HOGWARTS SCHOOL OF IMPROVEMENT INITIATIVES
PPC
PRODUCTION PLANNING & CONTROL
Resource Person
B.S.Subrahmanian bsstqm@gmail.com 0
HOGWARTS SCHOOL OF IMPROVEMENT INITIATIVES
PPC
Overview
Production-Planning Hierarchy Aggregate Planning Master Production Scheduling Production-Planning and Control Systems
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Capacity Planning, Aggregate Planning, Master Schedule, and ShortTerm Scheduling
Capacity Planning 1. Facility Size 2. Equipment Procurement
Long-term
Aggregate Planning 1. Facility Utilization 2. Personnel needs 3. Subcontracting Master Schedule 1. MRP 2. Disaggregation of master plan Short-term Scheduling 1. Work center loading 2. Job sequencing
Intermediate-term
Intermediate-term
Short-term
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PRODUCTION PLANNING HIERARCHY
Long-Range Capacity Planning
Aggregate Planning
Master Production Scheduling
Production Planning and Control Systems
Pond Draining Systems
Push Systems
Pull Systems
Focusing on Bottlenecks
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PRODUCTION PLANNING HORIZONS
Long-Range Capacity Planning Long-Range (years)
Aggregate Planning
Medium-Range (6-18 months)
Master Production Scheduling
Short-Range (weeks) Very-Short-Range (hours - days)
Production Planning and Control Systems
Pond Draining Systems
Push Systems
Pull Systems
Focusing on Bottlenecks 4
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Production Planning: Units of Measure
Long-Range Capacity Planning Entire Product Line
Aggregate Planning
Product Family
Master Production Scheduling
Specific Product Model Labor, Materials, Machines
Production Planning and Control Systems
Pond Draining Systems
Push Systems
Pull Systems
Focusing on Bottlenecks 5
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AGGREGATE PLANNING STRATEGIES PURE STRATEGIES
Capacity Options --change capacity: changing inventory levels varying work force size by hiring varying production capacity through overtime or idle time subcontracting using part-time workers Demand Options --change demand: Influencing demand backordering during high demand periods Counter seasonal product mixing
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COMPARISON OF AGGREGATE PLANNING METHODS
Advantages Graphical Methods: - Simple, easy to use and understand Linear Programming: - Provides optimal solution - Popular in some industries - Sensitivity & dual analysis provide useful information - Constraints readily added. Linear Decision Rule - Provides optimal solution - Handles non-deterministic demand Limitations Graphical Methods: - Many solutions; solution need not be optimal Linear Programming: - Mathematical functions must be linear, and deterministic -- not necessarily realistic
Linear Decision Rule: - Incorporates some non-standard costs. Skilled personal required. Quadratic model not always realistic. Value of variables unconstrained. Feasible solution is optimal if it exists - not guaranteed.
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COMPARISON OF AGGREGATE PLANNING METHODS
Advantages (continued) Management coefficients Model: - Attempts to duplicate manager’s decision-making process. Simplest, last disruptive, easiest to implement Simulation: - Places no restrictions on mathematical structure or cost functions. Can test many relationships.
Limitations (continued) Managment coefficients Model: - Solution need not be optimal. - Assumes past decisions are good. - Built on individual’s invalidate model. Simulation - No optimal solution guaranteed. - Often a long, costly, process.
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WHY AGGREGATE PLANNING IS NECESSARY?
