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POM 4530 ........MATERIALS AND PROCESS CONTROL

 

 

Ch 1 .....MATERIAL ........MANAGEMENT

Ch 5 CAPACITY ....REQUIREMENTS ....PLANNING.

chap 9 ....INVENTORY .......FUNDAMENTALS

Ch 2..... PRODUCTION ...PLANNING SYSTEMS

Ch 6 CAPACITY ....MANAGEMENT

Order Quantities

Ch 3 ......MASTER ......PRODUCTION ......SCHEDULING

Ch 7 Making The Plan.

 

Ch 4 .....MATERIAL ....REQUIREMENT PLANNING

 

 

 

 

Notes Below in above order.

CH 1 DR. KHADE

 

INTRODUCTION TO MATERIAL MANAGEMENT

WEALTH IS MEASURED BY THE GNP.

 

VALUE IS ADDED AT EACH STEP IN THE MANUFACTURE PROCESS.

TO GET THE MOST , WE MUST BE MOST EFFICIENCE.

 

CONFLICTS IN TRADITIONAL SYSTEMS.

TO GET MOST PROFIT , COMPANY MUST

1. PROVIDE BEST CUSTOMER SERVICE

2. PROVIDE LOWEST PRODUCTION COSTS.

3. PROVIDE LOWEST INVENTORY INVESTMENT.

4. PROVIDE LOWEST DISTRIBUTION COSTS.

 

MARKETING WANTS:

1.HIGH INVENTORIES SO PRODUCT IS ALWAYS THERE.

2. INTERRUPT PRODUCTION LINES SO SPECIAL ITEMS CAN BE RUN.

3. EXTENSIVE AND COSTLY DISTRIBUTION SYSTEM SO PRODUCT CAN GET TO CUSTOMER AS FAST AS POSSIBLE.

 

FINANCE WANTS:

1. LOW INVENTORIES SINCE INVESTMENT IS AT MINIMUM.

2. DECREASE NUMBER OF PLANTS AND WAREHOUSES.

3. PRODUCE LARGE QUANTITIES WITH LONG PRODUCTION RUNS.

4. MANUFACTURE ONLY TO CUSTOMER ORDER.

 

PRODUCTION WANTS:

1. LONG PRODUCTION RUNS OF FEW PRODUCTS.

2. HIGH INVENTORIES OF RAW MATERIALS SO WORK FLOW UNINTERRUPTED.

 

TO OPTIMIZE THIS YOU NEED GOOD COORDINATION OF ALL.

 

MATERIALS MANAGEMENT IS TO:

1. OPTIMIZE FIRMS RESOURCES

2. PROVIDE DESIRED LEVEL OF CUSTOMER SERVICE.

 

MANUFACTURING PLANNING AND CONTROL:

1. PRODUCTION PLANNING.

A. FORECASTING

B. MASTER PLANNING

C. MATERIAL PLANNING

D. CAPACITY PLANNING.

2. IMPLEMENTATION AND CONTROL ~ SHOP FLOOR CONTROL

3. INVENTORY MANAGEMENT.

 

INVENTORY TURNS=ANNUAL C.O.G.S./AVERAGE INVENTORY IN DOLLARS.

 

INPUTS TO THE MANUFACTURING PLANNING AND CONTROL SYSTEM.

1. PRODUCT DESCRIPTION : ~ BILL OF MATERIAL.

A. DESCRIBES THE COMPONENTS USED TO MAKE PRODUCT.

B. DESCRIBES THE SUB-ASSEMBLIES AT VARIOUS STAGES OF MFG.

 

2. PROCESS SPECIFICATIONS ~ STEPS NECESSARY TO FAB.

A. OPERATIONS REQUIRED TO FAB.

B. SEQUENCE OF OPERATIONS.

C. EQUIPMENT AND ACCESSORIES REQUIRED.

D. STANDARD TIME REQUIRED TO PERFORM EACH OPERATION.

 

3. TIME NEEDED TO FAB

= AVERAGE OPERATOR AT NORMAL PACE .

USUALLY STANDARD TIMES ARE FOUND IN ROUTING FILE.

 

4. AVAILABLE FACILITIES

MUST KNOW WHAT IS AVAILABLE. USUALLY IN WORK CENTER FILE.

 

5. QUANTITIES REQUIRED.

COMES FROM FORECASTS, CUSTOMER ORDERS, ORDERS TO REPLACE FINISHED GOODS INVENTORY AND MATERIAL REQUIREMENT PLAN.

 

PHYSICAL SUPPLY AND DISTRIBUTION

1. TRANSPORTATION

2. DISTRIBUTION INVENTORY

3. WAREHOUSING

4. PACKAGING

5. MATERIAL HANDLING

6. ORDER ENTRY.

 

OVERALL CONCERN OF MATERIALS MANAGEMENT IS THE BALANCE BETWEEN PRIORITY AND CAPACITY. AND AT MINIMUM COST.

 

MANUFACTURING SYSTEMS

1. FLOW MFG.

ALL IN SEQUENCE/ LIMITED RANGE OF PRODUCTS.

A. DESIGNED SPECIFICALLY FOR TASKS REQUIRED.

B. USUALLY DESIGNED TO MINIMIZE LABOR REQUIRED.

C. BECAUSE OF FLOW THERE IS LITTLE INVENTORY BETWEEN WORKSTATIONS.

 

 

INTERMITTENT MANUFACTURING.

A. WORKSTATIONS BASED ON SIMILAR TASKS AND SKILLS.

B. FLEXIBLE = CHANGE MORE QUICKLY THAN FLOW OPERATIONS.

C. CONTROL OF FLOW IS MANAGED BY WORKSTATION = CONCERN.

 

PROVIDED VOLUME OF WORK JUSTIFIES FLOW IS CHEAPER SINCE.

