Managing Production across the Supply Chain

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1 Managing Production across the Supply Chain
Planning and control can be best thought of as a set of tactical and execution-level business activities that include master scheduling, material requirements planning, and some form of production activity control and vendor order management. Planning and control begins where sales and operations planning (S&OP) ends, as Figure 14.1 shows. The first step in planning and control is master scheduling, in which the overall resource levels established by S&OP begin to he fleshed out with specifics. The master schedule states exactly when and in what quantities specific products will be made. Il also links production with specific customer orders, allowing the firm to tell the customer exactly when an order will be filled. Finally, master scheduling informs the operations manager what inventory or resources are still available to meet new demand. As we shall see, the concept of available to promise is an important function of master scheduling. Material requirements planning (MRP) takes the process one step further: It translates the- master schedule for final products into detailed material requirements. For example, if the master schedule indicates that 500 chairs will be finished and ready to sell in week 5, MRP determines when the individual pieces—seats, legs, back spindles, and so on—need to be made or purchased.

2 Overskrifter, Kap. 14 14.1 Master scheduling defined 14.2 MRP defined
Basic MPS record Rough-cut capacity planning 14.2 MRP defined Basic MRP record MRP considerations 14.3 Special topics: PAC, Job Sequencing DRP At the lowest level in the hierarchy are two systems, production activity control (PAC) and vendor order management. At this point, all the plans have been made; the only task remaining is to make sure they are executed properly. Because materials ultimately come either from in-house manufacturing or from outside suppliers, two distinct types of control systems have sprung up to handle those different environments. Our description of planning and control seems to suggest a top-down process, with higher-level plans feeding into more detailed lower-level systems. Why, then, do the arrows in Figure 14.1 run in both directions? The reason is simple: Changes in the business environment or other conditions may become apparent at lower levels, requiring the organization to redo its plans at higher levels. In the rest of this chapter, we describe planning and control tools in more detail, starting with master scheduling and ending with PAC and vendor order management systems. We also discuss one tool for synchronizing planning and control across the supply chain, distribution requirements planning (DRP). As thorough as this chapter is, it cannot begin to cover all the choices firms face in designing their planning and control systems. Our intent, rather, is to give you an appreciation of both the advantages and the complexities of these systems.

3 Forkortelser TLA (Three Letter Acronym) Definitioner
ATP: Available to Promise BOM: Bill of Materials DRP: Distribution Requirements Planning MPS: Master Production Schedule MRP: Materials Requirements Planning PAC: Production Activity Control SOP: Sales and Operations Planning

4 The Big Picture Taktisk kapacitetsplanlægning SOP
Produktion, ordrebehandling og forsyning MPS Materiale planlægning og timing MRP Vendor Order Managemnent Supply Chain Management and PDCA PAC Production Management and PDCA

5 Master-schedulering I
Kontrol med timing og kvantiteter af produktion af produkter eller grupper af produkter Primære interface mod faktiske kunde-ordrer Koordinerer efterspørgsels-forecasts of faktiske ordrer med produktionsaktiviteten Fungerer som et redskab til at sikre enighed mellem “marketing” og “operations” (men på et andet niveau end SOP (taktiske overvejelser)) Kontrol med timing og kvantiteter af produktion af produkter eller grupper af produkter Primære interface mod faktiske kunde-ordrer Koordinerer efterspørgsels-forecasts of faktiske ordrer med produktionsaktiviteten Fungerer som et redskab til at sikre enighed mellem “marketing” og “operations” (men på et andet niveau end SOP (taktiske overvejelser))

6 Master-schedulering II
Fremskaffer mere detaljeret materiale-planlægning Indikerer kvantitet og timing (f.eks. leveringstidspunkter for et produkt eller en gruppe af produkter Mere detaljeret end SOP ugeplan versus månedsplan specifikke produkter versus “gennemsnit” Fremskaffer mere detaljeret materiale-planlægning Indikerer kvantitet og timing (f.eks. leveringstidspunkter for et produkt eller en gruppe af produkter Mere detaljeret end SOP ugeplan versus månedsplan specifikke produkter versus “gennemsnit”

7 Link mellem SOP og MPS SOP MPS Måned: Januar Februar Marts
Output: SOP Januar (uge) Master scheduling is a detailed planning process that tracks production output and matches this output to actual customer orders. We have said that master scheduling picks up where S&OP leaves off. Figure 14.2 shows this linkage in more detail. The top of the figure shows four months of a sales and operations plan for a fictional manufacturer of lawn equipment. Note that management has established overall targets for demand, production, and ending inventory. These targets will guide the firm's tactical decisions, including planned workforce levels, storage space requirements, and cash flow needs. The bottom half of the figure shows the monthly master schedules for the three products the company produces. For every week in March, it shows what the expected demand is, how many of each product will be produced, and what the projected ending inventory is. Hånd-græsslåmaksiner Motor-græsslåmaskiner Plæne-traktorer MPS

8 Link mellem SOP og MPS If we add up the numbers for production and demand across the three master schedules, we see that they match the figures in the sales and operations plan. Similarly, if we add up the ending inventory figures in week 4 of the master schedules, we see that they, too, match the figures in the plan. As long as the sales and operations planning values (for instance, the number of labor hours required per unit) are correct, the company should have enough capacity to implement these master schedules. In reality, however, the demand and production numbers in the master schedule are unlikely to match the sales and operations plan exactly. Furthermore, the actual capacity requirements might not match the planning values. For example, the plan may state that the average product needs an estimated 4.5 hours of labor, but the actual figure may turn out to be 4.7 hours. In such cases, firms may need to dip into their safety stock, schedule overtime, or take other measures to make up the difference between the plan and reality. As long as the numbers in the sales and operations plan are dose to those in the master schedule, firms will be able to manage the differences.

