Chapter 7Chapter 7

Push and Pull Push and Pull

Production Control SystemsProduction Control Systems

MRPMRP and and JITJIT

Push and Pull Control Push and Pull Control SystemsSystems

• A Push System (MRP) initiates A Push System (MRP) initiates production in anticipation of future production in anticipation of future demanddemand– Incorporates forecasts of future demandIncorporates forecasts of future demand

• A Pull System initiates production as A Pull System initiates production as a reaction to present demand (JIT)a reaction to present demand (JIT)

• Initiates production as a reaction of … demand

Difference between MRP Difference between MRP and JITand JIT

• MRP:MRP:– Determine lot sizes based on future Determine lot sizes based on future

demand forecastsdemand forecasts

• JITJIT– Reduce lot sizes to eliminate waste and Reduce lot sizes to eliminate waste and

unnecessary buildups of inventoryunnecessary buildups of inventory

MRP BasicsMRP Basics• Production PlanProduction Plan

– MMaster aster PProduction roduction SSchedule (MPS)chedule (MPS)– MRP systemMRP system– Job shop ScheduleJob shop Schedule

• At the heart of the production plan At the heart of the production plan are the are the demand forecasts of end itemsdemand forecasts of end items– End item:End item:– ComponentsComponents– Raw materialsRaw materials

Figure 7-1Figure 7-1

Schematic of the Schematic of the Productive SystemProductive System

Fig. 7-1

Production PlanProduction Plan

• MPSMPS: specification of the exact : specification of the exact amounts and timing of production of amounts and timing of production of each of the end itemseach of the end items

• MRPMRP is the means by which MPS is is the means by which MPS is broken down into a detailed schedule broken down into a detailed schedule of production for each component that of production for each component that comprises an end itemcomprises an end item

• MRP results are translated into MRP results are translated into specific specific shop floor schedulesshop floor schedules

Data sources for determining Data sources for determining the MPSthe MPS

• Firm customer ordersFirm customer orders• Forecasts of future demand by itemForecasts of future demand by item• Safety stock requirementsSafety stock requirements• Seasonal plansSeasonal plans• Internal orders from other parts of Internal orders from other parts of

the organizationthe organization

Success of MRPSuccess of MRP

• Integrity and timeliness of the dataIntegrity and timeliness of the data• The information system that supports The information system that supports

MRP receives input from:MRP receives input from:– ProductionProduction– MarketingMarketing– And Finance DepartmentsAnd Finance Departments

• A smooth flow of information among A smooth flow of information among these three functional areas is a key these three functional areas is a key ingredient to a ingredient to a successful production successful production planning systemplanning system

Major phases of the control Major phases of the control systemsystem

• Phase 1:Phase 1:

Gathering and coordinating of the Gathering and coordinating of the information require to develop the MPSinformation require to develop the MPS

• Phase 2:Phase 2:

Determination of planned order releases Determination of planned order releases using MRPusing MRP

• Phase 3:Phase 3:

Development of detailed shop floor Development of detailed shop floor schedules and resource requirements from schedules and resource requirements from the MRP planned order releasesthe MRP planned order releases

The Three Major Control The Three Major Control Phases of the Productive Phases of the Productive

SystemSystem

Fig. 7-2

Explosion CalculusExplosion CalculusBill of Material (BOM) Bill of Material (BOM)

explosionexplosion• Set of rules by which Set of rules by which gross gross

requirementsrequirements at one level of at one level of the product the product structurestructure are translated into a are translated into a production schedule at that level and production schedule at that level and requirements at lower levelsrequirements at lower levels

• At the heart of the MRP system is the At the heart of the MRP system is the product structure (figure 7-3):product structure (figure 7-3):

• The method is best illustrated with an The method is best illustrated with an example:example:

Typical Product Structure Typical Product Structure DiagramDiagram

Fig. 7-3

Trumpet and Trumpet and SubassembliesSubassemblies

Fig. 7-4

Product Structure Diagram Product Structure Diagram for Harmon Trumpetfor Harmon Trumpet

Fig. 7-5

Indented BOMIndented BOM

1 Trumpet1 Trumpet

1 Bell assembly1 Bell assembly

1 Valve assembly1 Valve assembly

3 slide assemblies3 slide assemblies

3 valves3 valves

WeekWeek 88 99 1100

1111

1122

1313 1144

1515 1166

1717

DemandDemand 7777 4422

3388

2211

2266

111122

4455

1414 7766

3838

ReturnsReturns

ScheduleScheduled d ReceiptsReceipts

1212 66 99

Expect 23 in inventory at the Expect 23 in inventory at the end of week 7end of week 7

