Systems for Planning & Control in Manufacturing
X
Supporting Slides
Systems for Planning &
Control in Manufacturing:
Systems and Management for
Competitive Manufacture
Professor David K Harrison
Glasgow Caledonian University
ISBN 0 7506 49771
Dr David J Petty
The University of Manchester Institute of
Science and Technology
Produced by D K Harrison and D J Petty 21/04/02
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Systems for Planning & Control in Manufacturing
16
Planning and Control – Overview
• Objectives
Appropriate Quality
Appropriate Quantity
Produced at the Right Time
Optimal Cost
Philosophies:
• Concerns
Forward Planning
Establishing Priorities
Scheduling
• Outside Scope
Product Design, R&D
Marketing
Process Technology
MRPII
JIT
OPT
Definition:
"The coordination of manufacturing and
logistical activities within an
organisation to enable the
transformation of materials into
finished product in line with the corporate
objectives of an organisation".
• Limitations
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16
Rationale for Planning
Organisation
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Environment
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Systems for Planning & Control in Manufacturing
Manufacturing Management - History
16
Scientific
Management
ROP
Operations
Research
MRP
Closed
Loop MRP
ERP
Finite Capacity
Scheduling
MRP II
OPT
JIT
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Systems for Planning & Control in Manufacturing
Open-Loop Systems
16
• Earliest Form of Planning
• Techniques to be Covered
Re-Order Point (ROP)
Material Requirements Planning (MRP)
• The Manufacturing Database
• Basic Inventory Management
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Systems for Planning & Control in Manufacturing
Manufacturing Data - Items
16
• Items Definition
Make
Buy
Sell
• Unique Identifier
• Holds Key Data
Lead-times
Lot Sizes
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Systems for Planning & Control in Manufacturing
16
Items and Bills of Materials (BOMs)
Shaft
Motor
Steel Bar
(300mm)
Rotor
End Terminal
Cover
Box
(2)
Motor
Body
Winding
Feet
(2)
Bearing
(2)
Rotor
Produced by D K Harrison and D J Petty 21/04/02
Rotor Core
Shaft
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16
Full Parts Explosion
Motor
Rotor
E.Cover
T.Box
(2)
Rotor
Shaft
Casting
Core
Casting
Motor
Feet
Bearing
Body
(2)
(2)
Casting
Casting
Winding
Small
Items
Winding
Copper
Core
Wire
(3Kg)
Steel
(300mm)
Bills of Materials are Alternatively Called “Product Structures”
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16
Use of Phantoms
A
B
C
D
A
E
F
X
X
F
G
G
B
B
C
D
E
C
D
E
H
I
B
C
D
X
I
X
E
H
J
J
Orders are Never Generated for “X”, but rather B, C, D and E
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Systems for Planning & Control in Manufacturing
16
Order Model of Control (1)
Raised by a Supplier in Response to a
Purchase Order
Sales.
Customer name, address
Product(s)/quantities(s)
Price(s)
Terms and conditions
Delivery dates
Works.
Sent by a Customer to a Supplier
Purchase.
Supplier name, address
Product(s)/quantities(s)
Price(s)
Terms and conditions
Delivery dates
Product/quantities
Launch Date
Due Date
Raised by a Supplier to Trigger
Manufacturing Activity
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16
Order Model of Control (2)
STK = Stock
RM = Raw Material
PO = Purchase Order
STK = Stock
FGI = Finished Goods
Inventory
SO = Sales Order
Issue
Transaction
Shopfloor
Feedback
Receipt
Transaction
STK
STK
Due
Date
Launch
Date
RM
Queue
Process
1
Due
Date
PO Receipt
Produced by D K Harrison and D J Petty 21/04/02
Queue
Process
2
Work in Process
Lead Time (Lt )
Queue
Process
3
FGI
Due
Date
SO
Despatch
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16
ROP Theory
Stock
Average
= Gradient
Demand (Ad)
ROP
Ls
Ss
Lt
Time
ROP  A dL t  Ss
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Systems for Planning & Control in Manufacturing
Typical Demand Pattern
16
ROP - Assumptions
Orders Arrive Late
Material is Consumed Discontinuously
Average Demand is Not Representative
Demand (Units)
400
+90%
300
Mean
-90%
200
100
0
Time (Months)
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16
Effect of Uncertainty
1200
Stock 1000
800
600
400
200
Produced by D K Harrison and D J Petty 21/04/02
Nov
Sep
Jul
Mar
Jan
Nov
Jul
May
Sep
May
Stockout
Mar
-200
Jan
0
Time
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Systems for Planning & Control in Manufacturing
16
Probability Distribution
10
Probability %
8
Mean = 270
6
M.A.D = 35
4
2
0
0
100
200
300
400
500
Weekly Sales
1 in
MAD   (x i Fi )
n i 1
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16
Forecast Uncertainty (1)
• What Level of Safety
Stock is Required?
