Thursday Night Operations Management

Class 7

Chapter 14

Resource Resource PlanningPlanning

Enterprise Resource Planning (ERP)

Organizes and manages a Organizes and manages a company’s business processes by company’s business processes by sharing information across sharing information across functional areasfunctional areas

Connects with supply-chain and Connects with supply-chain and customer management customer management applicationsapplications

Largest ERP provider SAPLargest ERP provider SAP

ERP Modules

ERP’s Central Database

Finance & Accounting

Sales &

Marketing

Human Resources

Production & Materials

ManagementERP Data

Repository

ERP Implementation

First step is to analyze business First step is to analyze business processesprocesses

Which processes have the biggest Which processes have the biggest impact on customer relations?impact on customer relations?

Which process would benefit the Which process would benefit the most from integration?most from integration?

Which processes should be Which processes should be standardized?standardized?

Customer Relationship Management (CRM)

Plans and executes business Plans and executes business processes that involve customer processes that involve customer interactioninteraction

Changes focus from managing Changes focus from managing products to managing customersproducts to managing customers

Point-of-sale data is analyzed for Point-of-sale data is analyzed for patterns used to predict future patterns used to predict future behaviorbehavior

Supply Chain Management

Supply chain planningSupply chain planningSupply chain executionSupply chain executionSupplier relationshipsSupplier relationshipsDistinctions between ERP and Distinctions between ERP and

SCM are becoming increasingly SCM are becoming increasingly blurredblurred

ERP and MRP

MRP (material requirements planning) MRP (material requirements planning) was the precursor to ERPwas the precursor to ERP

Primarily a production planning and Primarily a production planning and control systemcontrol system

MRP evolved to MRP II (manufacturing MRP evolved to MRP II (manufacturing resource planning)resource planning)

ERP and ERP II continue to extend the ERP and ERP II continue to extend the links through all business processeslinks through all business processes

Material Requirements Planning

Computerized inventory control & Computerized inventory control & production planning systemproduction planning system

Schedules component items when they Schedules component items when they are needed - no earlier and no laterare needed - no earlier and no later

When to Use MRP

Dependent and discrete itemsDependent and discrete itemsComplex productsComplex productsJob shop productionJob shop productionAssemble-to-order environmentsAssemble-to-order environments

Material Requirements Planning

Materialrequirements

planning

Planned order

releases

Work orders

Purchase orders

Rescheduling notices

Itemmaster

file

Productstructure

file

Master production schedule

Master Production Schedule

Drives MRP process with a schedule of Drives MRP process with a schedule of finished productsfinished products

Quantities represent production not Quantities represent production not demanddemand

Quantities may consist of a combination of Quantities may consist of a combination of customer orders & demand forecastscustomer orders & demand forecasts

Quantities represent what needs to be Quantities represent what needs to be produced, not what can be producedproduced, not what can be produced

Basic MRP Processes

1.1. Exploding the bill of materialExploding the bill of material

2.2. Netting out inventoryNetting out inventory

3.3. Lot sizingLot sizing

4.4. Time-phasing requirementsTime-phasing requirements

MRP Outputs

Planned ordersPlanned ordersWork ordersWork ordersPurchase ordersPurchase orders

Changes to previous plans or Changes to previous plans or existing schedulesexisting schedules

Action noticesAction noticesRescheduling noticesRescheduling notices

Capacity Terms

Load profileLoad profileCompares released and planned Compares released and planned

orders with work center capacity orders with work center capacity CapacityCapacity

Productive capability; includes Productive capability; includes utilization and efficiencyutilization and efficiency

UtilizationUtilization% of available working time spent % of available working time spent

workingworking

More Capacity Terms

Efficiency – how well the Efficiency – how well the machine or worker performs machine or worker performs compared to a standard outputcompared to a standard output

LoadLoadThe standard hours of work The standard hours of work

assigned to a facilityassigned to a facility

Load percentLoad percentThe ratio of load to capacityThe ratio of load to capacity

Load % = Load % = ((load/capacityload/capacity)x100%)x100%

Capacity Requirements Planning

MRP plannedorder

releases

Routingfile

Capacityrequirements

planning

Openorders

file

Load profile foreach machine center

Initial Load ProfileH

ou

rs o

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pac

ity

Ho

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cap

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11 22 33 44 55 66

Time (weeks)Time (weeks)

NormalNormalcapacitycapacity

120 120 –

110 110 –

100 100 –

90 90 –

80 80 –

70 70 –

60 60 –

50 50 –

40 40 –

30 30 –

20 20 –

10 10 –

0 0 –

Remedies for Underloads

1.1. Acquire more workAcquire more work

2.2. Pull work ahead that is scheduled Pull work ahead that is scheduled for later time periodsfor later time periods

3.3. Reduce normal capacityReduce normal capacity

Remedies for Overloads

1.1. Eliminate unnecessary requirementsEliminate unnecessary requirements

2.2. Reroute jobs to alternative machines or Reroute jobs to alternative machines or work centerswork centers

3.3. Split lots between two or more machinesSplit lots between two or more machines

4.4. Increase normal capacityIncrease normal capacity

5.5. SubcontractSubcontract

6.6. Increase the efficiency of the operationIncrease the efficiency of the operation

7.7. Push work back to later time periodsPush work back to later time periods

8.8. Revise master scheduleRevise master schedule

Initial Load ProfileH

ou

rs o

f ca

pac

ity

Ho

urs

of

cap

acit

y

11 22 33 44 55 66

Time (weeks)Time (weeks)

