Production Planning and Control

Sections: 1. Aggregate Production Planning and the Master Production Schedule 2. Material Requirements Planning 3. Capacity Planning 4. Shop loor Control !. "n#entory Control $. %&tensions o' MRP

Production Planning and Control

Concerned (ith the logistics pro)lems in manu'acturing: Managing the details o' (hat* (hen* and ho( many products to produce And o)taining the ra( materials* parts* and resources to produce them PPC sol#es these logistics pro)lems )y managing in'ormation PPC is the integrator in computer integrated manu'acturing

Production Planning
Concerned (ith: 1. +eciding (hich products to ma,e* ho( many o' each* and (hen they should )e completed 2. Scheduling the deli#ery and-or production o' the parts and products 3. Planning the manpo(er and equipment resources needed to accomplish the production plan

Acti#ities in Production Planning

Aggregate production planning . planning the production output le#els 'or ma/or product lines Must )e coordinated (ith product design* production* mar,eting* and sales Master production planning . speci'ic schedule 0master production schedule1 o' the quantities o' indi#idual models in each ma/or product line Material requirements planning 0MRP1 . detailed schedule o' ra( materials and parts production 'or models in master schedule Capacity planning . planning la)or and equipment resources to achie#e the master schedule

Production Control
Concerned (ith determining (hether the necessary resources to implement the production plan ha#e )een pro#ided "' not* it attempts to ta,e correcti#e action to address the de'iciencies Ma/or topics in production control: Shop 'loor control Manu'acturing e&ecution systems "n#entory control Manu'acturing resource planning %nterprise resource planning

Acti#ities in a Production Planning and Control System

Aggregate Production Planning

Planning the production output le#els 'or ma/or product lines 2igh3le#el corporate planning acti#ity Must )e coordinated (ith the plans o' the sales and mar,eting departments "ncludes products that are currently in production Must consider current and 'uture in#entory le#els o' those products Also includes ne( products currently )eing de#eloped Mar,eting plans 'or current and ne( products must )e reconciled against total capacity resources o' the company

Aggregate Production Plan

"ndicates production output le#els 'or the ma/or product lines o' the company

Master Production Schedule

4he speci'ic schedule o' indi#idual products and models that is deri#ed 'rom the aggregate production plan "t is a list o' the products to )e manu'actured* (hen they should )e completed and deli#ered* and in (hat quantities Master production schedule includes three categories o' items: 1. irm customer orders 2. orecasted demand 3. Spare parts

Master Production Schedule

Speci'ic schedule o' indi#idual products* quantities and times

Material Requirements Planning 0MRP1

Computational technique that con#erts the master production schedule 'or end products into a detailed schedule 'or the ra( materials and components used in the end products 5se'ul 'or dependent demand items* not independent demand items "ndependent demand items inal products and spare parts +ependent demand items Component parts used in 'inal products

Structure o' an MRP System

"nputs to the MRP System

1. Master production schedule %&pressed in terms o' time )uc,ets 1. 6ill o' materials 'ile . product structure and list o' component parts in each product 2. "n#entory record 'ile 0item master 'ile1 . includes: "tem master data . part num)er* order quantities* lead times "n#entory status . time3phased record o' in#entory status Su)sidiary data . purchase orders* engineering changes

4ypical Product Structure

"n#entory Record ile

Complicating actors in MRP

7et requirements 8 gross requirements less on3hand in#entories and less quantities on order Common use items . ra( materials and components used on more than one product 9ead times . scheduled deli#ery o' end products must )e translated into time3phased requirements o' components and materials )y 'actoring in lead times :rdering lead times . time )et(een purchase requisition and receipt 'rom #endor Manu'acturing lead times . time )et(een order release and completion

MRP :utputs
1. Planned order releases Purchase orders . to )uy ra( materials and parts ;or, orders . to ma,e parts and products 1. Report o' planned order releases in 'uture periods 2. Rescheduling notices 3. Cancellation notices 4. "n#entory status reports !. Per'ormance reports $. %&ception reports <. "n#entory 'orecasts

MRP 6ene'its Reported )y 5sers

1. 2. 3. 4. !. Reduction in in#entory =uic,er response to changes in demand Reduced setup and changeo#er costs 6etter machine utili>ation "mpro#ed capacity to respond to changes in master production schedule $. Aid in de#eloping the master schedule

;hy Some MRP Systems +o 7ot Succeed

1. Application (as not appropriate 5sually )ecause product structure did not 'it data requirements o' MRP 1. MRP computations )ased on inaccurate data 2. Master production schedule (as not coupled (ith capacity planning MRP generated an unrealistic schedule o' (or, orders that o#erloaded the 'actory

