2. What are the typical problems with Manufacturing Resources Planning (MRP)? Indicate how one can overcome each problem. 4 points

Size: px

Start display at page:

Download "2. What are the typical problems with Manufacturing Resources Planning (MRP)? Indicate how one can overcome each problem. 4 points"

Jessie Lawson
6 years ago
Views:

1 EXAM: PRODUCTIO MAAGEMET -- 35V6A5 Date: 12 May 2010 Part 1: Closed Book You have ± 45 minutes to answer the following questions. Write your answers short, clear and to the point (max. 8 lines per question). Please write readable. Total 25 points 1. Discuss under which conditions assembly layout and line balancing is viable option. Indicate also alternative solution when conditions are not met. 4 points Assembly line is a good choice when (a) product design does not change often, (b) the volume is large and stable, (c) process times are relatively stable and do OT vary. When process times are variable, then it is better to arrange the layout based on the sequence of operations and instead of line balancing we use TOC (Theory of Constraint), which tolerates variable process times. When both process time and design are variable Job-Shop or Group Tech layout are preferred. 2. What are the typical problems with Manufacturing Resources Planning (MRP)? Indicate how one can overcome each problem. 4 points Fixed lead times: This problem can be eased by regularly observing and collecting statistics on waiting times (Activation and Availability) in system (using queueing) and by correcting or adjusting then the leadtimes in MRP system. Wrong Priorities: Backward planning based on fixed leadtimes this can be improved when leadtimes are frequently corrected or buffer times are allowed for the variability (similar to TOC). Infinite capacity: This can be improved by using mathematical programming models. Fixed (large) batch sizes: This can be improved by using mathematical programming models to optimize lotsizes. Buffering (Inventories): The usually fixed buffer sizes (safety stocks or times) can be linked to forecast accuracy of demand, improvement of production processes, and the performance improvement of suppliers. Lack of short term planning: This can be improved by using heuristic techniques or mathematical programming models. 3. Define Capacity Planning in MRP. What are the factors that should be considered in Capacity Planning? 4 points Capacity planning is the process of determining capacity. The process checks the planned order processing and when overloads occur for the work center(s), the process tries to level the overload periods and shift the capacity to earlier periods. When is not shift and not feasible to subcontract extra load, the order delivery must be delayed. Two levels are long-term, RCCP where roughly only few machines capacities are checked, mid-term where all machines checked. Short-term does not exist in MRP, where machines are loaded and scheduled. Factors: in capacity planning, time available is a corrected by two factors: Availability (fraction of time due to machine breakdown and / or absenteeism), Activation

2 (fraction of time down due to lack of work). ever load up to capacity, otherwise this creates long leadtimes. 4. Specify the determinants of JIT. Describe the need and role of Load-Leveling. 4 points The determinants are: Product Design; Process Design; Human & Organizational Elements; Manufacturing Planning & Control. Load Leveling is planning to build the same product mix every single day during a given month. It is required to bring stability in the production planning process and introduce pull system. 5. Describe tactical planning decisions in Flexible Manufacturing (FMS) systems and indicate the production management objectives. 4 points Tactical planning problems in flexible manufacturing systems integrates batching, loading, and routing problems with their critical aspects related to a system's performance. The idea is to load the FMS system economically and bring stability in the production planning process and avoid creating bottleneck in the system. 6. Which manufacturing planning technique(s) such as MRPII, JIT, TOC, would be suitable for a manufacturer of Brass? why? 5 points (ote: Brass is an alloy of copper and zinc; it also includes small amounts of other metals such as tin, lead, nickel, iron, aluminum, antimony. The production is continuous flow process and consists of a) melt down, b) purify the resulting molten alloy, c) pouring a portion of the molten into molds. Melting operations require long process time. The melting process time is dependent on the input materials; it could be as pure copper and zinc and scraps materials or as scrap brass parts and scrap cables. Scrap materials are much cheaper than pure materials; using them allows a significant reduction in material costs, but also poses a challenge to meet specification limits, because scrap materials contain different metals with varying percentages and require longer melting time. Given the fact that input mix (raw material) changing and the output is of make-tostock nature, the planning of finished goods inventory is a necessity. MRP front-end is perfect choice if it is integrated with an optimization model, because the melting time is long can cannot be reduced, a decision must made on selecting the right orders, raw materials, and their production sequence. Please write your name on the answer sheets GOOD LUCK!