1. SETUP COST ARE LOW, ONCE SETUP COMPLETE ,LITTLE CHANGE OVERS.

2. WORK CENTERS DESIGNED FOR SPECIAL PRODUCTS = RUN COST ARE LOW.

3. PRODUCTS MOVE STEADY SO WORK IN PROCESS IS MINIMAL(AN INVENTORY)

4. COSTS ASSOCIATED WITH CONTROLLING PRODUCTION ARE LOW DUE TO WORK FLOWING IN A STRAIGHT SEQUENCE.

 

PROJECT MANUFACTURING

CALLED ALSO FIXED POSITION USED FOR LARGE PROJECTS LIKE A SHIP OR CONSTRUCTION.

 

SUMMARY:

MFG CREATES WEALTH BY ADDING VALUE TO GOODS.

 

 

POM 4530 MATERIALS AND PROCESS CONTROL

DR. KHADE CHAPTER 2

 

PRODUCTION PLANNING SYSTEMS

 

1. WHAT ARE WE GOING TO MAKE ?

2. WHAT DOES IT TAKE TO MAKE IT ?

3. WHAT DO WE HAVE ?

4. WHAT DO WE NEED ?

 

CAPACITY IS THE CAPABILITY OF THE FIRM TO PRODUCE GOODS.

 

FIVE MAJOR LEVELS IN MANUFACTURING PLANNING AND CONTROL SYSTEM.

1. STRATEGIC BUSINESS PLAN

2. PRODUCTION PLAN (SALES AND OPERATION PLAN )

3. MASTER PRODUCTION SCHEDULE

4. MATERIAL REQUIREMENTS PLAN

5. PURCHASING AND PRODUCTION ACTIVITY CONTROL.

 

EACH DIFFER IN TIME SPAN AND FOR PURPOSE.

1. PURPOSE OF THE PLAN

2. PLANNING HORIZON

3. LEVEL OF DETAIL

4. PLANNING CYCLE ( FREQUENCY OF PLAN BEING REVIEWED)

 

AT EACH LEVEL 3 QUESTIONS MUST BE ASKED.

1. WHAT ARE THE PRIORITIES ?

2. WHAT IS THE AVAILABLE CAPACITY ?

3. HOW CAN THE DIFFERENCES BETWEEN PRIORITIES/CAPACITIES BE RESOLVED.

 

BIG 1 .STRATEGIC PLAN

2-10 YEARS, BROAD DIRECTION, PROVIDES DIRECTION / COORDINATION.

 

1. MARKETING

RESPONSIBLE FOR ANALYZING MARKETPLACE, MARKETS TO BE SERVED, PRODUCTS SUPPLIED, LEVEL OF CUSTOMER SERVICE, PRICING, PROMOTIONAL STRATEGIES.

 

2. FINANCE

DECIDING SOURCES AND USES OF FUNDS AVAILABLE TO FIRM.

CASH FLOWS, PROFITS, RETURN ON INVESTMENTS, BUDGETS.

 

 

3. PRODUCTION

MUST SATISFY DEMANDS OF MARKETPLACE BY UTILIZING ALL RESOURCES AS EFFICIENT AS POSSIBLE.

4. ENGINEERING

DO RESEARCH, DEVELOPMENT, AND DESIGN OF NEW PRODUCTS. MUST WORK WITH , MARKETING SO THAT NEW PRODUCTS WILL SELL IN MARKETPLACE AND BE MADE AS ECONOMICALLY AS POSSIBLE.

 

BIG 2 . THE PRODUCTION PLAN

A. QUANTITIES OF EACH GROUP THAT MUST BE PRODUCED IN EACH PERIOD.

B. DESIRED INVENTORY LEVELS.

C. RESOURCES REQUIRED IN EACH PERIOD.

D. AVAILABILITY OF RESOURCES NEEDED.

LEVEL OF DETAIL NOT HIGH / TIME PLANNING OF 6-18 MONTHS / REVISED MONTH/QUARTER

 

3. MASTER PRODUCTION SCHEDULE MPS

THIS IS FOR THE PRODUCTION OF INDIVIDUAL END ITEMS.

LEVEL IS HIGHER / PLANNING IS 3- 18 MONTHS

WEEKLY OR MONTHLY REVISED.

 

4. MATERIAL REQUIREMENT PLAN MRP

PLAN FOR THE PRODUCTION AND PURCHASE OF THE COMPONENTS USED IN MAKING THE ITEMS IN THE MASTER PRODUCTION SCHEDULE.

LEVEL OF DETAIL IS HIGH / PLANNING AS LEAST AS LONG AS THE LEAD TIMES REQUIRED. USUALLY 3-18 MONTHS(PURCHASE=MANUFACTURE)

 

5. PURCHASING AND PRODUCTION ACTIVITY CONTROL PAC

THE IMPLEMENTATION AND CONTROL PHASE OF THE PRODUCTION PLANNING AND CONTROL SYSTEM.

PURCHASING FOR ESTABLISHING / CONTROLLING FLOW OF RAW GOODS .

PRODUCTION ACTIVITY CONTROL FOR CONTROLLING FLOW OF WORK THROUGH FACTORY.

PLANNING TIME VERY SHORT (DAY TO MONTH) LEVEL DETAIL=HIGH

PLANS REVIEWED DAILY.

 

CAPACITY MANAGEMENT

BASIC PROCESS IS ONE OF CALCULATING THE CAPACITY REQUIRED TO MANUFACTURE THE PRIORITY PLAN AND OF FINDING WAYS TO MAKE THAT CAPACITY AVAILABLE.

THERE CAN BE NO PLAN WITHOUT THIS OCCURRING. CAPACITY NOT=PLAN CHANGED. OVER YEARS RESOURCES CAN BE ACQUIRED, HOWEVER FROM PRODUCTION PLANNING TO PRODUCTION ACTIVITY CONTROL (PAC) YOU MUST USUALLY USE LABOR ~ O/T , SUB OUT.

 

 

 

MANUFACTURING RESOURCE PLANNING ( MRP II )

THE SYSTEM IS INTENDED TO BE FULLY INTEGRATED THAT WORKS FROM THE TOP DOWN AND HAS FEEDBACK FROM THE BOTTOM UP.

IF PRIORITY CHANGES FROM BELOW THEN IT WILL BE REFLECTED ABOVE.

THIS IS CALLED CLOSED LOOP MRP.

A MASTER GAME PLAN FOR THE OPERATION.

