mrp and jit
DESCRIPTION
MRP and JIT. Introduction. Many products are not single entities, they are composed of subassemblies and parts, some purchased and some manufactured. A production plan specifies quantities of each final product (end item), subassemblies, and parts needed at distinct points in time. - PowerPoint PPT PresentationTRANSCRIPT
MRP and JIT
Introduction
Many products are not single entities, they are composed of subassemblies and parts, some purchased and some manufactured.
A production plan specifies quantities of each final product (end item), subassemblies, and parts needed at distinct points in time.
To generate a production plan two things are required: estimates for the end-product demand, and a master production schedule (MPS)
Forecast independent demand – plan dependent demand The need for one item is created by the need for another item
The MPS is a delivery plan for the manufacturing organization: includes exact amounts and delivery timings for each end product is derived from the demand estimates, but is not necessarily equal to
them MPS must account for manufacturing constraints (such as capacity) and
on-hand finished-goods inventory
Introduction
Breaking the MPS into a production schedule for each component of an end-item is achieved by the material requirements planning (MRP) system
The MRP system determines material requirements and timings for
each phase of production. Material shortage is another major manufacturing constraint
The MRP system was introduced by Joseph Orlicky (IBM, 1960’s); by 1989, sales of MRP software and implementation support exceeded $1 billion
MRP II – manufacturing resources planning Includes demand management, forecasting, capacity planning, MPS, rough-
cut capacity planning, capacity requirements planning, dispatching, input/output control
ERP – enterprise resources planning Targets all operations of a company: manufacturing, distribution,
accounting, financial, and personal
Production planning process End-ItemDemandEstimate
Master ProductionSchedule (MPS)
Material RequirementsPlanning (MRP)
Rough-CutCapacity
Detailed CapacityPlanning
MaterialPlan
PurchasingPlan
ShopOrders
Shop Floor Control
UpdatesClosed-Loop MRP
MRP Procedure
Purchase orders – outside orders Jobs – orders from within the plant Buckets – time is divided into discrete chunks End items – finished products Lower-level items – constituent parts of the end items Bill of material (BOM) – relationship between end and the lower-level items
The basic MRP procedure is simple: for each level in the bill of material, beginning with end items, MRP does the following:
1. Netting: Determine net requirements by subtracting on-hand inventory and any scheduled receipts from the gross requirements. The gross requirements for level-zero items come from the MPS, while those for lower-level items are the result of previous MRP operations
2. Lot sizing: Divide the netted demand into appropriate lot sizes to form jobs
3. Time phasing: Offset the due dates of the jobs with lead times to determine start times
4. BOM explosion: Use the start times, the lot sizes, and the BOM to generate gross requirements of any required components at the next level(s)
5. Iterate: Repeat these steps until all levels are processed.
MRP Procedure: Lot SizingDetermining the lot size (order quantity or production quantity) of an item
Static lot sizing rule: A decision rule that orders the same quantity each time an order is
placed Tend to generate higher average on-hand inventory because they
create inventory remnants Can provide extra safety stock
Dynamic lot sizing rule: A decision rule that changes the order quantity with each order,
typically so that each order is just large enough to prevent shortages over a specified time period
Tend to cause instability by tying lot-size to gross requirements Lower-level components may not be able to respond sufficiently fast
to changes in requirements
MRP Procedure: Static Lot Sizing
1. Fixed order quantity (FOQ)
Order (or produce) a fixed quantity, or a multiple of that fixed quantity by combining the net requirements of P periods
2. Economic Order Quantity (EOQ)
Order (or produce) the economic order quantity, plus any additional items needed to replenish safety stock if it has fallen below its desired level
Yields minimum total setup/ordering costs and the holding costs
Assumes relatively constant demand
MRP Procedure: Dynamic Lot-Sizing1. Lot-for-Lot (L4L)
Produce exactly the quantity required in each period to satisfy gross requirements, and used if setup cost < carrying cost for 1 period of demand
Simple to use, and agrees with Just-In-Time philosophy of ordering (or producing) only when required
Lot size can be modified easily for purchase discounts or restrictions, scrap allowances, process constraints, etc
Minimizes on-hand inventory, but maximizes number of orders placed (so can be expensive if setup/ordering costs are significant)
2. Periodic Order Quantity (POQ) Order (or produce) a quantity equal to the gross requirements for P periods minus any items in on-hand inventory plus any additional items needed to replenish safety stock if it has fallen below its desired level
Restores safety stock and covers exactly P periods of gross requirements.
