le10 mps + mrp + kanban - mdhzoomin.idt.mdh.se/.../le10_mps_mrp_kanban.pdf · push vs. pull...

Antti Salonen

KPP227 - HT 2015

KPP227 1 Antti Salonen

Short-term planning


Inventory Control Systems

•  Independent demand Items for which demand is influenced by market conditions and is not related to the inventory decisions for any other item held in stock or produced.

•  Dependent demand Items required as components or inputs to a service or product. Dependent demand exhibits a pattern very different from that of independent demand and must be managed with different techniques.


Independent vs dependent demand


Push vs. Pull Production


Push/Pull methods in material flow

Push Firms (such as job shops) producing products in low volumes with low repeatability in the production process tend to use push methods such as Material Requirements Planning (MRP). Pull Firms that tend to have highly repetitive manufacturing processes and well defined material flow use push systems, such as Just In Time (JIT) systems, since it allows closer control of inventory and production at the workstations.


Disaggregating the aggregate plan

To put the production plan into operation, the aggregated units (e.g. product families) must be broken down into actual products that will be produced => Master Production Schedule (MPS)

Jan Feb Mar

200 300 400

Jan Feb Mar

100 100 100

75 150 200

25 50 100

Lawn Mower

Model 1 - push Model 2 - self prop.

Model 3 - riding

Aggregate Plan

Master Production Schedule


Lead times

1 2 3 4 5 6 7 8

Assembly

Subassembly

Fabrication

Procurement

The planning horizon must cover the cumulative lead times:


MRP explosion

An MRP system translates the MPS and other sources of demand into requirements for all subassemblies, components and raw material needed to produce the parent items. Input •  Master Production Schedule •  Bill of material (BOM) •  Inventory Records Output •  MRP for all parts


MPS

•  An MPS gives details on how many end items that will be produced within specified periods of time.

•  It disaggregates the aggregate production plan into specific product schedules. An aggregate plan for a family of chairs is disaggregated into the weekly MPS for each specific chair type.

•  Time periods (called time buckets) are usually weeks although hours, days or even months may be used.

Aggregate plan

MPS


Step 1: Calculate projected on-hand inventories

= + –Projected on-hand

inventory at endof this week

On-handinventory at

end of last week

MPS quantitydue at startof this week

Projectedrequirements

this week

where:

Projected requirements = max(Forecast, Customer orders booked)

=Inventory +55 chairscurrentlyin stock

–MPS quantity(0 for week 1)

38 chairs alreadypromised for

delivery in week 1

= 17 chairs


l The goal is to maintain a nonnegative projected on-hand inventory balance

l As shortages are detected, MPS quantities should be scheduled to cover them

Step 2: Determine the timing and size of MPS quantities

=Inventory17 chairs in

inventory at theend of week 1

+ MPS quantityof 150 chairs – Forecast of

30 chairs

= 137 chairs


EXAMPLE 1 MPS


Step 1: Calculate projected on-hand inventories

= + –Projected on-hand

inventory at endof this week

On-handinventory at

end of last week

MPS quantitydue at startof this week

Projectedrequirements

this week

where:

Projected requirements = max(Forecast, Customer orders booked)

=Inventory +55 chairscurrentlyin stock

–MPS quantity(0 for week 1)

38 chairs alreadypromised for

delivery in week 1

= 17 chairs


Item: Ladder-back chair Order Policy: 150 unitsLead Time: 1 week

1 2 3 4 5 6 7 8

April

Forecast

Customerorders booked

Projected on-hand inventory

MPS quantity

MPS start

Quantityon Hand:

30

38

30

27

30

24

30

8 0

35

0

35

0 0

3535

55

May

17 137 107 77 42 7 122 87

0 150 0 0 0 0 150 0

150 0 0 0 0 150 0 0

Explanation:On-hand inventory balance = 17 + 150 – 30 = 137. The MPS quantity is needed to avoid a shortage of 30 – 17 = 13 chairs in week 2.