COORDINATION BETWEEN MARKETING AND PRODUCTION.

 

MAKING THE PRODUCTION PLAN.

BASED ON THE MARKET PLAN AND AVAILABLE RESOURCES THE PRODUCTION PLAN SETS THE LIMITS FOR SOME TIME IN THE FUTURE.

IT INTEGRATES WHAT IT’S CAPABILITIES WITH THE MARKET AND FINANCIAL GOALS OF THE FIRM.

 

PRODUCT GROUPS

 

BASIC STRATEGIES

1. CHASE

2. LEVEL

3. SUBCONTRACTING

4. HYBRID STRATEGY

 

SUMMARY

PRODUCTION PLANNING IS THE FIRST STEP IN THE MANUFACTURING AND CONTROL SYSTEM.

PLANNING HORIZON USUALLY EXTENDS A YEAR.

THE MINIMUM DEPENDS ON LEAD TIMES TO GET PRODUCT AND MAKE IT.

USUALLY THE PLAN IS FOR ENTIRE FAMILIES OF PRODUCTS.

LEVEL OF DETAIL IS NOT HIGH.

3 GENERAL TYPES OF METHODS, CHASE, LEVEL,SUB-OUT.

MAKE TO STOCK=

1. ACHIEVE FORECAST.

2. MAINTAIN DESIRED INVENTORY LEVELS.

MAKE TO ORDER=

1. ACHIEVE FORECAST.

2. MAINTAIN PLANNED BACKLOG.

BACKLOG CAN BE LOST SALES.

1. 1. 1. DEMAND MUST BE MET !!!!!!!!!!

 

POM 4530 MATERIALS / PROCESS CONTROL

CHAPTER 3

 

 

MASTER PRODUCTION SCHEDULING

 

1. AFTER PRODUCTION PLANNING IT IS THE MPS.

2. M.P.S. FORMS THE LINK BETWEEN SALES AND MFG.

3. M.P.S. FORM LINK BETWEEN WHAT PRODUCTION PLANNING SAYS AND WHAT ACTUALLY GETS BUILT.

4. FORMS BASIS FOR CALULATIONS OF CAPACITY AND RESOURCES.

5. DRIVES THE MATERIAL RESOURCE PLAN. MRP II.

6. M.P.S. IS THE PRIORITY PLAN FOR MANUFACTURING.

 

M.P.S. FORMS LINK BETWEEN SALES AND PRODUCTION.

1. M.P.S. MAKES POSSIBLE ORDERS VALID.

2. M.P.S. STATES WHEN PRODUCTS WILL BE DONE SO THAT SALES KNOWS.

3. M.P.S. IS A CONTACT BETWEEN MARKETING AND MANUFACTURING. AGREED UPON PLAN.

 

M.P.S. DEVELOPMENT

INFORMATION NEEDED.

1. THE PRODUCTION PLAN

2. FORECAST FOR INDIVIDUAL END ITEMS.

3. ACTUAL ORDERS RECIEVED FROM CUSTOMERS AND STOCK REPLACEMENT.

4. INVENTORY LEVELS FOR INDIVIDUAL END ITEMS.

5. CAPACITY RESTRAINTS.

 

OBJECTIVES IN DEVELOPING A MASTER PRODUCTION PLAN.

1. MAINTAIN DESIRED LEVEL OF CUSTOMER SERVICE.

2. OPTIMIZE ALL RESOURCES.

3. MAINTAIN INVENTORIES AT DESIRED LEVELS.

 

STEPS IN DEVELOPING MASTER PRODUCTION PLAN.

1. DEVELOPE PRELIMINARY M.P.S.

2. CHECK PRELIMINARY M.P.S. AGAINST AVAILABLE CAPACITY.

3. RESOLVE ANY DIFFERENCES BETWEEN THE TWO.

THIS IS CALLED ROUGH-CUT CAPACITY PLANNING.

 

ROUGH-CUT CAPACITY PLANNING.

ROUGH-CUT VERIFIES THE CRITICAL RESOUCES ARE AVAILABLE.

PROCESS LIKE PRODUCTION PLANNING ,BUT FOR SINGLE ITEMS NOW.

CONCERNS ARE BOTTLENECKS AND LACK OF CRITICAL RESOURCES.

 

RESOLUTION OF DIFFERENCES.

1. RESOURCE USE = IS MPS WITHIN RESTRAINTS IN EACH PERIOD. OPTIMIZED ?

2. CUSTOMER SERVICE= WILL DUE DATE BE MET ?

3. COST = IS PLAN ECONOMICAL OR NOT.

 

MASTER SCHEDULE DECISIONS.

1. MAKE TO STOCK.

2. MAKE TO ORDER.

3. ASSEMBLE TO ORDER. MANY SUBASSEMBLIES HERE.

 

FINAL ASSEMBLY SCHEDULE. FAS

THIS IS A SCHEDULE OF WHAT WILL BE BUILT.

FAS TAKES PLACE WHEN CUSTOMER ORDER IS RECIEVED.

 

PLANNING HORIZON.

COVER AT LEAST THE LEAD TIMES ,CUMULATIVE.

USUALLY LONGER = GREATER VISIBILITY AND MORE TIME FOR MANAGEMENT TO AVOID PROBLEMS.

MUST INCLUDE TIME TO ASSEMBLE CUSTOMER ORDER.

NOT THE TIME TO MFG.COMPONENTS , MPS PLAN IS THAT.

 

PRODUCTION PLANNING - M.P.S. - SALES.

MPS IS BUILT FROM FORECASTS AND ACTUAL DEMANDS FOR END ITEMS.

MPS MUST BE REAL OR SYSTEM WILL BREAK DOWN.

RIGIDIGITY NOT OVERALL--PROBLEMS WILL OCCUR.

1. ORDERS CANCELLED.

2. MACHINE BREAKDOWNS.

3. SUPPLIERS MISS DELIVERY DATES.

4. PROCESS CREATES MORE SCRAP THAN PLANNED.

 

COST INCREASES DUE TO RESCHEDULING.