Capacity Planning
Concerned (ith determining la)or and equipment resources required to meet the current master schedule as (ell as long3term 'uture production needs o' the 'irm Also ser#es to identi'y the limitations o' the a#aila)le production resources so that an unrealistic master schedule is not planned Accomplished in t(o stages: 1. Rough3cut capacity planning . to assess 'easi)ility o' master production schedule 2. Capacity requirements planning . detailed capacity calculation 'or indi#idual departments and (or, cells

4(o Stages o' Capacity Planning

Short 4erm Capacity Ad/ustments

%mployment le#els . hiring #s. layo''s 4emporary (or,ers 7um)er o' (or, shi'ts per period 9a)or hours per shi't . o#ertime or reduced hours "n#entory stoc,piling . to smooth production and maintain steady employment :rder )ac,logs Su)contracting . letting /o)s during )usy periods* ta,ing in (or, during slac, periods

9ong 4erm Capacity Ad/ustments

7e( equipment in#estments 7e( plant construction Purchase o' e&isting plants 'rom other companies Acquisition o' e&isting companies Plant closings

Shop loor Control

Concerned (ith releasing production orders to the 'actory* monitoring and controlling the progress o' the orders through the plant* and acquiring current in'ormation on the status o' the orders Manu'acturing e&ecution system 0M%S1 3 the computer so't(are that supports shop 'loor control 4ypically includes capa)ility to respond to on3line inquiries a)out the status o' orders in the shop :ther M%S 'unctions may include generation o' process instructions* real3time in#entory control* and la)or trac,ing

4hree Phases in Shop loor Control

4hree Phases o' Shop loor Control

1. :rder release 2. :rder scheduling 3. :rder progress

:rder Release
Pro#ides documentation to process a production order through the 'actory +ocumentation 0shop pac,et1: Route sheet . process plan Material requisitions . to dra( ra( materials 'rom in#entory ?o) cards 3 to report direct la)or hours e&pended on order and trac, progress o' order Mo#e tic,ets 3 to authori>e transport o' parts )et(een (or, centers Parts list 0i' assem)ly1

:rder Scheduling
Assigns production orders to (or, centers in the plant %&ecutes the dispatching 'unction in production planning and control Sol#es t(o pro)lems in production control: 1. Machine loading . allocating orders to (or, centers Shop loading . loading all machines in the plant 1. ?o) sequencing . determining the sequence in (hich orders (ill )e processed through each (or, center

Priority Control
Sets appropriate priority le#els 'or production orders Possi)le dispatching rules in priority control: irst3come3'irst3ser#e %arliest due date Shortest processing time 9east slac, time Slac, time 8 time remaining until due date minus processing time remaining Critical ratio Ratio o' time remaining until due date di#ided )y processing time remaining

:rder Progress
Monitors the status o' the orders in the plant* ;"P* and other parameters that indicate production progress and per'ormance Purpose is to pro#ide in'ormation use'ul to manage the 'actory )ased on data collected 'rom the 'actory Reports generated )y order progress module: ;or, order status reports . (hether orders are on schedule or )ehind Progress reports . num)er o' orders completed #s. num)er that should ha#e )een completed %&ception reports . o#erdue /o)s* other e&ceptions

actory +ata Collection System

Consists o' the #arious paper documents* terminals* and automated de#ices throughout plant 'or collecting data on shop 'loor operations "ncludes methods to compile and process the data unctions o' 'actory data collection system: 1. 4o supply status and per'ormance data to the shop 'loor control system 2. 4o pro#ide current in'ormation to production 'oremen* plant management* and production control personnel

4ypes o' +ata Collected

+irect la)or time on each order Parts scrapped or needing re(or, Piece counts completed at each (or, center %quipment utili>ation and do(ntime 4ime cloc,s 'or employees

Manual 0Clerical1 +ata "nput 4echniques

Production (or,ers read and 'ill out paper 'orms indicating order progress data 3 e&amples: ?o) tra#eler . (or,ers must record their time spent* piece counts* re/ects* etc.* onto log sheet that tra#els (ith shop pac,et %mployee time sheets . (or,ers 'ill out daily time sheet indicating orders (or,ed on* pieces completed :peration tear strips . preprinted sheets that can )e separated 'rom shop pac,et* 'illed out* and turned in Prepunched cards . similar to tear strips