When trying to guarantee any level of service for an assembly, the service for the component parts must be much greater
MRP Example 1: The Product Structure Diagram
End item - parent
Lower level items - components
Red toy carD70524
(1)
Red bodyT19862
(1)
Axle/wheel assemblyS44381
(2)
AxleS11844
(1)
WheelR21174
(2)
Red truck
Car and truck gift pack Level 0
Level 1
Level 2
Level 3
Part Number Description
External Sales
D70524
S44381
S11844
R21174
T19862
Red truck
Red toy car
A/W assembly
Axle
Wheel
Red body
Shortcomings of Material Requirement Plan Uncertainty: MRP ignores demand uncertainty, supply
uncertainty, and internal uncertainties that arise in the manufacturing process
Capacity Planning: Basic MRP does not take capacity constraints into account
Lead Times Dependent on Lot Sizes: In MRP lead times are assumed fixed, but they clearly depend on the size of the lot required
Quality Problems: Defective items can destroy the linking of the levels in an MRP system
Data Integrity: Real MRP systems are big (perhaps more than 20 levels deep) and the integrity of the data can be a serious problem
Order Pegging: A single component may be used in multiple end items, and each lot must then be pegged to the appropriate item
Introduction to Just-In-Time Revolution The successful manufacturing organizations in North
America and throughout the world have common essential characteristics: company that produces high quality products at low cost, and responds quickly to customer’s requests for delivery, changes in design, and changes in volume
The process of improving manufacturing productivity with emphasis on high quality and low cost often uses terms such as: the Just-in-Time (JIT) approach, zero inventory, total quality management, world class manufacturing, and the search for excellence
What stands behind the words ”Just-in-Time”?
Introduction to Just-In-Time Revolution Just-in-Time system – approach alternative to MRP
The Philosophy of JIT
The goal of JIT is to (1) remove all waste from the manufacturing environment, and as result: Right quantity of products are produced in the highest quality at
exactly right time (not late or early) Have zero inventory, zero lead time, no queues
Waste = inventory + disruptions of the flow + poor quality + counting + scheduling + moving + sorting + etc.
JIT seeks to (2) eliminate all uncertainty, including machine breakdowns
Kaizen = pursue continuous improvement
The Philosophy of JIT
Continuous improvement. Attacking fundamental problems - anything that does not add value to the
product. Devising systems to identify problems. Striving for simplicity - simpler systems may be easier to understand, easier to
manage and less likely to go wrong. A product oriented layout - produces less time spent moving of materials and
parts. Quality control at source - each worker is responsible for the quality of their own
output. Poka-yoke - `foolproof' tools, methods, jigs etc. prevent mistakes Preventative maintenance, Total productive maintenance - ensuring machinery
and equipment functions perfectly when it is required, and continually improving it.
The Philosophy of JIT Eliminating waste. There are seven types of waste:
waste from overproduction. waste of waiting time. transportation waste. processing waste. inventory waste. waste of motion. waste from product defects.
Good housekeeping - workplace cleanliness and organisation. Set-up time reduction - increases flexibility and allows smaller batches. Ideal batch
size is 1item. Multi-process handling - a multi-skilled workforce has greater productivity, flexibility and job satisfaction.
