Thursday Night Operations Management Class 7

Chapter 14 Resource Planning

Enterprise Resource Planning (ERP) Organizes and manages a company’s business processes by sharing information across functional areas Organizes and manages a company’s business processes by sharing information across functional areas Connects with supply-chain and customer management applications Connects with supply-chain and customer management applications Largest ERP provider SAP Largest ERP provider SAP

ERP Modules

ERP’s Central Database Finance & Accounting Sales & Marketing Human Resources Production & Materials Management ERP Data Repository

ERP Implementation First step is to analyze business processes First step is to analyze business processes Which processes have the biggest impact on customer relations? Which processes have the biggest impact on customer relations? Which process would benefit the most from integration? Which process would benefit the most from integration? Which processes should be standardized? Which processes should be standardized?

Customer Relationship Management (CRM) Plans and executes business processes that involve customer interaction Plans and executes business processes that involve customer interaction Changes focus from managing products to managing customers Changes focus from managing products to managing customers Point-of-sale data is analyzed for patterns used to predict future behavior Point-of-sale data is analyzed for patterns used to predict future behavior

Supply Chain Management Supply chain planning Supply chain planning Supply chain execution Supply chain execution Supplier relationships Supplier relationships Distinctions between ERP and SCM are becoming increasingly blurred Distinctions between ERP and SCM are becoming increasingly blurred

ERP and MRP MRP (material requirements planning) was the precursor to ERP MRP (material requirements planning) was the precursor to ERP Primarily a production planning and control system Primarily a production planning and control system MRP evolved to MRP II (manufacturing resource planning) MRP evolved to MRP II (manufacturing resource planning) ERP and ERP II continue to extend the links through all business processes ERP and ERP II continue to extend the links through all business processes

Material Requirements Planning Computerized inventory control & production planning system Computerized inventory control & production planning system Schedules component items when they are needed - no earlier and no later Schedules component items when they are needed - no earlier and no later

When to Use MRP Dependent and discrete items Dependent and discrete items Complex products Complex products Job shop production Job shop production Assemble-to-order environments Assemble-to-order environments

Material Requirements Planning Material requirements planning Planned order releases Work orders Purchase orders Rescheduling notices Item master file Product structure file Master production schedule

Master Production Schedule Drives MRP process with a schedule of finished products Drives MRP process with a schedule of finished products Quantities represent production not demand Quantities represent production not demand Quantities may consist of a combination of customer orders & demand forecasts Quantities may consist of a combination of customer orders & demand forecasts Quantities represent what needs to be produced, not what can be produced Quantities represent what needs to be produced, not what can be produced

Basic MRP Processes 1.Exploding the bill of material 2.Netting out inventory 3.Lot sizing 4.Time-phasing requirements

MRP Outputs Planned orders Planned orders Work orders Work orders Purchase orders Purchase orders Changes to previous plans or existing schedules Changes to previous plans or existing schedules Action notices Action notices Rescheduling notices Rescheduling notices

Capacity Requirements Planning (CRP) Computerized system that projects load from material plan Computerized system that projects load from material plan Creates load profile Creates load profile Identifies underloads and overloads Identifies underloads and overloads

Capacity Terms Load profile Load profile Compares released and planned orders with work center capacity Compares released and planned orders with work center capacity Capacity Capacity Productive capability; includes utilization and efficiency Productive capability; includes utilization and efficiency Utilization Utilization % of available working time spent working % of available working time spent working

More Capacity Terms Efficiency – how well the machine or worker performs compared to a standard output Efficiency – how well the machine or worker performs compared to a standard output Load Load The standard hours of work assigned to a facility The standard hours of work assigned to a facility Load percent Load percent The ratio of load to capacity Load % = (load/capacity)x100% The ratio of load to capacity Load % = (load/capacity)x100%

Capacity Requirements Planning MRP planned order releases Routing file Capacity requirements planning Open orders file Load profile for each machine center

Initial Load Profile Hours of capacity Time (weeks) Normalcapacity – – – – – – – – – – – – 0 0 –

Remedies for Underloads 1.Acquire more work 2.Pull work ahead that is scheduled for later time periods 3.Reduce normal capacity

Remedies for Overloads 1.Eliminate unnecessary requirements 2.Reroute jobs to alternative machines or work centers 3.Split lots between two or more machines 4.Increase normal capacity 5.Subcontract 6.Increase the efficiency of the operation 7.Push work back to later time periods 8.Revise master schedule

Initial Load Profile Hours of capacity Time (weeks) Normalcapacity – – – – – – – – – – – – 0 0 –

Adjusted Load Profile Hours of capacity Time (weeks) Normalcapacity – – – – – – – – – – – – 0 0 – Pull ahead Push back Overtime Work an extra shift

