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Scott is a Chief Solution Architect at Solugenix Corporation, a Microsoft Dynamics AX partner with offices around North America and a well-known reputation as a trusted advisor for AX implementations. Scott can be reached at Scott.Hamilton@Solugenix.com.
4.1
A planned yield percentage for a manufactured item represents a slightly different concept than planned scrap percentages for components, even though both approaches can generate inflated requirements for the components. A planned yield percentage only applies to a formula item, its formula versions, and its batch orders. It does not apply to BOM items. The value specified for an item acts as a default value for the items formula versions (which can be overridden), and this value is included in planning and cost calculations. In a similar fashion, the yield percentage for the formula version acts as the default when creating a batch order, and the value can be overridden prior to scheduling the batch order. This value impacts the component quantities in the order-dependent formula. The default value for a formula item is 100%, and a manually specified value can be greater or less than 100%. The value assigned to a formula
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version provides the basis for dividing component requirements by the yield percentage, so that a value less than 100% will increase the component requirements.
4.2
A batch-oriented manufacturing process is often characterized by the capacity constraints of the equipment, such as a mixing vessel or kettle that handles a batch size of 1000 gallons. In this example, a given batch quantity of a product could be something less than 1000 gallons, or batch sizes of 1000 gallons may be required or preferred. When there is a required or preferred batch size, it can be specified as part of the formula version assigned to the item. The information consists of a formula size and an optional multiple expressed in the products inventory UM. The formula size must equal the multiple if a multiple has been specified. The formula size and multiple assigned to a products formula version have several implications. The implications are described below (as a repeat of Section 3.4), and the topics will also be covered in future chapters. Defining the required quantity for a component. A components required quantity is specified for the formula size, either as a fixed or variable consumption amount.1 With a variable amount, an additional policy for a formula line (termed the Scalable checkbox) simply means that changes to the formula size will automatically change the components required quantity. The component requirements can also be expressed as percentages rather than quantities (as described in a subsequent section), so that a required quantity reflects the percentage multiplied by the formula size. Planned batch order. The suggested quantity will cover demands and reflect the formula size and multiple associated with the products active formula version. You can manually override the suggested quantity when viewing the planned batch order, and subsequently firm the planned order. Manually created batch order. As part of the creation dialogue, the quantity will initially default to the corresponding formula size for the items selected formula version. You can manually override this quantity, but an infolog warning message will be displayed if it does not reflect the formula multiple (if specified). The infolog message suggests
The specified formula size for a formula version is also reflected in the per series quantity for each component, such as a per series quantity of 100 when the formula size equals 100.
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a rounded-up quantity that reflects the formula multiple, and you can accept or reject the suggested quantity. Cost roll-up calculations for amortizing an items constant costs. The cost roll-up calculations will reflect the formula size associated with the products active formula version. This acts as the accounting lot size for amortizing constant costs. The implications become more complex when you specify a minimum quantity or a standard order quantity for a formula item. These can be defined as company-wide or site-specific values. Planned batch order. The suggested batch quantity will cover demands and reflect the larger of (1) the products minimum order quantity or (2) the formula size and multiple associated with the products active formula version. Manually created batch order. The batch quantity will initially default to the larger of (1) the formula size corresponding to the selected formula version for the product, (2) the minimum order quantity, or (3) the standard order quantity. The initial value will also be rounded up to the formula multiple.
A percentage can be specified for a component when it has been flagged with the Percent Controlled checkbox, and the relevant component quantity will be automatically calculated based on the formula size for the items formula version. The component percentages are assumed to be scalable for various batch sizes, as indicated by the automatic assignment of the Scalable checkbox to each component.