9 Master Scheduling Criteria
Master Production Schedule må: Tilfredsstille marketing afdelingens informationsbehov Skal være “brugbar”/implementerbar for produktionsafdelingerne/ for ”operations” Afsnit page 455: Master Scheduling Criteria Satisfy the needs of marketing Be feasible for operations *******************************************************************************’ Now that we understand the linkage between the sales and operations plan and the mister schedule, let's look at the master schedule record. Because firms tailor the master schedule record to their manufacturing environment and the characteristics of their product, generalizing about its precise form is difficult. Nevertheless, most master schedule records track several key pieces of information: (næste (skjulte) slide) Forecasted demand; Booked orders; Projected inventory levels; Production quantities; and Units still available to meet customer needs (available to promise). To illustrate how the master schedule works, let's look at the master schedule record for Sandy-Built, a company that makes snow blowers

10 Master Scheduling Record
Master schedule records track several key pieces of information: Forecasted demand Booked orders Projected inventory levels Production quantities, and Units still available to meet customer needs (available to promise). Skjult her i 2005!!! Sæt skemaer nedenfor op på tavlen uden tal!!! 14.3 Partial Master Schedule Record !4.4 nedenfor introducerer vi ”projected end inventory”

11 MPS Formler: Definitioner
ATPt = “Available to promise” i periode t EIt = “Ending Inventory” for periode t (samme som “projected on-hand inventory periode t” tilrådighed for næste periode, ) Ft = Efterspørgsels-forecast for periode t MPSt = MPS-mængde, som er tilrådighed i periode t OBt = ordrer, som er book’et for periode t MPS Formler: Definitioner ATPt = “Available to promise” i periode t EIt = “Ending Inventory” for periode t (same as projected on-hand inventory for next period) Ft = Forecasted demand for period t MPSt = MPS quantity available in period t OBt = orders booked for period t

12 MPS Formler (14.1-3): Kun med for ATP(t), t=første uge Bemærk ATP(t) udregnes kun i uge 1, og i uger hvor MPS(t)> 0 EIt = “Ending Inventory” for periode t (same as projected on-hand inventory for next period) MPSt = MPS quantity available in period t OBt = orders booked for period t ATPt = “Available to promise” i periode t

13 Detaljeret MPS for et produkt
On-hand lager ultimo oktober = 100 Måned November December Uge 45 46 47 48 49 50 51 52 Eftersp.-Forecast 150 125 Ordrer som er book’et 170 165 140 120 85 20 Master Schedule 300 250 Noter: Figur (dog er nogle tal anderledes her Detaljeret MPS for et produkt, Planning time fence  cumulative lead time for product What seems to be the lot-sizing rule here? Forecasted Demand versus Booked Orders. At the beginning of November (week 45), Sandy-Builts management is reviewing the master schedule for the company's newest model, the MeltoMatic. The master schedule record in Figure 14.3 shows the forecasted demand — the company's best estimate of the demand in any period — for the months of November and December. It also shows booked orders, which represent confirmed demand for products. At this point, forecasted demand is running behind booked orders. In week 45, for instance, the estimated demand for snow blowers is 150, yet Sandy-Built already has confirmed orders for 170. Now look at the forecasts and booked orders for December. In that month, booked orders appear to be lagging forecasted demand. Perhaps more orders will materialize as December draws nearer. But if booked orders do not increase, managers may need to take action, cither by cutting back production or by lowering the price of the MeltoMatic, to move more units. One of the benefits of master scheduling is that it allows managers to take corrective action when needed, Another line on the master schedule record, called the master production schedule shows how many products will be finished and available for sale at the beginning of each week. In our example, Sandy-Built seems to be producing enough snow blowers every other week to meet the forecasted demand. Noter: Planlægnings-tidsramme skal være  den kumulative lead tid for produktet Hvordan ser reglen vedr. lot-size ud her?

14 Projected On-Hand lager
Max-værdier er markeret!! Projected On-Hand lager On-hand lager ultimo oktober = 100 Måned November December Uge 45 46 47 48 49 50 51 52 Eftersp.-Forecast 150 125 Ordrer som er book’et 170 165 140 120 85 20 Projected On-Hand Lager 230 65 215 190 Master Schedule 300 250 dvs Projected on-hand lager for uge 45: – 170 = 230 Projected on-hand lager for uge 47: – 150 = 215 Projected on-hand lager for uge 49: – 125 = 190 Ending Inventory. With these basic numbers, we can start to get a picture of what overall inventory levels should look like and, more important, how many more snow blowers we can sell. Figure 14.4 contains a new row called projected ending inventory, which is calculated as follows: (14.1) where ATPt = “Available to promise” i periode t EIt = “Ending Inventory” for periode t (same som “projected on-hand inventory” for næste periode) Ft = Efterspørgsels-forecast for periode t MPSt = MPS-mængde, som er tilrådighed i periode t OBt = ordrer, som er book’et for periode t Projected ending inventory is a conservative estimate of the inventory position at the end of each week. In our example, the inventory at the end of week 44 is 100. Therefore, the projected inventory at the end of week 45 is = 230, and the same calculation for week 46 is = 65. In each case, we use booked orders because this number is higher than the forecasted demand. This makes sense because using the lower forecasted demand numbers would overestimate inventory levels. But what about other weeks, such as week 47, in which the forecasted demand is higher than booked orders? In this ease, the assumption is that the booked orders (140) probably do not reflect all the demand that will eventually occur in that week (150). To be conservative, we subtract the higher number in calculating ending inventory: = 215.

