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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
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 –
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
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 –
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