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X. Supporting Slides. Systems for Planning & Control in Manufacturing: Systems and Management for Competitive Manufacture. Professor David K Harrison Glasgow Caledonian University Dr David J Petty The University of Manchester Institute of Science and Technology. ISBN 0 7506 49771. 0000.

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  1. X Supporting Slides Systems for Planning & Control in Manufacturing: Systems and Management for Competitive Manufacture Professor David K Harrison Glasgow Caledonian University Dr David J Petty The University of Manchester Institute of Science and Technology ISBN 0 7506 49771 0000

  2. Objectives • Appropriate Quality • Appropriate Quantity • Produced at the Right Time • Optimal Cost • Concerns • Forward Planning • Establishing Priorities • Scheduling • Outside Scope • Product Design, R&D • Marketing • Process Technology • Limitations MRPII JIT OPT Philosophies: Definition: "The coordination of manufacturing and logistical activities within an organisation to enable the transformation of materials into finished product in line with the corporate objectives of an organisation". 16 Planning and Control – Overview 1601

  3. 16 Rationale for Planning Organisation Environment 1602

  4. Scientific Management Operations Research Closed Loop MRP Finite Capacity Scheduling 16 Manufacturing Management - History ROP MRP ERP MRP II OPT JIT 1603

  5. 16 Open-Loop Systems • Earliest Form of Planning • Techniques to be Covered • Re-Order Point (ROP) • Material Requirements Planning (MRP) • The Manufacturing Database • Basic Inventory Management 1604

  6. 16 Manufacturing Data - Items • Items Definition • Make • Buy • Sell • Unique Identifier • Holds Key Data • Lead-times • Lot Sizes 1605

  7. Shaft Shaft Steel Bar (300mm) Rotor Rotor Core Shaft Shaft 16 Items and Bills of Materials (BOMs) Motor Rotor End Cover (2) Terminal Box Motor Body Winding Feet (2) Bearing (2) 1606

  8. Motor Rotor E.Cover T.Box Motor Feet Bearing Winding Small (2) Body (2) (2) Items Rotor Shaft Casting Casting Casting Casting Winding Copper Core Core Wire (3Kg) Steel (300mm) 16 Full Parts Explosion Bills of Materials are Alternatively Called “Product Structures” 1607

  9. G A I G A I B B B C C C D D D E E E H F J X X X H F J 16 Use of Phantoms X B C D E Orders are Never Generated for “X”, but rather B, C, D and E 1608

  10. Order Model of Control (1) Sales. Purchase. Customer name, address Supplier name, address Product(s)/quantities(s) Product(s)/quantities(s) Price(s) Price(s) Terms and conditions Terms and conditions Delivery dates Delivery dates Works. Product/quantities Launch Date Due Date 16 Raised by a Supplier in Response to a Purchase Order Sent by a Customer to a Supplier Raised by a Supplier to Trigger Manufacturing Activity 1609

  11. STK STK RM FGI 16 Order Model of Control (2) STK = Stock RM = Raw Material PO = Purchase Order STK = Stock FGI = Finished Goods Inventory SO = Sales Order Receipt Issue Shopfloor Transaction Transaction Feedback Due Launch Date Date Process Process Process Queue Queue Queue 1 2 3 Due Work in Process Due Date Date SO PO Receipt Lead Time (Lt ) Despatch 1610

  12. 16 ROP Theory Average Demand (Ad) = Gradient Stock Ls ROP Ss Time Lt 1611

  13. 400 +90% 300 Mean Demand (Units) -90% 200 100 0 Jul Jul May Mar May Mar Jan Jan Nov Sep Nov Sep Time (Months) 16 Typical Demand Pattern ROP - Assumptions Orders Arrive Late Material is Consumed Discontinuously Average Demand is Not Representative 1612

  14. Stockout 16 Effect of Uncertainty 1200 Stock 1000 800 600 400 200 0 -200 Jan Mar May Jul Sep Nov Jan Mar May Jul Time Sep Nov 1613

  15. 16 Probability Distribution 1614

  16. Forecast Uncertainty (1) 16 • What Level of Safety Stock is Required? • This Depends on the Service Level Required Stage 1. Calculate MAD. Stage 2. Determine the numbers of MADs corresponding to Service Level. Stage 3. Multiply the number of MADs by the MAD Value. 1615

  17. Forecast Uncertainty (2) Safety Stock = 1.32 x 2 Safety Stock = 2.64 Safety Stock 3 16 Assume a Service Level of 95% 1.32 95% Stage 2. Stage 3. Stage 1. 1616

