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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
1144
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
1144
1155
1616 1177
4242 4242 3322
1122
2626 111122
4455
1144
7676 3388
NetNet
ReReqtqt
4422
4422
3322
1122
2626 111122
4455
1144
7676 3388
OrOrdd
112288
00 00 00 191977
00 00 00 111144
00
DeDell
121288
00 00 00 191977
00 00 00 111144
00
InInvv
8686 4444 1122
00 171711
5599
1144
00 3838 00
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