Lecture Notes in Management and Industrial Engineering Volume 1 Series Editor: Adolfo López-Paredes Valladolid, Spain
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Gideon Halevi Industrial Management Control and Profit A Technical Approach 1 3
Gideon Halevi Industrial Engineering and Management Technion Tel Aviv Israel ISSN 2198-0772 ISSN 2198-0780 (electronic) ISBN 978-3-319-03469-0 ISBN 978-3-319-03470-6 (ebook) DOI 10.1007/978-3-319-03470-6 Springer Cham Heidelberg New York Dordrecht London Library of Congress Control Number: 2014932421 Springer International Publishing Switzerland 2014 This work is subject to copyright. All rights are reserved by the Publisher, whether the whole or part of the material is concerned, specifically the rights of translation, reprinting, reuse of illustrations, recitation, broadcasting, reproduction on microfilms or in any other physical way, and transmission or information storage and retrieval, electronic adaptation, computer software, or by similar or dissimilar methodology now known or hereafter developed. Exempted from this legal reservation are brief excerpts in connection with reviews or scholarly analysis or material supplied specifically for the purpose of being entered and executed on a computer system, for exclusive use by the purchaser of the work. Duplication of this publication or parts thereof is permitted only under the provisions of the Copyright Law of the Publisher s location, in its current version, and permission for use must always be obtained from Springer. Permissions for use may be obtained through RightsLink at the Copyright Clearance Center. Violations are liable to prosecution under the respective Copyright Law. The use of general descriptive names, registered names, trademarks, service marks, etc. in this publication does not imply, even in the absence of a specific statement, that such names are exempt from the relevant protective laws and regulations and therefore free for general use. While the advice and information in this book are believed to be true and accurate at the date of publication, neither the authors nor the editors nor the publisher can accept any legal responsibility for any errors or omissions that may be made. The publisher makes no warranty, express or implied, with respect to the material contained herein. Printed on acid-free paper Springer is part of Springer Science + Business Media (www.springer.com)
Preface The traditional approach to design of manufacturing systems is the hierarchical approach. The design is based on a top-down approach and strictly defines the system modules and their functionality. Communication between modules is strictly defined as a one way and limited in such a way that modules are allowed to communicate only with their parent and child, were the parent sets constraints on the child, and the child set constraints on the following module parent. For example: a process planner set the routing for each item. Production planning regards this routing as a constraint. It must plan capacity planning using this specific routing. In case of overload, or disruptions, it must search a solution with sophisticated theory of constraint mathematic algorithms. He is not allowed to search for technological solution, i.e. another routing. Process planning was regarded as an art and not a science, therefore, the intentions, ideas and optimization used in formulating a routing are unknown, and it is a constraint. Research developments proposed several computer aided process planning programs, were the user may generate a routing to his specifications and optimization without the support of a process planner. (The process planner task is redefined). This option converted the process planning from art to science were routing should not anymore be a constraint, but a tool for user. For example, the production planning will solve scheduling problems by generating another routing. Such option introduced flexibility to the manufacturing process. The stumbling block between manufacturing modules can be removed. The decisions made at each stage become observable, controversial and doubtful. While restructuring the manufacturing process and preparing computer program, detailed specifications for any decision to be made had to be carefully analyzed and tested, and consult with the appropriate specialist(s) in the field. This stage conspicuous expose that there is a mix of experts interest in several manufacturing modules. Some decisions are engineering ones, but they affect economics interest, therefore they should be involving management decision or at least authorization. This book intention is to enlighten engineering and management to where are the boundaries for making decision without the consent of management. Engineering v
vi Preface must make operational decision but should be careful not to jeopardize company profitability. Such contravention areas are presented and discussed. On the other hand management should consult with engineering concerning technological decisions. The method of presentation is by dedication a chapter to each stage of the manufacturing process. The theme of the chapter is described. Assuming that the technological maters are handled satisfactory by the engineering professionals, therefore they are not referred in this book. However, the subjects which are calls for economic consideration, and therefore, management involvement is needed are marked as a section Management control. The reasons are detailed and explained.