  18. 16 EOQ Theory (1) Inventory Time D r Inventory L s Time 1617

  19. 16 EOQ Theory (2) Annual Stock Holding Cost = Ci (£/unit) Annual Demand Rate = Dr (units/year) Production Cost Rate = Cp (£/min) Lot Size = Ls (units) Set-up time = Ts (mins) Lot Size for Minimum Cost = EOQ Process Time = Tp (mins) 1618

  20. 16 EOQ Theory (3) Cost Inventory EOQ Production Total Total Cost Production Cost Inventory Cost Lot Size 1619

  21. Evolution of MRP 16 Business Planning Sales and Operations Planning Demand Demand Master Production Scheduling Re-Order Point Material Requirements Planning Material Requirements Planning Capacity Requirements Planning Orders Orders No Realistic Yes Shop Floor Control Definition: The planning of components based on the demand for higher level assemblies. Purchasing 1620

  22. Limitations of ROP 10 0.95 < 0.6 16 A Assembly B C D E F G H I J K Components (95%) (95%) (95%) (95%) (95%) (95%) (95%) (95%) (95%) (95%) Overall Service Level = Independent ROP Demand from outside the organisation Dependent MRP Demand from higher level assemblies 1621

  23. 16 ROP - Exceptions Low Cost High Volume Commonality "C" Class Items Eg. Fasteners Non-Critical Availability 120 100 80 C 60 B 40 % of Value A 20 0 0 10 20 30 40 50 60 70 80 90 100 % of Variety 1622

  24. Gross Requirements MRP Inventory Item Balances Data Bill of Order Materials Information Net Requirements 16 MRP Principles Sales Orders Next Level 1623

  25. MRP - Example 45 25 5 45 60 60 60 Ord No: 0023 Ord No: 0024 60 60 15 75 75 75 15 15 15 15 120 120 Ord No: 0025 16 Part No: A0 SOH = Stock on Hand Lead Time: 3 SOH 3 4 5 6 7 8 9 10 Order Qty: 60 Gross Requirements 20 20 20 20 20 20 20 20 Scheduled Receipts 60 Projected Available Balance 25 5 45 25 5 Product Structure Planned Order Receipt Planned Order Release 60 A0 Part No: F1 Lead Time: 1 F1 SOH 3 4 5 6 7 8 9 10 Order Qty: 120 Gross Requirements Scheduled Receipts Projected Available Balance 15 Planned Order Receipt Planned Order Release 1624

  26. MRP – Summary 16 Collect - Gross Requirements Nett - Stocks and Receipts Apply - Allowances and Lot Sizes Offset - Lead Times Explode - Into Components 1625

  27. MRP - Summary 16 • Avoids Problems of ROP • Not Required for All Parts • More Complex • Requires Bills of Material • Scheduling Engine for Closed Loop MRP 1626

  28. 17 Closed Loop MRP - Overview Business Planning Sales and Operations Planning Demand Demand Master Production Scheduling Material Requirements Planning Re-Order Point Material Requirements Planning Capacity Requirements Planning Orders Orders No Realistic Definition: A system built around MRP, but including the additional functions of sales and operations planning, master production scheduling and capacity requirements planning. Closed loop implies monitoring and control of the execution functions (both purchase and manufacture). Yes Shop Floor Control Purchasing 1701

  29. Corrective Action Closed Loop MRP 17 Closed-Loop Control Planning Plan Do Execution Act Check Feedback Deming Cycle 1702

  30. 17 Hierarchical Management Business Planning Sales and Operations Planning Corporate Planning Master Production Scheduling Material Requirements Planning Aggregate Planning Capacity Requirements Planning Master Planning No Realistic Intermediate Planning Yes Shop Floor Control Low Level Planning Purchasing Process Control 1703

  31. 17 Open-Loop Assumptions • Demand Remains Constant • Execution Proceeds as Planned • All Data is Static and Accurate • Management Policies Remain Constant 1704

  32. Extra Demand Changed Due Dates Policy Changes Schedule Changes Poor Quality BOM Changes Late Delivery Routing Changes Accurate Records Poor Quality Damaged Items Late Delivery 17 Open-Loop Limitations (1) Sales Planning Open Loop MRP Order Launch and Expedite Suppliers Engineering Stores Manufacturing 1705

