1. 14 - 1© 2011 Pearson Education, Inc. publishing as Prentice Hall Master Production Schedule (MPS)  The MPS states what products are to be produced  Also agrees with the aggregate production plan (which is about family of products)  Inputs from financial plans, customer demand, engineering, supplier performance  The MPS is a rolling schedule, but as the process moves from planning to execution, each step must be tested for feasibility, then is fixed (no changes).  The MPS is the result of the production planning process

2. 14 - 2 MPS is found ‘backwards’  Aggregate production plan  (high level ‘product family’ forecasts – eg icecreams ).  Individual product production plan  (product by product analysis – eg types of ice creams).  Components for each product  (ingredients mix for each type of icecream – eg nuts / choc / jelly). © 2011 Pearson Education, Inc. publishing as Prentice Hall

3. 14 - 3© 2011 Pearson Education, Inc. publishing as Prentice Hall Dependent Demand Concept  Using the quantity for the end item, then demand for all input parts and components can be found.  In general, used whenever a schedule can be established for an item.  Effective use of dependent demand inventory models requires very accurate versions (99%) of 1.Master production schedule 2.Specifications or bill of material 3.Inventory availability 4.Purchase orders outstanding 5.Lead times

4. 14 - 4© 2011 Pearson Education, Inc. publishing as Prentice Hall Material requirements planning (MRP) “Is a system of working ‘backwards’ through production sequence to organise components” Benefits for Business are.. 1.Better (faster)response to customer orders 2.Faster response to market changes 3.Improved utilization of facilities and labor (lower cost) 4.Reduced inventory levels (lower cost)

5. 14 - 5© 2011 Pearson Education, Inc. publishing as Prentice Hall MRP Structure Figure 14.5 Output Reports MRP by period report MRP by date report Planned order report Purchase advice Exception reports Order early or late or not needed Order quantity too small or too large Data Files Purchasing data BOM Lead times (Item master file) Inventory data Master production schedule Material requirement planning programs (computer and software)

6. 14 - 6 MRP benefits come from..  Forecasting of demand for parts is dependent on demand for final product (not statistical) – so more accurate.  Product and time linkages through the MRP system show planners where/when capacity issues may develop.  IT based MRP systems automatically track changes through links to update all parts sequences if any changes occur. © 2011 Pearson Education, Inc. publishing as Prentice Hall

7. 14 - 7© 2011 Pearson Education, Inc. publishing as Prentice Hall Focus for Different Process Strategies Stock to Forecast (Product Focus) Schedule finished product Assemble to Order or Forecast (Repetitive) Schedule modules Make to Order (Process Focus) Schedule orders Examples:Print shopMotorcyclesSteel, Beer, Bread Machine shopAutos, TVsLightbulbs Fine-dining restaurantFast-food restaurantPaper Typical focus of the master production schedule Number of inputs Number of end items Figure 14.3

8. 14 - 8© 2011 Pearson Education, Inc. publishing as Prentice Hall Master Production Schedule (MPS) 1.A customer order in a job shop (make-to-order) company 2.Modules in a repetitive (assemble-to-order or forecast) company 3.An end item in a continuous (stock-to-forecast) company Can be expressed as any of the following

9. 14 - 9© 2011 Pearson Education, Inc. publishing as Prentice Hall MPS Examples Gross Requirements for Crabmeat Quiche Gross Requirements for Spinach Quiche Day67891011121314and so on Amount50100476011075 Day78910111213141516and so on Amount1002001506075100 Table 14.1 For Nancy’s Specialty Foods

10. 14 - 10© 2011 Pearson Education, Inc. publishing as Prentice Hall Bills of Material (BOM)  List of components, ingredients, and materials needed to make product showing  Quantities  Stage in production process  Provides product (family tree) structure  Items above given level are called parents  Items below given level are called children (or components)  A parent is made from children or components.