Automated and Semi3Automated +ata Collection Systems

2ard(are and technology includes: Speciali>ed ,eypads or con#entional ,ey)oards :ptical )ar code readers :ther A"+C systems Con'igurations: :ne centrali>ed terminal Satellite terminals ;or,station terminals

"n#entory Control
Concerned (ith achie#ing an appropriate compromise )et(een t(o opposing o)/ecti#es: 1. Minimi>ing the cost o' holding in#entory "mplies ,eeping in#entory to a minimum 1. Ma&imi>ing customer ser#ice "mplies ,eeping large stoc,s on hand so the customer can immediately ta,e possession

Costs o' 2olding "n#entory

1. "n#estment costs Cost o' money tied up in in#entory until the customer pays 'or the 'inished product 1. Storage costs Cost o' space to store the in#entory 1. Cost o' possi)le o)solescence or spoilage Reduction in #alue o' in#entory (hen it cannot )e used Collecti#ely* these costs are re'erred to as carrying costs or holding costs

:rder Point "n#entory Systems

Concerned (ith t(o related pro)lems that must )e sol#ed (hen managing in#entories o' independent demand items: 1. 2o( many units should )e ordered@ :'ten sol#ed )y using economic order quantity 'ormulas 1. ;hen should the order )e placed@ Can )e sol#ed using reorder point methods

"n#entory Model in Ma,e34o3Stoc,

"n#entory le#el o#er time in a typical ma,e3to3stoc, situation

%conomic :rder =uantity ormula

Situations (hen %:= 'ormula is appropriate: 1. +emand rate 'or the item is 'airly constant 2. Rate o' production is signi'icantly greater than the demand rate

4otal "n#entory Cost %quation

4otal annual cost o' in#entory includes t(o terms 1. Cost o' holding in#entory 2. Cost o' reordering or setup %quation 'or total in#entory cost TIC

Ch Q Csu Da TIC = + 2 Q
(here Ch 8 holding cost* Q 8 order quantity* Csu 8 setup cost* and Da 8annual demand 'or the item

%:= ormula
6y ta,ing the deri#ati#e o' TIC (ith respect to Q and setting the deri#ati#e equal to >ero* the minimum cost order quantity can )e determined

Q = EOQ =

2 Da Csu Ch

Reorder Point Systems

4he actual demand rate 'or the item is not constant throughout the order cycle 4he time to reorder occurs (hen the actual in#entory le#el 'alls )elo( a point ,no(n as the reorder point

:peration o' Reorder Point System

;hen in#entory le#el reaches the reorder point* the ne&t order 'or quantity Q is placed

%&tensions o' MRP

Manu'acturing resource planning 0MRP ""1 %nterprise resource planning 0%RP1

Manu'acturing Resource Planning 0MRP ""1

Computer3)ased system 'or planning* scheduling* and controlling the materials* resources* and supporting acti#ities needed to meet the master production schedule 4ypical modules in MRP "": Management planning . aggregate production planning* master production scheduling Customer ser#ice . sales 'orecasting* order entry* 'inished goods in#entory :perations planning . MRP enhanced (ith capacity requirements planning :perations e&ecution . purchasing* production scheduling and control* shop 'loor control

%nterprise Resource Planning 0%RP1

+e'ined as a computer so't(are system that organi>es and integrates all o' the data and )usiness 'unctions o' an organi>ation through a single* central data)ase 4he 'unctions include: Sales Mar,eting Purchasing :perations 9ogistics +istri)ution "n#entory control Accounting inance 2uman resources %RP runs as a client3ser#er system 3 users access the system through their PCs %RP operates company3(ide* not /ust plant3)ased

%RP 5ses a Single +ata)ase

A#oids pro)lems such as +ata redundancy or con'licting data in di''erent data)ases 4ime delays in entering the data Communication issues )et(een di''erent data)ases %#eryone in the organi>ation has access to the same sets o' data according to their indi#idual /o) responsi)ilities 7ot all o' the data can )e accessed )y all employees

%RP Systems "nclude Multiple So't(are Modules

%ach module is 'ocused on a di''erent )usiness 'unction or group o' 'unctions Modules are integrated through the %RP 'rame(or, Modules can )e classi'ied into 'our main groups 1. Production and materials management 3 MRP ""* master production scheduling* process planning 2. Sales and mar,eting 3 order input* customer ser#ice* deli#ery* in#oicing* product returns 3. inance and accounting 3 )udgeting* cost control* asset management* accounts paya)le 4. 2uman resources 3 payroll* )ene'its* training* /o) descriptions* employee personal data