15 Available-to-Promise
On-hand lager ultimo oktober = 100 Måned November December Uge 45 46 47 48 49 50 51 52 Eftersp.-Forecast 150 125 Ordrer som er book’et 170 165 140 120 85 20 Projected On-Hand Lager 230 65 215 190 Master schedule 300 250 Available-to-Promise 40 Available to Promise. Another figure on the master schedule record, available to promise (ATP), indicates the number of units that are available for sale each week, given those that have already been promised to customers. The available-to-promise calculation is one of the most important in the master schedule record. It is also one of the more difficult calculations for students to understand. The formula for ATP for the first week of the master schedule record is FEJL I udlagte slides ATP(49)=250-(85+45)=120 er ikke sat ind I tabellen ATP(51)=250-(20+0)=230 er ikke sat ind I tabellen ATP(45) = – ( ) = 65 ATP(47) = 300 – ( ) = 40 ATP(49) = 250 – ( ) = 120

16 Ændring i eftersp- forecast!
On-hand lager ultimo oktober = 100 Måned November December Uge 45 46 47 48 49 50 51 52 Eftersp.-Forecast 150 Ordrer som er book’et 170 165 140 120 85 20 Projected On-Hand Lager 230 65 215 15 Master schedule 300 250 Available-to-Promise 40 Efterspørgslen stiger i ugerne fra 125 til 150 – giver det leveringsproblemer? Nej det giver ikke leveringproblemer, men Projected On-hand lager når betænkelig tæt på nu (15) i ugerne 50 og 52

17 Fig 14.5-14.8, using the MPS Using the Master Schedule
Look at Figure 14.5 and imagine Sandy-Built receives a call from a large retail chain that the company has never dealt with before. The buyer needs 150 snow blowers "as soon as possible "Sandy-Built would like to do business with this customer, but management had not anticipated such a huge order. When can Sandy-Built ship the snow blowers, and what will be the impact on production? With a formal master schedule, managers can quickly answer these questions, According to the ATP figures in Figure 14.5, Sandy-Built can ship 65 snow blowers now, 40 more in week 47, and the remaining 45 in week 49 ( ). If Sandy-Built decides to accept this order, however, managers will need to recalculate the ending inventory and available-to-promise numbers. Figure 14.8 shows the updated master schedule record. Booked orders in weeks 45, 47, and 49 are now 235, 18O, and 130. Because the order is so large, projected ending inventories drop dramatically. In fact, the calculations suggest that inventories will drop to zero on a regular basis unless management alters production levels to increase the safety stock. Finally, the retailer's large order will use up all the ATP for November. Unless another order is cancelled, Sandy-Built cannot accept new orders until December—a change the sales force should be made aware of. Bemærk, at ATP(47)=40 bygger netyop på, at vi har lovet 65 væk I uge 45

18 Opsummering omkring MPS
Provides more detail than SOP Tracks the following information: Actual versus forecasted demand Available-to-Promise This gives sales information for accepting or not accepting new orders for delivery in a given week Tilvejebringer flere detaljer end SOP Opfanger følgende information: Faktisk versus forecast’et efterspørgsel Available-to-Promise Dette giver information, som direkte kan anvendes i beslutning om at acceptere eller ikke acceptere nye ordrer til levering i en givet uge

19 Interaktion med Master Scheduling
SOP Marketing Operations MPS The master schedule calculations might seem complicated at first, but imagine what could go wrong if a business did not have this information available. Salespeople wouldn't he sure if and when they could fill customer orders. Production managers might not become aware of the impact of orders on inventory levels in time to do something about it. Worse still, salespeople might continue to promise products to customers, unaware that all output has already been spoken for. In short, chaos would result. When master scheduling works well, it allows organizations to avoid these problems by closely matching demand with supply, anticipating customers' needs, and adjusting the organization's plans accordingly. Rough-Cut Capacity Plan

20 Material Requirements Planning (MRP)
MRP i planlægnings-cyclen MRP-logik et lidt større eksempel MRP betragtninger MRP i planlægnings-cyclen MRP-logik et lidt større eksempel MRP betragtninger

21 Indtil nu ... Vi har betragtet arbejdskraft, overordnede lagerniveauer, materiel:  SOP  Master schedulering  Rough-Cut Capacity Planning (master production schedule to monitor key resource requirements) Men vi mangler at fremskaffe/lave ordrer på materialerne/halvfabrikata! Indtil nu ... Vi har betragtet arbejdskraft, overordnede lagerniveauer, “equipment”:  SOP  Master schedulering  Rough-Cut Capacity Planning Men vi mangler at fermskaffe/lave ordrer på materialerne! With strategic capacity planning (Chapter 8), S&OP (Chapter 12), and master scheduling, we have a comprehensive set of higher-level planning tools. Master scheduling, as we have seen, is particularly valuable because it allows managers to match production figures to actual customer demand. In addition, some firms use the master production schedule to monitor key resource requirements, an activity called rough-cut capacity planning. For instance, Sandy-Built's managers, seeing that 350 snow blowers are scheduled to be completed in week 49, might check lo make sure the company has the capacily to meet that production goal. Rough-cut capacity planning verifies the feasibility of the master schedule.