1. REROUTING, RESCHEDULING, EXTRA SETUPS, EXPEDITING, BUILDUP OF WORK IN PROCESS.

2. REDUCED CUSTOMER SERVICE. ONE DISRUPTED ORDER CAN CONTINUE DOWN ENTIRE DELIVERY SCHEDULE.

3. LOSS OF CREDIBILITY FOR MPS AND PLANNING PROCESS.

 

MPS PROVIDES BASIS FOR ALL TO AGREE ON SOLUTION SOLVING.

 

 

MPS AND DELIVERY PROMISES.

AVAILABLE TO PROMISE IS A CALCULATION HERE.= ATP.

PERIOD 1. ATP=ON HAND-CUSTOMER ORDERS BEFORE NEXT MPS.

PERIOD 2. ATP= MPS RECEIPT - CUSTOMER ORDERS BEFORE NEXT MPS.

BOOK METHOD ASSUMES ALL PREVIOUS ATP WILL BE SOLD.

SCHEDULED RECEIPT IS AN ORDER THAT HAS BEEN ISSURED TO MFG./SUPPLIER.

 

FOR CACULATIONS TAKE THE HIGHER OF FORECAST OR ORDERS.

 

TIME FENCES.

TREE WITH LEAD TIMES OF ALL COMPONENTS.

 

FROZEN ZONE

CAPACITY AND MATERIALS ARE COMMITED TO SPECIFIC ORDERS.

 

SLUSHY ZONE.

COMMITTED TO LESS EXTENT.

 

LIQUID ZONE.

ANY CHANGE CAN BE MADE TO M.P.S.

 

CHANGES WILL OCCUR. MUST KNOW COSTS.

 

SUMMARY:

MPS IS NOT A FORECAST FOR DEMAND.

MPS IS MEETING GROUND FOR SALES AND PRODUCTION.

 

 

CH.4 POM 4530

MATERIAL REQUIREMENT PLANNING

 

IS USED TO AVOID MISSING PARTS.

 

ESTABLISHES A PRIORITY PLAN SHOWING COMPONENTS REQUIRED AT EACH LEVEL AND AT WHAT TIME THEY NEED TO BE ORDERED AND IN WHAT QUANTITY.

THE BILLS OF MATERIAL IS THE MAJOR BUILDING BLOCK HERE.

 

NATURE OF DEMAND

INDEPENDENT = NOT RELATED TO ANY OTHER PART.

DEPENDENT = DEPENDS ON OTHER PARTS.

SINCE INDEPENDENT DEMAND IS NOT RELATED IT MUST BE FORECAST.

THE DEPENDENT ITEMS CAN BE CALCULATED AND THIS IS WHAT MATERIAL RESOURCE PLANNING IS DESIGNED TO DO.

SOME PARTS LIKE A REPAIR STOCK (FOR BROKEN PIECES) CAN BE BOTH INDEPENDENT AND DEPENDENT.

 

OBJECTIVES OF MRP

1. DETERMINED REQUIREMENTS.

2. KEEP PRIORITIES CURRENT.

~ HAVE THE RIGHT MATERIALS IN THE RIGHT QUANTITIES AT THE RIGHT TIME.

1A. WHAT TO ORDER.

1B. HOW MUCH TO ORDER.

1C. WHEN TO ORDER.

1D. WHEN TO SCHEDULE DELIVERY.

2A. THINGS CHANGE ~ CUSTOMER ORDERS,BREAKDOWNS, SUPPLIERS LATE, SCRAP INCREASES.

2B. MRP MUST BE ABLE TO ADD,DELETE,CHANGE,EXPEDITE,DELAY ORDERS.

 

LINKAGES TO OTHER FUNCTIONS.

THE MASTER PRODUCTION SCHEDULE DRIVES THE MATERIAL REQUIREMENT PLAN.

THE MRP IS THE PRIORITY PLAN FOR THE COMPONENTS NEEDED IN THE MPS.

THE PLAN IS ONLY VALID IF THE CAPACITY IS PRESENT. THE PROCESS OF CHECKING THIS IS CALLED CAPACITY REQUIREMENT PLANNING. ~ CRP.

THE MRP IS THE INPUT TO PRODUCTION ACTIVITY CONTROL AND PURCHASING.

THE MRP RELEASES DATE NECESSARY FOR ORDERING IN THE RIGHT QUANTITY AT THE RIGHT TIME.

THE COMPUTER PROGRAM WHICH ORGANIZES AND MAINTAINS THE BILLS OF MATERIAL AND THEIR LINKAGE IS CALLED BILL OF MATERIAL PROCESSOR.

 

INPUTS TO THE MRP

1. MASTER PRODUCTION SCHEDULE.

2. INVENTORY RECORDS.

3. BILLS OR MATERIAL.

COULD ALSO INCLUDE CAPACITY AS 4.

 

INVENTORY RECORDS.

TWO TYPES OF INFORMATION NEEDED.

1. PLANNING FACTORS: INCLUDES ORDER QUANITITIES,LEAD TIMES, SAFETY STOCK, SCRAP.

THIS INFORMATION DOES NOT CHANGE OFTEN, BUT IT IS TO ORDER QUANTITIES AND WHEN.

2. THE STATUS OF EACH ITEM.

HOW MUCH IS AVAILABLE, HOW MUCH IS ALLOCATED, HOW MUCH IS PRESENT FOR FUTURE DEMAND.

THIS INFORMATION IS DYNAMIC AND CHANGES AS EACH TRANSACTION TAKES PLACE.

THIS DATA IS MAINTAINED IN THE INVENTORY RECORD FILE OR A PART MASTER FILE OR ITEM MASTER FILE. EACH ITEM HAS A RECORD AND ALL RECORDS TOGETHER FORM THE FILE.

 

BILLS OF MATERIAL

THE BOM IS THE LISTING THAT SHOWS ALL SUBASSEMBLIES,INTERMEDIATES, PARTS, AND RAW MATERIALS THAT GO INTO MAKING THE PARENT PART.

DEFINED BY: THE AMERICAN PRODUCTION AND INVENTORY CONTROL SOCIETY. (APICS)

BOM TWO IMPORTANT PARTS.