NormalNormalcapacitycapacity

120 120 –

110 110 –

100 100 –

90 90 –

80 80 –

70 70 –

60 60 –

50 50 –

40 40 –

30 30 –

20 20 –

10 10 –

0 0 –

Adjusted Load ProfileH

ou

rs o

f ca

pac

ity

Ho

urs

of

cap

acit

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11 22 33 44 55 66

Time (weeks)Time (weeks)

NormalNormalcapacitycapacity

120 120 –

110 110 –

100 100 –

90 90 –

80 80 –

70 70 –

60 60 –

50 50 –

40 40 –

30 30 –

20 20 –

10 10 –

0 0 –

Pull aheadPull aheadPush backPush back

Push backPush backOvertime

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

NoNo

YesYes

FeedbackFeedback

NoNo

YesYes

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

NoNo

YesYes

FeedbackFeedback

NoNo

YesYes

Chapter 16

SchedulingScheduling

Scheduling

Specifies when labor, Specifies when labor, equipment, facilities are needed equipment, facilities are needed to produce a product or provide to produce a product or provide a servicea service

Last stage of planning before Last stage of planning before production occursproduction occurs

Scheduling by Process Type

Process IndustryProcess Industry Linear programmingLinear programming EOQ with noninstantaneous replenishmentEOQ with noninstantaneous replenishment

Mass ProductionMass Production Assembly line balancingAssembly line balancing

ProjectProject Project -scheduling techniques (PERT, CPM)Project -scheduling techniques (PERT, CPM)

Objectives in Scheduling

Meet customer due datesMeet customer due dates Minimize job latenessMinimize job lateness Minimize response timeMinimize response time Minimize completion timeMinimize completion time Minimize time in the systemMinimize time in the system Minimize overtimeMinimize overtime Maximize machine or labor utilizationMaximize machine or labor utilization Minimize idle timeMinimize idle time Minimize work-in-process inventoryMinimize work-in-process inventory EfficiencyEfficiency

Shop Floor Control

1.1. Loading - Check availability of Loading - Check availability of material, machines & labormaterial, machines & labor

2.2. Sequencing - Release work orders Sequencing - Release work orders to shop & issue dispatch lists for to shop & issue dispatch lists for individual machinesindividual machines

3.3. Monitoring - Maintain progress Monitoring - Maintain progress reports on each job until it is reports on each job until it is completecomplete

Scheduling and monitoring day to day production of a jobScheduling and monitoring day to day production of a job

Loading

Allocate work to machines Allocate work to machines (resources)(resources)

Perform work on most efficient Perform work on most efficient resourcesresources

Use assignment method of linear Use assignment method of linear programming to determine programming to determine allocationallocation

Sequencing

Prioritize jobs assigned to a Prioritize jobs assigned to a resourceresource

If no order specified use first-come If no order specified use first-come first-served (FCFS)first-served (FCFS)

Many other sequencing rules existMany other sequencing rules existEach attempts to achieve to an Each attempts to achieve to an

objectiveobjective

Sequencing Rules

FCFS - first-come, first-servedFCFS - first-come, first-served LCFS - last come, first servedLCFS - last come, first served DDATE - earliest due dateDDATE - earliest due date CUSTPR - highest customer priorityCUSTPR - highest customer priority SETUP - similar required setupsSETUP - similar required setups SLACK - smallest slackSLACK - smallest slack CR - critical ratioCR - critical ratio SPT - shortest processing timeSPT - shortest processing time LPT - longest processing timeLPT - longest processing time

Critical Ratio Rule

CR considers both time and work remainingCR considers both time and work remaining

CR = =CR = =

If CR > 1, job ahead of scheduleIf CR > 1, job ahead of scheduleIf CR < 1, job behind scheduleIf CR < 1, job behind scheduleIf CR = 1, job on scheduleIf CR = 1, job on schedule

time remainingtime remaining due date - today’s datedue date - today’s date

work remainingwork remaining remaining processing timeremaining processing time

Sequencing Jobs Through Many Machines/Processes

Facility is dynamic, new jobs addedFacility is dynamic, new jobs addedDevelop global sequencing rulesDevelop 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 simulationStudy system via simulation

Monitoring

Gantt ChartGantt ChartShows both planned and completed Shows both planned and completed

activities against a time scaleactivities against a time scale

Input / Output ControlInput / Output ControlMonitors the input and output from Monitors the input and output from

each work centereach work center

Advanced Planning and Scheduling Systems

Infinite - assumes infinite capacityInfinite - assumes infinite capacity Loads without regard to capacityLoads without regard to capacity Then levels the load and sequences jobsThen levels the load and sequences jobs

Finite - assumes finite (limited) capacityFinite - assumes finite (limited) capacity Sequences jobs as part of the loading Sequences jobs as part of the loading

decisiondecision Resources are never loaded beyond Resources are never loaded beyond

capacitycapacity

Advanced Planning and Scheduling Systems

Advanced planning and scheduling (APS)Advanced planning and scheduling (APS) Add-ins to ERP systemsAdd-ins to ERP systems Constraint-based programming (CBP) Constraint-based programming (CBP)

identifies a solution space and evaluates identifies a solution space and evaluates

alternativesalternatives Genetic algorithms based on natural selection Genetic algorithms based on natural selection

properties of geneticsproperties of genetics Manufacturing execution system (MES) Manufacturing execution system (MES)

monitors status, usage, availability, qualitymonitors status, usage, availability, quality

Theory of Constraints

Not all resources are used evenlyNot all resources are used evenlyConcentrate on the” bottleneck” Concentrate on the” bottleneck”

resourceresourceSynchronize flow through the Synchronize flow through the

bottleneckbottleneckUse process and transfer batch sizes Use process and transfer batch sizes

to move product through facilityto move product through facility

Theory of Constraints

• What to Change

• What to Change to

• How to cause the change