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Ea
Ea
Packaging
Qty = 1
1 .25
Packaging
1
Bulk Item A
Gal
Bulk Item A
Gal
Ea
Ea
Mixing
Qty = 600 Qty = 400 60%
Mixing
40%
Ingredient #1
Gal
Ingredient #2
Gal
Ingredient #1
Gal
Ingredient #2
Gal
Figure 4.1 Example Formula for a Bulk Item and its Packaging Variations
If applicable, a mix of percentages and quantities can be used to define component requirements. The sum of percentages for relevant components must still equal 100%. As a caveat, the formulas specified batch size should be at least 100 so that the cost calculations will correctly account for a components percentage. Otherwise, the cost roll-up calculations will treat a small component quantity (of less than .5) as zero, so that its costs are not included.
4.4
Quantity-Sensitive Formulations
A product with a quantity-sensitive formulation can be modeled using multiple formula versions with different quantity breakpoints.3 For example, one formula version can reflect a small batch size (up to 999 gallons), a second formula version can reflect a larger batch size (for 1000 gallons or more), and both formula versions can be approved and active. A planned batch order will be assigned the relevant formula version based on the required quantity.
Quantity breakpoints also apply to BOM items, as mentioned in the previous chapter. However, they typically only apply to process manufacturing and the use of formula items, so they are mentioned again in this chapter.
3
55
The concept of a quantity-sensitive formulation also applies to routing versions, where larger batch sizes are produced on different equipment. Hence, you typically define the same quantity breakpoints in the routing versions and the formula versions. Chapter 7 provides further explanation of work centers and routing information.
4.5
Substitute ingredients can be optionally defined for an ingredient within a formula. As a result, master scheduling logic will automatically consider the substitute ingredients when there is insufficient inventory of the preferred ingredient, and assign the appropriate ingredients to the formula lines for a planned batch order. Typical examples include the use of more expensive alternates, or using the alternate after running out of stock. The substitute ingredient approach involves some setup information, and several considerations about planning and costing. Setup Information for Substitute Ingredients The preferred ingredient (and its quantity) must be defined in the formula, and each substitute ingredient is also defined (with a zero quantity) in the formula.4 In addition, each of these ingredients must be assigned a plan group and a priority. The assignment of a user-defined plan group provides a grouping of components, and the priority (of 1, 2, and so forth) indicates the desired sequence for planning calculation purposes. Planning Considerations for Substitute Ingredients The master scheduling logic will automatically consider the substitute ingredients when there is insufficient inventory of the preferred ingredient, and assign the appropriate substitute(s) to the formula lines for a planned batch order. Based on available inventory, for example, the scheduling logic may assign the primary ingredient (up to its available inventory) and also assign the substitute ingredient for the remaining requirements. The assigned ingredients will also be reflected in the formula lines after you firm the planned batch order. This logic does not apply to a manually created batch order. The scheduling logic will assign the primary ingredient when there is no available inventory of any substitute. Costing Considerations for Substitute Ingredients The zero quantity for a substitute ingredient means that it will not be included in the
In some cases such as potency, the substitute item may need a greater (or lesser) quantity, which can be expressed as an incremental fraction using a positive (or negative) quantity in the formula line. However, these fractional quantities will be included in the cost roll-up calculations for the parent item.
4
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cost roll-up calculations (aka formula calculations) for the parent item. However, the assignment of a substitute ingredient (and quantity) to a batch order will be considered in order costing.