11. 14 - 11© 2011 Pearson Education, Inc. publishing as Prentice Hall BOM Example B (2) Std. 12” Speaker kit C (3) Std. 12” Speaker kit w/ amp-booster 1 E (2) F (2) Packing box and installation kit of wire, bolts, and screws Std. 12” Speaker booster assembly 2 D (2) 12” Speaker D (2) 12” Speaker G (1) Amp-booster 3 Product structure for “Awesome” (A) A Level 0

12. 14 - 12© 2011 Pearson Education, Inc. publishing as Prentice Hall BOM Example B (2) Std. 12” Speaker kit C (3) Std. 12” Speaker kit w/ amp-booster 1 E (2) F (2) Packing box and installation kit of wire, bolts, and screws Std. 12” Speaker booster assembly 2 D (2) 12” Speaker D (2) 12” Speaker G (1) Amp-booster 3 Product structure for “Awesome” (A) A Level 0 Part B:2 x number of As =(2)(50) =100 Part C:3 x number of As =(3)(50) =150 Part D:2 x number of Bs + 2 x number of Fs =(2)(100) + (2)(300) =800 Part E:2 x number of Bs + 2 x number of Cs =(2)(100) + (2)(150) =500 Part F:2 x number of Cs =(2)(150) =300 Part G:1 x number of Fs =(1)(300) =300

13. 14 - 13© 2011 Pearson Education, Inc. publishing as Prentice Hall Lead Times  The time required to purchase, produce, or assemble an item  For production – the sum of the order, wait, move, setup, store, and run times  For purchased items – the time between the recognition of a need and the availability of the item for production

14. 14 - 14© 2011 Pearson Education, Inc. publishing as Prentice Hall Time-Phased Product Structure (BOM on its side) ||||||||12345678||||||||12345678 Time in weeks F 2 weeks 3 weeks 1 week A 2 weeks 1 week D E 2 weeks D G 1 week Start production of D Must have D and E completed here so production can begin on B Figure 14.4 1 week 2 weeks to produce B C E

15. 14 - 15 Inventory Record jargon  Gross requirement plan (quantity)  The components to meet parent demand.  Net requirements plan (quantity)  All components needed after inventory is included  Scheduled receipts (dates & quantity)  Orders for parts that are in production but not yet received  Planned order releases (dates & quantity)  Orders that are planned as part of meeting the inventory needs  Planned order receipts (dates & quantity)  Orders that are planned to be received into inventory © 2011 Pearson Education, Inc. publishing as Prentice Hall

16. 14 - 16© 2011 Pearson Education, Inc. publishing as Prentice Hall Determining Gross Requirements The demand for final parent item plus any extras sets the dependent demand for all componentry. This is the gross requirement. This information can be used with information from the  BOM and  Time phased product structure..... to set order times for all needed parts to meet final parent production goals.

17. 14 - 17© 2011 Pearson Education, Inc. publishing as Prentice Hall Determining Gross Requirements  The process continues through the entire BOM one level at a time – often called “ MRP explosion”  By processing the BOM by level, items with multiple parents are only processed once, saving time and resources and reducing confusion  “Lowest-level coding” ensures that each item has a unique code in the BOM  The gross requirement for any part can include several different end (parent) products, spare parts, parts already allocated (but not yet used) etc.

18. 14 - 18© 2011 Pearson Education, Inc. publishing as Prentice Hall Gross Requirements Plan Table 14.3 Week 12345678Lead Time A.Required date50 Order release date501 week B.Required date100 Order release date1002 weeks C.Required date150 Order release date1501 week E.Required date 200300 Order release date2003002 weeks F.Required date300 Order release date3003 weeks D.Required date 600200 Order release date6002001 week G.Required date 300 Order release date3002 weeks

19. 14 - 19© 2011 Pearson Education, Inc. publishing as Prentice Hall S BC 1213891011 203040 Lead time = 6 for S Master schedule for S Gross Requirements Schedule Figure 14.6 123 10 Master schedule for B sold directly Periods Therefore, these are the gross requirements for B Gross requirements: B 10405020 40+1015+30 =50=45 12345678 Periods A B C Lead time = 4 for A Master schedule for A 567891011 401550

20. 14 - 20© 2011 Pearson Education, Inc. publishing as Prentice Hall Determining Net Requirements The logic of net requirements Total requirements Gross requirements Allocations + Available inventory Net requirements On hand Scheduled receipts +–=

21. 14 - 21© 2011 Pearson Education, Inc. publishing as Prentice Hall Net Requirements Plan

22. 14 - 22© 2011 Pearson Education, Inc. publishing as Prentice Hall MRP Management  MRP is a dynamic (ie changing) system which allows re-planning when changes to schedules, design etc occur  Regenerating (recomputing with new data)  Net change (a new requirement from sales etc)  too many changes cause system ‘nervousness’ which can be partly overcome by  Pegging which links each item to its parent so changes ‘track’ through.  Time fences after which MPS is fixed “ not to be rescheduled” to create short term certainty.