Net Net demanddemand

4242 4422

3322

1122

2266

111122

4455

1414 7766

3838

MRP calculations for Bell MRP calculations for Bell assemblyassembly

WeekWeek 66 77 88 99 1100

1111 1122

1133

1144

1155

1166

1177

Gross Gross ReqtsReqts

4422

4422

3322

1212 2266

111122

4455

1144

7766

3388

Net Net ReqtsReqts

Lead Lead timetime

4422

4422

3322

1212 2266

111122

4455

1144

7766

3388

Time-Time-phasedphased

Net ReqtsNet Reqts

4422

4422

3322

1122

2266

111122

4455

1144

7766

3388

Planned Planned order order releaserelease

(lot for (lot for lot)lot)

4422

4422

3322

1122

2266

111122

4455

1144

7766

3388

MRP calculations for the MRP calculations for the valvesvalves

WeekWeek 22 33 44 55 66 77 88 99 1100

1111

1122

1133

Gross Gross ReqtsReqts

121266

121266

9696 3636 7788

333366

131355

4242 222288

111144

Scheduled Scheduled ReceiptsReceipts 99

66On-hand On-hand Inv.Inv.

181866

6060 3030

Net ReqtsNet Reqts 00 00 6666

3636 7788

333366

131355

4242 222288

111144

Time-Time-phasedphased

Net ReqtsNet Reqts

6666 3636 7878 333366

131355

4422

222288

111144

Planned Planned order order releaserelease

(lot for (lot for lot)lot)

6666 3636 7878 3333

66131355

4422

222288

111144

Incorporating the lot-sizing Incorporating the lot-sizing algorithms into the algorithms into the explosion calculusexplosion calculus

______________________________________________________________________________________

WeekWeek 4 5 6 7 8 9 4 5 6 7 8 9 1010 11 12 11 12 1313

Time-phased Time-phased 42 42 4242 32 32 12 26 112 12 26 112 4545 14 14 76 76 3838

Net ReqtsNet Reqts

__________________________________________________________________________________________________________________________________________________________

Valve casing assemblyValve casing assembly

Starting in week 4Starting in week 4C(1)=132C(1)=132

C(2)=[132+0.6(42)]/2=78.6C(2)=[132+0.6(42)]/2=78.6

C(3)=[132+0.6(42+2(32))]/3=65.2C(3)=[132+0.6(42+2(32))]/3=65.2

C(4)=[132+0.6(42+2(32)+3(12))]/C(4)=[132+0.6(42+2(32)+3(12))]/4=54.34=54.3

C(5)=[132+0.6(42+2(32)+3(12)+4(26C(5)=[132+0.6(42+2(32)+3(12)+4(26))]/5=55.92))]/5=55.92 yy44= 42+42+32+12=128= 42+42+32+12=128

WeekWeek 44 55 66 77 88 99 1100

1111

1122

1133

Time-phased Time-phased

net reqtsnet reqts..4422

4422

3322

1122

2266

111122

4455

1144

7766

3388

Starting in week 8:Starting in week 8:C(1)=132C(1)=132

C(2)=[132+0.6(112)]/2=99.6C(2)=[132+0.6(112)]/2=99.6

C(3)=[112+0.6(112+2(45))]/3=84.4C(3)=[112+0.6(112+2(45))]/3=84.4

C(4)=[112+0.6(112+2(45)+3(14))]/C(4)=[112+0.6(112+2(45)+3(14))]/4=69.64=69.6

C(5)=[112+0.6(112+2(45)+3(14)+4(7C(5)=[112+0.6(112+2(45)+3(14)+4(76))]/5=92.166))]/5=92.16 yy88= 26+112+45+14=197= 26+112+45+14=197

WeekWeek 44 55 66 77 88 99 1100

1111

1122

1133

Time-phased Time-phased net reqts.net reqts.

4422

4422

3322

1122

2266

111122

4455

1144

7766

3388

Starting in week 12:Starting in week 12:

C(1)=132C(1)=132

C(2)=[132+0.6(38)]/2=77.4C(2)=[132+0.6(38)]/2=77.4

yy1212= 76+38=114= 76+38=114

WeekWeek 4 4 5 6 5 6 7 7 88 9 10 9 10 1111 1212 13 13Pon Pon 128128 0 0 0 0 0 0 197197 0 0 0 0 0 0 114114 0 0

WeekWeek 44 55 66 77 88 99 1100

1111

1122

1133

Time-phased Time-phased net reqts.net reqts.