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4.7
A manufacturing process that generates co-products or by-products can be modeled within the formula information for the parent item, and actual receipts can be reported against a batch order for the parent item. A coproduct represents a desirable or reusable output from a manufacturing process for a parent item, whereas a by-product typically represents waste. The differences between a co-product and by-product are reflected in different approaches to costing and master scheduling. For example, a coproducts costs can be calculated (thereby reducing the costs associated with its parent item), and its requirements can result in the generation of planned orders for the parent item. In contrast, you manually specify the costs for a by-product, and the cost calculations add these costs to the parent items costs. A by-products requirements are ignored by master scheduling logic. Co-products and by-products can also be used to model a disassembly process, where a batch order only results in co/by-products and the parent item (designated as a planning item) is never received. The following three subsections describe the formula information for co-products, by-products, and planning items. Formula Information with a Co-Product Each co-product must be identified by an item number, and explicitly designated (on the item master) as a co-product using the Product Type field. A co-product must also be assigned an Item Type of Item. The item number can then be specified as a co-product when defining the formula information for a parent item. This information is specified on a separate form (termed the Co/By Products form) for the formula version. The definition of this formula information is illustrated in the top half of Figure 4.2, which shows the ingredients for producing the parent item and a co-product. In this example formula, the ingredients (totaling 100 pounds) are used to produce the parent item (with a formula size of 70 pounds) and the coproduct (with an expected quantity of 30 pounds). A recurrent co-product represents a special case, since the same item number is also defined as an ingredient of the parent item. As part of the formula version information, you must explicitly flag a co-product as a recurrent co-product in order to support the circular logic. The synonyms for a recurrent co-product vary by industry, exemplified by the terms regrind, reclaim, and recycled products. For example, a chocolate manufacturer can reuse chocolate grind in the next melting batch, and a paper manufacturer can reuse trim paper in the next paper slurry. The formula information about a co-product has several implications for the formula size, costing, master scheduling, and batch orders, as summarized below and described in more detail in future chapters.
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Co-Product #200
Lb
Qty= 20
Ingredient #101
Cost = $10/Lb
Lb
Ingredient #102
Cost = $10/Lb
Lb
Costing Implications
Total Ingredients = 100 Lbs to produce the parent item (70 Lbs) and co-product (30 Lbs) Total Ingredient Costs = $1000 = (80 Lbs x $10/Lb) + (20 Lbs x $10/Lb)
Calculate the costs Calculate the costs for the parent item (via BOM calculations)
Calculated $1000 x 70% = = $10 Cost per Unit 70 Units for the Parent Item
Formula size and component quantities. The total expected output of a formula version includes the formula size (for the parent item) and the expected quantity of the co-product(s), and the component quantities should be specified for this total expected output (rather than just the formula size). Component requirements expressed as a percentage will only reflect the formula size, so that component requirements are typically expressed as a quantity. Costing implications of a co-product. The BOM calculation for the manufactured items cost is normally based on 100% of the costs associated with its component and routing information. However, you can optionally allocate a percentage of these costs to a formulas coproduct (either as a prorated or specified percentage), which provides the basis for automatically calculating the co-products cost as part of the BOM calculation. The remaining costs are used to calculate the parent items costs. These costing implications are illustrated in the bottom half of Figure 4.2. In this example, the parent items formula information specifies a formula size of 70, an expected co-product quantity of 30 (with a manually specified cost allocation percentage of 30%), and total component
59
quantities to produce 100 units (valued at $1000). The system uses the specified cost allocation percentage to automatically track the remaining cost allocation for the parent item (of 70%). A BOM calculation for the parent item results in a calculated per unit cost for the parent item (of $10) and for the co-product (of $10). These calculation results can be viewed on the Complete BOM Calculation form for the parent item and for the co-product item. Chapter 8 provides further explanation of the product costing implications of a co-product, such as the cost allocation approaches for calculating the co-products cost. Master scheduling implications of a co-product. Sales forecasts and sales orders (and other demands) can apply to the parent item and the coproduct. Master scheduling logic will generate planned orders to cover these demands based on the site/warehouse-specific planning data. As described in Chapter 9, the planning data for a co-product item determines whether master scheduling generates planned purchase orders or transfer orders for the co-product, or planned batch order (for the designated parent item) to cover requirements for the co-product. Batch order implications of a co/by-product. The output of a batch order includes the parent item and the co/by-products, which can be recorded in the report-as-finished journal for the batch order. You can optionally add an expected co/by-product to a batch order, or add an unexpected co/by-product to the report-as-finished journal, but only when permitted (as designated by the Co/By Product Variations checkbox for the batch order).6 In this case, you should review and modify the associated cost allocations prior to ending the batch order. When using a standard costing method, variances will be calculated after you update the batch order status to ended. You can view the variances associated with producing the parent item, and a separate form displays the variances associated with producing the co-products. The key fields in the formula information for a co-product are summarized below. Quantity. The expected co-product quantity is typically expressed for the formula size (aka the per series field), although you can override the per series value. Cost Allocation Method and Percent. A cost allocation method of manual or pro rata allows the co-products cost to be calculated
The policy on a batch order (for the Co/By Product Variations checkbox) is initially inherited from the policy specified for the Formula Version for the parent item.
