Supporting Slides

Systems for Planning & Control in Manufacturing

Produced by D K Harrison and D J Petty 21/04/02 Sld - 0000

XSupporting Slides

Professor David K HarrisonGlasgow Caledonian University

Dr David J PettyThe University of Manchester Institute of Science and Technology

Systems for Planning & Control in Manufacturing:Systems and Management for Competitive Manufacture

ISBN 0 7506 49771


Produced by D K Harrison and D J Petty 21/04/02 Sld -

Planning and Control – Overview

• ObjectivesAppropriate QualityAppropriate QuantityProduced at the Right TimeOptimal Cost

• ConcernsForward PlanningEstablishing PrioritiesScheduling

• Outside ScopeProduct Design, R&DMarketingProcess Technology

• Limitations

MRPIIJIT

OPTPhilosophies:

Definition:"The coordination of manufacturing and

logistical activities within anorganisation to enable the

transformation of materials intofinished product in line with the corporate

objectives of an organisation".

16

1601



Rationale for Planning

Organisation Environment

16

1602



Manufacturing Management - History 16

ROP

ScientificManagement

OperationsResearch

MRP

ClosedLoop MRP

MRP II

JIT

OPT

Finite CapacityScheduling

ERP

1603



Open-Loop Systems

• Earliest Form of Planning

• Techniques to be CoveredRe-Order Point (ROP)Material Requirements Planning (MRP)

• The Manufacturing Database

• Basic Inventory Management

16

1604



Manufacturing Data - Items

• Items DefinitionMakeBuySell

• Unique Identifier

• Holds Key Data Lead-timesLot Sizes

16

1605



Items and Bills of Materials (BOMs)

Motor

Rotor

Rotor Core ShaftShaft

ShaftShaft

Steel Bar

(300mm)Motor Body

End Cover

(2)

TerminalBox

Rotor Winding Feet(2)

Bearing(2)

16

1606



Full Parts Explosion

Motor

FeetT.BoxE.Cover BearingMotorRotor

(2)(2)(2)

Rotor

Core

Shaft

Steel

(300mm)

CastingCasting Casting Casting

Body

Winding

Winding

Core

Copper

Wire

(3Kg)

Small

Items

Bills of Materials are Alternatively Called “Product Structures”

16

1607



Use of Phantoms 16

B C D E

A

F

B C D E

G

H

B C D E

I

J

B C D E

XX

A

F

X

G

H

X

I

J

Orders are Never Generated for “X”, but rather B, C, D and E

1608



16Order Model of Control (1)

Sales. Customer name, addressProduct(s)/quantities(s)Price(s)Terms and conditionsDelivery dates

Works. Product/quantitiesLaunch DateDue Date

Purchase. Supplier name, addressProduct(s)/quantities(s)Price(s)Terms and conditionsDelivery dates

Sent by a Customer to a SupplierRaised by a Supplier in Response to a

Purchase Order

Raised by a Supplier to Trigger Manufacturing Activity

1609



Order Model of Control (2)

RM

STK

FGI

STK

ShopfloorFeedback

IssueTransaction

ReceiptTransaction

Work in Process

LaunchDate

DueDate

PO Receipt SODespatch

DueDateDue

Date

Lead Time (Lt )

QueueProcess

3QueueProcess

1 Queue 2Process

STK = StockRM = Raw MaterialPO = Purchase Order

STK = StockFGI = Finished Goods InventorySO = Sales Order

16

1610



ROP Theory 16

std SLAROP

AverageDemand (Ad)

= Gradient

Sto

ck

Time

Ls

Ss

Lt

ROP

1611



16Typical Demand Pattern

0

100

200

300

400

Jan

Mar

May Ju

lSep Nov Ja

nM

arM

ay Jul

Sep Nov

Time (Months)

Dem

and

(U

nit

s)

Mean

+90%

-90%

ROP - Assumptions

Orders Arrive LateMaterial is Consumed DiscontinuouslyAverage Demand is Not Representative

1612



16Effect of Uncertainty

Jan

Mar

May

Jul

Sep

Nov

Jan

Mar

May

Jul

Sep

Nov

-200

0

200

400

600

800

1000

1200

Stockout

Stock

Time

1613



Probability Distribution

0 100 200 300 400 500

Weekly Sales

0

2

4

6

8

10

Pro

babi

lity

%

Mean = 270

M.A.D = 35

)F(xn

1 MAD ii

ni

1i

16

1614



959799

101103105107109111113115

Months

Sales

Actual Forecast Corrected

• What Level of Safety Stock is Required?