Fully load facilities and minimize overloading and underloading Make sure enough capacity available to satisfy expected demand Plan for the orderly and systematic change of production capacity to meet the peaks and valleys of expected customer demand Get the most output for the amount of resources available
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AGGREGATE PLANNING Goal: Specify the optimal combination of production rate workforce level inventory on hand Product group or broad category (Aggregation)
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Medium-Range: 6-18 months
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AGGREGATE PLANNING TERMINOLOGY
Production Rate
Workforce Level
Inventory on Hand
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INPUTS
A forecast of aggregate demand covering the selected planning horizon (6-18 months) The alternative means available to adjust short- to medium-term capacity, to what extent each alternative could impact capacity and the related costs The current status of the system in terms of workforce level, inventory level and production rate
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OUTPUTS
A production plan: aggregate decisions for each period in the planning horizon about workforce level inventory level production rate Projected costs if the production plan was implemented
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MEDIUM-TERM CAPACITY ADJUSTMENTS
Workforce level Hire or layoff full-time workers Hire or layoff part-time workers Hire or layoff contract workers Utilization of the work force Overtime Idle time (under time) Reduce hours worked . . . more
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MEDIUM-TERM CAPACITY ADJUSTMENTS
Inventory level Finished goods inventory Backorders/lost sales Subcontract
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APPROACHES
Informal or Trial-and-Error Approach Mathematically Optimal Approaches Linear Programming Linear Decision Rules Computer Search Heuristics
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MATCHING DEMAND STRATEGY
Capacity (Production) in each time period is varied to exactly match the forecasted aggregate demand in that time period Capacity is varied by changing the workforce level Finished-goods inventories are minimal Labor and materials costs tend to be high due to the frequent changes
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MATCHING CAPACITY & DEMAND
Demand Management Vary prices change lead time encourage/discourage business Capacity Management adjust staffing adjust equipment and processes change methods to facilitate production redesign the product to facilitate production
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DEVELOPING AND EVALUATING THE MATCHING PRODUCTION PLAN
Production rate is dictated by the forecasted aggregate demand Convert the forecasted aggregate demand into the required workforce level using production time information The primary costs of this strategy are the costs of changing workforce levels from period to period, i.e., hirings and layoffs
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LEVEL CAPACITY STRATEGY
Capacity (production rate) is held level (constant) over the planning horizon The difference between the constant production rate and the demand rate is made up (buffered) by inventory, backlog, overtime, part-time labor and/or subcontracting
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DEVELOPING AND EVALUATING THE LEVEL PRODUCTION PLAN
Assume that the amount produced each period is constant, no hirings or layoffs The gap between the amount planned to be produced and the forecasted demand is filled with either inventory or backorders, i.e., no overtime, no idle time, no subcontracting . . . more
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DEVELOPING AND EVALUATING THE LEVEL PRODUCTION PLAN
The primary costs of this strategy are inventory carrying and backlogging costs Period-ending inventories or backlogs are determined using the inventory balance equation: EIt = EIt-1 + (Pt - Dt )
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AGGREGATE PLANS FOR SERVICES
For standardized services, aggregate planning may be simpler than in systems that produce products For customized services, there may be difficulty in specifying the nature and extent of services to be performed for each customer customer may be an integral part of the production system Absence of finished-goods inventories as a buffer between system capacity and customer demand
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PREEMPTIVE TACTICS
There may be ways to manage the extremes of demand: Discount prices during the valleys.... have a sale Peak-load pricing during the highs .... electric utilities,
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OBJECTIVES OF MPS
Determine the quantity and timing of completion of end items over a short-range planning horizon. Schedule end items (finished goods and parts shipped as end items) to be completed promptly and when promised to the customer. Avoid overloading or underloading the production facility so that production capacity is efficiently utilized and low production costs result.
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TIME FENCES
The rules for scheduling 4-6 weeks
+/- 10% Change
6+ weeks
1-2 weeks
No Change
2-4 weeks
+/- 5% Change
+/- 20% Change
Frozen
Firm Full Open
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DEVELOPING AN MPS
Using input information Customer orders (end items quantity, due dates) Forecasts (end items quantity, due dates) Inventory status (balances, planned receipts) Production capacity (output rates, planned downtime) Schedulers place orders in the earliest available open slot of the MPS . . . more
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DEVELOPING AN MPS
Schedulers must: estimate the total demand for products from all sources assign orders to production slots make delivery promises to customers, and make the detailed calculations for the MPS As orders are slotted in the MPS, the effects on the production work centers are checked Rough cut planning - identify underloading or overloading of capacity
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Model parameters: • c1 (Rs/unit): cost per unit when item is outsourced (item price, ordering and receiving costs) • C (Rs): required capital investment in order to support internal production • c2 (Rs/unit): variable production cost for internal production (materials, labor,variable overhead charges) • Assume that c2 < c1 • X: total quantity of the item to be outsourced or produced internally
Total cost as a function of X c1*X C+c2*X
A SIMPLE ECONOMIC TRADE-OFF MODEL FOR THE “MAKE OR BUY” PROBLEM
C
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X0 = C / (c1-c2)
X
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EXAMPLE: INTRODUCING A NEW (STABILIZING) BRACKET FOR AN EXISTING PRODUCT
Machine capacity available Required “infrastructure” for in-house production new tooling: Rs12,500 Hiring and training an additional worker: Rs1,000 Internal variable production (raw material + labor) cost: Rs1.12 / unit Vendor-quoted price: Rs1.55 / unit Forecasted demand: 10,000 units/year for next 2 years X0 = (12,500+1,000)/(1.55-1.12) = 31,395 > 20,000 Buy!
