1. Copyright © 2011 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin Manufacturing Planning and Control MPC 6 th Edition Chapter 8

2. 8-2 Production Activity Control Production Activity Control (PAC) concerns the execution of material plans. A number of MPC activities, including Shop-floor Scheduling and Control (SFC), Vendor Scheduling and Follow- up, Order Release, and Purchasing fall partly or completely within the realm of Production Activity Control.

3. 8-3 Agenda Production Activity Control–An OverviewManufacturing Planning and Control LinkagesProduction Activity Control TechniquesTheory of ConstraintsVendor SchedulingPrinciples

4. 8-4 Production Activity Control in the MPC System Resource planning Sales and operations planning Demand management Master production scheduling Detailed material planning Material and capacity plans Shop-floor scheduling and control (SFC) Purchasing Detailed capacity planning Vendor scheduling and follow-up Order release Production activity control

5. 8-5 System Links–MPC and Production Activity Control PAC System Detailed Capacity Planning Planning information to PAC Feedback from PAC – status and warnings Detailed Material Planning Planning information to PAC Feedback from PAC – status and warnings

6. 8-6 Just-in-Time (JIT) Effect on PAC Formal systems for shop-floor control are largely unnecessary under JIT PAC functions are simplified Order release through kanbans or other pull system Limited work-in-process inventories Detailed scheduling is not needed No data collection or monitoring requirements–only raw material and finished goods inventories Vendor scheduling may be more complex under JIT

7. 8-7 Production Activity Control and Company Environment The primary PAC objective is managing material flows to meet MPC plans Other objectives may pertain to efficient use of capacity, labor, tools, time, or materials Under JIT the objective is material velocity PAC objectives reflect the firm’s strategy and competitive position

8. 8-8 Production Activity Control Techniques Production Activity Control Gantt Charts Provides graphic representation of the system Priority Sequencing Rules Selecting the order of job processing Theory of Constraints Scheduling Scheduling to minimize impact of bottleneck resources

9. 8-9 Basic Shop Floor Concepts Routing and lead-time data are essential inputs Routing specifies the operation, its duration, and the work center performing the work Lead times typically consist of four elements Run time Setup time Move time Queue time

10. 8-10 10 Routing Data and Operation Setback Chart

11. 8-11 Operation Setback Chart Component parts Sub-AssemblyFinished Product Part D has three operations

12. 8-12 Lead-Time Management The four elements of lead time (run, setup, move, and queue) can be compressed with good PAC management A basic principle of MPC systems is to substitute information for inventory The knowledge of when an order will arrive at a work center replaces the need to WIP inventory feeding the work center

13. 8-13 Gantt Charts Gantt charts show a schedule Each step listed separately Relationship between steps portrayed visually

14. 8-14 14 Gantt Charts The incoming orders at Tom's Sailboard follow different routes through the shop but all orders must stop at each of the three work centers in the plant. The table below shows all tasks for four jobs that arrive over 5 days and need to be scheduled at the company. It is currently November 10 and Tom works a seven-day week. _____________________________________________________ ArrivalJob/WCProcessing time (days) Order date routing WC 1WC 2WC 3 (B)iffNov. 10 1-3-2 1 3 1 (G)riffinNov. 10 2-3-1 2 2 2 (H)erbieNov. 12 3-2-1 3 1 2 (K)errieNov. 14 2-1-3 1 3 1 Assume that the new material for all orders is in stock and that a first-come/first-served sequencing rule is used at all work centers. All three work centers are idle as work begins on orders B and G on November 10.

15. 8-15 15 Tom’s Sailboard a.Construct a Gantt chart depicting the processing and idle times for the three work centers for these four jobs. ArrivalJob/WCProcessing time (days) Order date routing WC 1WC 2WC 3 (B)iff Nov. 10 1-3-2 1 3 1 (G)riffinNov. 10 2-3-1 2 2 2 (H)erbieNov. 12 3-2-1 3 1 2 (K)errieNov. 14 2-1-3 1 3 1

16. 8-16 16 Tom’s Sailboard b. How many days does each job wait in queue for processing at work center 2? The determination of how long jobs wait at work center 2 is as follows: B and G are processed immediately at work center 2, order K must wait 1 day (11/14) and order H waits 4 days (11/12, 11/13 at WC3) and (11/16 and 11/17 at WC2).