• This Depends on the Service Level Required

Stage 1. Calculate MAD.

Stage 2. Determine the numbers of MADs corresponding to Service Level.

Stage 3. Multiply the number of MADs by the MAD Value.

Forecast Uncertainty (1) 16

1615



Stage 1.

Service vs MAD

0.00

0.50

1.00

1.50

2.00

2.50

3.00

50 60 70 80 90 100

Service Level %

MA

D

1.32

95%

Stage 2.

Stage 3.

Sales Forecasing ExampleDate Sales Forecast Dev Ab Dev

Dec 97 97 0 0Jan 97 97 0 0Feb 98 97 1 1Mar 101 97 4 4Apr 105 98 7 7May 104 99 5 5Jun 103 100 3 3Jul 104 101 3 3Aug 104 102 2 2Sep 103 102 1 1Oct 99 102 -3 3Nov 100 101 -1 1Dec 102 101 1 1Jan 101 101 0 0Feb 102 101 1 1Mar 107 101 6 6Apr 104 103 1 1May 107 103 4 4Jun 108 104 4 4Jul 107 105 2 2Aug 109 105 4 4Sep 104 106 -2 2Oct 105 105 0 0Nov 103 105 -2 2Dec 106 105 1 1

MAD = 2

Forecast Uncertainty (2) 16

Assume a Service Level of 95%

Safety Stock = 1.32 x 2Safety Stock = 2.64Safety Stock 3

1616



EOQ Theory (1) 16In

ven

tory

Inve

nto

ry

Time

Time

Dr

Ls

1617



EOQ Theory (2) 16

C

T.C.D2. = EOQ

L

.T.CD

2

C

dL

dC

.CS2

.CL

L

)T.T(L.CD= C

i

spr

2s

spri

s

t

isis

s

spsprt

Annual Stock Holding Cost = Ci (£/unit) Annual Demand Rate = Dr (units/year)Production Cost Rate = Cp (£/min) Lot Size = Ls (units)Set-up time = Ts (mins) Lot Size for Minimum Cost = EOQProcess Time = Tp (mins)

1618



EOQ Theory (3)

Lot Size

Inventory

Production

Total

InventoryCost

ProductionCost

TotalCost

Cost

EOQ

1619

16



16Evolution of MRP

Definition: The planning of components based on the demand for higher level assemblies.

Demand

Orders

Re-Order Point

Demand

Orders

Material Requirements Planning


Master Production Scheduling

Sales and Operations Planning

BusinessPlanning

Capacity Requirements Planning

Realistic

Shop Floor Control

No

Yes

Purchasing

1620



Limitations of ROP 16

A

B C D E F G H I J K(95%) (95%) (95%) (95%) (95%) (95%) (95%) (95%) (95%) (95%)