Levelled / mixed production - to smooth the flow of products through the factory. Kanbans - simple tools to `pull' products and components through the process. Jidoka (Autonomation) - providing machines with the autonomous capability to use
judgement, so workers can do more useful things than standing watching them work. Andon (trouble lights) - to signal problems to initiate corrective action
JIT Systems
Four requirements for the success of a JIT system
1. Elimination of waste
Uncovering problems by eliminating cost-adding processes (rock-river picture)
Reduce (or eliminate) setup times, lot sizes, lead times
Low setup times small batch sizes reduction of capacity loss If large batch is run before the problem is found
many parts have to be repaired/discarded
Preventive maintenance
Multi-skilled work force provides flexibility in scheduling
Foolproof operations – ensure that simple errors are not made
JIT Systems
Four requirements for the success of a JIT system
2. Employee involvement in decision making Improving process by implementing employees’
suggestions Develop employee motivation and mutual trust between
workers and management
3. Supplier participation The good relationships make joint improvement efforts
possible Reduce the number of suppliers and establish long-term
associations with them
JIT SystemsFour requirements for the success of a JIT system
4. Total quality control Each employee is given more responsibility for the
production process.
Every employee can stop the whole production line if quality is not satisfactory
Highly reliable equipments are needed to escape high level of frustration
Repetitive manufacturing and a stable master production schedule are needed
Having some excess capacity allows variability to be met without constantly injecting more inventory into the system and permits time for the workers to experiment with ways to eliminate wastes
Kaizen
Kaizen = pursue continuous improvement
Why Push and Pull?
MRP is the classic push system. The MRP system computes production schedules for all levels based on forecasts of sales of end items. Once produced, subassemblies are pushed to next level whether needed or not.
Why Push and Pull? JIT is the classic pull system. The basic mechanism is that production
at one level only happens when initiated by a request at the higher level. That is, units are pulled through the system by request. The ideal cell is self-contained with all necessary equipment and resources.
Kanban Systems“Kanban” = cards or visible
record
A communication signal from a consumer (downstream process) to a producer (upstream process)
A manual information system to control production, material transportation, and inventory
Kanban kanban is the means through which JIT is managed refers to a signal of some kind. kanbans are signals used to
replenish the inventory of items used repetitively within a facility kanban signal is an empty container designed to hold a standard
quantity of material or parts When the container is empty, the customer sends it back to the
supplier. The container has attached to it instructions for refilling the container such as the part number, description, quantity, customer, supplier, and purchase or work order number
Some other common forms of kanban signals are supplier replaceable cards for cardboard boxed designed to hold a standard quantity, standard container enclosed by a painting of the outline of the container on the floor, and color coded striped golf balls sent via pneumatic tubes from station to station
Dual Card System
Each workcenter has 5 components:• Production cell• Input store (A)• Output store (B)• P-kanban post (C)• T-kanban post (D)
All parts stored in containersEach container has fixed capacity = authorization to produce or to moveEach container has T- or P-kanban attached
Characteristics of Kanban System
A kanban system is not for everyone
Works best when flow is uniform and the product mix is highly stable (similar to bucket brigade)
Set-up operations are short at every workcenter
Variability disrupts a kanban system
Extra cards must be introduced to avoid backorders
Kanban does not work well in systems with many active stock numbers – difficult to control large number of kanbans
Comparison of MRP and JIT Systems
These methods offer two completely different approaches to basic production planning in a manufacturing environment. Each has advantages over the other, but neither seems to be sufficient on its own. Both have advantages and disadvantages, suggesting that both methods could be useful in the same organization.
Main Advantage of MRP over JIT: MRP takes forecasts for end product demand into account. In an environment in which substantial variation of sales are anticipated (and can be forecasted accurately), MRP has a substantial advantage.
Main Advantage of JIT over MRP: JIT reduces inventories to a
minimum. In addition to saving direct inventory carrying costs, there are substantial side benefits, such as improvement in quality and plant efficiency.
JIT works best in “favorable” manufacturing environments: little demand variability, reliable vendors, and small set up times
MRP worked well in favorable environments (comparable to JIT) and better in unfavorable environments
Comparison of MRP and JIT Systems