23. 14 - 23© 2011 Pearson Education, Inc. publishing as Prentice Hall Safety (buffer) Stock  BOMs, inventory records, purchase and production quantities are usually not 100%correct perfect.  Safety (buffer) stock is common sense.  Ideally this should be minimized and ultimately eliminated  Typically built into projected on-hand inventory as a factor ( eg +10%)

24. 14 - 24© 2011 Pearson Education, Inc. publishing as Prentice Hall MRP and JIT Not an easy fit as MRP is about planning but not detail. Four techniques which help are… 1.Finite Capacity Scheduling MRP used to be ‘infinite’, but now usually puts output into time frames. 2. Small Bucket Approach Four step process to make MRP work with JIT through more accurate timing & constant updating of BOM. See page 589. 3. Balanced flow Approach Keeping lot sizes small and using JIT techniques to keep inventory flowing. 4. Supermarket Using KanBan type system for an inventory of parts that are widely (and constantly) used in several product lines.

25. 14 - 25© 2011 Pearson Education, Inc. publishing as Prentice Hall Material Resource Planning ( = MRP II)  Requirements data can be used to find other  Necessary inputs  (labour, energy, consumables, etc)  Other (unwanted (?)) outputs.  (Scrap, Packaging waste, Carbon emissions) Tracking production and entire business operation in this way is key part of sustainability strategy for Operations Management.

26. 14 - 26© 2011 Pearson Education, Inc. publishing as Prentice Hall Material Resource Planning Weeks LT5678 Computer1100 Labor Hrs:.2 each20 Machine Hrs:.2 each20 Scrap: 1 ounce fiberglass each6.25lbs Payables: $0 each$0 PC Board (1 each)2100 Labor Hrs:.15 each15 Machine Hrs:.1 each10 Scrap:.5 ounces copper each3.125lb Payables: raw material at $5 each$500 Processor (5 each)4500 Labor Hrs:.2 each100 Machine Hrs:.2 each100 Scrap:.01 ounces of acid waste each0.3125lb Payables: processors at $10 each$5,000 Table 14.4

27. 14 - 27© 2011 Pearson Education, Inc. publishing as Prentice Hall Smoothing Tactics 1.Overlapping  Sends part of the work to following operations before the entire lot is complete  Reduces lead time 2.Operations splitting  Sends the lot to two different machines for the same operation  Shorter throughput time but increased setup costs 3.Order or lot splitting  Breaking up the order into smaller lots and running part earlier (or later) in the schedule

28. 14 - 28© 2011 Pearson Education, Inc. publishing as Prentice Hall Order Splitting Day Units Ordered Capacity Required (hours) Capacity Available (hours) Utilization: Over/ (Under) (hours) Production Planner’s Action New Production Schedule 110 12(2)12 214 122Split order: move 2 units to day 1 12 313 121Split order: move one unit to day 6 or request overtime 13 410 12(2)12 514 122Split order: move 2 units to day 4 12 61

29. 14 - 29© 2011 Pearson Education, Inc. publishing as Prentice Hall Order Splitting Figure 14.9 Available capacity Capacity exceeded on days 2, 3, and 5 2 orders moved to day 1 from day 2 (a day early) 1 order forced to overtime or to day 6 2 orders moved to day 4 (a day early) 14 – 12 – 10 – 8 – 6 – 4 – 2 – 0 – 12345 Days (b) Standard labor-Hours 14 – 12 – 10 – 8 – 6 – 4 – 2 – 0 – 12345 Days (a) Standard labor-Hours

30. 14 - 30 Queuing Queuing is a fact of life in service industries. Efforts to reduce the impact of the queuing time on the customer are made, based on customer population (limited or unlimited) arrival pattern (random, or known pattern) system capacity / type of service (customers/hr, one wait or two, brain surgery or haircut ?) size of queue accepted by business (physical capacity, SLA,) © 2011 Pearson Education, Inc. publishing as Prentice Hall

31. 14 - 31 Queuing Types of queue 1. single line in order of arrival.(eg banks) 2. multiple channels – find shortest queue (eg McD) 3. diffuse queue – take-a-ticket and sit anywhere. (eg student cnetral) 4. priority queue – based on type of customer (eg airline check-in) © 2011 Pearson Education, Inc. publishing as Prentice Hall

