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1
Oran Kittithreerapronchai
1
Department of Industrial Engineering, Chulalongkorn University
Bangkok 10330 THAILAND
Outline
1.
Keys Concepts of Manufacturing System
.
2 Review of Forecasting in Production Environment
3
.
Aggregated Planning and Sale & Operation
planning
.
4 Material Production Scheduling
Inventory Control
Bill of Material
.
5
Material Requirement Planning Integrating
.
6
Capacity Planning into MPS
Previously lecture...
This lecture...
Realize important of Manufacturing System
Review of key concepts of Operation Management, esp information
flow in manufacturing system
Illustrate how IS (i.e., MS Excel) helps with Aggregate planning,
Inventory control, MRP, CRP
Criticism
Globalization
Large capital
Cooperate = Evil
Future is in service
Manufacturing Classifications
Business Classification
Inventory Position
Product & Process Matrix
ProMIS v2.0: review 4/ 79
Manuf Sys Forecasting Agg. & SOP MPS MRP Capacity
Business Classification
Sources
North America Industry Classification Systemwww.census.gov
source: www.oie.go.th
Inventory Position
ETO
MTO
ATO
MTS
..
Engineering Procurement Fabrication Assembly Delivery
Engineer to Order (ETO): work with the customer to design and then make the product
Make to Order (MTO): make the customers product from raw mat
Assemble to Order (ATO): combine a number of preassembled modules to meet
customers specifications
Make to Stock (MTS): serve customers from finished goods inventory
Production Process
source: Chase & Jacabs. 2010. Operation and Supply Chain Management.
System Structure
Time Horizon
Decision horizon
Issues
Evaluation of Manufacturing IS
source: www.arhum.com
RRP
L. Forecasting Agg. Planning
Long-Term Plan
PO
RCCP
Demand Mgt.
S. Forecasting
Intermediate Plan
CRP
BOM
MRP
Inventory
Job Shop
What is Forecasting?
Year 1949
80
60
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Month
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1200 1600
800
600
400
200
0
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Month
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
source: Singkarlsiri C., 1997. pp.10-25
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Month
Accuracy of Forecasting
Example: Mean Error (ME), Mean Absolute Deviation (MAD), Mean Square
Error (MSE), Mean Absolute Percentage Error(MAPE), Tracking signal (TS)
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Measurements of Error
j j
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Ft = At 1 + (1 )Ft 1
= At 1 + (1) [ At 2 + (1)Ft 2]
2
= At 1 + (1)At 2 + (1) Ft 2
Month
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Which is a better?
Knife Sales
0.9
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Month
ME
MAD
MSE
MAPE
Method
Regression
Moving average or
Exponential smoothing
Weighted moving
average
Exponential smoothing
with trend
source:Jacob. etal 2011.
.
What if data is not stationary?
.
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Item number:
Sale ID. UPC Barcode (12 digits in US and 13 digits in other)
Lot/batch number: e.g., pharmaceutical, ceramic tiles
Color/size code: shade color, (UF case)
Buyer code: link to receivable bank a/c
Supplier code: link to payable bank a/c
SKU ID. shortage and retrieving code
Drawing code: link to engineering database
Family group: category, e.g.,
Group technology code: dimension, # holes, type material, strength
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Aggregated Planning
SkyCell, a European cell phone manufacturer, and its customers, service providers, come up
with monthly forecast (in thousand cell phone) as follow:
Month
Jan.
Feb.
Mar.
Apr.
The manufacturing process is govern by numbers of assembly worker, totally 1250 workers.
