Thursday Night Operations Management

1. Thursday Night Operations Management Class 7

2. Chapter 14 Resource Planning

3. Enterprise Resource Planning (ERP) • Organizes and manages a company’s business processes by sharing information across functional areas • Connects with supply-chain and customer management applications • Largest ERP provider SAP

4. ERP Modules

5. Finance & Accounting Sales & Marketing Production & Materials Management ERP Data Repository Human Resources ERP’s Central Database

6. ERP Implementation • First step is to analyze business processes • Which processes have the biggest impact on customer relations? • Which process would benefit the most from integration? • Which processes should be standardized?

7. Customer Relationship Management (CRM) • Plans and executes business processes that involve customer interaction • Changes focus from managing products to managing customers • Point-of-sale data is analyzed for patterns used to predict future behavior

8. Supply Chain Management • Supply chain planning • Supply chain execution • Supplier relationships • Distinctions between ERP and SCM are becoming increasingly blurred

9. ERP and MRP • MRP (material requirements planning) was the precursor to ERP • Primarily a production planning and control system • MRP evolved to MRP II (manufacturing resource planning) • ERP and ERP II continue to extend the links through all business processes

10. Material Requirements Planning • Computerized inventory control & production planning system • Schedules component items when they are needed - no earlier and no later

11. When to Use MRP • Dependent and discrete items • Complex products • Job shop production • Assemble-to-order environments

12. Master production schedule Product structure file Material requirements planning Item master file Planned order releases Work orders Purchase orders Rescheduling notices Material Requirements Planning

13. Master Production Schedule • Drives MRP process with a schedule of finished products • Quantities represent production not demand • Quantities may consist of a combination of customer orders & demand forecasts • Quantities represent what needs to be produced, not what can be produced

14. Basic MRP Processes Exploding the bill of material Netting out inventory Lot sizing Time-phasing requirements

15. MRP Outputs • Planned orders • Work orders • Purchase orders • Changes to previous plans or existing schedules • Action notices • Rescheduling notices

16. Capacity Terms • Load profile • Compares released and planned orders with work center capacity • Capacity • Productive capability; includes utilization and efficiency • Utilization • % of available working time spent working

17. More Capacity Terms • Efficiency – how well the machine or worker performs compared to a standard output • Load • The standard hours of work assigned to a facility • Load percent • The ratio of load to capacityLoad % = (load/capacity)x100%

18. MRP planned order releases Open orders file Capacity requirements planning Routing file Load profile for each machine center Capacity Requirements Planning

19. 120 – 110 – 100 – 90 – 80 – 70 – 60 – 50 – 40 – 30 – 20 – 10 – 0 – Hours of capacity Normal capacity 1 2 3 4 5 6 Time (weeks) Initial Load Profile

20. Remedies for Underloads Acquire more work Pull work ahead that is scheduled for later time periods Reduce normal capacity

21. Remedies for Overloads Eliminate unnecessary requirements Reroute jobs to alternative machines or work centers Split lots between two or more machines Increase normal capacity Subcontract Increase the efficiency of the operation Push work back to later time periods Revise master schedule

22. 120 – 110 – 100 – 90 – 80 – 70 – 60 – 50 – 40 – 30 – 20 – 10 – 0 – Hours of capacity Normal capacity 1 2 3 4 5 6 Time (weeks) Initial Load Profile

23. 120 – 110 – 100 – 90 – 80 – 70 – 60 – 50 – 40 – 30 – 20 – 10 – 0 – Work an extra shift Hours of capacity Push back Pull ahead Push back Overtime Normal capacity 1 2 3 4 5 6 Time (weeks) Adjusted Load Profile

24. Customer orders Customer orders Aggregate production plan Aggregate production plan Forecast Forecast No No Feasible? Feasible? Yes Yes Master production schedule Master production schedule Material requirements planning Material requirements planning Capacity requirements planning Capacity requirements planning No No Feasible? Feasible? Feedback Feedback Yes Yes Work orders Work orders Purchase orders Purchase orders Shop floor control Shop floor control Inventory Inventory Manufacture Manufacture Manufacturing Resource Planning (MRP II)

25. Chapter 16 Scheduling

26. Scheduling • Specifies when labor, equipment, facilities are needed to produce a product or provide a service • Last stage of planning before production occurs

27. Scheduling by Process Type • Process Industry • Linear programming • EOQ with noninstantaneous replenishment • Mass Production • Assembly line balancing • Project • Project -scheduling techniques (PERT, CPM)

28. Objectives in Scheduling • Meet customer due dates • Minimize job lateness • Minimize response time • Minimize completion time • Minimize time in the system • Minimize overtime • Maximize machine or labor utilization • Minimize idle time • Minimize work-in-process inventory • Efficiency

29. Shop Floor Control Scheduling and monitoring day to day production of a job Loading - Check availability of material, machines & labor Sequencing - Release work orders to shop & issue dispatch lists for individual machines Monitoring - Maintain progress reports on each job until it is complete

30. Loading • Allocate work to machines (resources) • Perform work on most efficient resources • Use assignment method of linear programming to determine allocation

31. Sequencing • Prioritize jobs assigned to a resource • If no order specified use first-come first-served (FCFS) • Many other sequencing rules exist • Each attempts to achieve to an objective

32. Sequencing Rules • FCFS - first-come, first-served • LCFS - last come, first served • DDATE - earliest due date • CUSTPR - highest customer priority • SETUP - similar required setups • SLACK - smallest slack • CR - critical ratio • SPT - shortest processing time • LPT - longest processing time

33. CR considers both time and work remaining CR = = If CR > 1, job ahead of schedule If CR < 1, job behind schedule If CR = 1, job on schedule time remaining due date - today’s date work remaining remaining processing time Critical Ratio Rule

34. Sequencing Jobs Through Many Machines/Processes • Facility is dynamic, new jobs added • Develop global sequencing rules • First-in-system, first-served (FISFS) • Work-in-next-queue (WINQ) • Fewest # remaining operations (NOPN) • Slack per remaining operation (S/OPN) • Remaining work (RWK) • Study system via simulation

35. Monitoring • Gantt Chart • Shows both planned and completed activities against a time scale • Input / Output Control • Monitors the input and output from each work center

36. Advanced Planning and Scheduling Systems • Infinite - assumes infinite capacity • Loads without regard to capacity • Then levels the load and sequences jobs • Finite - assumes finite (limited) capacity • Sequences jobs as part of the loading decision • Resources are never loaded beyond capacity

37. Advanced Planning and Scheduling Systems • Advanced planning and scheduling (APS) • Add-ins to ERP systems • Constraint-based programming (CBP) identifies a solution space and evaluates alternatives • Genetic algorithms based on natural selection properties of genetics • Manufacturing execution system (MES) monitors status, usage, availability, quality

38. Theory of Constraints • Not all resources are used evenly • Concentrate on the” bottleneck” resource • Synchronize flow through the bottleneck • Use process and transfer batch sizes to move product through facility

39. Theory of Constraints • What to Change • What to Change to • How to cause the change