4422

4422

3322

1122

2266

111122

4455

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7766

3388

Part Period BalancingPart Period Balancing

• Set the order horizon = the number Set the order horizon = the number of periods that most closely matches of periods that most closely matches the total the total holding costholding cost with the with the set up set up costcost over that period over that period

Order horizonOrder horizon total holding cost total holding cost11 0022 0.6(42)=25.20.6(42)=25.233 0.6(42+2(32))=64.80.6(42+2(32))=64.844 0.6(42+2(32)+3(12))=86.40.6(42+2(32)+3(12))=86.455

0.6(42+2(32)+3(12)+4(26))=148.8 0.6(42+2(32)+3(12)+4(26))=148.8 > 132> 132 Since 148.8 is closer to 132 than 86.4 the order Since 148.8 is closer to 132 than 86.4 the order horizon is 5 periodshorizon is 5 periods _________________________________________________________ _________________________________________________________

11 0022 0.6(45)=27=270.6(45)=27=2733 0.6(45+2(14))=43.80.6(45+2(14))=43.844 0.6(45+2(14)+3(76))=180.6 0.6(45+2(14)+3(76))=180.6

> 132> 132 Since 121.2 is closer to 132 than 151.2 the order Since 121.2 is closer to 132 than 151.2 the order horizon is 3 periodshorizon is 3 periods__________________________________________________________________________________________________________________

WeekWeek 44 55 66 77 88 99 1100

1111

1122

1133

Time-phased Time-phased

net reqtsnet reqts..4422

4422

3322

1122

2266

111122

4455

1144

7766

3388

MRP calculations for MRP calculations for valve casingvalve casing

44 55 66 77 88 99 1100

1111

1212 1133

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1155

1616 1177

4242 4242 3322

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2626 111122

4455

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NetNet

ReReqtqt

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OrOrdd

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DeDell

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InInvv

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Cost comparisonCost comparison

• Silver-MealSilver-Meal– Setup cost = 3(132) = $396Setup cost = 3(132) = $396– Holding cost = 0.6(424) = $254.40Holding cost = 0.6(424) = $254.40– Total cost = Total cost = $650.40$650.40

• Lot-for-lotLot-for-lot– Setup cost = 132(10) = $1,320Setup cost = 132(10) = $1,320– Holding cost = 0Holding cost = 0– Total cost = Total cost = $1,320$1,320

Lower level of valve casing Lower level of valve casing (valves)(valves)

11 22 33 44 55 66 77 88 99 1100

1111

1122

1313

GrosGross s Rqts.Rqts.

383844

00 00 00 595911

00 00 00 343422

00

ReceiReceiptspts

9696

OH OH invinv

118866

00 9696 9696 9966

00

Net Net ReqtsReqts

191988

00 00 00 494955

00 00 00 343422

00

Time-Time-PhasPhaseded

191988

00 00 00 494955

00 00 00 342342 00 00 00 00SM Orders 198 0 0 0 495 0 0 0 342 0 0 0 0

Lot-sizing with capacity Lot-sizing with capacity constraintsconstraints

• r = (20,40,100,35,80,75,25)r = (20,40,100,35,80,75,25)• c = (60,60,60,60,60,60,60)c = (60,60,60,60,60,60,60)

Checking for feasibility:Checking for feasibility:• rr11 = 20 = 20 c c11=60=60

• rr1 1 +r+r2 2 = 60= 60 c c1 1 +c+c2 2 = 120= 120

• rr1 1 +r+r2 2 +r+r3 3 = 160= 160 c c1 1 +c+c2 2 +c+c3 3 = 180= 180

• rr1 1 +r+r2 2 +r+r3 3 +r+r4 4 = 195= 195 c c1 1 +c+c2 2 +c+c3 3 +c+c4 4 = 240= 240

• rr1 1 +r+r2 2 +r+r3 3 +r+r4 4 +r+r5 5 = 275= 275 c c1 1 +c+c2 2 +c+c3 3 +c+c4 4 +c+c5 5 = 300= 300

• rr1 1 +r+r2 2 +r+r3 3 +r+r4 4 +r+r5 5 +r+r6 6 = 350= 350 c c1 1 +c+c2 2 +c+c3 3 +c+c4 4 +c+c5 5 +c+c6 6 = 360= 360