1. BOM SHOWS ALL PARTS TO MAKE ONE COMPLETE ITEM.

2. EACH PART HAS A NUMBER WHICH IS ONLY ASSIGNED TO IT AND NO OTHER PART. PERIOD.

BOM DOES NOT SHOW HOW TO ASSEMBLE PART OR STEPS INVOLVED, THAT IS IN ROUTING FILE.

 

BILLS OF MATERIAL STRUCTURE.

EVERY INDIVIDUAL HAS A PREFERENCE FOR THE STRUCTURE BUT IT MUST ONLY BE ONE WAY.

HOWEVER THERE CAN BE SEVERAL FORMATS.

1. PRODUCT TREE= USUALLY FOR TEACHING OR TESTING.

2. PARENT-COMPONENT RELATIONSHIP.

3. MULTILEVEL BILL=NOT COMPLETE UNTIL ALL BRANCHES END UP WITH A PURCHASED PART.

MULTIPLE BILL=COVERS SIMILAR PRODUCT WITH A "TEMPLATE".

4. SINGLE LEVEL=SHOWS ONLY PARENT AND IMMEDIATE COMPONENTS.

ADVANTAGES OF SINGLE LEVEL

1. DUPLICATION OF RECORDS IS AVOIDED.

2. FILE SPACE IS MINIMIZED.

5. INDENTED BILL=MULTILEVEL CAN ALSO BE SHOWN LIKE THIS WITH PARENT FLUSH WITH LEFT COLUMN AND THE PARTS FLUSHING RIGHT AS THE COMPONENTS ARE ADDED.

 

SUMMARIZED PARTS LIST.

LIST ALL PARTS TO MAKE ONE COMPLETE UNIT. PRODUCED BY DESIGN ENGINEER AND DOES NOT SHOW ASSEMBLY.

 

PLANNING BILL.

ARTIFICIAL GROUPING OF COMPONENTS FOR PLANNING PURPOSES.

 

WHERE USED REPORT.

THIS REPORT IS OPPOSITE OF BOM, BOM GIVES COMPONENT PART TO PARENT, WHERE USED REPORT GIVES PARENT PART TO THE COMPONENT. USAGE EXAMPLE~ENGINEERING CHANGE.

 

PEGGING REPORT

LIKE THE WHERE USED REPORT EXCEPT OF INSTEAD OF SHOWING ALL PARENTS FOR A COMPONENTS IT SHOWS ONLY THE ONES WHERE THERE IS A REQUIREMENT. KEEPS TRACK OR ORIGIN OF DEMAND.

 

USES FOR BILLS OF MATERIAL.

1. PRODUCT DEFINITION = SPECIFIES COMPONENTS NEEDED TO MAKE PRODUCT.

2. ENGINEERING CHANGE CONTROL= FOR RECORDS AND CONTROL OF CHANGES.

3. SERVICE PARTS= REPLACEMENT PARTS.

4. PLANNING= WHAT TO HAVE WHEN FOR MPS.

5. ORDER ENTRY= CONFIGURE END PRODUCT BILL. ALSO COULD USE TO PRICE IT.

6. MANUFACTURING= LIST OF PARTS NEEDED TO MAKE OR ASSEMBLE IT.

7. COSTING =PROVIDE DIRECT MATERIAL COSTS AND RECORD DIRECT LABOR.

MOST DEPARTMENTS WILL USE THIS AT SOME TIME.

 

 

MATERIAL REQUIREMENT PLANNING PROCESS.

THESE ARE THE TECHNIQUES USED TO DETERMINE NEEDED PARTS.

1. EXPLODING AND OFFSETTING.

2. GROSS AND NET REQUIREMENTS.

3. RELEASING ORDERS.

4. LOW LEVEL CODING AND NETTING.

1A. EXPLODING=MULTIPLYING BY AMOUNT NEEDED TO GET TOTAL (~TABLE LEGS)

1B. OFFSETTING= PLACING EXPLODED REQUIREMENTS BY THEIR LEAD TIMES.

1C. PLANNED ORDERS=WHEN TO RELEASE ORDER SO PART ASSEMBLED WHEN SCHEDULED.

2A. GROSS VS. NET REQUIREMENTS.= MIGHT HAVE INVENTORY TO USE BEFORE BUILDING MORE.

3A. RELEASED ORDERS=EVERY ITEM SHOULD CHANGES INVENTORY, THE COMPUTER CHECKS INVENTORY TO SEE IF MORE SHOULD BE ORDERED , IF NEEDED THE COMPUTER WILL TELL THE MATERIAL SCHEDULER.

 

SCHEDULED RECEIPTS ARE ORDERS PLACED ON MANUFACTURING OR A VENDOR AND MAKE A COMMITMENT TO MAKE OR BUY. IT SHOWS AMOUNT AND DELIVERY DATE.

 

OPEN ORDERS. SCHEDULED RECEIPTS ON THE MRP ARE OPEN ORDERS ON THE FACTORY OR VENDOR AND ARE RESPONSIBILITY OF PRODUCTION ACTIVITY CONTROL.

 

NET REQUIREMENTS=GROSS-SCHEDULED RECEIPTS-AVAILABLE INVENTORY.

 

BASIC MRP RECORD.

1. CURRENT TIME ~ BEGINNING OF THE FIRST PERIOD.

2. TOP ROW SHOWS PERIODS OR TIME BUCKETS. PERIOD FROM DAY TO MONTH.

3. NUMBER OF PERIODS =PLANNING HORIZON.

4. ITEM IS CONSIDERED AVAILABLE AT BEGINNING OF TIME BUCKET IT IS REQUIRED.

5. QUANTITY SHOWN IN PROJECTED ON HAND ROW IS BALANCE AT END OF PERIOD.

6. IMMEDIATE OR MOST CURRENT PERIOD IS CALLED ACTION BUCKET.

 

CAPACITY REQUIREMENTS PLANNING.

MRP MUST BE CHECKED AGAINST AVAILABLE CAPACITY. IF NOT AVAILABLE,PRIORITY PLAN MUST CHANGE.

 

LOW LEVEL CODING AND NETTING.

SAME PART MIGHT EXIST LOWER ON TREE AND MUST ALSO BE INCLUDED IN OVERALL REQUIREMENTS.