17. 8-17 Priority Sequencing Rules Determine which job to run next at a particular work center When a job is near completion, the available jobs in the queue are evaluated

18. 8-18 Priority Sequencing Rules Common rules Order slack–work on the job with the least total slack Slack per operation–divide total slack by the number of remaining operations, then work on job with least slack Critical ratio–calculate (time remaining)/(work remaining) and work on job with lowest ratio Shortest operation next–work on the job that can be completed most quickly

19. 8-19 19 Priority Sequencing Rules First Come, First Served Shortest Operation Next Earliest Due Date Order Slack: (Time Remaining until Due Date – Sum of Remaining Setup and Run Time) Slack per Operation Critical Ratio: (Due Date-Now)/(Lead Time Remaining) __________________________________ _____ Lead Time Remaining includes setup, run, move and queue time for all remaining operations.

20. 8-20 20 Knox Machine 2. The jobs below are waiting to be processed at the P&W Grinder at the Knox Machine Company. (There are no other jobs and the machine is empty.) __________________________ Machine processingDate job arrived Job due Job time (in days)*__at this machine date __ A 4 6-23 8-15 B 1 6-24 9-10 C 5 7-01 8-01 D 2 6-19 8-17 *Note: This is the final operation for each of these jobs. ___________________________________________________________

21. 8-21 21 Knox Machine: Solution a. The production manager has heard about three dispatching rules: the Shortest Operation Next Rule, the First-Come/First-Served Rule, and the Earliest Due Date Rule. In what sequence would these jobs be processed at the P&W grinder if each rule was applied? 1. The shortest operation next rule: B-D-A-C 2. The first-come, first-served rule: D-A-B-C 3. The earliest due date rule: C-A-D-B Machine processing Date job arrived Job due Job time (in days)*__at this machine date__ A 4 6-23 8-15 B 1 6-24 9-10 C 5 7-01 8-01 D 2 6-19 8-17 *Note: This is the final operation for each of these jobs.

22. 8-22 22 Knox Machine: Solution b. If it's now the morning of July 10 and the Shortest Operation Next Rule is used, when would each of the four jobs start and be completed on the P&W grinder? (Express your schedule in terms of the calendar dates involved, assuming that there are 7 working days each week.) P & W Grinder JobBDAC Date7/107/117/127/137/147/157/167/177/187/197/207/21

23. 8-23 23 Critical Ratio Scheduling Eight weeks remain for constructing the a 50­foot yacht. Assume that each week consists of 5 work days, for a total lead time of 40 days. The work required to complete the yacht comprises 10 operations, 4 days for each.

24. 8-24 24 Yacht Project Example a. On Tuesday morning of week 3, 3 of the 10 operations had been completed and the yacht was waiting for the fourth operation. What's the critical ratio priority?

25. 8-25 25 Yacht Project Example b. What's the critical ratio priority if only 2 of the 10 operations are completed by Tuesday morning of week 3?

26. 8-26 26 Finite Loading

27. 8-27 27 The Bundy Company The Bundy Company produces for three products (A, K, and P). Each order goes through the same three machine centers, but not necessarily in the same sequence. Each order must be finished at a machine center before another can be started. Orders cannot be split. The shop works a single eight-hour shift five days per week. Assume that the time to move between machines is negligible. each machine center is operated eight hours per day. All three machines are currently available for scheduling, and no further orders will arrive.

28. 8-28 28 The Bundy Company Processing time Machineat machine center center ___(in days)____Order Orderrouting123due date A3-1-2132 14 K2-3-1313 12 P3-2-1234 10 Note: Order due dates are fixed based on the shop calendar. It is now 8:00 A.M. Monday (day 1), Monday of next week is day 6, etc.

