A typical manufacturing plant

Transcription

1 CHAPTER6: PRODUCTION PLANNING & CONTROL Production planning is concerned with the determination of production, inventory, and work force levels to meet fluctuating demand A typical manufacturing plant This plant must purchase materials, and perhaps parts, convert these materials into specific components, then assemble the components into several products offered to the customers 2

2 PRODUCTION PLANNING FUNCTIONS Aggregate Planning Master Production Schedule Material Requirements Planning Production Scheduling Inventory Management 3 AGGREGATE PLANNING Aggregate planning begins with the forecast of demand Aggregate planning translates demand forecasts into strategic decisions 4

3 Planning strategies Zero Inventory Plan - Changing workforce levels (cost effective, but poor long-run business strategy) Fixed Workforce Plan - Keeping inventory allowing backlogging (increases motivation, commitment and efficiency, but builds up inventory, and decreases profits) 5 Aggregate Planning Example A company is to plan workforce and production levels for the six-month period January to June. Forecast demands over the next six months for a particular line of products are as follows: Month Jan. Feb. March April May June Demand Working days Ending inventory in December (current month) is expected to be 500 units, and the firm would like to have 600 units on hand at the end of June 6

4 Example 1 Continued There are currently (end of December) 300 workers in the plant There are only three costs to be considered: Cost of hiring workers = C H = $500 /worker Cost of firing workers = C F = $1000 /worker Cost of holding inventory = C I = $80/unit/month Cost of backordering = C B = $150/unit/month K = 0.15 (number of aggregate units produced by one worker in one day 7 Level (Fixed) Workforce Plan Fixed # of Workers = Total demand Total # of days x units/worker-day Fixed # of Workers = = workers 8

5 Fixed Workforce Plan 9 Zero Inventory Plan Workers needed = demand/month days/month x units/worker-day 10

6 Zero Inventory Plan 11 Inventory Management Inventory is a buffer between supply and demand S(t) Inventory D(t) Supply process (+) Demand process ( ) S(t) and D(t) have different rates and timings due to endogenous and exogenous factors. 12

7 Factors for Inventory Internal factors: are a matter of policy Economies of scale Operation smoothing Customer service External factors: are uncontrollable Uncertainty 13 Inventory Types Types are classified according to the value added during the manufacturing process: Raw material inventories Work-in-process (WIP) inventories Finished goods inventories 14

8 Costs in an Inventory System Purchasing / production cost Inventory holding cost Ordering / setup cost Stockout cost Total Inventory Cost 15 Inventory Holding Cost H = i.c Cost to carry one unit of inventory for one unit of time Cost of carrying $1 of inventory for one unit of time Cost / unit 16

9 Fixed reorder quantity system Inventory level Q (order quantity) Reorder point 0 Lead time Lead time Lead time time 17 Average inventory Inventory level Q 0 Q (order quantity) Total Inventory Q T 2 T (period length) Average inventory per time-unit Q T / 2 Q = = T 2 time 18

10 Total Inventory Cost D TC ( Q) = cd + A + H Q Annual purchasing cost Annual setup cost Q 2 Where, Annual holding cost c = unit cost ($/unit) D = annual demand (units) A = fixed ordering cost ($/order) H = annual inventory holding cost ($/unit/year) Q = lot size (quantity to be purchased per order) 19 Economic Order Quantity (EOQ) Cost ($) D Q TC ( Q) = A + H Q 2 H Q 2 (Holding cost) Minimum total cost Q* (EOQ) Q Setup cost = Holding cost A D Q (Setup cost) 20

11 Economic Order Quantity (EOQ) dtc( Q) = 0 dq AD H + Q 2 2 = 0 2AD Q *= H Q* = Economic Order Quantity, EOQ (optimal lot size) AD Qic 2 2AD 2AD = Q = Q * = Q 2 ic ic 21 EOQ-Example Plant Open order Two weeks later Supplier Q (order quantity)? Lead time = 2 weeks A= $1000 (fixed cost per order) c = $500 per unit i = 20% Consumption rate = 4 parts /hr Available time = 40 hours/wk 22

12 EOQ-Example Continued Suppose plant should work in its full capacity for 52 weeks in one year. Annual consumption of raw material in plant = D = annual demand from supplier D = = 8320 parts/year 23 Economic Order Quantity (EOQ) 2AD 2(1000)(8320) Q * = EOQ = = 408units H 100 EOQ - D T Each inventory period length = Q* / D = 408 / 8320 = years x 52 weeks = 2.55 weeks 2.55 x 40 hours = 102 hours 24

13 EOQ, T, and Reorder point (r) 320 Q* = weeks 2.55 weeks 2 weeks 2.55 weeks EOQ = 408 T = Q*/D = 2.55 weeks r = L x D = 2 x 160 = 320 L = lead time 2.55 weeks 25 Structure of MRP System Open Purchase Orders Master Production Schedule Open Shop Orders Inventory Master Parts File Explosion of parent planned order into component gross requirement. Netting to generate net requirements. Lot sizing and offsetting Planned Orders Releases Purchasing/Manufacturing Bill of Material (BOM) 26

14 Netting procedure Finding net requirements Gross requirement (on hand inventory + scheduled receipts) Computing lot sizes Simplest is Lot-for-Lot : Batch size = period s net requirement Offsetting Subtracting the Lead-time from the time at which orders are delivered 27 Steps of MRP Explosion of parent into component items using BOM MRP performs netting calculation for each requirement of an item Generation of appropriate messages 28

15 MRP Example You are producing skateboards, and each consists of one unit of board, and two units of subassembly of roller-set. Roller-sets are produced inside the plant, and consist of two components rollers and axles. Prepare the MRP tables of all items. 29 Skateboard assembly Material Inventory 30

16 Product Structure / Bill-of-matreial (BOM) Item A: Skateboard Material Inventory Item B: Board Item C: Roller-set Item D: Roller Item E: Axle 31 Bill of Material (BOM) Level 0 Level 1 A B [ 1 ] C [ 2 ] Parent of B and C Components of A 2 units of C, and 1 unit of B to make 1 unit of A Level 2 D [ 2 ] E [ 1 ] 2 units of D, and 1 unit of E to make 1 unit of C 32

17 Master Production Schedule Week A D Item A B C D E Lead time (weeks) Inventory Master Parts File Item A B C D E Current inventory levels Lot size L4L 100 L4L Material Inventory Work-in-process Inventory Finished good Inventory 34

18 Open Orders Data Scheduled Receipts (Due Dates) ITEM / WEEKS A B 20 C 90 D 40 E 35 MRP table for item A WEEKS Gross Requirements Scheduled Receipts Inventory on hand Net Requirements Planned Orders

19 MRP table for item B WEEKS Gross Requirements Scheduled Receipts 20 Inventory on hand Net Requirements 80 Planned Orders MRP table for item C WEEKS Gross Requirements Scheduled Receipts 90 Inventory on hand Net Requirements 100 Planned Orders

20 MRP table for item D WEEKS Gross Requirements Scheduled Receipts 40 Inventory on hand Net Requirements 230 Planned Orders MRP table for item E WEEKS Gross Requirements 100 Scheduled Receipts Inventory on hand Net Requirements 80 Planned Orders

21 MRP Outputs Planned Orders (Release Dates) ITEM / WEEKS A B 100 C 100 D 400 E