MOS 3330 Operations Management Professor Burjaw Fall/Winter

Learning Objectives: 1.What MRP is and does 2.Inputs and outputs of MRP 3.Scheduling basics 4.Scheduling sequencing rules MOS 3330MRP2 Formula Sheet

MOS 3330MRP3 Items Product lines or families Individual products Components Manufacturing operations Resource level Plants Individual machines Critical work centers Production PlanningCapacity Planning Resource Requirements Plan Rough-Cut Capacity Plan Capacity Req’ts Plan (CRP) Input/Output Control Aggregate Production Plan Master Production Schedule (MPS) MRP Shop Floor Schedule All work centers

Aggregate plan provides a framework for shorter-term production and capacity decisions –Disaggregation: The process of breaking an aggregate plan into more detailed plans Material Requirements Planning (MRP): Computerized inventory and production control system that determines the requirements of dependent demand inventory –Introduced in the 1960s –Dependent demand inventory = parts, components, raw materials –Determine what is required, how much is required, and when it is required MOS 3330MRP4

5 MOS Explosion: disassembly of the end product into its components 2. Netting: (Net requirements) = (Gross reqts) – (On-hand inventory) – (Quantity on order) 3. Offsetting: order release is offset by production or delivery lead time 4. Lot sizing: determine the batch size to be purchased or produced Inventory Master File Product Structure File Work Orders Purchase Orders Action Notices Planned Order Releases Master Production Schedule (MPS) Formula Sheet

States the requirements for individual end items by date and quantity MOS 3330MRP6 MPS is Not a sales forecast a wish list a final assembly schedule MPS should be anticipated build schedule realistic and achievable may not be feasible Aggregate Production Plan MonthJanFebMarApr Days Plan21,00019,00023,000 20,000 MPS for April Week Prod X2,0004,0005,0002,500 Prod Y3,0001,0002,500 Totals5,0005,0005,000 5,000

DescriptionInventory Policy ItemBoardLead time2 Item no.7341Annual demand5,000 Item typeManuf.Holding cost1 Product/sales classAss’yOrdering/setup cost50 Value classBSafety stock 25 Buyer/plannerRSRReorder point39 Vendor/drawing07142EOQ316 Phantom codeNMinimum order qty100 Unit price/cost1.25Maximum order qty500 PeggingYMultiple order qty100 LLC3Policy code3 Physical InventoryUsage/Sales On hand100YTD usage/sales1,100 LocationW142MTD usage/sales75 On order50YTD receipts1,200 Allocated75MTD receipts0 Cycle3Last receipt8/25 Difference-2Last issue10/5 MOS 3330 MRP 7

MOS 3330MRP8 Clipboard Rivet (2) Iron Rod (3 in.) Spring (1) Spring Steel (10 in.) Bottom Clip (1) Top Clip (1) Pivot (1) Sheet Metal (8 in 2 ) Clip Assembly (1) Sheet Metal (8 in 2 ) Board (1) Pressboard (1) Finish (2oz.) Bill of material (BOM): lists which and how many items that go into a product Parent Child

Example 1: Based on the product structure diagram on the previous page: a) How much spring steel is needed to fill an order of 500 clipboards if on-hand inventory = 0? (Explosion & netting) b) How much sheet metal is needed to fill an order of 1000 clipboards if on- hand inventory = 7000? (Explosion & netting) c) In order to produce 1000 clipboards, subassembly takes 1 day and final assembly takes 1 day. For b), when should an order for sheet metal be placed if 1000 clipboards are needed by April 11? Order lead time = 5 days. (Offsetting) d) In b), if the order lot size is 2000, how much would you order? (Lot sizing) MOS 3330MRP9

MRP is not a demand planning tool –Input quantities are production quantities, not demand –Production plan derived from aggregate production planning MRP is deterministic –All input numbers are known –Problems show up as the action notices Main MRP problem = shortage of components/finished goods MRP is a simulation tool –Can estimate the production outcome  identifies potential shortage before actual production –Does not solve problems on its own  requires human input Solution examples: to purchase or produce more ahead of time; to move some jobs forward (expediting) or backward (de-expediting) –Can show how the change in MRP input (i.e., a potential solution) affects MRP output  shows whether or not the solution would work MOS 3330MRP10

Allocation of resources to accomplish specific tasks –Last stage of planning before production Scheduling objectives –Meet customer due dates –Minimize job lateness, response time, completion time, overtime, idle time, and work-in-process inventory –Maximize labour or equipment utilization Scheduling performance measures –Job flow time: total time a job spends in the shop incl. waiting, setup –Makespan: total time to finish a batch of jobs –Average number of jobs in the system: measure of WIP inventory –Job lateness: ahead of, on, or behind the schedule –Job tardiness: how long after the due date the job is completed MOS 3330MRP11

Length of a production run, flow schedule, line balancing Bottleneck: an operation with the lowest effective capacity Optimized Production Technology (OPT): a technique used to schedule bottleneck systems Theory of Constraints (TOC): a management philosophy that extends the concepts of OPT Coordination difficulty from having a variety of orders, tasks & process requirements Loading: assigns jobs to work centres according to performance efficiency, skill requirements, and job priority Sequencing: determines the sequence in which jobs assigned to a work centre are to be processed MOS 3330MRP12

First come first served (FCFS) Last come first served (LCFS) Earliest due date first (EDD): min. tardiness Shortest processing time first (SPT): min. average flow time Longest processing time first (LPT) “Formulas” for Scheduling Performance Measures: Job flow time = (waiting time) + (processing time) Makespan = finish time for the last job Avg. # jobs in the system = (  all jobs job flow time)/(makespan) Job lateness =  all jobs (finish time  due time) Job tardiness =  only late jobs (finish time  due time) MOS 3330MRP13 Formula Sheet Formula Sheet Formula Sheet Formula Sheet Formula Sheet

Example 2: A hospital lab has one MRI, and 5 patients need scheduling. Job:ABCDE Processing time (hrs):47263 Pickup time (hrs from now): MOS 3330MRP14 FCFS LCFS EDD SPT Sequence Avg. flow time Tardiness LPT Flow time =wait+process Tardiness =finish-due

Scheduling in services –Complicated because demand is often variable and difficult to forecast –Service scheduling: appointments, reservations, posted schedules, backlogs –Staff scheduling: peak demand, floating, on-call, seasonal, part-time Maintenance scheduling –Repair scheduling –Preventative maintenance MOS 3330MRP15

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“The study on the inventory coordination in the two- level supply chain based on BOM” Interdisciplinary Business Research. May ntId=11263&RQT=309&VName=PQD 17