De
c
O
ct
ug
A
Ju
n
pr
A
Fe
b
De
c
O
ct
ug
A
ju
n
A
pr
• This Depends on the
Service Level Required
Fe
b
De
c
S
a
l
e
s
115
113
111
109
107
105
103
101
99
97
95
Months
Actual
Forecast
Corrected
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.
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16
Forecast Uncertainty (2)
Dec
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Sales Forecasing Example
Sales Forecast
Dev
97
97
98
101
105
104
103
104
104
103
99
100
102
101
102
107
104
107
108
107
109
104
105
103
106
97
97
97
97
98
99
100
101
102
102
102
101
101
101
101
101
103
103
104
105
105
106
105
105
105
0
0
1
4
7
5
3
3
2
1
-3
-1
1
0
1
6
1
4
4
2
4
-2
0
-2
1
MAD =
Stage 1.
Produced by D K Harrison and D J Petty 21/04/02
Service vs MAD
Ab Dev
0
0
1
4
7
5
3
3
2
1
3
1
1
0
1
6
1
4
4
2
4
2
0
2
1
2
Assume a Service
Level of 95%
3.00
1.32
2.50
2.00
MAD
Date
1.50
1.00
0.50
0.00
50
60
70
80
90
Service Level %
100
95%
Stage 2.
Safety Stock = 1.32 x 2
Safety Stock = 2.64
Safety Stock 3
Stage 3.
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16
EOQ Theory (1)
Time
Dr
Ls
Time
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16
EOQ Theory (2)
Annual Stock Holding Cost
Production Cost Rate
Set-up time
Process Time
Ct =
= Ci (£/unit)
= Cp (£/min)
= Ts (mins)
= Tp (mins)
Annual Demand Rate
= Dr (units/year)
Lot Size
= Ls (units)
Lot Size for Minimum Cost = EOQ
D r .C p (L s .Tp  Ts )
Ls

L s .Ci
 Ss .Ci
2
dC t Ci D r .C p .Ts


dL s
2
L2s
EOQ =
2. Dr . Cp . Ts
Ci
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16
EOQ Theory (3)
Cost
Inventory
EOQ
Production
Total
Total
Cost
Production
Cost
Inventory
Cost
Lot Size
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16
Evolution of MRP
Business
Planning
Sales and Operations
Planning
Demand
Demand
Master Production
Scheduling
Re-Order
Point
Material Requirements
Planning
Orders
Orders
Material Requirements
Planning
Capacity Requirements
Planning
No
Realistic
Yes
Shop Floor
Control
Definition:
The planning of components based on
the demand for higher level assemblies.