22 Vi vil schedulere 500 stole til at være klar til levering om 5 uger . . .
Material requirements planning, more commonly known as MRP, takes planning one step further by translating the master production schedule into planned orders for the actual parts and components needed to produce the master schedule items. The logic of the MRP approach to inventory management is completely different from the independent inventory approaches described in Chapter 13. That is because MRP is used to manage dependent demand inventory, or inventory items whose demand levels are tied directly to the production of another item. Suppose, for instance, that each MeltoMatic snow blower Sandy-Built produces requires three wheels. Once managers know how many snow blowers they arc going to make, they can calculate exactly how many wheels they will need. The demand for wheels is completely dependent on the number of snow blowers made. Unlike independent demand items, then, there is no mystery about how many dependent demand items a firm will need and when. MRP takes advantage of this fact to manage inventory quite differently—and more efficiently—than an EOQ-based system. MRP is based on three related concepts: 1. The bill of material, or BOM; 2. Backward scheduling; and 3. Explosion of the bill of material. We will illustrate these concepts using a simple example, the assembly of a furniture piece called the King Philip chair. . . . hvordan det!

23 Materialer til en stol “Bill of Materials” (BOM)
Back supports (3) Side rails (2) Front legs (2) Cross bars (2) Seat The bill of material (BOM) is "a listing of all the subassemblies, intermediates, parts, and raw materials that go into a parent assembly, showing the quantity of each required to make an assembly." The bill of material for the King Philip chair has 10 different components, shown in Figure

24 Struktur-træ over stol “Bill of Materials” (BOM)
Leg Assembly Seat Back Assembly Legs (2) Cross bar Side rails (2) Back Supports (3) 1 uge Level 0 1 uge 1 uge Level 1 2 uger The product structure tree in Figure shows how the components in the BOM are put together to make the chair. The chair is assembled using a leg assembly, a back assembly, and a seat; the leg and back assemblies, in turn, are assembled from individual components such as legs, back slats, and crossbars. In MRP jargon, the complete chair is a Level 0 item; the leg assembly, back assembly, and seat are Level 1 items; and the remaining components are Level 2 items. In practice, product assemblies can be dozens of levels deep. The product structure tree also shows the planning lead times for each component. The planning lead time is the time from when a component or material is ordered until it arrives and is ready to use. For instance, the finished chair has a planning lead time of one week, the amount of time workers need to assemble a typical batch of chairs using the Level 1 items. Seats have a planning lead time of two weeks, which may reflect the time an outside supplier takes to fill an order fur .seats. We will discuss planning lead times in more detail later in this chapter. Level 2 2 uger 2 uger 2 uger 2 uger 2 uger

25 Lead-Tid I Uge 4 Uge 5 Hvis den endelige montage af stolene tager en uge, så skal denne montage startes primo uge Stol Montage (1 uge)

26 Lead-Time II Dette betyder at alle “submontager” må være tilendebragt
Uge 2 Uge 3 Uge 4 Uge 5 Stole-ryg Montage Dette betyder at alle “submontager” må være tilendebragt inden primo uge 4 (1 uge) Stol Montage Sæder (2 uger) (1 uge) Stoleben Montage (1 uge)

27 Lead-Tid III Uge 1 Uge 2 Uge 3 Uge 4 Uge 5 Back Support (2 uger)
Side Rails (2 uger) Back Assembly Cross Bar (2 uger) (1 uge) Chair Assembly Seats (2 uger) (1 uge) Leg Assembly We can now show how backward scheduling (exploding the BOM) is used in MRP. 1 master schedule record in Figure shows that 500 finished chairs should be ready to sell at the beginning of week 5. How do managers ensure that this commitment is met? To finish 500 chairs by the beginning of week 5, workers must start assembling the chairs at the beginning of week 4 (recall from Figure that the planning lead time for the assembled chair is one week). This deadline can be met only if the back assemblies, leg assemblies, and seats are available at the beginning of week 4. Continuing to work backward in time, we see that workers must start the back and leg assemblies at the beginning of week 3 in order to have them ready by the beginning of week 4. Seats have a two-week lead time, so they must be ordered no later than the beginning of week 2. Back slats, crossbars, side rails, and legs must be ordered at the beginning of week 1 — right now! — if managers want to have 500 chairs ready to go in week 5. The timeline in Figure shows the logic behind backward scheduling. From a single order for 500 chairs in week 5, we worked backward, first through the Level 1 items and then through the Level 2 items. This process is called exploding the BOM. Legs (2 uger) Cross Bar (2 uger) (1 uge)

28 Lead-Tid, opsummering Hvis stolene skal være klar primo uge 5, så skal vi påbegynde produktion og ordreafgivelse på materialer i uge 1. “Exploding” “bill of materials” (BOM) giver information om hvornår de enkelte ordreafgivelser skal foretages. Når først “processen” er sat i gang i uge 1, så kan vi ikke ændre på produktions-volumen af stole til levering primo uge 5. Hvorfor? Lead-Tid, opsummering Hvis stolene skal være klar primo uge 5, så skal vi påbegynde produktion og ordreafgivelse på materialer i uge 1. “Exploding” “bill of materials” (BOM) giver information om hvornår de enkelte ordreafgivelser skal foretages. Når først “processen” er sat i gang i uge 1, så kan vi ikke ændre på produktions-volumen af stole til levering primo uge 5. Hvorfor?