6
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when performing a BOM calculation for the parent item. A method of none means that the co-products cost will not be calculated. Recurrent Flag and the Recovery Percentage. In the special case of a recurrent co-product, the recurrent flag allows the entry of the co-product item when it is also defined as an ingredient. The co-product quantity can be manually specified, or it can be expressed as a recovery percentage of the ingredient quantity. Formula Information with a By-Product Each by-product must be identified by an item number, and explicitly designated (on the item master) as a by-product using the Product Type field. The item number can then be specified as a by-product (or co-product) when defining the formula information for a parent item (using the Co/By Products form). The definition of this formula information is illustrated in the top half of Figure 4.3, which shows the ingredients for producing the parent item and a by-product.
efine the information on efine the information on he Co/By Products form
By-Product #300
Lb
Formula Size = 70 lbs Expected Quantity = 30 Lbs By-Product Burden Amount = $35
Qty= 80 Qty= 20
Ingredient #101
Cost = $10/Lb
Lb
Ingredient #102
Cost = $10/Lb
Lb
Costing Implications
Total Ingredients = 100 Lbs to produce the parent item (70 Lbs) and by-product (30 Lbs) Total Ingredient Costs = $1000 = (80 Lbs x $10/Lb) + (20 Lbs x $10/Lb) Calculate the costs Calculate the costs for the parent item (via BOM calculations)
$1000 70 Units
$35 70 Units
= $14.79
The by-product burden amount reflects the additional cost to dispose of the by-product
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In this example formula, the ingredients (totaling 100 pounds) are used to produce the parent item (with a formula size of 70 pounds) and the byproduct (with an expected quantity of 30 pounds). The formula information about a by-product has several implications for the formula size, costing, master scheduling, and batch orders, as summarized below and described in more detail in subsequent chapters. Formula size and component quantities. The total expected output of a formula version includes the formula size (for the parent item) and the expected quantity of the by-product(s). The component quantities should be specified for this total expected output (rather than just the formula size). Component requirements expressed as a percentage will only reflect the formula size. Costing implications of a by-product. The costs for a by-product item represent its disposal costs. These costs can be manually specified for the item, although they are often specified as zero so that the byproducts inventory will be valued at zero. When a formula includes the by-product item, the cost roll-up calculation for the parent item will include the by-products cost. Alternatively, you can specify the value for the by-products cost (termed the By-Product Burden Amount field) as part of the formula information. In either case, you can view the contributions of the by-products costs to the parent items costs on the Complete BOM Calculation form. These costing implications are illustrated in the bottom half of Figure 4.3. In this example, the parent items formula information specifies a formula size of 70 pounds, an expected by-product quantity of 30 pounds (with a manually specified burden amount of $35 representing the disposal fee), and total component quantities to produce 100 pounds (valued at $1000). A cost roll-up calculation for the parent item results in a per unit cost of $14.79, which reflects the cost of ingredients and the by-product. Master scheduling implications of a by-product. Master scheduling logic ignores the demands for a by-product item, and the demands are not displayed as net requirements. This means master scheduling will not generate a planned order for the parent item to satisfy requirements for the by-product. Batch order implications of a by-product. The output of a batch order includes the parent item and the by-product, which can be recorded in the report-as-finished journal for the batch order. You can optionally add an unexpected by-product to the report-as-finished journal, but only when