Produced by D K Harrison and D J Petty 21/04/02
Purchasing
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16
Limitations of ROP
A
Assembly
Components
B C D E F G H
I
J K
(95%) (95%) (95%) (95%) (95%) (95%) (95%) (95%) (95%) (95%)
Overall Service Level =
Independent
Demand from outside the organisation
ROP
Dependent
Demand from higher level assemblies
MRP
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16
ROP - Exceptions
Low Cost
High Volume
Commonality
Non-Critical
Availability
"C" Class Items
Eg. Fasteners
120
100
% of Value
80
60
C
B
40
A
20
0
0
Produced by D K Harrison and D J Petty 21/04/02
10
20
30
40
50
60
% of Variety
70
80
90
100
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16
MRP Principles
Gross
Requirements
Sales
Inventory
Balances
Order
Information
Orders
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MRP
Net
Requirements
Item
Data
Bill of
Materials
Next Level
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16
MRP - Example
Part No:
Lead Time:
Order Qty:
A0
3
60
SOH = Stock on Hand
SOH
Gross Requirements
3
4
5
6
7
8
9
10
20
20
20
20
20
20
20
20
Scheduled Receipts
Projected Available Balance
60
25
Product
Structure
Planned Order Receipt
Planned Order Release
Part No:
F1
Lead Time:
1
Order Qty: 120
A0
SOH
3
4
5
6
7
8
9
10
F1
Gross Requirements
Scheduled Receipts
Projected Available Balance
15
Planned Order Receipt
Planned Order Release
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16
MRP – Summary
Collect
-
Gross Requirements
Nett
-
Stocks and Receipts
Apply
-
Allowances and Lot Sizes
Offset
-
Lead Times
Explode
-
Into Components
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Systems for Planning & Control in Manufacturing
MRP - Summary
16
• Avoids Problems of ROP
• Not Required for All Parts
• More Complex
• Requires Bills of Material
• Scheduling Engine for Closed Loop MRP
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17
Closed Loop MRP - Overview
Business
Planning
Sales and Operations
Planning
Demand
Demand
Re-Order
Point
Material Requirements
Planning
Orders
Orders
Master Production
Scheduling
Material Requirements
Planning
Capacity Requirements
Planning
No
Realistic
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).
Produced by D K Harrison and D J Petty 21/04/02
Yes
Shop Floor
Control
Purchasing
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17
Closed-Loop Control
Planning
Plan
Do
Corrective
Action
Act
Execution
Check
Feedback
Deming
Cycle
Produced by D K Harrison and D J Petty 21/04/02
Closed
Loop MRP
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17
Hierarchical Management
Business
Planning
Sales and Operations
Planning
Master Production
Scheduling
Material Requirements
Planning
Capacity Requirements
Planning
No
Realistic
Yes
Shop Floor
Control
Purchasing
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Open-Loop Assumptions
17
• Demand Remains Constant
• Execution Proceeds as Planned
• All Data is Static and Accurate
• Management Policies Remain Constant
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17
Open-Loop Limitations (1)
Sales
Planning
Open Loop MRP
Order Launch
and Expedite
Suppliers
Engineering
Manufacturing
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Stores
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17
Open-Loop Limitations (2)
Part No:
Lead Time:
Order Qty:
A0
3
60
SOH
Gross Requirements
3
40
20
Scheduled Receipts
Projected Available Balance
Part No:
F1
Lead Time:
1
Order Qty: 120
Gross Requirements
5
6
7
8
9
10
20
20
20
20
20
20
20
65
45
25
5
45
25
60
25
Planned Order Receipt
Planned Order Release
4
45
85
60
60
SOH
Product
Structure
60
60
3
4
5
60
6
A0
7
8
9
10
15
15
15
15
F1
60
Scheduled Receipts
Projected Available Balance
15
Planned Order Receipt
Planned Order Release
Produced by D K Harrison and D J Petty 21/04/02
75
75
75
15
120
120
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Systems for Planning & Control in Manufacturing
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
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17
Closed-Loop Mechanism (2)
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.
Sales and Operations
Planning
Master Production
Scheduling
Material Requirements
Planning
Capacity Requirements
Planning
No
Realistic
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.
Produced by D K Harrison and D J Petty 21/04/02
Yes
Shop Floor
Control
Purchasing
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17
Planner Action Lists
Generate
Action
Message
Independent
Demand
No
Explode
to Next
Level
Next
Item
Yes
Is Plan
Valid?
Generate
Release
Message
No
Any Gross
Yes
Requirements?