29 Material Requirements Planning (MRP)
Kræver: Bill-of-Materials (BOM) Information om lagerbeholdninger Master schedulering For at få fastsat hvad der skal laves ordrer på hvornår, og hvor meget der skal alves ordrer på. Material Requirements Planning (MRP) Kræver: Bill-of-Materials (BOM) Information om lagerbeholdninger Master schedulering For at få fastsat hvad der skal laves ordrer på hvornår, og hvor meget tder skal alves ordrer på.

30 MRP processen starter med MPS
Lidt andre tal end Figur 14.16 Antallet af enheder angives som “Level 0” enheder The simple MRP record builds on the backward scheduling logic but provides some additional information. Like the master schedule record, the format of the MRP record may differ slightly from one firm to the next, but the basic principle—working backward from the planned completion date for the final item—is the same.

31 “Forældre / Barn” relationenip
Lidt andre tal end Figur 14.16 “Forældre / Barn” relationenip H E Refer back to bill of materials on slide 20, or insert duplicate after this slide for ready reference Figure shows an example of how the MRP record is calculated. Looking at point A in the top row of Figure 14.14, we see that management has committed itself lo having 500 chairs ready at the beginning of week 5. Given the planning lead time from Figure 14.11, workers need to start assembling the chairs in week 4 (point B). This assembly task triggers the need for Level 1 components like seats. The bottom half of Figure shows the MRP record for the seat. The top row shows gross requirements—that is, how many seats are needed each week. Because no chairs are being assembled in weeks 1 through 3, the gross requirement for seats in those weeks is zero (point C). In week 4, the gross requirement for seats is 500 (point D}. This number is drawn directly from the "Start assembly" quantity at point B. F Hvor kommer “gross requirements” fra? G

32 Hvor kommer “net requirements” fra?
Gross requirements can be met by drawing from three sources: inventory carried over from the previous week, or the projected ending inventory; units already on order, referred to as scheduled receipts; and new orders, termed planned receipts. To determine whether any new orders need to be placed, we must first calculate net requirements: (14.4) In laymen's terms, if enough seats can be obtained from inventory and scheduled receipts to cover the gross requirements, then managers don't need to order any more seats (net requirement equals zero). Otherwise, they have a net requirement that must be met with new planned receipts. In our chair example, the projected inventory at the end of week 3 is zero, and there are no scheduled receipts in week 4. Therefore, the net requirement for seats in week 4 is NR4 = maximum(0; GR4 – El3 - SR4) = maximum (0; ) = 500 This result is shown in Figure as point E. If you look in the lower lefl-hand corner of Figure 14.14, you will see that the minimum order size for seats is one. In general, a business would not want to order more units than necessary, as doing so would increase inventory levels and costs. Therefore, managers should plan on ordering just enough seats to meet the net requirement (point F). If they plan to receive 500 seats in week 4, they must release the order no later than week 2 (point C) because of the two-week planning lead time for seats. Finally, the ending inventory for week 4 (point H) is calculated using Equation (14.5): (NÆSTE SLIDE) EI(4)=EI(3)+SR4+PR4-GR4 = – 500 = 0

33 Hvor kommer “end inventory” fra?
Finally, the ending inventory for week 4 (point H) is calculated using Equation (14.5): EI(4)=EI(3)+SR4+PR4-GR4 = – 500 = 0

34 Vi dykker længere ned i MRP
Lidt andre tal end Figur 14.16 Vi dykker længere ned i MRP 25 25 25 I To test your understanding of the MRP record, try tracing the calculations through weeks 5 and 6. Figure shows the complete MRP record for all the Level 1 items, including the leg assembly and the back assembly. First, the factory begins week 1 with 25 leg assemblies in inventory (point I). Because there are no gross requirements in the first three weeks, these assemblies gather dust until they are needed in week 4. Though the net requirement in week 4 is only 475, managers place an order for 1,000 (point J) because that is the minimum order size. The result is excess inventory at the end of week 4. In week 5, the factory has more than enough leg assemblies (525) in beginning inventory to meet the gross requirement (400). As a result, managers do not place any additional orders (point K). Finally, for the back assemblies, the factory has a scheduled receipt of 250 units in week 2 (point L). These units will sit in inventory until week 4, when they are needed. J K L

35 Går fra “Level 1” til “Level 2” komponenter . . .
25 25 25 M Figure shows the complete MRP calculations for all components in the King Philip chair. Notice that managers want to put together 1,000 leg assemblies in week 3 (planned orders = 1,000). Because each leg assembly requires two legs (Figure 14.11), the gross requirement for legs in week 3 is 2,000 (point M). Similarly, each back assembly requires two side rails. Therefore, a planned order for 300 back assemblies in week 5 results in a gross requirement of 600 side rails in the same week (point N). Hvor kommer gross requirements for LEGS fra?

36 Kombinerede materialekrav: “Cross Bars”
25 25 25 Bemærk effekten af forskelle i lead tider og ordre størrelser på “gross requirements” for hver komponent Now for a real test. Where do the crossbar's gross requirements in Figure come from? Because the crossbar is used in two different Level 1 items, we must calculate gross requirements based on planned orders for both the leg assemblies and the back assemblies. Therefore: Gross requirements for crossbars = Leg assembly planned orders + back assembly planned orders Week 3: 1, = 1,250 Week 4: = Week 5: 1, = 1,300 Once we have calculated the gross requirements, filling out the rest of the MRP records is a matter of following the rules outlined earlier. PAS På andre tal end I tabel 14.16!!!