• rr1 1 +r+r2 2 +r+r3 3 +r+r4 4 +r+r5 5 +r+r6 6 +r+r7 7 = 375= 375 c c1 1 +c+c2 2 +c+c3 3 +c+c4 4 +c+c5 5 +c+c6 6 +c+c7 7 = = 420420

Feasibility test is satisfiedFeasibility test is satisfied

Lot shifting techniqueLot shifting technique• r = (20,40,r = (20,40,100100,35,80,75,25),35,80,75,25)• r’ = (r’ = (4040,,6060,,6060,35,80,75,25),35,80,75,25)• c = (60,60,60,60,60,60,60)c = (60,60,60,60,60,60,60)______________________________________________________________________________

• r’ = (r’ = (4040,,6060,,6060,35,80,75,25),35,80,75,25)

• r’ = (r’ = (4040,,6060,,6060,,5555,,6060,75,25),75,25)

• r’ = (r’ = (5050,,6060,,6060,,60,60,6060,60,60,25),25)

The improvement stepThe improvement step

• K=450 and h =2K=450 and h =2• r = (100, 79, 230, 105, 3, 10, 99, r = (100, 79, 230, 105, 3, 10, 99,

126,40)126,40)• c = (120, 200, 200, 400, 300, 50, c = (120, 200, 200, 400, 300, 50,

120, 50, 30)120, 50, 30)r’r’ 11 22 33 44 55 66 77 88 99

r’r’ 101000

101099

200200 105105 2828 5050 120120 5050 3030

cc 121200

202000

200200 400400 300300 5050 120120 5050 3030

yy 101000

101099

200200 105105 2828 5050 120120 5050 3030

ExcessExcess

capacicapacityty

2020 9191 00 295295 272272 00 00 00 00

Calculations of the Calculations of the improvement stepimprovement step

PerioPeriodd

11 22 33 44 55 66 77 88 99

r’r’ 101000

101099

202000

101055

2828 5050 121200

5050 3030

cc 121200

202000

202000

404000

303000

5050 121200

5050 3030

101088

5858 00 00

yy 101000

101099

202000

101055

2828 5050 121200

5050 3030

191922

242422

ExcesExcesss

capacicapacityty

2020 9191 00 292955

272722

00 00 00 00

Calculations continuedCalculations continued

PerioPeriodd

11 22 33 44 55 66 77 88 99

r’r’ 101000

101099

202000

101055

2828 5050 121200

5050 3030

cc 121200

202000

202000

404000

303000

5050 121200

5050 3030

151588

00

yy 101000

101099

202000

101055

101088

5050 121200

00 00

141422

ExcesExcesss

capaccapacityity

2020 9191 00 292955

191922

00 00 00 00

PerioPeriodd

11 22 33 44 55 66 77 88 99

r’r’ 101000

101099

202000

101055

2828 5050 121200

5050 3030

cc 121200

202000

202000

404000

303000

5050 121200

5050 3030

262633

00

yy 101000

101099

202000

101055

151588

00 121200

00 00

131377

303000

ExcesExcesss

capaccapacityity

2020 9191 00 292955

141422

00 00 00 00

PerioPeriodd

11 22 33 44 55 66 77 88 99

r’r’ 101000

101099

202000

101055

2828 5050 121200

5050 3030

cc 121200

202000

202000

404000

303000

5050 121200

5050 3030

yy 101000

101099

202000

262633

00 00 121200

00 00

ExcesExcesss

capaccapacityity

2020 9191 00 131377

303000

00 00 00 00

Cost comparisonCost comparison

• Initial solutionInitial solution– Holding cost = 2 Holding cost = 2

(0+30+0+0+25+65+86+10)=432(0+30+0+0+25+65+86+10)=432– Set up cost = 9 x 450 = 4,050Set up cost = 9 x 450 = 4,050

Total Cost = 432 + 4,050 = Total Cost = 432 + 4,050 = 4,4824,482• Improved solutionImproved solution

– Holding cost = 2 Holding cost = 2 (0+30+0+158+155+145+166+40+0)(0+30+0+158+155+145+166+40+0)

= 2 x 694 = 1,388= 2 x 694 = 1,388– Set up cost = 5 x 450 = 2,250Set up cost = 5 x 450 = 2,250

Total cost = 1,388 + 2,250 = Total cost = 1,388 + 2,250 = 3,6383,638