Yuji Yamamoto PPU411. Today s topic. What is MPS and MRP Developing MPS How to make MRP Enterprise Resource Planning Kanban system

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1 Yuji Yamamoto PPU411 Today s topic What is MPS and MRP Developing MPS How to make MRP Enterprise Resource Planning Kanban system 1

Production planning and scheduling Demand Production

How much to work? Lets make 1,200pcs/m with overtime!

Resource planning MPS MRP Scheduling What is Master

A schedule showing how many end items need to be

2 Production planning and scheduling Demand Production planning 1,400pcs/m for coming months How many to make? How much to work? Lets make 1,200pcs/m with overtime! What model/part to make until when? Resource planning MPS MRP Scheduling What is Master Production Schedule (MPS)? A schedule showing how many end items need to be produced within specified period of time Model A Model B Model C Volume per month

3 What is Material Resource Planning (MRP)? Translate MPS into the requirement of what parts are needed when, in order to make the end item When to order? How many? =1500pcs Week n-4 x3 (2w to get purchased parts) 1w 1w x pcs at week n! MPR is for dependent demand x3 x10 Dependent demand (Dependent on the constitute of the product) Independent demand Market demand 3

4 Bill of Material (BOM) Information of parent-component relationship x3 x10 Bill of Material (BOM) 4

5 MRP exploration Developing MPS Lot size 150 units, Lead time 1w Forecast Booked orders Projected onhand How many items left at the end of the week? How many items to be completed in this week? MPS quantity MPS Start I week lead time 5

6 Developing MPS Lot size 150 units, Lead time 1w Development of MPS Forecast Booked orders Projected onhand Calculate product onhand Decide MPS quantity and MPS start MPS quantity MPS Start Calculation of Projected on-hand Projected on-hand at end of this week On-hand MPS quantity = at + due at start end of last week of this week Projected requirements this week where: Projected requirements = max(forecast, Customer orders booked) 6

7 Calculation of Projected on-hand Lot size 150 units, Lead time 1w Forecast = Booked orders Projected onhand MPS quantity MPS Start = If we do not produce anything. Lot size 150 units, Lead time 1w Forecast Booked orders Projected onhand MPS quantity MPS Start Add lot size to avoid out of stock 7

8 Developing MPS Lot size 150 units, Lead time 1w Forecast Booked orders Projected onhand MPS quantity MPS Start Making MRP 8

9 Making MRP BOM Inventory record Inventory record Lot size 230 units, Lead time 2w Total demand from parent s MPS Gross requirement Scheduled Projected onhand Order actually placed and to be completed this week The amount should be completed to avoid out of stock order release 9

10 Calculation of Projected on-hand Lot size 230 units, Lead time 2w = Gross requirement Scheduled = Projected onhand order release Lot size rules Fixed order quantity (FOQ) Periodic order quantity Lot for Lot As shown in the previous slides. Lot size can be decided by Discount Truckload capacity Minimum purchased quantity EOQ etc. 10

11 Periodic order quantity TBO (P) = 3, Lead time 2w Gross requirement Scheduled Projected onhand We know when but how many to order? order release Calculation of Periodic order quantity POQ lot size to arrive in week t Total gross requirements = for P week, including week t Projected on-hand balance at end of week t 1 11

12 Calculation of POQ TBO (P) = 3, Lead time 2w Gross requirement 0 Scheduled Projected onhand Need to make sure we do not get out of stock until the next fill-up order release 153 = = Lot for Lot Order any week, Lead time 2w Gross requirement Scheduled Projected onhand order release Order any week so that will not be below zero 12

0-120 0 0 3 150 120 order release 3 150 120

13 Lot for Lot Order any week, Lead time 2w Gross requirement Scheduled Projected onhand order release Comparison of Lot-sizing rules Average from week 4 to 8: 13

EXAMPLE 5 MRP explosion MPS BOM Item Qty Due (week) A 80 4 1 A 55 7 1 B 125 7 2 C