29. 8-29 29 The Bundy Company Using the horizontal loading procedure with earliest-due-date priority sequencing rule, prepare a Gantt chart showing the production schedule for the three orders above.

30. 8-30 30 The Bundy Company Using the vertical loading procedure and the shortest-operation-next priority sequencing rule, prepare a Gantt chart showing the production schedule for the three orders above.

31. 8-31 31 Process Design Impact Scheduling Batch Manufacturing: Work Orders Repetitive Manufacturing: JIT/Kanban

32. 8-32 Theory of Constraints (TOC) TOC focuses effort on bottleneck resources Bottlenecks limit the capacity of the entire plant Objective is to maximize throughput Bottlenecks may be constraints other than work centers Constraints are identified, buffered with inventory, and their importance is stressed to the entire factory

33. 8-33 Theory of Constraints Scheduling Drum-Buffer-Rope Drum–bottleneck work centers which control the tempo of workflow through the plant Buffer–inventory and/or scheduling activities to protect the throughput at bottlenecks from random variation Rope–use of pull scheduling at non-bottleneck resources Material moves through non-bottleneck resources as quickly as possible, bottlenecks are managed for maximum efficiency

34. 8-34 TOC Scheduling Potential bottlenecks are identified using rough-cut capacity planning Scheduling is completed according to the work center type

35. 8-35 Capacity Utilization Chart Work centers over a capacity threshold (80%) are considered bottlenecks

36. 8-36 Buffers TOC uses both safety stock and safety lead time at bottleneck operations Safety lead time is introduced between sequential orders at the bottleneck Safety stock of completed parts from preceding, non-bottleneck operations is held in front of the bottleneck to prevent shortages

37. 8-37 TOC and Lot Sizing Lot sizes are calculated differently for bottleneck and non-bottleneck resources For the same finished item, lot sizes at different operations may be different TOC splits orders at non-bottleneck resources and combines orders at bottlenecks This maintains supply of non-bottleneck parts while reducing setup time and/or increasing efficiency at the bottleneck

38. 8-38 Managing the TOC Schedule Schedule new orders on the bottleneck operations (drums) Finite backward scheduling Exploiting the drums If necessary, add capacity to drums by moving work or outsourcing Material release–ropes Release raw materials to non-bottlenecks only when scheduled Proactive management of buffers Ensure that bottleneck resources are not starved for orders Elevating the drum Increase capacity at the bottlenecks to allow the organization to grow

39. 8-39 TOC Contributions A feasible master schedule Less WIP, shorter lead times, greater material velocity Eliminates the conflict between MRP and finite scheduling

40. 8-40 TOC Implementation Issues Requires a major shift in manufacturing mindset (paradigm shift) Its OK to not work (at a non-bottleneck) if there are no orders Firm needs sound systems, education, top- management support, and willingness to change

41. 8-41 Vendor Scheduling and Follow-Up Objective–align orders with due dates Vendor must have continually updated information concerning priorities Contractual agreements may limit the type and degree of change the vendor must accommodate Use of the Internet can enhance the speed and efficiency of information exchange

42. 8-42 Principles Production activity control system design must be in concert with the firm’s needs. Vendor capacities should be planned and scheduled with as much diligence as internal resources. Lead times must be managed. Feedback from the PAC should provide both status and early warning information to other MPC modules

43. 8-43 Principles E-based systems can improve communication between customer and vendor, reducing lead time and overhead. TOC scheduling provides improved performance by focusing on the constraining resources. TOC implementation requires a change in culture. Traditional priority rules can play a role in scheduling non-bottleneck resources. Stability in manufacturing loads and capacity plans facilitates shop-floor execution.

44. 8-44 Quiz – Chapter 8 Production activity control (PAC) actions take place mainly in which section of the MPC system? The shop-floor control system is kept current on changes in material plans by the MRP system? (True/False) Formal shop-floor control systems are unnecessary under JIT? (True/False) A visual representation of the scheduling process can be provided by _________ charts. The TOC scheduling process is called ______-_________- _________. In TOC scheduling, buffers are maintained before and after _____________ resources.