LOW LEVEL CODE IS LOWEST LEVEL AT WHICH A PART RESIDES IN ALL BILLS OF MATERIAL. YOU WOULD START AT THE LOWEST LEVEL AND WORK UP ASSURING ALL SPOTAGE.

 

PROCEDURE FOR CAPACITY REQUIREMENT PLANNING/LOW LEVEL CODING/NETTING.

1. START AT LEVEL ZERO AND DETERMINE IF ANY PARTS HAVE A LOW LEVEL CODE OF ZERO. IF SO THAT PART EXIST AT NO LOWER LEVEL AND PART CAN BE EXPLODED DOWN ONE LEVEL. ~ INTO THEIR COMPONENTS.

2. CONTINUE WITH SAME PROCESS AS ABOVE.

 

USING THE MATERIAL REQUIREMENT PLAN

PEOPLE WHO MANAGE PLANNING USE THIS.~ KEEP MATERIAL FLOWING.

 

 

 

RESPONSIBILITIES OF A PLANNER.

1. LAUNCH (RELEASE) OF ORDERS TO PURCHASING AND MANUFACTURING.

2. RESCHEDULE DUE DATES OF OPEN (EXISTING) ORDERS AS REQUIRED.

3. RECONCILE ERRORS AND FIND THEIR CAUSE.

4. SOLVE CRITICAL MATERIAL SHORTAGES BY EXPEDITING OR REPLANNING.

5. COORDINATE WITH OTHER PLANNERS, MPS SCHEDULERS, PAC, AND PURCHASING TO RESOLVE PROBLEMS.

PLANNED ORDERS=MRP RECOMMENDS TO PLANNER RELEASE DATE .

RELEASED ORDERS= PLANNER ACTUALLY DOES THIS.

FIRM PLANNED ORDERS=COMPUTER RECALCULATES AS DATES GO BY.

EXCEPTION MESSAGES.

COMPUTER MAKES SUGGESTIONS TO PLANNER ON HOW TO SOLVE PROBLEM. SOME SITUATIONS WHERE EXCEPTION MESSAGES WOULD REPORT.

1. COMPONENTS IN ACTION BUCKET AND WHICH TO RELEASE.

2. OPEN ORDERS WHICH DO NOT HAVE NECESSARY PARTS AVAILABLE.

3.LEAD TIMES TO LONG OR PART NOT AVAILABLE.

 

TRANSACTION MESSAGES

ANY TRANSACTION MUST BE TOLD TO THE COMPUTER ELSE COUNT IS OFF.

 

MANAGING THE MRP.

THERE ARE MANY VARIABLES WHICH ENTROPY CAN VARY UNDESIRABLY.

PLANNER MUST

1. KNOW PRIORITY

2. BOTTOM UP REPLANNING.

 

REDUCING SYSTEM NERVOUSNESS

SOMETIME A CHANGE MIGHT NOT JUSTIFY A HIGH STRESS LEVEL. ONE SOLUTION IS WORK WITH FIRM PLANNED ORDERS.

 

 

CAPACITY MANAGEMENT

 

Supplying the necessary resources to the MRP plan.

Capacity is the amount of work that can be done in a period of time.

Available capacity is the capacity of this system to produce a quantity of output in a given time.

Required capacity is the capacity needed to produce the desired output in the period.

 

Capacity management is responsible for determining the capacity needed to achieve the priority plan as well as provide monitoring, and controlling that capacity so the priority plan can be met.

 

Capacity planning determines capacity needed to meet priority plan and the methods needed to make capacity available. The plans above cannot be met until this step is calculated. Capacity planning links the priority plan with manufacturing resources.

 

Capacity control is the monitoring step in production output and comparing it with capacity plans and taking corrective measures when needed.

 

Capacity planning.

1. Determine capacity available at each work center in each time period.

2. Determine the load at each work center in each work center.

A. Translate priority plan into hours required at each work center in each time period.

B. Sum up the capacities for each item on each work center to determine the load on the work center in each period.

3. Resolve all differences between available and required capacity. If possible available should meet required , otherwise priority plan must change to meet available capacity.

 

This process occurs at each level of priority planning varying only by level of detail and time period.

 

Planning levels.

Resource planning involves long range capacity resource requirements and is directly linked to production planning. It involves manpower changes, capital equipment, product design, or other facilities that take a long time to acquire or eliminate.

 

The resource requirement plan (production planning ) and the capacity requirement plan (MRP) sets the limits for production. If right the Master Production Schedule should be able to be met.

 

The Rough Cut Capacity Planning gets it’s data from the Master Production Schedule. Rough cut capacity checks the feasibility of the MPS, find bottle necks, ensure utilization of work centers, and advise vendors of capacity requirements.

 

Capacity requirements planning is directly linked to the Material Requirement Plan. Greater detail here than the Rough Cut Plan. CRP is working with individual items and focuses on component parts and calculates work center loads and labor requirements for each time period.

Capacity requirements planning.

This is the most detailed of the requirement plans.

Inputs.

1. Open shop orders. ~ open order file.

2. Planned order releases. ~ material requirement plan.

3. Routings, time standards, lead times, work center capacities. ~ routing file

 

3a. Routing file contains.

3A1. Operations to be performed.

3A2. Sequence of operations.

3A3. Work centers to be used.

3A4. Possible alternate work centers.

3A5. Tooling needed at each operation.

3A6. Standard times: setup times and run times per piece.

 

Work center file.

Information on similar machines in regards to move time, wait time, queue time, lead time.

 

Shop calender.

Shows working days.

 

Available capacity.

Capacity of system to produce a quantity of output in given time.

Affected by the following.

1. Product specification. ~ if changed all else can change.

2. Product mix. ~ each has own varying variables, if change occurs ,overall will change.

3. Plant and equipment. ~ changes here affect overall performance.

4. Work effort. ~ If work force speeds up or down , this will change things.

 

Measuring capacity.

Units of output.

Standard time.

 

Levels of capacity.

Needs to be measured on at least 3 levels.