32. 14 - 32 Queuing discipline (how the queue is managed) Various methods FIFO (first in –first out) FCFS (first come first served) FIBD (first in best dressed). (All have same result). Most customers expect in a random arrival system. © 2011 Pearson Education, Inc. publishing as Prentice Hall

33. 14 - 33 Queuing discipline (how the queue is managed) LIFO (last in first out) LCFS(last come, first served) Used deliberately in some systems like loading/unloading a ship for weight balancing. Otherwise seen as a problem creating unfairness. © 2011 Pearson Education, Inc. publishing as Prentice Hall

34. 14 - 34 Queuing discipline (how the queue is managed) SPF (shortest processed first) Short actions done first to reduce number of people waiting. Express queue in supermarkets. © 2011 Pearson Education, Inc. publishing as Prentice Hall

35. 14 - 35 Queuing discipline (how the queue is managed) SIRO (Serve in random order) No formal queue. Competition for service among customers. Nightclub bars. © 2011 Pearson Education, Inc. publishing as Prentice Hall

36. 14 - 36 Queuing in manufacturing Also called job ranking Some terms are the same as for queuing, and refer to doing the work as it arrives (FCFS / FIFO), or in opposite order (LIFO)(courier delivery) © 2011 Pearson Education, Inc. publishing as Prentice Hall

37. 14 - 37 Queuing in manufacturing Also called job ranking EDD (Earliest delivery date) The work that has the earliest delivery deadline is completed first. (ignores duration of work) Used when delivery dates vary independently of work arrival dates. (eg copy centre) © 2011 Pearson Education, Inc. publishing as Prentice Hall

38. 14 - 38 Queuing in manufacturing Also called job ranking LPT (Longest processing time) LOT (Longest operating time) (Same thing) – refers to actual processing time. - do longest task first. Reduces downtime for setup etc, and keeps capacity utilisation high, but no consideration of delivery dates etc. © 2011 Pearson Education, Inc. publishing as Prentice Hall

39. 14 - 39 Queuing in manufacturing Also called job ranking Question 5bi + ii SPT (Shortest processing time) SOT(Shortest operating time)(same thing). - refers to operating time. More responsive to market, faster turnaround for shorter jobs. Better for invoicing and cashflow for SME. May lower productivity due to frequent changes. © 2011 Pearson Education, Inc. publishing as Prentice Hall

40. 14 - 40 Queuing in manufacturing Also called job ranking The choice of queuing/job ranking discipline is based on the Ops Mgt performance objectives of Quality – fit for purpose, meet customer expectations. Speed – minimise time (LEAN), first to market. Dependability- able to repeat performance indefinitely Flexibility – ability to change for customer needs / circumstances. Cost – must be cost effective. © 2011 Pearson Education, Inc. publishing as Prentice Hall

41. 14 - 41 Johnsons rule (from S.M.Johnson 1954) Used to find the quickest way to process a number of products in a production line with two workstations. © 2011 Pearson Education, Inc. publishing as Prentice Hall ONE TWO chocolate nuts

42. 14 - 42 Icecreams Choc Bar Choc (3) Nuts (1) Jelly Tip Choc (2) Nuts (0) Magnum Choc (5) Nuts (4) Memphis Choc (3)Nuts (6) © 2011 Pearson Education, Inc. publishing as Prentice Hall

43. 14 - 43 How to run production line most efficiently? Johnsons Rule says: 1.List all jobs & process times for each step. 2.Find the shortest process time (either step). 3.If this time is 1.for step one – schedule that job first 2.for step two – schedule that job last 4.Repeat steps 2&3 on next shortest job. 1.Work in from either end until all jobs are scheduled. © 2011 Pearson Education, Inc. publishing as Prentice Hall

44. 14 - 44 Icecreams result  Jellytips (last)  Choc bars (second last)  Memphis (first)  Magnum (third last)  Memphis / Magnum / Choc Bars /Jellytips © 2011 Pearson Education, Inc. publishing as Prentice Hall

45. 14 - 45 Sequence activities (Gantt chart) Choc Nuts © 2011 Pearson Education, Inc. publishing as Prentice Hall 3 35 2 6 4 3