37 Effekt af længere lead tider
Vi kan ikke “implemen-tere dette, da “planned order” vil skulle afgives “tilbage i tiden” …. Hvis vi “skynder os at lave en ordre på 250 crossbars, så vil disse blive leveret en uge for sent i.f.t. hvornår montage skal bruge dem. 25 25 25 Vi kan ikke “implementere dette, da “planned order” vil skulle afgives “tilbage i tiden” …. Hvis vi “skynder os at lave en ordre på 250 crossbars, så vil disse blive leveret en uge for sent i.f.t. hvornår montage skal bruge dem.

38 Opsummering ... Hvorfor er det vigtigt at have præcise BOM- opgørelser og præcise lager-information? Hvorfor “fryser” vi produktions-scheduleringen? Hvor kommer “gross requirements” fra? Hvad er forskellen på “planned receipts” og “scheduled receipts”? Opsummering ... Hvorfor er det vigtigt at have præcise BOM- opgørelser og præcise lager-information? Hvorfor “fryser” vi produktions-scheduleringen? Hvor kommer “gross requirements” fra? Hvad er forskellen på “planned receipts” og “scheduled receipts”? “Gross requirements can be met by drawing from three sources: inventory carried over from the previous week, or the projected ending inventory; units already on order, referred to as scheduled receipts; and new orders, termed planned receipts. To determine whether any new orders need to be placed, we must first calculate net requirements:” page 464

39 MRP overvejelser I MRP Feedback Feedback Planlagte Ordre Produktion
The Advantages of MRP Just as in master scheduling, getting lost in the calculations is easy to do with MRP. Figures and showed all the MRP records for two very simple products. Imagine what the MRP records must look like in a firm that produces hundreds of products, with dozens of BOM levels and thousands of components! So now is a good time to pull back and consider just what the benefits of MRP are: 1. MRP is directly tied to the master production schedule and indicates the exact timing and quantity of orders for all components. By eliminating a lot of the guesswork associated with the management of dependent demand inventory, MRP simultaneously lowers inventory levels and helps firms meet their master schedule commitments. 2. MRP allows managers to trace every order for lower-level items through all the levels of the BOM, up to the master production schedule. This logical linkage between higher and lower levels in the BOM is often called the parent/child relationship. If for some reason the supply of a lower-level item is interrupted, a manager can quickly check the BOM to see the impact of the shortage on production. 3. MRP tells the firm and its suppliers precisely what needs to be made when. This information can be invaluable in scheduling work or shipments, or even in planning budgets and cash flows. In fact, MRP logic is often called the “engine" of planning and control systems. MRP plays a big part in many enterprise resource planning (ERP) systems, described in Chapter 16. MRP Feedback Feedback Planlagte Ordre Produktion Udbydere

40 MRP overvejelser II Hvornår opdateres systemet?
Kapacitetskrav, planlægning med udgangspunkt i MRP output “Pegging” Lot size betragtninger MRP overvejelser II Hvornår opdateres systemet? Kapacitetskrav, planlægning med udgangspunkt i MRP output “Pegging”???? Lot size betragtninger Pegging. To solve a potential part requirement problem highlighted by the MRP run, a system-generated pegging report is offered. It identifies the source of the part's requirement from its own master schedule or dependent demand from other planned orders, work orders, or firm planned orders. Knowing the source, the planner is able to readily decide the best action. Conventional MRP uses 'pegging' to display the interdependent relationships among planned orders, which can be excessively complicated for planners to follow. To avoid mistakes, much time is spent verifying and changing MRP recommendations.

41 Stoleben montage i.f.t. stolebenproduktion ...
Bemærk de store “klumper” af efterspørgsel efter stoleben!!

42 Hvis vi laver “lot-for-lot” ordrer (LFL-politik i Jensen)
Meget mere udglattet efterspørgsel efter stoleben, lavere gennemsnitligt lagerniveau

43 Special Considerations in MRP
The complexity of MRP demands that these systems be computerized. But even with the help of computers, MRP requires organizational discipline. For an MRP system to work properly, it must have accurate information. Key data include the master production schedule, the BOM, inventory levels, and planning lead limes. If any of this information is inaccurate, components will not be ordered at the right time or in the right quantity. In some cases, the correct components won't be ordered at all. As a result, most firms that want to implement MRP find that they must first ensure accurate planning information. Yet MRP systems must also accommodate uncertainty about a host of factors, including the possibility of variable lead times, shipment quantities and quality levels, and even changes to the quantities in the master production schedule. In general, firms deal with this uncertainty by lengthening the planning lead times or by holding additional units as safety stock. Of course, such buffers increase the amount of inventory in the system. As a result, many firms make a conscious effort to eliminate uncertainty. They do so by choosing suppliers and processes that offer reliable lead times and high quality levels and by keeping the quantities on the master production schedule firm. Reducing uncertainty requires a high degree of organizational discipline, but the rewards can be pronounced. A final consideration in implementing an MRP system is a phenomenon called MRP nervousness. Because higher-level items drive the requirements for lower-level items in an MRP system, any change, even a small one, in the requirements for upper-level items can have drastic effects on items listed further down the bill of material. Example 14.6 shows how such changes can affect the MRP records. Compared to Figure 14.16, the change eliminates the need for a second planned order of 1,000 leg assemblies in week 5. That, in turn, affects the gross requirements for legs and crossbars. The change in planned production also spills over to the records for seats, back assemblies, side rails, and back slats, although the impact is not quite as pronounced. The point is that a minor change at the top can cause huge changes at lower levels. Planners must take MRP nervousness into consideration when making changes, especially with higher-level items, They must also choose their minimum order quantities with care. Notice the impact of the minimum order, or lot size, for leg assemblies: The firm went from ordering 1,000 leg assemblies in week 5 to ordering none at all that week. Because large lot sizes make MRP systems more nervous, firms that take this approach to inventory management usually try to keep their minimum order quantities as small as possible, especially for higher-level items that have the potential to disrupt lower-level requirements.