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TYPES OF PRODUCTION-PLANNING AND CONTROL SYSTEMS
Pond-Draining Systems Push Systems Pull Systems Focusing on Bottlenecks
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POND-DRAINING SYSTEMS
Emphasis on holding inventories (reservoirs) of materials to support production Little information passes through the system As the level of inventory is drawn down, orders are placed with the supplying operation to replenish inventory May lead to excessive inventories and is rather inflexible in its ability to respond to customer needs
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PUSH SYSTEMS
Use information about customers, suppliers, and production to manage material flows Flows of materials are planned and controlled by a series of production schedules that state when batches of each particular item should come out of each stage of production Can result in great reductions of raw-materials inventories and in greater worker and process utilization than pond-draining systems
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PULL SYSTEMS
Look only at the next stage of production and determine what is needed there, and produce only that Raw materials and parts are pulled from the back of the system toward the front where they become finished goods Raw-material and in-process inventories approach zero Successful implementation requires much preparation
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FOCUSING ON BOTTLENECKS
Bottleneck Operations Impede production because they have less capacity than upstream or downstream stages Work arrives faster than it can be completed Binding capacity constraints that control the capacity of the system Optimized Production Technology (OPT) Synchronous Manufacturing
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SYNCHRONOUS MANUFACTURING
Operations performance measured by throughput (the rate cash is generated by sales) inventory (money invested in inventory), and operating expenses (money spent in converting inventory into throughput) . . . more
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SYNCHRONOUS MANUFACTURING
System of control based on: drum (bottleneck establishes beat or pace for other operations) buffer (inventory kept before a bottleneck so it is never idle), and rope (information sent upstream of the bottleneck to prevent inventory buildup and to synchronize activities)
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PROCESS-FOCUSED MANUFACTURING
Process-focused factories are often called job shops. A job shop’s work centers are organized around similar types of equipment or operations. Workers and machines are flexible and can be assigned to and reassigned to many different orders. Job shops are complex to schedule.
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PRE-PRODUCTION PLANNING
Design the product in customer order, Plan the operations the product must pass through ..... this is the routing plan, Work moves between operations on a move ticket,
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COMMON SHOP FLOOR CONTROL ACTIVITIES
The production control department controls and monitors order progress through the shop. Assigns priority to order Issues dispatch list Tracks WIP and keeps systems updated Controls input-output between work centers Measures efficiency, utilization, and productivity of shop
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INPUT-OUTPUT CONTROL
Input-output control identifies problems such as insufficient or excessive capacity or any issues that prevents the order from being completed on time. Gantt charts are useful tools to coordinate jobs through shop; graphical summary of job status and loading of operations
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ASSIGNING JOBS TO WORK CENTERS: HOW MANY JOBS/DAY/WORK CENTER
Infinite loading - assigns jobs to work centers without regard to capacity.. large queues Finite loading - uses work center capacity to schedule orders. .. popular scheduling approach . . . more
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Infinite: Schedule in time period needed
Finite: Schedule according to capacity limits
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PRINCIPLES OF SCHEDULING
1. There is a direct equivalence between work flow and cash flow. 2. The effectiveness of any job shop should be measured by speed of flow through the shop. 3. Schedule jobs as a string, with process steps back to back. 4. A job once started should not be interrupted.