Assembly

Components

Overall Service Level =

Independent

Dependent

Demand from outside the organisation ROP

Demand from higher level assemblies MRP

1621



ROP - Exceptions

0 10 20 30 40 50 60 70 80 90 1000

20

40

60

80

100

120

Low Cost High Volume Commonality Non-Critical Availability

"C" Class Items Eg. Fasteners

% of Variety

% o

f V

alu

e

AB

C

1622

16



MRP Principles

Net

Requirements

Gross

Requirements

Next Level

Sales

Orders

Bill ofMaterialsInformation

Item

Order

DataInventoryBalances MRP

16

1623



MRP - Example 16

10SOH 3 4 5 6 7 8

20 20 20 20 20 20 20 20

Projected Available Balance

Gross Requirements

Scheduled Receipts

Planned Order Release

Planned Order Receipt

60

9

25

10SOH 3 4 5 6 7 8


Gross Requirements

Scheduled Receipts



9

15

A0

F1

ProductStructure

Part No: A0

Lead Time: 3

Order Qty: 60

Lead Time: 1

Order Qty: 120

Part No: F1

SOH = Stock on Hand

1624



MRP – Summary 16

Collect - Gross Requirements

Nett - Stocks and Receipts

Apply - Allowances and Lot Sizes

Offset - Lead Times

Explode - Into Components

1625



• Avoids Problems of ROP

• Not Required for All Parts

• More Complex

• Requires Bills of Material

• Scheduling Engine for Closed Loop MRP

MRP - Summary 16

1626



17Closed Loop MRP - Overview

Definition: A system built around MRP, but including the additional functions of sales and operations planning, master production scheduling and capacity requirements planning. Closed loop implies monitoring and control of the execution functions (both purchase and manufacture).

Demand

Orders

Re-Order Point

Demand

Orders





BusinessPlanning


Realistic

Shop Floor Control

No

Yes

Purchasing

1701



17Closed-Loop Control

DemingCycle

Feedback

Planning

ClosedLoop MRP

Execution

Act Check

DoPlan

CorrectiveAction

1702



Hierarchical Management 17

Pro

cess

Con

trol

Low

Lev

elP

lann

ing

Cor

pora

teP

lann

ing

Agg

rega

teP

lann

ing

Mas

ter

Pla

nnin

g

Inte

rmed

iate

Pla

nnin

g




BusinessPlanning


Realistic

Shop Floor Control

No

Yes

Purchasing

1703



Open-Loop Assumptions 17

• Demand Remains Constant

• Execution Proceeds as Planned

• All Data is Static and Accurate

• Management Policies Remain Constant

1704



Open-Loop Limitations (1) 17

Sales

Suppliers

Manufacturing

Engineering

Planning

Stores

Open Loop MRPOrder Launchand Expedite

1705



Open-Loop Limitations (2) 17

10SOH 3 4 5 6 7 8

20 20 20 20 20 20 20 20


Gross Requirements

Scheduled Receipts



60

9

25

10SOH 3 4 5 6 7 8


Gross Requirements

Scheduled Receipts



9

15

A0

F1

Product Structure

Part No: A0

Lead Time: 3

Order Qty: 60

Lead Time: 1

Order Qty: 120

Part No: F1

40

45 85 65 45 5 45

60

25

60

75 75 15 15 1515

120

75

120

60 60

60

25

60

15

1706



Closed-Loop Mechanism (1) 17

• By the Provision of Capacity Planning Tools

• By the Monitoring of the Execution of Plans

• By the Printing of Planner Action Messages

1707



Closed-Loop Mechanism (2) 17

Sales and Operations Planning (SOP).requires management to review business requirements over the medium term and provide capacity.

Master Production Scheduling (MPS).allows any discontinuities between supply and demand to be taken into account. If it is not possible for demand to be met, MPS is the mechanism whereby management can exercise control.

Capacity Requirements Planning (CRP).CRP checks the output of MRP to ensure that sufficient capacity is available at a detailed level to meet the plans generated.

Progress of orders through the various operations required.

If any items in a batch are scrapped, this will similarly be recorded.

Changes in purchase order due dates can also be recorded.





Realistic

Shop Floor Control

No

Yes

Purchasing

1708



Planner Action Lists 17

ArePlanned

Orders Due forRelease?

Is PlanValid?

NextItem

YesNo

SufficientScheduledReceipts?

Yes

GeneratePlannedOrder(s)

Any Gross Requirements?

SufficientStock on Hand?