Yes
Sufficient
Stock on
Hand?
Yes
No
Sufficient
Scheduled
Receipts?
Yes
No
Generate
Planned
Order(s)
Are
No
Planned
Orders Due for
Release?
Items Processed in Logical Order (ie., According to BOM)
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Systems for Planning & Control in Manufacturing
Typical Messages
17
Generated After MRP Run
•
•
•
•
•
•
Past Due Order
Reschedule Order in
Reschedule Order Out
Cancel Order
Planned Order Due for Release
Planned Order Past Due for Release
Actioned by Planner
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Systems for Planning & Control in Manufacturing
17
Terminology
Part No:
Lead Time:
Order Qty:
A0
3
60
SOH = Stock on Hand
SOH
Gross Requirements
3
4
5
6
7
8
9
10
20
20
20
20
20
20
20
20
25
5
45
25
5
45
Scheduled Receipts
Projected Available Balance
60
25
5
45
Planned Order Receipt
60
Planned Order Release
•
Regenerative/
Net Change MRP
Part No:
F1
Lead Time:
1
Order Qty: 120
60
SOH
3
Gross Requirements
•
Pegging
5
6
7
A0
8
9
10
15
15
15
F1
60
Scheduled Receipts
Projected Available Balance
Planned Order Release
Bucketed/
Bucketless System
Product
Structure
60
60
15
15
Planned Order Receipt
•
4
60
75
75
75
15
120
120
A
B C D E F G H
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I
J K
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17
MRPII
Business
Planning
Sales and Operations
Planning
• Similar to Closed Loop
Rough-Cut Capacity
Planning
Master Production
Scheduling
• Simulation Capability
• Financial Management
Material Requirements
Planning
Capacity Requirements
Planning
No
Realistic
Yes
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.
Produced by D K Harrison and D J Petty 21/04/02
Shop Floor
Control
Purchasing
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Systems for Planning & Control in Manufacturing
ERP
17
• No Universal Definition
• Some “Re-Badging”
• Functionality
Product Families/Medium-Term Aggregate Plans
Multi-Site Reporting
Electronic Commerce Functionality
• Widely Used Terminology
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Systems for Planning & Control in Manufacturing
Advantages of the Package Approach
17
• Maintenance Fees
• Business Focus
• Implementation Times
• System Reliability
• Advanced IT/IS Functionality
Produced by D K Harrison and D J Petty 21/04/02
Bespoke
Approach
Package
Approach
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17
MRPII/ERP Package Structure
Manufacturing
Forecasting
MPS
RCCP
Sales
Ledger
SOP
MRP
BOM
General
Ledger
Inventory
Control
WOP
CRP
Purchase
Ledger
POP
SFC
Routings
Distribution
Financial
Fixed
Assets
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Systems for Planning & Control in Manufacturing
Additional ERP Functionality
17
• Configured Products
• Human Resource Management
• Maintenance Management
• Quality Management
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Systems for Planning & Control in Manufacturing
17
Static and Dynamic Data
Function
Static
Dynamic
Sales/Marketing
Customer
Addresses
Design
Part
Geometry
Process Planning
Machines
Production Planning
Work Centre
Capacity
Works
Orders
Purchasing
Suppliers
Addresses
Purchase
Orders
Personnel
Personnel
Names
Payments
Year to Date
Accounts
Account
Numbers
Account
Balances
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Sales
Orders
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17
The MRPII/ERP Database
BOM
Routing
Master
Works Orders
Supplier
Master
Item Master
Purchase
Orders
Sales
Orders
Customer
Master
Inventory
Data Accuracy is Crucial
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Systems for Planning & Control in Manufacturing
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
Produced by D K Harrison and D J Petty 21/04/02
17
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Systems for Planning & Control in Manufacturing
X
Course Book
Systems for Planning & Control in
Manufacturing:
Systems and Management for Competitive Manufacture
Professor David K Harrison
Dr David J Petty
ISBN 0 7506 49771
Produced by D K Harrison and D J Petty 21/04/02
Sld - 0000