3 EXAM: PRODUCTIO MAAGEMET -- 35V6A5 Date: 12 May 2010 Part 2 : Open Book You have ± 135 minutes to answer the following questions. Write your answers short, clear and to the point. Please write readable. Exercise points Delta Equipment, Inc., (DEI) is an implement manufacturer operating out of Jonesboro, AR. Some of the items manufactured by DEI include lawn tractors, wheelbarrows, hand trucks, and concrete buggies. DEI's primary customers are several large hardware stores, a couple of high volume discount retailers, and numerous wholesalers. Currently, DEI is putting together a materials plan for the wheelbarrows it manufactures (i.e., assembles). The plan is to be based upon a 10 week planning horizon. Over the course of this horizon, DEI has firm orders for 40 wheelbarrows to be available at the beginning of week 2, 60 each at the beginnings of weeks 5 and 7, and 50 at the beginning of week 9. These wheelbarrows are assembled in-house by DEI from three major components: handles (2 per wheelbarrow), wheel assembly packs, and barrows. DEI orders the handles from outside suppliers and assembles the wheel assembly packs in-house. Each wheel assembly pack has two subcomponents, a tire and an axle assembly, both of which are acquired from outside suppliers. Basic inventory data for the SKUs involved in the wheelbarrow operation are given by the following table: SKU On- Hand Lot Size Leadtime Wheelbarrow 0 LFL 1 week Handle weeks Wheel * weeks Assembly Barrow week Axle Assembly weeks Tire week * Tractors require 90 wheel assemblies in week 5 Use the above data and the enclosed worksheets to determine a 10 week materials requirement plan for all SKUs associated with the wheelbarrow operation. See the last two pages. Exercise 2: 6 points A forging department is feeding parts to a U-shaped manufacturing cell (see following figure). It takes the forging area about 30 minutes to hammer out a container of 10 forgings. There is additional waiting time between processing steps of approximately 15 minutes, and moving a container to the U-Shaped cell takes 15 minutes. It is desired to set up a pull system between the U-shaped cell and the forging area. Using JIT concepts, answer the following questions: a) Under the rules of kanban, what would be the maximum container capacity? b) What would be the proper number of kanban cards, assuming 10 forgings per container? c) What is the maximum allowable WIP in this case?

4 a) The maximum capacity is either a cost trade-off (similar to EOQ) or time trade-off, minimizing the waiting time for a full container of forged items for work-cells. The information provided is not sufficient to make the necessary computation! b) Lead for full container: = 1 hour Assuming 8 working hours per day, 1/8=0.125 day at full capacity forging area supply is 10 per half an hour and assuming equal demand coming to forging (leveled production) then we have 8 * 20/hr = 160 forgings per day. Assume no safety SS=0 # Kanban = D * L (1+SS)/C = 160 * / 10 = 2 c) Max. WIP == # Kanban * Container Capacity = 20