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PRINCIPLES OF SCHEDULING
5. Speed of flow is most efficiently achieved by focusing on bottleneck work centers and jobs. 6. Reschedule every day. 7. Obtain feedback each day on jobs that are not completed at each work center. 8. Match work center input information to what the worker can actually do.
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PRINCIPLES OF SCHEDULING
9. When seeking improvement in output, look for incompatibility between engineering design and process execution.
10. Certainty of standards, routings, and so forth is not possible in a job shop, but always work towards achieving it.
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ASSIGNING JOBS TO WORK CENTERS: WHICH JOB GETS BUILT FIRST?
Forward scheduling - jobs are given earliest available time slot in operation... excessive WIP Backward scheduling - start with promise date and work backward through operations reviewing lead times to determine when a job has to pass through each operation .. less WIP but must have accurate lead times
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ORDER SEQUENCING PROBLEMS
We want to determine the sequence in which we will process a group of waiting orders at a work center. Many different sequencing rules can be followed in setting the priorities among orders. There are numerous criteria for evaluating the effectiveness of the sequencing rules.
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ORDER SEQUENCING RULES
Sequencing rules include: First-Come First-Served (FCFS) Shortest Processing Time Earliest Due Date Critical Ratio - (time to due date/total remaining production time) Least Changeover Cost
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JOB SEQUENCING EXAMPLE FIRST-COME FIRST-SERVED
Jobs (in order of arrival) A B C D Processing Time (days) 4 7 3 1 Due Date (days hence) 5 10 6 4
Orders submitted at beginning of week n-jobs on one machine
FCFS Schedule
Jobs (in order of arrival) A B C D Processing Time (days) 4 7 3 1 Due Date Flow Time (days hence) (days) 5 4 10 11 6 14 4 15
Late? On-Time?
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JOB SEQUENCING EXAMPLE SHORTEST OPERATING TIME
Jobs (in order of arrival) A B C D Processing Time (days) 4 7 3 1 Due Date (days hence) 5 10 6 4
Orders submitted at beginning of week n-jobs on one machine
Shortest Operating Time Schedule
Jobs (in order of arrival) D C A B Processing Time (days) 1 3 4 7 Due Date Flow Time (days hence) (days) 4 1 6 4 5 8 10 15
Late? On-Time?
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JOB SEQUENCING EXAMPLE LAST-COME FIRST-SERVED
Jobs (in order of arrival) A B C D Processing Time (days) 4 7 3 1 Due Date (days hence) 5 10 6 4
Orders submitted at beginning of week n-jobs on one machine
Last-Come First-Served Schedule
Jobs (in order of arrival) D C B A Processing Time (days) 1 3 7 4 Due Date Flow Time (days hence) (days) 4 1 6 4 10 11 5 15
Late? On-Time?
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Job Sequencing Example Earliest Due Date First
Jobs (in order of arrival) A B C D Processing Time (days) 4 7 3 1 Due Date (days hence) 5 10 6 4
Orders submitted at beginning of week n-jobs on one machine
Earliest Due Date First
Jobs (in order of arrival) D A C B Processing Time (days) 1 4 3 7 Due Date Flow Time (days hence) (days) 4 1 5 5 6 8 10 15
Late? On-Time?
