Thursday Night Operations
Management
Class 7
Chapter 14
Resource
Planning
Enterprise Resource Planning
(ERP)
 Organizes and manages a
company’s business processes by
sharing information across
functional areas
 Connects with supply-chain and
customer management
applications
 Largest ERP provider SAP
ERP Modules
ERP’s Central Database
Finance &
Accounting
Sales
&
Marketing
ERP Data
Repository
Human
Resources
Production &
Materials
Management
ERP Implementation
 First step is to analyze business
processes
 Which processes have the biggest
impact on customer relations?
 Which process would benefit the
most from integration?
 Which processes should be
standardized?
Customer Relationship
Management (CRM)
 Plans and executes business
processes that involve customer
interaction
 Changes focus from managing
products to managing customers
 Point-of-sale data is analyzed for
patterns used to predict future
behavior
Supply Chain Management
 Supply chain planning
 Supply chain execution
 Supplier relationships
 Distinctions between ERP and
SCM are becoming increasingly
blurred
ERP and MRP
 MRP (material requirements planning)
was the precursor to ERP
 Primarily a production planning and
control system
 MRP evolved to MRP II (manufacturing
resource planning)
 ERP and ERP II continue to extend the
links through all business processes
Material Requirements
Planning
 Computerized inventory control &
production planning system
 Schedules component items when they
are needed - no earlier and no later
When to Use MRP
 Dependent and discrete items
 Complex products
 Job shop production
 Assemble-to-order environments
Material
Requirements
Planning
Product
structure
file
Master
production
schedule
Material
requirements
planning
Item
master
file
Planned
order
releases
Work
orders
Purchase
orders
Rescheduling
notices
Master Production Schedule
 Drives MRP process with a schedule of
finished products
 Quantities represent production not
demand
 Quantities may consist of a combination of
customer orders & demand forecasts
 Quantities represent what needs to be
produced, not what can be produced
Basic MRP Processes
1. Exploding the bill of material
2. Netting out inventory
3. Lot sizing
4. Time-phasing requirements
MRP Outputs
 Planned orders
Work orders
Purchase orders
 Changes to previous plans or
existing schedules
Action notices
Rescheduling notices
Capacity Terms
 Load profile
Compares released and planned
orders with work center capacity
 Capacity
Productive capability; includes
utilization and efficiency
 Utilization
% of available working time spent
working
More Capacity Terms
 Efficiency – how well the
machine or worker performs
compared to a standard output
 Load
The standard hours of work
assigned to a facility
 Load percent
The ratio of load to capacity
Load % = (load/capacity)x100%
Capacity Requirements Planning
MRP planned
order
releases
Routing
file
Capacity
requirements
planning
Load profile for
each machine center
Open
orders
file
Hours of capacity
Initial Load Profile
120 –
110 –
100 –
90 –
80 –
70 –
60 –
50 –
40 –
30 –
20 –
10 –
0–
Normal
capacity
1
2
3
4
Time (weeks)
5
6
Remedies for Underloads
1. Acquire more work
2. Pull work ahead that is scheduled
for later time periods
3. Reduce normal capacity
Remedies for Overloads
1. Eliminate unnecessary requirements
2. Reroute jobs to alternative machines or
work centers
3. Split lots between two or more machines
4. Increase normal capacity
5. Subcontract
6. Increase the efficiency of the operation
7. Push work back to later time periods
8. Revise master schedule
Hours of capacity
Initial Load Profile
120 –
110 –
100 –
90 –
80 –
70 –
60 –
50 –
40 –
30 –
20 –
10 –
0–
Normal
capacity
1
2
3
4
Time (weeks)
5
6
Hours of capacity
Adjusted Load Profile
120 –
110 –
100 –
90 –
80 –
70 –
60 –
50 –
40 –
30 –
20 –
10 –
0–
Pull ahead
Overtime
1
2
Work
an
extra
shift
3
Push back
Push back
4
Time (weeks)
Normal
capacity
5
6
Manufacturing
Resource Planning
(MRP II)
Customer
orders
Aggregate
production
plan
Forecast
No
Feasible?
Yes
Master production
schedule
Material requirements
planning
Capacity requirements
planning
No
Feasible?
Feedback
Yes
Purchase
orders
Work
orders
Inventory
Shop floor
control
Manufacture
Chapter 16
Scheduling
Scheduling
 Specifies when labor,
equipment, facilities are needed
to produce a product or provide
a service
 Last stage of planning before
production occurs
Scheduling by
Process Type
 Process Industry
 Linear programming
 EOQ with noninstantaneous replenishment
 Mass Production
 Assembly line balancing
 Project
 Project -scheduling techniques (PERT, CPM)
Objectives in Scheduling
 Meet customer due dates
 Minimize job lateness
 Minimize response time
 Minimize completion time
 Minimize time in the system
 Minimize overtime
 Maximize machine or labor utilization
 Minimize idle time
 Minimize work-in-process inventory
 Efficiency
Shop Floor Control
Scheduling and monitoring day to day production of a job
1. Loading - Check availability of
material, machines & labor
2. Sequencing - Release work orders
to shop & issue dispatch lists for
individual machines
3. Monitoring - Maintain progress
reports on each job until it is
complete
Loading
 Allocate work to machines
(resources)
 Perform work on most efficient
resources
 Use assignment method of linear
programming to determine
allocation
Sequencing
 Prioritize jobs assigned to a
resource
 If no order specified use first-come
first-served (FCFS)
 Many other sequencing rules exist
 Each attempts to achieve to an
objective
Sequencing Rules
 FCFS - first-come, first-served
 LCFS - last come, first served
 DDATE - earliest due date
 CUSTPR - highest customer priority
 SETUP - similar required setups
 SLACK - smallest slack
 CR - critical ratio
 SPT - shortest processing time
 LPT - longest processing time
Critical Ratio Rule
CR considers both time and work remaining
CR =
time remaining
work remaining
=
due date - today’s date
remaining processing time
If CR > 1, job ahead of schedule
If CR < 1, job behind schedule
If CR = 1, job on schedule
Sequencing Jobs Through Many
Machines/Processes
 Facility is dynamic, new jobs added
 Develop global sequencing rules
First-in-system, first-served (FISFS)
Work-in-next-queue (WINQ)
Fewest # remaining operations (NOPN)
Slack per remaining operation (S/OPN)
Remaining work (RWK)
 Study system via simulation
Monitoring
 Gantt Chart
Shows both planned and completed
activities against a time scale
 Input / Output Control
Monitors the input and output from
each work center
Advanced Planning and Scheduling
Systems
 Infinite - assumes infinite capacity
 Loads without regard to capacity
 Then levels the load and sequences jobs
 Finite - assumes finite (limited) capacity
 Sequences jobs as part of the loading
decision
 Resources are never loaded beyond
capacity
Advanced Planning and Scheduling
Systems
 Advanced planning and scheduling (APS)
 Add-ins to ERP systems
 Constraint-based programming (CBP)
identifies a solution space and evaluates
alternatives
 Genetic algorithms based on natural selection
properties of genetics
 Manufacturing execution system (MES)
monitors status, usage, availability, quality
Theory of Constraints
 Not all resources are used evenly
 Concentrate on the” bottleneck”
resource
 Synchronize flow through the
bottleneck
 Use process and transfer batch sizes
to move product through facility
Theory of Constraints
• What to Change
• What to Change to
• How to cause the change