Contents 1 Introduction... 1 1 Introduction... 1 1.1 The Manufacturing Cycle... 3 1.2 Basic Concepts and Objectives... 7 1.3 Reviewing and Evaluating: The Traditional Approach... 10 1.4 Introduction to the Management Control System... 12 1.5 Notions for an Industrial Organizational System... 15 Part I Management Control Engineering 2 Product Design... 23 1 Introduction... 23 1.1 Manufacturing Product Specifications... 24 1.2 Manufacturing Product Design... 26 1.3 Production Design and Process Planning... 38 3 Process Planning... 45 1 Introduction... 45 2 Process Planning and Product Design... 46 2.1 Selection of Primary Production Processes... 47 2.2 Forming from Solid by Material Removal... 61 3 Process Planner Expert Method... 63 3.1 Process Planning Decisions... 64 3.2 CAPP Computer Aided Process Planning... 67 Appendix... 71 Hyper Rcapp Demo... 71 4 Production Lot Size & Maximum Profit... 77 1 Production Economic Lot Size... 77 1.1 Determining Lot Size... 79 1.2 Determining Lot Size by the Roadmap Method... 80 2 Maximum Profit Process Plan... 84 2.1 Constricting RTPP Table... 87 vii
viii Contents 2.2 Market Research... 88 2.3 Setting Selling Price and Maximum Profit... 88 2.4 Testing the Algorithm... 90 2.5 Management Control... 90 5 Traditional Production Planning... 91 1 Introduction... 91 1.1 Survey of Production Planning Methods... 91 1.2 Production Planning Dilemma... 95 2 Traditional Method... 95 2.1 Master Production Schedule... 95 2.2 Requirement Planning System RPS... 99 2.3 Capacity Planning and Order Release... 105 2.4 Order Release... 113 2.5 Shop Floor Control... 116 6 Flexible Production Planning... 121 1 Introduction... 121 2 Production Planning... 122 3 Stock Allocation... 123 3.1 Determine Allocation Priorities... 123 3.2 Stock Allocation Method... 126 3.3 Capacity Planning: Resource Loading... 128 3.4 Job Release for Execution... 132 4 Shop Floor Control... 133 4.1 Concept and Terminology... 134 4.2 Algorithm and Terminology... 135 Appendix... 141 Shop Floor Planning and Control... 141 The Strategy... 141 Example... 142 7 Quality Control: SQC & SPC... 145 1 Introduction... 145 2 Statistical Quality Control SQC... 146 2.1 Management Control... 147 3 Statistical Process Control SPC... 147 3.1 Introduction to SPC... 147 3.2 Goals and Benefits of SPC... 148 3.3 Basic Statistical Concepts... 150 3.4 Probability of Distribution... 152 3.5 Prerequisites for SPC Process Capability... 153 3.6 Control Charts... 157 3.7 Control Chart Parameter Selection... 160 3.8 Interpreting Control Chart Analysis... 161 3.9 Cause and Effect Analysis Troubleshooting... 163
Contents ix 3.10 Management Control... 165 3.11 Process Capability... 166 3.12 SPC Parameters... 166 Part II Engineering Support Management 8 Inventory Management and Control... 169 1 Introduction... 169 2 Inventory Control... 174 2.1 Classification, Coding and Unit of Measure... 175 2.2 Inventory Value Pricing... 175 2.3 Material Order Point... 176 2.4 Reduce Inventory Size... 183 2.5 Reduce Inventory Size... 184 2.6 Classification, Coding and Unit of Measure... 185 2.7 Reduce Inventory Size... 185 2.8 Left Over... 186 2.9 Extra Order Quantity Size... 186 3 Inventory System as Management Control Tool... 190 Appendix... 193 9 Resource Planning... 195 1 Introduction... 195 2 Engineering Support of Management... 197 2.1 Step 1: Request for Quotation RFQ... 197 2.2 Step 2: Constructing a Roadmap... 198 2.3 Step 3: Solving the Roadmap... 201 2.4 Resource Planning... 202 3 Evolution of Resources and Manufacturing Methods... 207 3.1 Group Technology Work Cell... 207 3.2 NC, CNC, DNC... 210 3.3 Machining Center... 211 3.4 Flexible Manufacturing System... 212 3.5 Automatic Factory... 213 3.6 Production Line (Transfer Line)... 213 10 Master Production Planning... 215 1 Introduction... 215 2 Management Control and Finance Planning... 221 2.1 Facility Requirement Planning... 221 2.2 Manpower Requirement Planning... 222 3 Cash Flow Planning... 222 3.1 Profit Forecasting... 224 3.2 Budget and Management Control... 224
x Contents 4 Improve Master Production... 225 4.1 Product Review... 226 4.2 Profile Load Balancing... 226 4.3 Profile Load Balancing Roadmap Method... 229 4.4 Management and Engineering... 232 11 Determining Delivery Date and Cost... 233 1 Introduction... 233 2 Generating Alternatives for Cost-Delivery Date: New Order... 235 2.1 Cost-Delivery Date with Minimum Cost Process Plan... 235 2.2 Cost-Delivery Date with Maximum Routing... 242 2.3 Cost-Delivery Date: Improved Maximum Production Routine... 243 2.4 Cost Delivery Dates: Other Alternatives... 244 2.5 Cost-Delivery Date: Improved Cost with Minimum Cost Process Plan... 244 2.6 Cost Delivery Data: Loading Profile for Improved Minimum Cost Process Plan... 244 2.7 Generating Alternatives for Cost-Delivery Date: Working Overtime Shifts, and Splitting... 245 2.8 Management Control... 245 Appendix... 247 Roadmap Method: Example... 247 12 Company s Level of Performance... 257 1 Introduction... 257 2 Performance Measurement... 258 3 Reference Point... 259 3.1 Basic (Theoretical) Process... 259 3.2 Practical Process... 259 3.3 Practical Optimum... 259 3.4 Actual Performance (AP)... 260 4 Machine Level Competitiveness... 260 4.1 Multiple Parts... 260 4.2 Machine Level of Competitiveness Variations... 263 5 Example of Machine Level Competitiveness... 263 5.1 Management Control... 266 5.2 The Quantity Effect... 266 6 Improvement of Competitiveness Level... 267 7 Management Control... 270 Index... 271