Explanation:The time needed to assemble 150 chairs is 1 week. The assembly department must start assembling chairs in week 1 to have them ready by week 2.

l The goal is to maintain a nonnegative projected on-hand inventory balance

l As shortages are detected, MPS quantities should be scheduled to cover them

Step 2: Determine the timing and size of MPS quantities

=Inventory17 chairs in

inventory at theend of week 1

+ MPS quantityof 150 chairs – Forecast of

30 chairs

= 137 chairs


Freezing the MPS

MPS is the basis for all end items. Changes to the MPS can be costly so firms freeze or disallow changes. Freezing can be accomplished by specifying: •  Demand Time Fence

No. of periods during which few (if any) changes can be made to the MPS. •  Planning Time Fence

Covers a longer period than the demand time fence (allows for some changes).


Bill Of Material (BOM)

A record of all components of an end item, the parent-component relationships, and the usage quantities derived from engineering and process designs.

A BOM specifies usage quantity or no. of units of components needed to make one unit of its immediate parent.


BOM

Seat cushion

Seat-frame boards

Front legs A

Ladder-back chair

Back legs

Leg supports

Back slats

J (4)Seat-frame

boards

G (4)Back slats

F (2)Back legs

I (1)Seat cushion

H (1)Seat frame

C (1)Seat

subassembly

D (2)Front legs

B (1)Ladder-backsubassembly

E (4)Leg

supports

ALadder-back

chair

Parent

Components


BOM: Inventory Items

•  End item Final product sold to customer (classified as finished goods)

•  Intermediate item has at least one parent and one component (classified as WIP)

•  Subassembly Assembled from more than one component (classified as WIP)

•  Purchased Item Comes from supplier, hence, has no component (classified as raw material)


EXAMPLE 2 BOM

Demand and planning time fences


a.  If there is no existing inventory, how many units of G, E, and D must be purchased to produce five units of end item A?

b.  Use the lead time shown next to each component to determine the demand time fence at the lead time required for final assembly and the planning time fence at the cumulative lead time required to make the earliest purchase comitment.


Solution: a) G = 1*1*1*5 = 5 E = 2*3*5 = 30 D = 1*3*5 + 1*1*5 = 20

Solution: b) Demand time fence = 1 week (required for final assembly of B & C) Planning time fence = 9 weeks (determined by the longest time path (E+B+A = 6+2+1 )

a.  If there is no existing inventory, how many units of G, E, and D must be purchased to produce five units of end item A?

b.  Use the lead time shown next to each component to determine the demand time fence at the lead time required for final assembly and the planning time fence at the cumulative lead time required to make the earliest purchase comitment.


Inventory Records

Like the MPS, inventory records divide the future into time periods called time buckets, which indicates an items lot size, lead time, safety stock requirements and various time-phased data including: •  Gross requirements •  Scheduled receipts •  Projected on-hand inventory •  Planned receipts •  Planned order releases


EXAMPLE 3 Inventory Records


= + –Projected on-handinventory balanceat end of week t

Inventory onhand at end of

week t–1

Scheduledor plannedreceipts in

week t

Grossrequirements

in week t

?

•  Gross requirements •  Scheduled receipts •  Projected on-hand inventory •  Planned receipts •  Planned order releases

J (4)Seat-frame

boards

G (4)Back slats

F (2)Back legs

I (1)Seat cushion

H (1)Seat frame

C (1)Seat

subassembly

D (2)Front legs

B (1)Ladder-backsubassembly

E (4)Leg

supports

ALadder-back

chair

MPS

BOM Seat cushion

Seat-frame boards

Front legs A

Ladder-back chair

Back legs

Leg supports

Back slats



Planning for the receipt of new orders will keep the projected on-hand balance from dropping below zero!

= + –Projected on-handinventory balanceat end of week t

Inventory onhand at end of

week t–1

Scheduledor plannedreceipts in

week t

Grossrequirements

in week t



A planned order release indicates when an order for a specified quantity of an item is to be issued.