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permitted (as designated by the Co/By Product Variations checkbox for the batch order). The costs associated with a by-product are automatically recorded when you change the batch order status to ended. These costs are recorded in the route card journal for the batch order.7 The key fields in the formula information for a by-product are summarized below. Quantity. The expected by-product quantity is typically expressed for the formula size (aka the per series field), although you can override the per series value. Burden checkbox and the By-Product Burden Amount. The Burden checkbox indicates that a specified burden amount should be used in calculating the costs of the parent item. Otherwise, the burden amount will equal the by-product quantity times the by-products cost. Formula Information for a Planning Item with Co/By Products (aka Disassembly Process) A disassembly process can be modeled with a planning item and the formula information about its co/by-products. The planning item must be identified by an item number, and explicitly designated on the item master as a planning item (using the Product Type field) and as a formula item (using the Item Type field). The disassembly concept applies to many different manufacturing processes, ranging from roll slitting and remanufacturing strip-down to chicken disassembly. The latter process has been so commonly used as an example across the years that the concept is often termed the chicken disassembly problem. Figure 4.4 provides a simplified illustration, where the disassembled chicken is represented by an item number (aka the planning item) which has a formula specifying a single ingredient of an incoming chicken. The formula for this planning item also specifies the expected coproductssuch as the wings and breastsof the chicken disassembly process. Hence, a batch order will model the disassembly process for a quantity of incoming chickens that results in wings and breasts. The approach builds on the above-described definition of co/by-products, so further explanation covers the implications of a planning item.
The route card journal provides a unique approach for recording the burden associated with a by-products quantity and costs, since this journal is normally used to report time or units against a routing operation. The byproducts quantity and costs are expressed as the number of hours and an hourly rate.
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Disassembled Checken
(Planning Item)
Co-Product Wing
Expected Qty = 200 Cost Allocation = 50%
Co-Product Leg
Expected Qty = 200 Cost Allocation = 50%
Incoming Chicken
Costing Implications
Calculated $2000 = = $20 Cost per Unit 100 Units for the Parent Item
Costing implications of a planning item. The cost roll-up calculation for a planning item will calculate the costs for a co-product, and include the costs for a by-product, as described in the previous subsections. Master scheduling implications of a planning item. Master scheduling logic will generate planned orders to cover demands for co-product items based on the site/warehouse-specific planning data. As described in Chapter 9, the site/warehouse-specific planning data for a co-product item determines whether master scheduling generates planned purchase orders or transfer orders, or planned batch orders for a designated parent item. Batch order implications of a planning item. The output of a batch order only includes the co-products or by-products, which can be recorded in the report-as-finished journal for the batch order. Some Caveats about Using Co/By-Products Co/by-products cannot be components of a phantom. The expected quantity of co/by-products should be considered in assigning the formula size for formula versions and the component required quantities (as illustrated in Figures 4.2 and 4.3).
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4.8
The use of catch weight items will impact formula definition and all other aspects of system usage, as described in the next chapter. This section focuses on two aspects of formula information: the component requirements for a catch weight item and the formula version for a manufactured catch weight item. Defining Component Requirements for a Catch Weight Item In a formula line, the components required quantity must be expressed in pieces (the catch weight UM) rather than weight (the inventory UM). This information must be entered in a separate field (termed the CW Quantity field), and the corresponding weight is automatically displayed in the Required Quantity field based on the nominal weight. As one example, the components required quantity may be 3 bags for a 1000 pound formula size, so that a nominal weight of 50 pounds per bag would result in a required quantity of 150 pounds. The components required quantity in an order-dependent formula is also expressed in pieces, with the same calculation of a corresponding weight. Defining a Formula Version for a Manufactured Catch Weight Item The formula size must be expressed in pieces (the catch weight UM) rather than weight (the inventory UM). This information must be entered in a separate field (termed the CW Size field), and the corresponding weight is automatically displayed in the Formula Size field based on the nominal weight. If applicable, you also express the breakpoints for a quantitysensitive formulation using the catch weight UM of pieces (termed the From CW Size field). However, you still specify a formula multiple using weight, which must reflect increments of the nominal weight. A nominal weight of 10 pounds, for example, means that the formula multiple must reflect a multiple of 10 pounds.