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EVALUATING THE EFFECTIVENESS OF SEQUENCING RULES
Average flow time - average amount of time jobs spend in shop Average number of jobs in system Average job lateness - average amount of time job’s completion date exceeds its promised delivery date Changeover cost - total cost of making machine changeovers for group of jobs
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EXPERIENCE SAYS:
First-come-first-served has many shortcomings. Shortest processing time does perform well; supervisors like it but have to watch out for long processing time orders Critical ratio works well on average job lateness criterion.. may focus too much on jobs that cannot be completed on time forcing more jobs to miss promise dates
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EXAMPLE: SEQUENCING RULES
Use the FCFS, SPT, and Critical Ratio rules to sequence the five jobs below. Evaluate the rules on the bases of average flow time, average number of jobs in the system, and average job lateness. Job Processing Time A 6 hours B 12 C 9 D 14 E 8 Time to Promised Completion 10 hours 16 8 14 7
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EXAMPLE: SEQUENCING RULES
FCFS Rule Processing Time 6 12 9 14 8 49 A>B>C>D>E Promised Flow Completion Time 10 6 16 18 8 27 14 41 7 49 141
Job A B C D E
Lateness 0 2 19 27 42 90
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EXAMPLE: SEQUENCING RULES
FCFS Rule Performance Average flow time: 141/5 = 28.2 hours Average number of jobs in the system: 141/49 = 2.88 jobs Average job lateness: 90/5 = 18.0 hours
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EXAMPLE: SEQUENCING RULES
SPT Rule Processing
Job Time
A>E>C>B>D Promised
Time
Flow
Lateness
Completion
A B C D E
6 8 9 12 14 49
10 7 8 16 14
6 14 23 35 49 127
0 7 15 19 35 76
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EXAMPLE: SEQUENCING RULES
SPT Rule Performance Average flow time: 127/5 = 25.4 hours Average number of jobs in the system: 127/49 = 2.59 jobs Average job lateness: 76/5 = 15.2 hours
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EXAMPLE: SEQUENCING RULES
Critical Ratio Rule Processing
Job Time
E>C>D>B>A Promised
Time
Flow
Lateness
Completion
E (.875) C (.889) D (1.00) B (1.33) A (1.67)
8 9 14 12 6 49
7 8 14 16 10
8 17 31 43 49 148
1 9 17 27 39 93
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EXAMPLE: SEQUENCING RULES
Critical Ratio Rule Performance Average flow time: 148/5 = 29.6 hours Average number of jobs in the system: 148/49 = 3.02 jobs Average job lateness: 93/5 = 18.6 hours
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Example: Sequencing Rules
Comparison of Rule Performance Average Flow Time 28.2 25.4 29.6 Average Average Number of Jobs Job in System Lateness 2.88 2.59 3.02 18.0 15.2 18.6
Rule FCFS SPT CR
SPT rule was superior for all 3 performance criteria.
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PRODUCT-FOCUSED SCHEDULING
Two general types of product-focused production: Batch - large batches of several standardized products produced Continuous - few products produced continuously.... minimal changeovers
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SCHEDULING DECISIONS
How large should production lot size be for each product? How many products should have passed each operation if time deliveries are to be on schedule?
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BATCH SCHEDULING
EOQ for production lots:
2DS p p − d C Does not consider production capacity Run-Out Method Only so much capacity available each week so determine size of lots for all orders at the same time Based on most current demand and production rates... not annual estimates
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EOQ =
2DS C
p p − d
D - annual demand (units/year) C - carrying cost (Rs/unit/year) S - ordering cost (Rs/order) d = daily demand (units per day) = D / no. of days per year p = daily production (units per day)
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EXAMPLE OF SCHEDULING - 1
Activity 1 Metal Cutting
Metal Job
Activity 2 Deburr & Grind
A B C D E
1 3 2 5 4
2 5 4 4 2
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EXAMPLE OF SCHEDULING - 1
Metal Job Activity 1 Metal Cutting 1 (first) 3 (fourth) 2 (second) 5 Activity 2 Deburr & Grind 2
1 2 3 4 5 6 7 8 9
1 1 1 1 1 1 1 1 1 0 1 2 3 4 5 6 7 8
A
B
5
A A C C B B B D D D D D E E E E c t 1 A c t 2 A A C C C C B B B B B D D D D E E
C
4 4 (fifth) 2 (third)
D
E
4
Ties: pick either
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EXAMPLE OF SCHEDULING - 2 Activity 1 Mopping A B C D E F 4 2 6 4 3 5 Activity 2 Buffing 3 7 5 5 4
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EXAMPLE
Job number Due Date Oper. #1 Oper. #2 Oper. #3 Oper. #4 Oper. #5 1 17 (1,2) (2,4) (4,3) (5,3) 2 18 (1,4) (3,2) (2,6) (4,2) (5,3) 3 19 (2,1) (5,4) (1,3) (3,4) (2,2) 4 17 (2,4) (4,2) (1,2) (3,5) 5 20 (4,5) (5,3) (1,7)
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A FEASIBLE SCHEDULE AND ITS GANTT CHART
Machine 1 2 3
4
5
5 Job 1 Job 2
10 Job 3
15 Job 4
20 Time 75 Job 5
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GANTT CHART
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GANTT CHART
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AN EXAMPLE FOR RECITATION TASKS TIMES AND PREDECESSORS FOR AN OPERATION
Task label A B C D E F G H I J K L M N Time 2 7 5 2 15 7 6 4 9 10 4 8 6 15 Predecessors None A None None C,D A,E None B,G A None None J,K A,L F,H,I,M
C E D F B H G I N
A
J L K M
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EXAMPLE OF MRP LOGIC AND PRODUCT STRUCTURE TREE
PPC
Given the product structure tree for “A” and the lead time and demand information below, provide a materials requirements plan that defines the number of units of each component and when they will be needed.