  33. 40 45 85 65 45 25 5 45 25 60 60 60 60 60 60 75 75 75 15 15 15 15 15 120 120 17 Open-Loop Limitations (2) Part No: A0 Lead Time: 3 SOH 3 4 5 6 7 8 9 10 Order Qty: 60 Gross Requirements 20 20 20 20 20 20 20 20 Scheduled Receipts 60 Projected Available Balance 25 Product Structure Planned Order Receipt Planned Order Release A0 Part No: F1 Lead Time: 1 F1 SOH 3 4 5 6 7 8 9 10 Order Qty: 120 Gross Requirements Scheduled Receipts Projected Available Balance 15 Planned Order Receipt Planned Order Release 1706

  34. 17 Closed-Loop Mechanism (1) • By the Provision of Capacity Planning Tools • By the Monitoring of the Execution of Plans • By the Printing of Planner Action Messages 1707

  35. Sales and Operations Planning (SOP). requires management to review business requirements over the medium term and provide capacity. Master Production Scheduling (MPS). allows any discontinuities between supply and demand to be taken into account. If it is not possible for demand to be met, MPS is the mechanism whereby management can exercise control. Capacity Requirements Planning (CRP). CRP checks the output of MRP to ensure that sufficient capacity is available at a detailed level to meet the plans generated. Progress of orders through the various operations required. If any items in a batch are scrapped, this will similarly be recorded. Changes in purchase order due dates can also be recorded. 17 Closed-Loop Mechanism (2) Sales and Operations Planning Master Production Scheduling Material Requirements Planning Capacity Requirements Planning No Realistic Yes Shop Floor Control Purchasing 1708

  36. Generate Independent Action Message Demand Explode Next Is Plan to Next Item Valid? Level Generate Release Message Are Planned Generate Sufficient Scheduled Receipts? Sufficient Any Gross Requirements? Planned Stock on Hand? Orders Due for Order(s) Release? 17 Planner Action Lists No Yes No Yes Yes Yes No Yes No No Items Processed in Logical Order (ie., According to BOM) 1709

  37. 17 Typical Messages Generated After MRP Run • Past Due Order • Reschedule Order in • Reschedule Order Out • Cancel Order • Planned Order Due for Release • Planned Order Past Due for Release Actioned by Planner 1710

  38. A B C D E F G H I J K 17 Terminology • Regenerative/ • Net Change MRP • Bucketed/ • Bucketless System • Pegging 1711

  39. 17 MRPII Business Planning Sales and Operations Planning • Similar to Closed Loop • Simulation Capability • Financial Management Rough-Cut Capacity Planning Master Production Scheduling Material Requirements Planning Capacity Requirements Planning No Realistic Yes Definition: A method for planning of all resources in a manufacturing organisation. It includes a simulation capability and is integrated with financial planning. These systems work with the modules of closed-loop MRP. Shop Floor Control Purchasing 1712

  40. 17 ERP • No Universal Definition • Some “Re-Badging” • Functionality • Product Families/Medium-Term Aggregate Plans • Multi-Site Reporting • Electronic Commerce Functionality • Widely Used Terminology 1713

  41. 17 Advantages of the Package Approach • Maintenance Fees • Business Focus • Implementation Times • System Reliability • Advanced IT/IS Functionality Bespoke Approach Package Approach 1714

  42. Manufacturing Forecasting MPS RCCP Distribution Financial Sales SOP MRP BOM Ledger Fixed Inventory General Assets WOP CRP Control Ledger Purchase POP SFC Routings Ledger 17 MRPII/ERP Package Structure 1715

  43. 17 Additional ERP Functionality • Configured Products • Human Resource Management • Maintenance Management • Quality Management 1716

  44. 17 Static and Dynamic Data Function Static Dynamic Customer Sales Sales/Marketing Addresses Orders Part Design Geometry Machines Process Planning Work Centre Works Production Planning Capacity Orders Purchase Suppliers Purchasing Orders Addresses Personnel Payments Personnel Names Year to Date Account Account Accounts Numbers Balances 1717

  45. Routing Master Supplier Master Customer Master Item Master BOM Purchase Orders Sales Orders Works Orders Inventory 17 The MRPII/ERP Database Data Accuracy is Crucial 1718

  46. 17 Closed-Loop MRP - Summary • Avoids "Order Launch and Expedite" • Uses Planner Action Lists • MRP Becomes a Module • Introduces New Elements • Generates Viable Plans • Monitors Execution • Has Evolved into ERP • Only a Piece of Software 1719

  47. X Course Book Systems for Planning & Control in Manufacturing: Systems and Management for Competitive Manufacture Professor David K Harrison Dr David J Petty ISBN 0 7506 49771 0000

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