Planning Factors

•  Lead time o  For purchased items o  For in-house manufacturing

•  Lot-sizing rules Determines the timing and size of order quantity.

o  Fixed order quantity (FOQ) o  Periodic order quantity (POQ)

o  Lot for Lot (L4L)

= –POQ lot size to arrive in

week t

Total gross requirementsfor P week, including

week t

Projected on-hand inventory balance at

end of week t–1

= –L4L lot size to arrive in

week tGross requirements

for week tProjected on-hand

inventory balance at end of week t–1


EXAMPLE 4 Lot sizing rules


= –(POQ lot size)Gross requirements

for weeks 4, 5, and 6

Inventory at end of week 3

The first order using P = 3 is

(POQ lot size) = (120 + 0 + 150) – 117 = 153 units

Seat cushion

Seat-frame boards

Front legs A

Ladder-back chair

Back legs

Leg supports

Back slats


= –(L4L lot size) Gross requirementsin week 4

Inventory balance at end of week 3

(L4L lot size) = 120 – 117 = 3 units

Seat cushion

Seat-frame boards

Front legs A

Ladder-back chair

Back legs

Leg supports

Back slats


Resulting MRP for seat subassembly

J(4)Seat-frameboards

C(1)Seat

subassembly

H(1)Seatframe

I(1)Seatcushion

Seat cushion

Seat-frame boards

Front legs A

Ladder-back chair

Back legs

Leg supports

Back slats


EXAMPLE 5 MRP explosion


Solution


Problem to solve

Shutters

Frames (2) Wood sections (4)


Solution

1. L4L


Solution

1. L4L

Week number 1 2 3 4 5 6 7 8

Quantity 100 150

Shutters Gross requirements: 100 150

LT = 1 week Scheduled receipts:

Projected on hand:

Lor size = L4L Net requirements: 100 100

Planned order receipts: 100 150

Planned order releases: 100 150

Frames Gross requirements: 200 300

LT = 2 weeks Scheduled receipts:

Projected on hand: 120 120 120 120 140

Lot size = 320 Net requirements: 200 180



Wood sections Gross requirements: 400 600

LT = 1week Scheduled receipts: 70

Projected on hand: 70 70 70 20 20 20 20 50




The master schedule asks for 100 shutters to be ready for delivery, and no shutters are projected to be on hand at the start of week 4, so the net requirements are also 100 shutters. Therefore planned receipts for week 4 equal 100 shutters. Beccause shutter assembly requires 1 week, this means a planned oreder release at the start of week 3. Using the same logic, 150 shutters must be assembled during week 7 in order to be available for delivery at the start of week 8. The planned order release of 100 shutters at the start of week 3 means that 200 frames (gross requirements) must be available at that time. Because none are expected to be on hand, this generates net requirements of 200 frames and necessitates planned receipts of 200 frames by the start of week 3. With a 2 week lead-time, this means that the firm must order 200 frames at the start of week 1. Similarly, the planned order release of 150 shutters at week 7 generates gross and net requirements of 300 frames for week 7 as well as planned receipts for that time. The 2 week lead time means that the firm must order frames at the start of week 5. The planned order release of 100 shutters at the start of week 3 also generates gross requirements of 400 wood sections at that time. However, because 70 wood sections are expected to be on hand, net requirements are 400 ´70 = 330. This means a planned receipt of 330 by the start of week 3. Since fabrication time is 1 week, the fabrication must start (planned order release) at the beginning of week 2. Similarly, the planned order release of 150 shutter in week 7 generates gross requirements of 600 wood sections at that point. Because no on hand inventory of wood sections is projected, net requirements are also 600, and planned order receipt is 600 units. Again, the 1 week lead time means 600 sections are scheduled for fabrication at the start of week 6.

x2 x2

x4 x4


Solution

2. FOQ

Week number 1 2 3 4 5 6 7 8

Quantity 100 150

Shutters Gross requirements: 100 150

LT = 1 week Scheduled receipts:

Projected on hand:

Lor size = L4L Net requirements: 100 100



Frames Gross requirements: 200 300

LT = 2 weeks Scheduled receipts:

Projected on hand: 120 120 120 120 140




Wood sections Gross requirements: 400 600

LT = 1week Scheduled receipts: 70

Projected on hand: 70 70 70 20 20 20 20 50




Under lot-size ordering, the only difference is the possibility that planned receipts will exceed net requirements. The excess is recorded as projected inventory in the following period. For example, in the figure, the order size for frames is 320 units, Net requirements for week 3 are 200; thus, there is an excess of 320 ´200 = 120 units, which become projected inventory in the next week. Similarly, net frame requirements of 180 units are 140 less than the 320 order size; again, the excess becomes projected inventory in week 8. The same thing happens with wood sections; an excess of planned receipts in weeks 3 and 7 is added to projected inventory in weeks 4 and 8. Note that the order size must be in multiples of the lot size; for week 3 it is 5 times 70, and for week 7 it is 9 times 70.

x2 x2

x4 x4


Benefits of MRP

Enables business to… •  …reduce inventory levels •  …utilize labor and facilities better •  … improve customer service


Capacity requirements

Capacity Requirement Planning (CRP)

•  Matches the MRP plan with the plant´s production capacity

•  Calculates work load according to work required to complete the scheduled receipts already in the shop and to complete planned order releases not yet released.

Represents backlog of work visible on shop floor

Labor requirements for all planned orders

Date: Week: 32

Plant 01 Dept. 03: Lathe station

Capacity: 320 hours/week

Week

32 33 34 35 36 37 38

Planned hours 90 156 349 210 360 280 220

Actual hours 210 104 41 0 0 0 0

Total hours 300 260 390 210 360 280 220

Production demand exceeds weekly capacity!



Input-Output control (IOC)

Workstation: Rough Mill Week 32

Tolerance: ±25 hours

Week ending

28 29 30 31 32

Inputs:

Planned 160 155 170 160 165

Actual 145 160 168 177

Cumulative deviation -15 -10 -12 +5

Outputs:

Planned 170 170 160 160 160

Actual 165 165 150 148

Cumulative deviation -5 -10 -20 -32

Cumulative deviations between -25 hours and + 25 hours are allowed.

Cumulative deviation exceeds lower tolerance limit, indicating actual hours

of output have fallen too far below planned hours of output and some

action is required.



1

2

3

4

5

6

7

8

9

10

11

12

13

Available

Capacity

Week

Workload

1

2

3

4

5

6a

7

8

9

10

11

12

13

Available

Capacity

Week

Workload

6b

Production smoothing


Resource planning

Material Requirement Planning (MRP) Manufacturing Resource Planning (MRP II)

•  A system that ties the basic MRP to the companies financial system.

Enterprise Resource Planning (ERP)

•  A system that has additional capabilities for quality management •  Databases to access the information systems of other companies

(e.g. suppliers)


Push/Pull methods in material flow

Push Firms (such as job shops) producing products in low volumes with low repeatability in the production process tend to use push methods such as Material Requirements Planning (MRP). Pull Firms that tend to have highly repetitive manufacturing processes and well defined material flow use push systems, such as Just In Time (JIT) systems, since it allows closer control of inventory and production at the workstations.


Just In Time (JIT)

A JIT system is a material flow system which focuses on reducing inefficiency and unproductive time in the production process to continuously improve the process and quality of the product or service. A pull system, like JIT, allows for closer control of inventory and production at the workstations. However, for most manufacturing environments, implementing a pure JIT system is simply not feasible. JIT works well when… •  Suppliers are located close to plant and reliable •  Demand does not vary •  Setup costs are low

When inventory drops to a certain level a signal is sent to the preceding stages of production that more input is needed (Kanban)


JIT - Lean

Characteristics of JIT/Lean Production •  Consistently high quality •  Small lot sizes •  Short setup times •  Uniform workstation loads •  Standardized components and work

methods •  Close supplier ties •  Flexible work force •  Product focus •  Automated production •  Preventive maintenance Continuous Improvements!


JIT vs. classical scheduling

The lot sizes for JIT are a lot smaller than for classical scheduling, striving for one piece flow.


Uniform plant loading

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.


Kanban


Relevant book chapters

•  Chapter: “Planning sufficient resources”

•  Chapter: “Designing and managing processes”: –  The Kanban system.


Questions?

[email protected]

Next lecture on Tuesday 2015-12-15

Supervision Q/A


le10 mps + mrp + kanban - mdhzoomin.idt.mdh.se/.../le10_mps_mrp_kanban.pdf · push vs. pull...

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