1. Machine or individual worker.

2. Work center.

3. Plant ~ Group of work centers.

 

Measured capacity is based on historical data.

Rated capacity is product of Available Time *Utilization *Efficiency.

 

Utilization = hours actually worked / available hours.

Efficiency = (Standard hours of work produced / hours actually worked) * 100.

Rated capacity = available time * utilization * efficiency.

Measured capacity = is to examine previous records to find capacity history.

Measured is not maximum.

 

Required capacity is a 2 step process.

1. Determine time needed for each item at each work center to be completed.

2. Sum up items time to acquire the load time.

 

LOAD.

Sum of all required times for all planned and actual orders to run in work center in time period.

Steps.

1. Determine standard hours of operation for each planned or actual order in period.

2. Add all standard hours together for each work center in each time period.

The result is the total required capacity ( load) on that work center in the period.

 

Work center load report.

Shows future capacity requirements for each period.

 

Scheduling orders.

Most work goes across number of work centers , it is necessary to calculate when orders must be started and completed at each work center so final due date can be met.

 

Back scheduling.

Usual process is to start with due date and with lead times work backwards to find start date for each operation. This is called Back scheduling.

1. Quantity and Due Date.

2. Sequence of operations and work centers needed.

3. Setup and run times for each operation.

4. Queue, wait, and move times.

5. Work center available capacity.

 

To be retrieved from.

Order file. ~ quantities and due dates.

Route file. ~ sequence of operations, work centers needed, setup times, and run time.

Work center file. ~ Queue, move and wait time at each work center.

Process.

1. For each order calculate required capacity at each work center.

2. Starting with due date work backward and get completion and start dates of each operations.

 

Making the plan.

2 ways

1. Alter load.

2. Change available capacity.

 

 

In short run capacity can be changed by .

1. Overtime / undertime.

2. Hire / fire.

3. Shift workers from overloaded to under loaded work centers. ~ cross trained workforce.

4. Shift some load to other work centers.

5. Sub- contract items.

 

Remember a closed looped system.

 

 

chap 9 INVENTORY FUNDAMENTALS

 

Balance sheet ,inventory counts for 20 -60% of assets.

Inventory is considered in Production planning, MPS,MRP.

Production planning concerned with overall inventory, master planning with end items, and material requirements with components parts and raw materials.

 

AGGREGATE INVENTORY MGMT.

deals according to raw material, work in process, and finished goods. as such AIM involves:

1/ flow and kinds of inventory needed.

2/ supply and demand patterns.

3/ functions that inventories perform.

4/ objectives of inventory mgmt.

5/ costs associated w/inventory.

 

ITEM INVENTORY MANAGEMENT.

MGMT must decide:

Which individual items are most important.

How individual items are to be controlled.

how much to order at one time.

When to place the order.

 

INFLUENCING FACTORS.

Types of inventory based on flow of material.

supply and demand patterns

functions performed by inventory.

objectives of inventory mgmt.

inventory costs.

 

CLASSIFICATION EXAMPLES.

raw materials

work in process. wip

finished goods.

distribution inventories.

maintenance, repair, operational supplies.

DEPENDS ON PRODUCTION ENVIRONMENT.

 

FUNCTIONS OF INVENTORIES.

INVENTORIES SERVES AS A BUFFER BETWEEN. FUNCTIONS ALSO.

supply and demand.

customer demand and finished goods.

finished goods and component availability.

requirements for an operation and output of other operation.

Parts and materials to begin operation.

 

Inventory reasoning: FUNCTIONS SERVED.

anticipation inventory.

fluctuation inventory.

lot-size inventory

transportation inventory

hedge inventory.

 

 

OBJECTIVES OF INVENTORY MGMT.

max customer service / low-cost plant operation / minimum inventory investment.

 

INVENTORIES HELP TO OPTIMIZE OPERATIONS BY:

lines with different speeds to stay busy.

lower overtime costs (if demand jumped)

lower hiring/firing cost.

lower training costs/ lower sub-contracting costs/lower

capacity required.

lower setup costs (making large runs).

increase in capacity due to lower overall setup times.

purchasing getting better price do to larger order.

 

BUT ALL OF THIS HAS A PRICE , MUST OPTIMIZE WITH: or balance with

customer service level desired.

all variables will be higher if production moves with demand

Costs of placing orders.

Transportation costs.

 

INVENTORY COSTS.

item cost = delivered price = landed price. + misc w/it.

carrying cost

1/ capital costs. 2/storage costs. 3/risk costs. 3a/ obsolescence. 3b/damage / pilferage / deterioration.

 

order costs: does not depend on quantity. includes issuing orders, scheduling, loading, dispatching, and expediting.

 

setup and tear down costs.

Lost capacity due to set up time.

Purchase order costs. administration costs of ordering, receiving.

Stock out cost.

 

Capacity associated costs = o/t, hire and fire, training,etc

 

ABC INVENTORY CONTROL. SKU= stock keeping unit.

In controlling inventory, 4 questions must be asked.

1/ what is the importance of the inventory item.

2/ how are they to be controlled.

3/ how much should be ordered at one time.

4/ when should the order be placed.

PARETO'S LAW

20 percent of items account for 80 percent of dollar usage.

30 % of items account for 15% of dollar usage.

50 % account for 5% of dollar usage.

 

 

 

 

 

STEPS IN MAKING ABC ANALYSIS.

 

1/. Establish item characteristics that influence the results of inventory mgmt. Usually annual dollar usage, could be other ~ material scarcity.

2/. Classify items into groups based on criteria.

3/. Apply a degree of control in proportion to the importance of the group.

4/. Determine annual usage for each item.

5/. Multiply item by usage cost to get annual cost.

6/. List items according to annual dollar usage.

7/. Calculate total annual dollar usage and percentage that each item is of total.

8/. Examine and group items into a, b, c group based on ranking.

 

CONTROL BASED ON ABC CLASSIFICATION.

Have plenty of low value items. adds little to inventory~5%.

Use time and money saved from above to watch highest 20%.

20 % of items (high) gets highest priority.

30 % medium costs gets middle priority.

50 % lowest costs are the lowest priority.