5 Exercise 3: 12 points In the PQ problem we went over in class, we have added a third product, product R, to the company that makes Ps and Qs. The new product requires 15 minutes on the B machine and a total of 20 minutes on the C machine (5 minutes at one operation and 15 minutes at another C operation that is not shown on the original PQ problem diagram see the revised diagram below), and requires one unit of RM 2 to produce. R sells for $70 per unit and the demand is 25 units per week. a. Calculate the maximum net profit the company can make in a week. b. Assume that we have the opportunity to purchase a component from a supplier rather than make it ourselves. The component starts out as RM 1 and would already have operation A (15 minutes) done when we buy it. The price is $25 per unit. Should we purchase this component? Why or why not? Show your calculation that supports your answer. c. ow assume that we have the opportunity to purchase another B machine for $50,000 and hire an additional B worker for $400 per week. Assume also that we did not purchase the component described in above. What is the payback period for this investment based on the initial market demand of 100 Ps, 50 Qs and 25 Rs? d. Assume that we buy the new B machine and hire the additional worker. Our VP of marketing has just told us that there is a potential customer in Japan that is interested in buying 25 units of R every week for the foreseeable future but is only willing to pay $63 per unit (i.e., 10% less than our US price). This demand is in addition to our existing demand of 100 Ps, 50 Qs, and 25 Rs in the US. Decide whether we should sell any of product R in Japan, what the new product mix should be if we decide to sell to the customer in Japan, and what the maximum profit we can make in a week is considering this new opportunity. Given: A, B, C, D: 1 of each resource w/ one employee each Available time: One shift per week (2,400 minutes) Operating expenses: $6,000 per week (including direct labor) Overhead rate: 200% of direct labor Labor cost: $10 per hour

6 Products P Demand R Demand Q Demand Total Utilization Process 100 Process 25 Process 50 Machine A B C D Profit per 45/15 50/15 60/30 unit of time Product R is most profitable, thus we follow the capacity on B -- a) Profit == 45* * *17 = = 770 b) if we don't produce component starting with RM1 -- o Bottleneck time is saved -- total saving is then only on A = 1/4(15')*10$/hr=2.5$/hr if we produce we pay 20$/unit+2.5$/unit = 22.5$ per unit up to machine C The saving is less thus we don't purchase. ote: overhead cannot be saved as machine A is still in use for other products. c) Extra machine allows full production, thus total profit is 8750$ -6000$-1200$(labor & OH for new machine) = 1550$ net The difference with case (a) is: 1550$-770$=780$ ==> 50000$ investment / 780$ = 64.1 == or almost 64 weeks d) checking the capacities -- once the B is not bottleneck, the next bottleneck is C! ew profit per unit should be calculated, P R Rj Profit per 45/15 50/20 43/20 60/5 unit of time ow Q is priority, then P, R, then Rj So we should sell because we got capacity -- thus we sell 2400'-2250'=150'/20' per Rj ==> 7 units of Rj Exercise points The manager of a pigment factory is considering implementing a hierarchal model to optimize the production planning. The plant of interest produces a variety of resin products, which are ultimately used for the paint manufacturing industry. The company produces over 100 finished products. These products are divided into twenty families, 10 products for Family 1-5 respectively, 8 products for Family 6-10 respectively and 1 product for Family respectively. The plant operates with two production lines. Products compatibility criteria is observed and considered as a planning constraint since changing from one product family to another involves significant cleaning time and setup cots. Therefore, management practices product families dedication in which one line is dedicated to Family 1-3 and the second production line dedicated to Family Working capacity is 815 tons and 728 tons per month for line one and line two respectively. These estimates are based on bottleneck known as filling equipment. Production department operates on three shifts, 7 days a week. Demand level is very high (between 95 % and 100 % of available capacity), which means that not all demand is satisfied from production since some of the available capacity is consumed for set-up. The firm has restrictions on finished products ending inventory levels due to storage limitations and therefore there is no provision for safety stock policies. It is estimated that the available maximum storage capacity per month was approximately 5950 tons. Workforce involved on the production is very limited due the characteristics of the manufacturing environment, each shift requires 7 persons to run the plant, and therefore, workforce stability exists and the company does not practice workforce variations policies. The management adopts chase demand strategy and strives to avoid inventory of finished products. Likewise, stiff competition limits the firm s ability to adjust delivery dates for confirmed orders. This situation leads to a very high level of plant utilization giving the production manager no alternative but to allow backordering of unfulfilled demands. Propose a hierarchal model, and the mathematical model formulation for the first level of this problem. The model should be linear. (10 points) Indicate in words the objectives and constraints of other levels of planning. (5 points)