Product Structure Tree for Assembly A A Lead Times A 1 day B 2 days C 1 day D 3 days E 4 days F 1 day Demand Day 10 50 A Day 8 20 B (Spares) Day 6 15 D (Spares)
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B(4)
C(2)
D(2)
E(1)
D(3)
F(2)
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First, the number of units of “A” are scheduled backwards to allow for their lead time. So, in the materials requirement plan below, we have to place an order for 50 units of “A” in the 9th week to receive them in the 10th week.
Day: A Required Order Placement
1
2
3
4
5
6
7
8
9 50
10 50
LT = 1 day
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Next, we need to start scheduling the components that make up “A”. In the case of component “B” we need 4 B’s for each A. Since we need 50 A’s, that means 200 B’s. And again, we back the schedule up for the necessary 2 days of lead time.
Day : A B R e q u ire d O rd e r P la c e m e n t R e q u ire d O rd e r P la c e m e n t 1 2 3 4 5 6 7 8 9 50 200
10 50
20 20 200
LT = 2
A
Spares
4x50=200
B(4)
C(2)
D(2)
E(1)
D(3)
F(2)
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HOGWARTS PPC Finally, SCHOOL OF IMPROVEMENT INITIATIVES for all components, we have repeating the process the final materials requirements plan:
A LT=1 B LT=2 C LT=1 D LT=3 E LT=4 F LT=1
Required Order Placement Required Order Placement Required Order Placement Required Order Placement Required Order Placement Required Order Placement
50 20 20 200 100 55 55 20 200 200 200 400 300 20 200 400 100 300 50 200
A Part D: Day 6 B(4) C(2)
40 + 15 spares
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D(2)
E(1)
D(3)
F(2)
HOGWARTS SCHOOL OF IMPROVEMENT INITIATIVES
PPC
To find out and direct Right people Right place Right time Right price
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HOGWARTS SCHOOL OF IMPROVEMENT INITIATIVES
PPC
COMMON SHOP FLOOR CONTROL ACTIVITIES
• The production control department controls and monitors order progress through the shop. • Assigns priority to order • Issues dispatch list • Tracks WIP and keeps systems updated • Controls input-output between work centers • Measures efficiency, utilization, and productivity of shop
84
HOGWARTS SCHOOL OF IMPROVEMENT INITIATIVES
PPC
COMMON SHOP FLOOR CONTROL ACTIVITIES
PROCESSES OBSERVATION Active processes: Output Vs time Idle processes: Machine Idle time, Breakdowns Compare progress with plan Expedite Process capability, Maintenance schedules
INVENTORY Records of stock levels.
ANALYSIS IMMEDIATE ACTION EVALUATION
Distribution of demand, seasonal variations, trends Issue production / procurement orders Replenishment policies, Inventory systems.
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HOGWARTS SCHOOL OF IMPROVEMENT INITIATIVES
PPC
COMPUTERIZED SCHEDULING
Develops detailed schedules for each work center indicating starting and ending times Develops departmental schedules Generates modified schedules as orders move Many packages available.... select one most appropriate for your business
86
HOGWARTS SCHOOL OF IMPROVEMENT INITIATIVES
PPC
COMPUTERIZED SCHEDULING
87
HOGWARTS SCHOOL OF IMPROVEMENT INITIATIVES
PPC
COMPUTERIZED SCHEDULING
88 