P=2 Lead time 3 w 1 w 2 w Safety stock 40 0 30 Scheduled 250 (week 1) 120 (week

14 EXAMPLE 5 MRP explosion MPS BOM Item Qty Due (week) A A B C Inventory record Lead time D E F Lot size rule FOQ =150 Lot for Lot POQ, P=2 Lead time 3 w 1 w 2 w Safety stock Scheduled 250 (week 1) 120 (week 2) None Beginning Question: Develop MRP for D, E, F for the next 8 weeks 14

15 Solution Solution 80x2 55x2 125 Gross requirement for D 60x2 15

ITEM D 150 Gross requirement Scheduled Projected on-hand order release Inventory beginning 150 FOQ = 150, LT= 3, Safety stock = 40 Scheduled 250 at w1 1 2 3 4

16 ITEM D 150 Gross requirement Scheduled Projected on-hand order release Inventory beginning 150 FOQ = 150, LT= 3, Safety stock = 40 Scheduled 250 at w Order when lower 250 than Solution x2 Gross requirement for E 60x2 16

17 ITEM E 0 Gross requirement Scheduled Projected on-hand order release Inventory beginning 0 Lot for Lot, LT= 1, Safety stock = 0 Scheduled 120 at w Solution ITEM E order release x2 250x2 55x2 Gross requirement for F 17

4 5 6 7 8 160 500 110 100 100-60 530 30-80 30 30 30 30 590 590 110 110+0+30-30

18 ITEM F 100 Gross requirement Scheduled Projected on-hand order release Inventory beginning 100 POQ P=2, LT= 2, Safety stock = 30 Scheduled none Make sure no out of stock until the next fill-up + Safety stock

19 Today s topic What is MPS and MRP Developing MPS How to make MRP Enterprise Resource Planning Kanban system What is Enterprise Resource Planning (ERP)? A large integrated information system. It supports operations processes through data processing and storage. 19

Expensive Rigid, inflexible May be ignored or untrusted Mismatch between data and actual things

20 Advantages and risks of ERP + - Automation of administration and calculation Rich and integrated info helps effective decision making. Expensive Rigid, inflexible May be ignored or untrusted Mismatch between data and actual things Mismatch between data and actual things Pro. mgr ERP Sales Model G? Model A 80pcs Model B 60pcs Model Model C 20pcs A 80pcs Model X 200pcs Model B 60pcs Model C 20pcs 20

Relatively steady demand on end item Frequent internal transport

21 Kanban system Kanban system Prerequisite of using Kanban system Flow production Small batch production Pull production Leveling production Relatively steady demand on end item Frequent internal transport (mizusumashi) Small standardized containers Fixed address for containers 21

22 Conventional production (mass production) Resource efficiency focus Flow production Flow efficiency focus 22

23 Flow production requires stability Stability in machines and equipment Stability in quality Stability in man power Stability of material supply from suppliers Sensitiveness till disturbances is an improvement opportunity High level (work-inprocess) can hide problems Defects Lack of parts Machine break down With low level, you can easily identify problems 23

24 Push production MRP Flow production + Pull production Make A Sold Product A 24

25 To meet demand and keep inventories low, a level schedule is developed so that the same mix of products is made every day in small quantities. Leveling production Kanban system 25

26 Kanban system Advantage: Prevent overproduction Prevent mismatch between information and actual things Visualize information flow etc. Relevant book chapters Chapter: Planning sufficient resources Chapter: Designing and managing processes : The Kanban system. 26

27 Questions? Next lecture on Tuesday Purchasing and Supplier management 27

Yuji Yamamoto PPU411 VT Today s topic. Inventory measures The ABC system Specific situations in finding economic order quantity

Yuji Yamamoto PPU411 VT Today s topic. Inventory measures The ABC system Specific situations in finding economic order quantity Yuji Yamamoto PPU411 VT 2017 Today s topic Inventory measures The ABC system Specific situations in finding economic order quantity Non-instantaneous replenishment Quantity discount One-period decisions