7 MODEL FORMULATIO This is an example of classical planning. There are two levels in this model. The first level is the aggregate planning level where it is formulated as a mixed integer-programming problem where total costs of production, inventory, setup and workforce are being minimized. Aggregate planning: Decision Variables P = Production quantity of product family i during period t in production line l. itl I = Inventory level of product family i at the end of period t in production line l. itl W = Regular workforce level in period t. t itl = φ Binary setup variable for product family i during period t in production line l. φ itl = itl itl itl 1 if P > 0; φ = 0 if P = 0 Parameters H it = = = Total number of product family. Length of planning Horizon. Z Unit production cost for family i in period t. V = Production setup cost for family i in period t; it h = Unit inventory holding cost for family i in period t. it k = Regular workforce cost for in period t. t D itl = et demand for product family i in period t in production line l.. ( SC) tl = Maximum storage capacity in period t in production line l. Q = Capacity available for production line l in period t. tl a = Unit process time for product family i in production line l. il b = Production setup time required for product family i in production line l. il TR = Total Regular time available in period t. t Objective Function Minimize the sum of production cost, setup cost, inventory cost and workforce cost. Min H 2 i= 1 t= 1 l= 1 [( Zit Pitl + Vitφ itl )] + hit Iitl + ktwt H i= 1 t= 1 H t= 1 Constraints Constraint (1) is the basic inventory identity relationship for each product family, which calls for the demand to be fulfilled by the production or inventory for each period at each production line. 2 Ditl = Pitl + I i, t 1, l I itl i, t (1) l= 1 Constraint (2) is to ensure that the total inventory does not exceed the storage capacity available for each period at each production line. I itl ( SC) tl t (2) i=1

8 Constraint (3) ensures that total production for each period does not exceed the production line capacity. Pitl Qtl t, l (3) i= 1 Constraint (4) is the regular workforce level in that period. [ ail Pitl ] = Wt t (4) i=1 Constraint (5) ensures that the regular workforce capacity for each period is sufficient for production and setup activities. Wt + [ bilφ itl ] TRt t (5) i=1 The last constraints represent the non-negativity constraints. P itl, I it, Wt 0 (6) φ itl = 0 or φitl = 1 (7) The second level is the disaggregate planning problem where for each family one model is formulated as the minimization of sum of backordering cost and inventory cost for items within the family. The constraints make sure that item production is equal to family production of level one model.

9 Item: Wheelbarrows On-hand inventory:.0 Lot size: LFL Lead time:...1wk et requirement On-hand inventory Planned receipts Planned releases Item:.Handles... On-hand inventory:.100 Lot size:..300 Lead time:...2wks et requirement On-hand inventory Planned receipts Planned releases Item:...Barrows... On-hand inventory: 60 Lot size: Lead time:...1wk et requirement On-hand inventory Planned receipts Planned releases

10 Item: Wheelass. packs On-hand inventory:.220 Lot size: 200 Lead time:...3wks required for tractor et requirement 30 On-hand inventory Planned receipts 200 Planned releases 200 Item:.Tires... On-hand inventory:.50 Lot size:..400 Lead time:...1wk 200 et requirement 150 On-hand inventory Planned receipts 400 Planned releases 400 Item:...Axie assembly... On-hand inventory: 50 Lot size:...50 Lead time:...2wks 200 et requirement 150 On-hand inventory Planned receipts 150 Planned releases 150

Introduction to Principles of Production Management WS 2012/2013 Chapter 14 Aggregate sales and Operations Planning Presented by Dr. Eng.

Introduction to Principles of Production Management WS 2012/2013 Chapter 14 Aggregate sales and Operations Planning Presented by Dr. Eng.Abed Schokry Learning Outcomes Explain business planning Explain