44 Distribution Requirements Planning (DRP)
Forudser/anticiperer downstream efterspørgsel Anvender denne information til at bestemme, hvornår der skal afgives ordre. Bemærk ordreafgivelse bestemmels ikke af predeterminerede ordrepunkter eller periodisk monitorerisng af lageret! Computer-baserede software systemer er her nødvendige for at “klare” kompleksiteten af sammenhængene Distribution Requirements Planning (DRP) Forudser/anticiperer downstream efterspørgsel Anvender denne information til at bestemme, hvornår der skal afgives ordre. Bemærk ordreafgivelse bestemmels ikke af predeterminerede ordrepunkter eller periodisk monitorerisng af lageret! Computer-baserede software systemer er her nødvendige for at “klare” kompleksiteten af sammenhængene The key difference between DRP and the other methods is that DRP uses demand forecasts and knowledge about the participant’s inventory policies to determine when to place an order. DRP is more complex and usually requires a computer-based system, but is far better when demand levels are unpredictable. LIGNER MRP BORTSET FRA AT FORECASTED DEMAND svarer til GROSS REQUIREMENT

45 DRP Fordele DRP Fordele Forbedrer kunde service (hurtigere og mere præcise informationer om tilgængelighed af varer) Tilvejebringer en “bedre” og hurtigere viden om effekterne af knaphed eller forøget salg Hjælper med at reducere omkostninger Lager Fragt Produktion Tilvejebringer integration mellem de forskellige elementer i supply-kæden “Reduced costs” deserves some more explanation. To the extent that the distributor could “see” when the wholesalers would require more product, the distributor could use that information to combine orders, plan production, or even combine freight shipments. The point is, with better information, the Distributor will have more choices on how to run its business. Forbedrer kunde service (hurtigere og mere præcise informationer om tilgængelighed af varer) Tilvejebringer en “bedre” og hurtigere viden om effekterne af knaphed eller forøget salg Hjælper med at reducere omkostninger Lager Fragt Produktion Tilvejebringer integration mellem de forskellige elementer i supply-kæden

46 DRP-”bibetingelser” Præcise forecast og lageropgørelser
Nødvendigt for at kunne på korrekt vis forudse hvornår ordrer vil blive afgivet Konsistente og pålidelige lead tider For at sikre, at ordrer kan afgives og modtages på de tidspunkter, hvor de bestilte varer skal anvendes “Nervousness” Selv mindre ændringer i efterspørgslen hos downstream partnere kan have en significant effekt på ordre volume, specielt når ordrestørrelser er relativet høje DRP-”bibetingelser” Præcise forecast og lageropgørelser Nødvendigt for at kunne på korrekt vis forudse hvornår ordrer vil blive afgivet Konsistente og pålidelige lead tider For at sikre, at ordrer kan afgives og modtages på de tidspunkter, hvor de bestilte varer skal anvendes “Nervousness” Selv mindre ændringer i efterspørgslen hos downstream partnere kan have en significant effekt på ordre volume, specielt når ordrestørrelserne er relativt høje “Nervousness” is a concept discussed in more detail in Module 12. “Nervousness” refers to the idea that slight changes in demand at the Wholesaler level may dramatically affect when they place orders. Look again at Wholesaler A. If demand turns out to be just 14 units in Day 2, then the reorder point wouldn’t be reached until Day 3. The result would be that Wholesaler A would not expect to receive more units until Day 4. The “nervousness” in this case is that a relatively small change in demand ( = 6 units) shifted an order for 200 units.

47 DRP Eksempel I Antag, at vi har forecast’et efterspørgslen for grossist A for de næste 8 dage (valget af “bedste” tidshorisont afhænger af mange faktorer) Baseret på dette vil vi forvente, at grossist A vil afgive en ordre på dag 3 As before???, Wholesaler A has a reorder point of 50, and orders in quantities of 200. The DRP record shows the forecasted demand for the next 8 days, the expected ending inventory level, and when Wholesaler A will expect to receive an order. For example, the wholesaler starts Day 1 with 85 units and expects to sell 20, leaving it with 65 at the end of the day. Wholesaler A falls below its order point some time on Day 2. As a result, Wholesaler A places an order which it expects to receive on Day 3. Based on the expected demand rate of 20 per day, Wholesaler A shouldn’t expect to receive another order over the remaining days showing in the record.

48 DRP Eksempel II Vi udvider nu analysen til at inkludere grossist B De to grossister i kombination gør, at vi vil forvente at se ordrer på dag 3 og 4 Here, we have completed a similar DRP record for Wholesaler B, and added its expected orders to those of Wholesaler A to get a line titled “Total expected orders” for the next 8 days.

49 Bemærk, her antages leadtid
hos distributøren på 0 dage DRP Eksempel IV Special notes: Even though the orders cause the demand to look “lumpy”, DRP allows the distributor to anticipate when the orders are required, and to plan accordingly. In this case, the distributor will need to plan on receiving 400 units in Day 3 (Q = 400 for the distributor). If it takes 2 days to get units to the distributor from the factory, this means the distributor should plan on releasing the order on Day 1. Distributøren anvender nu denne information til at planlægge sine egne ordrer. I dette tilfælde antages at lead tid for producenten er to dage, dvs det tager to dage for udbyderen at supplere op hos distributørerne. Baseret på denne informatio vil distributøren afgive ordre til producentern på dag en.

