ( k = 1, .. no) total cost after all operations*Cpc = Cm + no( Co Tp + Cno ) * assuming Tpk and Cnok are the same for each operation

22. Equations: part cost function line*C(t) = Cm + [no (Co Tp + Cno )]t/ MLT*using average Tp and Cno total cost per part including WIPTCpc = Cpc + (Cm + Cp)t/MLT)h dt where Cp = no (Co Tp + Cno ) then TCpc = Cpc + HCpc whereHCpc = holding cost for WIPHCpc= (Cm + Cp/2) h (MLT) MLT o WIP inventory cost analysis

23. WIP inventory example Problem: InventoryHoldingCostforWIPDuringManufacturing The cost of the raw material for a certain part is $100. The part is processed through 20 processing steps in the plant, and the manufacturing lead time is 15 wk. The production time per processing step is 0.8 hr, and the machine and labor rate is $25.00/hr. Inspection, material handling, and other related costs average to $10 per processing step by the time the part is finished. The interest rate used by the company i = 20%, and the storage rate s = 13%.Determine the cost per part and the holding cost.

24. WIP inventory example Problem: InventoryHoldingCostforWIPDuringManufacturing Solution: The material cost, operation costs, and non-operation costs are from Cpc = Cm + Cp = Cm + no( Co Tp + Cno ) = $100 + 20($25.00/hr x .8 hr + $10) = $100 + $600 = $700/pc Next, determine the holding cost rate h = 20%+13%=33%. Expressing this as a weekly rate, h = (33%)/(52 wk) = 0.6346 %/wk = 0.006346/wk. The holding cost/pc: HCpc = (Cm + Cp/2) h (MLT) = (100 + 600/2)(.006346)(15 wk) =$38.08/pc This gives a total cost of TCpc = Cm + Cp + HCpc = 700.00 + 38.08 =$738.08/pc

25. JIT production systems Problem- to reduce inventory costs by delivering the correct components to the manufacturing operation exactly when needed, minimizing WIP and MLT. JIT is the solution.

26. JIT production systems JIT must have: Pull system of production control– Kanban (card) system is often used to implement a pull system. The cards authorize 1) parts production (P-kanban) and 2) parts transport (T-kanban). A P-kanban authorizes an upstream process to produce only the parts that will fill a batch container, no more. A T-kanban authorizes the transport of the batch to a downstream station. These procedures are duplicated in sequence, eliminating much of the paperwork, but uses more labor, although said to promote teamwork among stations.

27. JIT kanban examples The withdrawalKanban shows that the preceding process which makes this part is forging, and the person carrying this Kanban from the subsequent process must go to position B-2 of the forging department to withdraw drive pinions. Each box of drive pinions contains 20 units and the shape of the box is B. This Kanban is the 4th of 8 issued. The item back number is an abbreviation of the item.

28. JIT kanban examples The production orderingKanban to the right shows that the machining process SB-8 must produce the crankshaft for the car type SX50BC-150. The crankshaft produced should be placed at store F26-18. The production-ordering Kanban is often called an in-process Kanban or simply a production Kanban.

29. JIT production systems JIT must have: Small batch sizes and reduced setup times– uses improvements in fixturing, part handling, group technology, automation, etc. to minimize batch size and setup.

30. JIT production systems JIT must have: Stable and reliable production operations– also includes a stable supplier base, good relationships, committed workforce, defect free materials and components (in other words, you must have your act together from A – Z)

31. Lean versus agile production systems Lean production Agile manufacturing Enhancement of mass production Emphasis on mass customization Flexible production for product variety Flexibility for customized products Focus on factory operations Scope is enterprise wide Emphasis on supplier management Formation of virtual enterprises Emphasis on efficient use of resources Thriving environment with continuous change Relies on smooth production schedule Responsive to change Minimize change! Embrace change!

32. Production planning, scheduling and control What have we learned?