NoYes No

Yes

No

Yes

No

GenerateAction

MessageIndependent

Demand

Explodeto NextLevel

Items Processed in Logical Order (ie., According to BOM)

GenerateReleaseMessage

1709



Typical Messages 17

Generated After MRP Run

Actioned by Planner

• Past Due Order• Reschedule Order in• Reschedule Order Out• Cancel Order• Planned Order Due for Release• Planned Order Past Due for Release

1710



Terminology

• Regenerative/Net Change MRP

• Bucketed/Bucketless System

• Pegging

10SOH 3 4 5 6 7 8

20 20 20 20 20 20 20 20


Gross Requirements

Scheduled Receipts



5 45 25 5 25 5

60

60

45

60

9

25

10SOH 3 4 5 6 7 8


Gross Requirements

Scheduled Receipts



75 75 15 15 1515

9

15 15

60 60

A0

F1

ProductStructure

Part No: A0

Lead Time: 3

Order Qty: 60

Lead Time: 1

Order Qty: 120

Part No: F1

60

45

60

120

75

120

SOH = Stock on Hand

10SOH 3 4 5 6 7 8

20 20 20 20 20 20 20 20


Gross Requirements

Scheduled Receipts



5 45 25 5 25 525 5

60

60

45

60

60

45

60

45

60

9

25

10SOH 3 4 5 6 7 8


Gross Requirements

Scheduled Receipts



75 75 15 15 151575 75 15 15 1515

9

15 15

60 60

15

60 60

A0

F1

ProductStructure

Part No: A0

Lead Time: 3

Order Qty: 60

Lead Time: 1

Order Qty: 120

Part No: F1

60

45

60

45

60

120

75

120

120

75

120

75

120

SOH = Stock on Hand

A

B C D E F G H I J K

17

1711



MRPII 17

Definition: A method for planning of all resources in a manufacturing organisation. It includes a simulation capability and is integrated with financial planning. These systems work with the modules of closed-loop MRP.




BusinessPlanning


Realistic

Shop Floor Control

No

Yes

Purchasing

• Similar to Closed Loop

• Simulation Capability

• Financial Management

Rough-Cut Capacity Planning

1712



ERP

• No Universal Definition

• Some “Re-Badging”

• FunctionalityProduct Families/Medium-Term Aggregate PlansMulti-Site ReportingElectronic Commerce Functionality

• Widely Used Terminology

17

1713



Advantages of the Package Approach

• Maintenance Fees

• Business Focus

• Implementation Times

• System Reliability

• Advanced IT/IS Functionality

17

BespokeApproach

PackageApproach

1714



Forecasting

SOP

POP

InventoryControl

Distribution

MRPII/ERP Package Structure 17

MRP

SFC

BOM

Routings

CRP

RCCPMPS

WOP

Manufacturing

PurchaseLedger

SalesLedger

GeneralLedger

Financial

FixedAssets

1715



Additional ERP Functionality

• Configured Products

• Human Resource Management

• Maintenance Management

• Quality Management

17

1716



Static and Dynamic Data

Sales/Marketing

DynamicStaticFunction

Design

Process Planning

Production Planning

AccountsAccountNumbers

WorksOrders

CustomerAddresses

PartGeometry

Personnel

AccountBalances

PaymentsYear to Date

Machines

Work CentreCapacity

SalesOrders

PersonnelNames

PurchaseOrders

SuppliersAddressesPurchasing

17

1717



The MRPII/ERP Database

Sales Orders

Purchase Orders Inventory

Works Orders

Item MasterBOM

Routing Master

Customer Master

Supplier Master

17

Data Accuracy is Crucial1718



Closed-Loop MRP - Summary

• Avoids "Order Launch and Expedite"

• Uses Planner Action Lists

• MRP Becomes a Module

• Introduces New Elements

• Generates Viable Plans

• Monitors Execution

• Has Evolved into ERP

• Only a Piece of Software

17

1719



Course Book

Systems for Planning & Control in Manufacturing:

Systems and Management for Competitive Manufacture

Professor David K HarrisonDr David J Petty

ISBN 0 7506 49771

X

0000

Documents

Supporting Slides