50 Figur 14.22 Suppose the MeltoMatic is sold through two regional distribution centers, Minneapolis, and in Buffalo. These distribution centers sell directly to retailers. Figure shows the structure of this downstream supply chain. Each distribution center has its own weekly demand forecasts, inventory data, order lead times, and minimum order quantities. Both centers use this information to estimate when they will need to place orders with the main plant. The two sections at the lop of Figure show the DRP records for the two distribution centers. Note that these records are almost identical to MRP records, with one exception: Instead of gross requirements, they show forecasted demand. Here the term forecasted demand refers to the number of snow blowers each center expects to ship lo retail customers each week. By substituting forecasted demand for gross requirements, managers it the distribution centers can calculate net requirements, planned receipts, and planned orders. Finally, activities at these two distribution centers are synchronized when their total weekly planned orders become forecasted demand in the factory's master schedule (see the third section of Figure 14.22). Master scheduling occurs as usual, except that the forecasted demand is tied explicitly to planned orders at the distribution centers.

51 Figur 14.23 Now look at what happens when forecasted demand changes at the distribution centers (Figure 14.23). Starting in week 49, the forecasted demand at the Minneapolis distribution center has increased dramatically. What is the impact of this change on the master schedule? Logic suggests that in order to meet the increased demand, Sandy-Built's managers will need to increase the master production schedule to 440 snow blowers in week 49. The point is that DRP quickly translates downstream demand into upstream production decisions.

52 Job Sekvens/Job Schedulering
Rules: FCFS — first come, first served EDD — earliest due date Kritisk ratio — resterende/udestående arbejdstid divideret med antal dage tilbage før tidsfrist Performance-mål: Gennemsnitlig forsinkelse (Average lateness) — summen af dage som går ud over tidsfrister for hvert job divideret med antal jobs Job Sekvens/Job Schedulering Rules: FCFS — first come, first served EDD — earliest due date Kritisk ratio — resterende/udestående arbejdstid divideret med antal dage tilbage før tidsfrist Performance-mål: Gennemsnitlig forsinkelse (Average lateness) — summen af dage som går ud over tidsfrister for hvert job divideret med antal jobs Job Sequencing The tools and techniques used to perform PAC and vendor order management are as varied as the operational environments in which they are used. They can be as simple as the rules for deciding which manufacturing job should be processed next or as complex as high-tech software or hardware solutions for tracking the flow of materials among supply chain partners. Job sequencing rules have been used for decades to determine the order in which jobs should be processed when resources are limited and multiple jobs are wailing to be done. And as Example 14.7 shows, job sequencing is just as valid in a services environment as it is in manufacturing.

53 Eksempel-data Job Estimeret Tid Dage før tidsfrist Kritisk Ratio
Weldco 8 32 0.250 MetroArt 10 20 0.500 MMCC 9 1.000 Jones 6 15 0.400 test three common job sequencing rules first come-first served (FO'S), earliest due date (EDD), and the critical ratio—to see which one performs best.

54 Eksempel FCFS Job Estim. Tid Dage før tidsfrist Start Slut
Dage ud over tidsfrist Weldco 8 32 MetroArt 10 20 18 MMCC 9 27 Jones 6 15 33 Gennemsnitlig forsinkelse = 36/4 = 9 dage

55 Eksempel EDD Job Estim. Tid Dage før tidsfrist Start Slut
Sorteret efter EDD Job Estim. Tid Dage før tidsfrist Start Slut Dage ud over tidsfrist MMCC 9 Jones 6 15 MetroArt 10 20 25 5 Weldco 8 32 33 1 Gennemsnitlig forsinkelse = 6/4 = 1.5 dage

56 Eksemple Kritisk Ratio (største ratio først)
Sorteret efter Kritisk Ratio Job Estim. Tid Dage før tidsfrist Start Slut Dage ud over tidsfrist MMCC 9 MetroArt 10 20 19 Jones 6 15 25 Weldco 8 24 33 Gennemsnitlig forsinkelse = 19/4 = 4.75 dage

57 Fortokning EDD reglen giver bedre gennemsnitlig forsinkelse i dette eksempel. Sammenlign med FCFS resultatet. Bemærk at Kritisk Ratio reglen performer ikke så godt som EDD reglen. Sammenlign med eksemplet i bogen på side 472. Hvorfor? Fortokning EDD reglen giver bedre gennemsnitlig forsinkelse i dette eksempel. Sammenlign med FCFS resultatet. Bemærk at Kritisk Ratio reglen performer ikke så godt som EDD reglen. Sammenlign med eksemplet i bogen på side 472. Hvorfor? Sammenlign EDD og KritRat: MMCC skal først med 9 dage tilbage og afvikling på 9 dage. Derefter er der enten plads til i) Jones uden forsinkelse eller til ii) MetroArt uden forsinkelser, men i) giver forsinkerlser på 5 og 1 mens ii) giver forsinkelser på 10 og 9 Hvad med at genberegne EDD og KritRat, hvor vi fjerner MMCC og Jones

58 Eksempel-data Job Estimeret Tid Dage før tidsfrist Kritisk Ratio
Weldco 8 32-9=23 8/23 MetroArt 10 20-9=11 10/11 MMCC væk - Jones 6 15-9=6 1 test three common job sequencing rules first come-first served (FO'S), earliest due date (EDD), and the critical ratio—to see which one performs best.

59 Table 14.2