Each worker can assemble each cell phone every 10 minute. The plant operate 20 days a
month, 8 hours a day and paid $20 per hour and 1.5 time wage for any overtime (maximum 20
hour per worker-month). Total raw materials cost $20, and handling cost is $3 per unit-month. At
the mean time, the company has no-lay o policy. SkyCell has inventory of 50,000 units in Jan
and like to have the same level of inventory.
source: Chopra, S. & Meindl 2010. pp. 243
SkyCell: Question
SkyCell: Formulation
SkyCell: Formulation
min z = 20 xprodt + 3 xinvt +(20)(8)(20) wt +30 yovert
t t t t
s.t.
balancing; = Dt + xtinv
over reg
production; = yt + yt
limit overtime; 20wt
limit regular-time; 160wt
non neg.; 0
0
non neg.;
Demand
RT prod.
OT prod.
Outsource
Inventory
Demand
RT prod.
OT prod.
Outsource
Inventory
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Demand
RT prod.
OT prod.
Outsource
Inventory
Demand
RT prod.
OT prod.
Outsource
Inventory
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Optimal
Demand
RT prod.
OT prod.
Outsource
Inventory
Demand
RT prod.
OT prod.
Outsource
Inventory
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SkyCell: Analysis
Pre-solve analysis
Capacity Reg_time: 1250 160 60/10 = 1,200,000 units/ month
Capacity over_time: 1250 20 60/10 = 150,000 units/ month
Average Demands: 1,242,000 unit/month
Inventory VS Overtime VS Outsource: minimize outsource
$20
Inventory: $20 + + $3 t = $ 23.33 + 3t 6
Outsource: $40
Cost Comparison
Material
RT Labor
OT Labor
Inventory
Outsouce
Total
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Method
Price taker: price can influence demand or negotiation (what if) ! S&OP
Application
Aggregated product: no information on exact product ! communication
source:Jacob. et al 2011.
Review Methods:
Periodic review: check inventory using chronological criteria, e.g.,
every fixed period
Non-Periodic review: check inventory non-chronological criteria,
e.g., quantity, order from customer, visual inspection,
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week
item A
If, the handling cost is $1 per week and ordering cost is $100 per order,
compare the released order and total cost of the following lot sizing rule: lot-
for-lot, EOQ, POQ, S-M, W-W, LUC, LPC
EOQ: Q =
POQ: t =
Part Period Balancing:
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week
1
2
3
4
week
1
2
3
4
Lot-for-lot 40 15
EOQ
POQ
W-W
PPB
LUC
LPC
Regular BOM
source:Smith, S. B. 1989.
source:Smith, S. B. 1989.
Time Fence
source:Smith, S. B. 1989.
pad35
LT: 1
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MPS Terminology
Requirement Related
Gross requirements:total requirements (MRP term)
Net requirements: requirements after calculating scheduled receipt
(MRP term)
Inventory Related:
Planned order release: releasing period of an order (back
scheduling of planned order due)
Planned order due: received period of an order
Scheduled receipts: actual delivery period of an order
On-Hand inventory/ Projected available: WIP that should have if
nothing wrong
Available to promise (ATP): available qty. for other additional customers
Available to located: qty. less than orders
x351
(MTS)
x356
(MTS/MTO)
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source:Smith, S. B. 1989.
source:Smith, S. B. 1989.
Concepts of MRP
.
Principle of dependent demand
.
Total quantities required = independent + dependent quantities required
Clarification
Gross requirement: total qty. after netting process
Net requirement: total qty. after considering inventory and
scheduled receipts
planned receipts: projected qty receipted
planned inventory: projected on-hand inventory according to
planned receipts
What
Scope
Process
Input
Output
Update
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item no.
x351
x356
pad35
cpu351
cpu356
ca351
ca356
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SkyCell: MRP
cpu356: (q,Q) = (200,1000)
Limitation MRP
pad35
ca351
ca356
x351
x356
Bill of Capacity
.
Bill of Capacity Average hour used to produce each product
Work center
10
20
30
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x351
x356
If MPS using lot-for-lot policy, then RCCP (resource of each work center) becomes
10
20
30
10
20
30
Elapsed time =
Elapsed time: minimal working time for first lot
std hour/unit lot size
util. e
O set time: minimal completed time for first lot
transitto + queue time + elapsed time +
transitfrom
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Quiz I