Case Studies
Case 9: Formula for Fruit Juice Products A fruit juice manufacturer produced batches of various flavors of fruit juices (such as orange, mango, and tropical), and packaged a juice batch into different carton sizes (such 3, 6, and 16 ounce cartons). As shown in the left side of Figure 4.5 for the orange juice product, the production process starts with a mixing kettle containing a 1000 gallon batch of the basic ingredients (concentrate, juice base, and water), and the resulting bulk juice was packaged into 12-pack
65
Ea
Ea
Packaging
12 Labels Tray 1.125
Packaging
1.266 27
Packaging
1 4
Gal
Mixing
86% 10% 4%
Water
Gal
Juice Base
Concentrate
Gal
Gal
Figure 4.5 Example Formulas for Fruit Juice and its Packaging Variations
trays of 6 ounce cartons. The figure also shows two other packaging variations for the bulk juice: 4-pack trays of 16 ounce cartons and 27-pack trays of 3 ounce cartons. Case 10: Yield Percentage for Aged Scotch Whiskey A whiskey manufacturer produced several types of blended scotches, where the age of a blended scotch whiskey determined how it should be packaged and sold. Examples include a 12-year-old and 20-year-old blended scotch. The initial blending process involved a combination of several single malt scotches, where the batch attributes of each ingredient were critical considerations in obtaining the correct taste. For example, one ingredient (from one part of Scotland) may have a slight charcoal taste, which required the appropriate blending with another ingredient (from another part of Scotland) with a peaty taste. The batch of blended scotch was placed into oak barrels, and then aged appropriatelysuch as 12 or 20 years. The yield percentage assigned to the 12-year old scotch was 20%, whereas 3% was assigned to the 20-year old scotch. The yield percentage reflected evaporation over time that was lost to the heavens, also termed the angels share. Case 11: Formula for Oat Processing An oat processor produced several types of finished oats from raw oats, as well as some co-products (such as oil from the oats). Figure 4.6 illustrates the formula for one of the oat products, identified as Finished Oats-E. In this example, the production process starts with a feed prep step to produce groats, which then go though several steps (such as a pin mill and a hammer mill) resulting in a 50 pound bag that must be irradiated. During these steps, solvent is added to the groats
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Finished Oats-E
Ea
Refined Oil
Gal
Irradiate
1
Oats-E
(50 Lb Bag)
Ea
Gal
Gal
Co-Products
Bag
(50 Lb)
Ea
Groats
Lb
Solvent
Gal
Feed Prep
Raw Oats
Lb
and then reclaimed as a co-product (via an oil stripper step) along with crude oil from the oats. This crude oil is then refined and packaged into a container with a label. Other types of finished oats (not shown in the figure) can also be produced from groats. As one example of a different finished oats product, the groats go through the same steps for the pin mill and solvent operation, but then go through a different hammer mill and pin mill before packaging into 50 pound bags and irradiation. Case 12: Formula for a Pharmaceutical Product A pharmaceutical manufacturer produced batches of various products, which were then placed in vials with labels and individual boxes. As shown in Figure 4.7 for an example product, the production process starts with a vessel containing a 1000 pound batch of ingredients, which requires a first level fermentation process of 7 days to produce an intermediate product. This intermediate requires three additional fermentation processes (labeled fermentation B, C, and D in the figure) across an 18 day period to produce the desired finished
67
Lead Time
Packaged Product-1
1 day
Ea
Packaging
Inspected Product-1
14 days
Lb
Inspection
Finished Product-1
18 days
Lb
Intermediate Product-1A Lb
7 days
Formula Size = 1000 Lb
Fermentation A
Ingredient #1 Lb
Ingredient #2 Lb
Product-1. Each of these additional fermentation processes result in a usable co-product (labeled Product-2, Product-3, and Product-4 in the figure). An inspection step for the finished Product-1 requires 14 days to obtain the certified test results. A similar inspection step applies to the co-products, but is not shown in the figure. The inspected product can then be used to fill vials that are individually labeled and boxed at a packaging line. Batch numbers are assigned to the items representing each ingredient, intermediate and end item, and several batch attributes are reported for each batch. In addition, the batches of packaged product are assigned shelf life dates based on the test results at the inspection step. For a given sales order, the customer specifications for remaining shelf life are used in reservation logic to ensure relevant batches will be shipped to the customer. Case 13: Slitter for Rolled Products A slitter process for a rolled product such as paper or metal results in one or more slit rolls. The simplest example of a slitter process results in the same item number, as illustrated in left side of Figure 4.8 for producing multiple slit rolls of 2 inch width (the
