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Incorporating lot sizing into MRP

Incorporating lot sizing into MRP. Lot sizing rule applied in MRP can lead into Lumpy demand structure as we go down in BOM Lumpy demand structure can cause serious capacity and inventory problems. Problems in MRP. 1 Capacity Infeasibility

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Incorporating lot sizing into MRP

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  1. Incorporating lot sizing into MRP • Lot sizingruleapplied in MRP can leadinto • Lumpydemandstructure as wegodown in BOM • Lumpydemandstructure can causeseriouscapacityandinventoryproblems.

  2. Problems in MRP • 1 Capacity Infeasibility • MRP assumes fixed lead times regardless of the lot sizes, this implies infinite capacity. • 2 Biased long lead times • MRP assumes constant lead time • Production control managers gives lead times much longer than average manufacturing time to hedge against uncertainties. • Result is large amount of inventories • 3 Ignored uncertainties • Demand, supply, andinternaluncertainties.

  3. Problems in MRP • 4 Rolling horizon effects • The MRP is implemented for the first period and the planning is redone at the beginning of the next period after adding one more period to the panning horizon • The decisions implemented may not be the best after adding the next period to the planning horizon • 5 System nervousness • The changes in the schedules due to the change in master production schedule (forecastupdates, latedelivery of rawmaterialandparts, equipmentfailures, unpredictableyields). • Frozen zones (firm orders); Not to allow any changes in someinitial periods (e.g. 3 weeks) in MPS W.J. Hope and M.L. Spearman, Factory Physics

  4. Capacity Constraints • Often, capacity constraints prohibit implementation of a lot-sizing solution • Example • Demand: 108 148 150 98 65 300 • Optimal Solution: 256, 0, 313, 0, 0, 300 • What if our maximum capacity is 300 units per period? • We assume that we have to meet demand

  5. Capacity Solution • First check overallfeasibilityconsideringcapacity. • Sum of requirements over a number of periods can never be bigger than the sum of capacity over those same periods. • If it isbigger, then we cannot meet demand.

  6. Capacity Solution- feasibility check

  7. SolutiontoCapacity Problem • Simple procedure: • Determine which periods will be over capacity and move the requirements backwardin time • preferable to the closest production period where there is enough capacity • preferably as a complete lot if possible. • Try to improve the solution;eliminatee some lots and shift their productionbackward, completely. • Better procedure: • Incorporate capacity constraints into algorithms.

  8. Manufacturing Resources Planning (MRPII) • In addition to MRP logic, MRPII considers • Adjusting Master Production Scheduling (MPS) • Rough Cut Capacity Planning (RCCP) • Quick check of the capacity of a few key resources to ensure the feasibility of MPS • Capacity Requirements Planning (CRP) • Detailed check of the capacity using the schedules produced by MRP. • If a workcenter is overloaded, overloading is solvedbyshiftingthe lot toearlier/laterperiods, lot splitting, reroutingetc. W.J. Hope and M.L. Spearman, Factory Physics

  9. Demand Forecast Resource Planning Aggregate Production Planning Rough-cut Capacity Planning Master Production Scheduling Bills of Material Material Requirements Planning Inventory Status Job Pool Capacity Requirements Planning Job Release Routing Data Job Dispatching MRP II Planning Hierarchy Long-term planning Closed-loop MRP Intermediate- term planning Short-term control From : http://www.factory-physics.com

  10. Solving capacity problems • Overlapping • Sends part of the work to following operations before the entire lot is complete, this reduces lead times. • Order or lot splitting • Breaking up the order into smaller lots and running someparts earlier (or later) in the schedule • Operations splitting • Sends the lot to two different machines for the same operation • Shorter throughput time but increased setup costs • Reroutingtheoperation • Selectinganotherwork-centerfortheoperation

  11. Capacity planning;order splitting Splitandshiftthelot forward, make sure thatduedate is met Shiftthelot backward Capacity of a work center in hours 1 2 3 4 5 6 7 1 2 3 4 5 6 7 Period (weeks) Period (weeks)

  12. Extensions of MRPII • Enterprise Resource Planning • In addition of MRP, ERP involvessupply chain management, customer relationship management, Human resource management, Finance and accounting. • Distribution resource planning • MRP implementation in multi level supply chain, considering all levels.It is a time phasedstockreplenishment plan foralllevels in a supplychain.

  13. Enterprise Resource Planning (ERP) • An extension of the MRP system to tie in customers and suppliers • Allows automation and integration of many business processesfrom supplier evaluation to customer invoicing. • Shares common data bases and business practices • Produces/usesinformation in real time • Allowscollection of keyperformanceindicatorsandgenerations of manyreports.

  14. ERPModules http://www.esds.co.in/blog/basic-modules-of-erp-system/#sthash.NAbW25yp.dpbs

  15. ERP and MRP

  16. SAP’s ERP Modules

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