Manufacturing Resource Planning (MRP II) Forecast Aggregate production plan Customer orders Feasible? Master production schedule Material requirements planning Capacity requirements planning Feasible? Purchase orders Work orders Inventory Shop floor control Manufacture No Yes Feedback No Yes Forecast Aggregate production plan Customer orders Feasible? Master production schedule Material requirements planning Capacity requirements planning Feasible? Purchase orders Work orders Inventory Shop floor control Manufacture No Yes Feedback No Yes

Chapter 16 Scheduling

Scheduling Specifies when labor, equipment, facilities are needed to produce a product or provide a service Specifies when labor, equipment, facilities are needed to produce a product or provide a service Last stage of planning before production occurs Last stage of planning before production occurs

Scheduling by Process Type Process Industry Process Industry Linear programming Linear programming EOQ with noninstantaneous replenishment EOQ with noninstantaneous replenishment Mass Production Mass Production Assembly line balancing Assembly line balancing Project Project Project -scheduling techniques (PERT, CPM) Project -scheduling techniques (PERT, CPM)

Objectives in Scheduling Meet customer due dates Meet customer due dates Minimize job lateness Minimize job lateness Minimize response time Minimize response time Minimize completion time Minimize completion time Minimize time in the system Minimize time in the system Minimize overtime Minimize overtime Maximize machine or labor utilization Maximize machine or labor utilization Minimize idle time Minimize idle time Minimize work-in-process inventory Minimize work-in-process inventory Efficiency Efficiency

Shop Floor Control 1.Loading - Check availability of material, machines & labor 2.Sequencing - Release work orders to shop & issue dispatch lists for individual machines 3.Monitoring - Maintain progress reports on each job until it is complete Scheduling and monitoring day to day production of a job

Loading Allocate work to machines (resources) Allocate work to machines (resources) Perform work on most efficient resources Perform work on most efficient resources Use assignment method of linear programming to determine allocation Use assignment method of linear programming to determine allocation

Sequencing Prioritize jobs assigned to a resource Prioritize jobs assigned to a resource If no order specified use first-come first-served (FCFS) If no order specified use first-come first-served (FCFS) Many other sequencing rules exist Many other sequencing rules exist Each attempts to achieve to an objective Each attempts to achieve to an objective

Sequencing Rules FCFS - first-come, first-served FCFS - first-come, first-served LCFS - last come, first served LCFS - last come, first served DDATE - earliest due date DDATE - earliest due date CUSTPR - highest customer priority CUSTPR - highest customer priority SETUP - similar required setups SETUP - similar required setups SLACK - smallest slack SLACK - smallest slack CR - critical ratio CR - critical ratio SPT - shortest processing time SPT - shortest processing time LPT - longest processing time LPT - longest processing time

Critical Ratio Rule CR considers both time and work remaining CR = = If CR > 1, job ahead of schedule If CR < 1, job behind schedule If CR = 1, job on schedule time remainingdue date - today’s date work remainingremaining processing time

Sequencing Jobs Through Many Machines/Processes Facility is dynamic, new jobs added Facility is dynamic, new jobs added Develop global sequencing rules Develop global sequencing rules First-in-system, first-served (FISFS) First-in-system, first-served (FISFS) Work-in-next-queue (WINQ) Work-in-next-queue (WINQ) Fewest # remaining operations (NOPN) Fewest # remaining operations (NOPN) Slack per remaining operation (S/OPN) Slack per remaining operation (S/OPN) Remaining work (RWK) Remaining work (RWK) Study system via simulation Study system via simulation

Monitoring Gantt Chart Gantt Chart Shows both planned and completed activities against a time scale Shows both planned and completed activities against a time scale Input / Output Control Input / Output Control Monitors the input and output from each work center Monitors the input and output from each work center

Advanced Planning and Scheduling Systems Infinite - assumes infinite capacity Infinite - assumes infinite capacity Loads without regard to capacity Loads without regard to capacity Then levels the load and sequences jobs Then levels the load and sequences jobs Finite - assumes finite (limited) capacity Finite - assumes finite (limited) capacity Sequences jobs as part of the loading decision Sequences jobs as part of the loading decision Resources are never loaded beyond capacity Resources are never loaded beyond capacity

Advanced Planning and Scheduling Systems Advanced planning and scheduling (APS) Advanced planning and scheduling (APS) Add-ins to ERP systems Add-ins to ERP systems Constraint-based programming (CBP) identifies a solution space and evaluates alternatives Constraint-based programming (CBP) identifies a solution space and evaluates alternatives Genetic algorithms based on natural selection properties of genetics Genetic algorithms based on natural selection properties of genetics Manufacturing execution system (MES) monitors status, usage, availability, quality Manufacturing execution system (MES) monitors status, usage, availability, quality

Theory of Constraints Not all resources are used evenly Not all resources are used evenly Concentrate on the” bottleneck” resource Concentrate on the” bottleneck” resource Synchronize flow through the bottleneck Synchronize flow through the bottleneck Use process and transfer batch sizes to move product through facility Use process and transfer batch sizes to move product through facility

Theory of Constraints What to Change What to Change to How to cause the change