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Chapter 4
Regrind
Lb .0001
Slit Roll-2
2 Width
Yd
Planning Item
Yd
4 Width
7
Regrind
Lb .0001
Yd
Slitter
.0345 1.0
Slitter
Regrind
Lb .0001
Master Roll
(60 Width)
SY
Master Roll
(60 Width)
SY
Extruder
.113 .105 .113
Extruder
.105
Resin #1
Lb
Resin #2
Lb
Resin #1
Lb
Resin #2
Lb
items UM = Linear Yards or LY for short) from a master roll of 60 inch width (the items UM = Square Yards or SY for short). In this example, an extrusion process produces the master roll from various resins, and the slitter and extruder process can generate a regrind co-product. A slightly more complex example of a slitter process results in multiple item numbers, where the same items are produced every time. The right side of Figure 4.8 illustrates the definition of a planning item, and its co-products of two different slit rolls with 2 inch and 4 inch widths. This concept can be extended to partially model the most complex example, where multiple different items are produced by slitting a master roll. The combination of different items typically reflects trim optimization logic performed by a separate software package. Predefined item numbers can provide an approximation of the unique widths for the slit rolls generated by the slitting process, and the batch number can identify the exact width of a slit roll. With this scenario, there are some cases in which you can predefine the co-products in the formula information, although most cases will report the actual coproducts as manually specified lines in the report-as-finished journal for the batch order. Case 14: Repair and Overhaul of Used Equipment A repair-andoverhaul business typically starts with a used item, and then goes through three phases (strip-down, repair and rebuild) to refurbish the item. Examples of used items may be transportation equipment, engines, auto parts, computers, or other types of equipment. The used items may reflect a customer supplied item, a customer return, or purchases of used equipment. Figure 4.9
69
Phases
Refurbished Equipment
Rebuild
Rebuild
Other Parts
Repair
Use Repair As Is
Disassembled Equipment
(Planning Item) 1.0
Strip-down
Used Part-1
.9
Used Assy-2
.7
Used Part-3
Other Parts
Strip-down
Used Equipment
Ea
Figure 4.9 Example Formula for Repair and Overhaul of Used Equipment
illustrates the formula for a typical scenario, where a planning item represents the disassembled equipment, and co-products represent the reusable parts (with a decimal quantity reflecting the fraction that can actually be reused). In this example, the Used Part-1 must be repaired and Used Part-3 can be used as is. The figure shows a used assembly (Used Assy-2) that requires repair. However, it could be the starting point for further strip-down, which means it would be the only component of another planning item with coproducts representing the expected parts. In many scenarios, inspection of the used equipment may identify the need for a predefined or ad hoc repair procedure. A predefined repair procedure can be modeled as an item number with predefined BOM and routing information, and a work order is used to report completion of the task. Ad hoc procedures are also modeled as an item number, but the required materials and labor are defined in the orderdependent BOM and routing. This example represents a hybrid manufacturer, since batch orders for a planning item model the strip-down steps and production orders can model the repair/rebuild steps.
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Executive Summary
Variations of formula information can be used to model different manufacturing environments, as illustrated by the case studies about pharmaceutical products, fruit juices, oat processing, slitting, and repair-andoverhaul. The variations described in this chapter reflect the unique functionality associated with formula items and their associated batch orders, such as the formula size, co/by-products, catch weight items, and substitute ingredients. One or more aspects of this additional information may apply to a given environment.