 

 

Order Quantities

 

The objectives of inventory are to provide the level of customer service required and to reduce the sum of all costs to a minimum.

1. How much should we order at one time.

2. When should the order be placed.

Reasonable estimates are often wrong.

 

Stock keeping unit. SKU.

Even two items of same product but in different inventories would have different sku numbers.

 

Lot size decision rules.

1. Lot for lot = no more / no less. Might be assigned by Material requirement plan, or Master production plan. Best for planning "A" items and for just in time systems.

2. Fixed order quantity. = 200 at a time. Min -Max system perhaps. Does not minimize costs.

3. Order in method= just enough for period needs.

 

Costs.

Cost is from ordering and storing and should be minimized.

Best known system is EOQ=economic order quantity.

 

EOQ

1. Demand is constant and known.

2. Item produced in batches or lots and NOT continuous.

3. Order preparation time and inventory cost, lead times are constant and known.

4. Replacement occurs all at once.

These assumptions are usually valid on independent and finished goods.

 

Relevant costs.

Annual cost of placing orders.

Annual cost of carrying inventory.

See -saw effect. =one or other.

 

Formula.

Carrying costs=ordering cost. Solve for order quantity in units.

 

How to reduce lot size.

As unit cost decreases the EOQ increases.

Cost of placing orders if reduced will reduce cost of EOQ

Just in time mfg. Give several desirables here.

 

Variations of the EOQ model.

Modifications for particular circumstances.

Monetary unit lot size = EOQ can be calculated in monetary units rather than physical units.

Non instant receipt of goods. Sometime order cannot come in all at once. This can be put into EOQ model.

 

Quantity discounts. Relevant costs.

1. Purchase cost.

2. Ordering cost.

3. Carrying cost.

Must weight first two against last one.

 

Use of EOQ when costs are not known.

Can still work when applied to Family of Items.

 

Period Order Quantity. POQ

If demand is not uniform E.Q. will not minimize costs. Theory is still based on E.Q..

The number of orders are the same but amount of orders varies.

This is an economic time between orders

POQ= E.Q./average weekly usage.

 

SUMMARY

Practical considerations when using the E.Q..

1. Lumpy demand.=E.Q. demand is uniform and delivery comes all at once.

2. Anticipation inventory = demand not uniform and stock must be built ahead. It is better to plan a buildup of inventory based on capacity and future demand.

3. Minimum order. = often these are "c" items and rule is to order plenty. Not an E.Q..

4. Transportation inventory= full load cost per item less than a partial truck load.

5. Multiples = sometimes order size is package size. Like pallets at a time. Unit here should be minimum package size.

 

 

Independent demand ordering systems.

 

When to place an order. Some rules are needed. The problem is to balance inventory cost with the price of stock out of the item.

 

Three basic systems are used to determine when to order.

1. Order point system.

2. Periodic review system.

3. Material requirements planning.

 

First two for independent items, last one for dependent items.

 

Order Point System.

Inventory falls to a predetermined level. Lead time a variable here ~ safety stock.

OP=order point=demand during lead time + safety stock.

1. Order quantities are usually fixed.

2. Order point determined by average demand during lead time.

3. Intervals between replenishment are not constant.

4. Average inventory = (order quantity/2)+(safety stock).

 

Determining safety stock.

Variability of demand during lead time.

Frequency of reorder.

Service level desired.

Length of lead time.

Ability to forecast lead times.

 

Variation in demand during lead time.

Use a normal distribution (histograms) bell curve to get probabilities of service levels being met. The possibilities that product will be available with reliability.

 

Mean absolute deviation.

MAD=(sum of absolute deviations / number of observations).

Deviations in demand are in same period (units of time) as lead times.

 

Determining the safety stock and the order point.

Using bell curve. Must use only one side of curve since other side would be chance of over requirements and not under. The curve is symmetrical about the average.

 

Safety factor.

The service level is directly related to number of mean absolute deviations provided as safety stock. This is known as the safety factor.

 

Determining service levels.

1. Back order costs.

2. Lost sales.

3. Lost customers.

It is the responsibilities of management to determine amount of stockouts tolerable.

 

Different forecast and lead time intervals.

Usually there are many items here making it impossible to cover all variables. So.

Some method of adjusting MAD for the different time intervals are needed.

If lead time is zero = MAD of demand is zero. As lead time increases so does MAD. However not in direct proportion.

 

Determining when order point is reached.

Must be some method to show when an reorder point is reached. There are many but subset of these two.

1. Two bin system.

Safety stock is in separate area and not used until other all used up.

2. Perpetual inventory record system. Computer based scanner setup with inventory records.

 

Permanent information.

Part number, name,description.

Storage location,order point, order quantity, lead time, safety stock,suppliers.

 

Variable information.

Quantities ordered: dates,order numbers,quantities.

Quantities received: above.

Quantities issued: above.

Balance on hand.

Allocated: dates,order numbers,quantities.

Available balance.

 

Periodic review system.

Target level or Maximum level inventory.

Max or min according to following examples.

 

1. Many small issues from inventory and posting transaction are expensive.~retailers,supermarkets

2. Ordering cost are small ~everything comes from one warehouse. Regional distribution.

3. Items ordered together to make a production run.~regional~ once a week.

 

Distribution inventory.

Ready to go and waiting.

Objectives are to.

Meet customer service level.

Minimize transportation costs and handling costs.

Interact with factory to optimize scheduling between the two.

 

Distribution systems vary greatly but in general have.

Central supply facility that is supported by a

factory, distribution centers, customers.

Even though customers buy at a steady rate, if distribution if having problems ( not the factory ) the end result is the same ... unhappy customer.

 

Distribution inventory management systems.

 

Pull system = distribution center decides when order needed then orders.

Each warehouse or center works alone , can reduce communication problems or increase them.

Many are going toward central control.

 

Push system = all decisions are made centrally, stock is pushed thru system.

The drawback is the distribution center cannot react to local demand which lowers level of service.

 

Distribution Requirement Planning.

DRP System which Forecasts when the various demands will be made by system to central supply.

Translate the logic of material requirement planning to the distribution system.

The planned order releases from central supply become the forecast of demand for the master production schedule.

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