6. PRODUCT LIFE CYCLE, PRODUCTS & PROCESS

7. PRODUCT LIFE CYCLE CHARACTERISTICS Stages Strategy

8. INDUSTRY / MANUFACTURING TYPES B A T C H S I Z E VOLUMES PROJECT JOB BATCH PROCESS continuous flow LARGE SMALL LARGE SMALL Commercial Printer Heavy Equipment ASSEMBLY LINE Automobiles Sugar / Oil Refinery Construction

9. MANUFACTURING ENVIRONMENT Volume V a r I e t y Project Continuous Flow Repetitive Batch Job Shop Business Drivers: Price, Speed, Quality, Design, Flexibility etc. Hospital care Text Books PCs or Cars Gas, Oil, Elect Ship Building High Low High

10. MANUFACTURING PROCESSES Product Layout (Line) Project Layout Process Layout (Functional) Manufacturing Processes Intermittent Production Continuous Production Repetitive Production Job Shop

11. PROCESS (FUNCTIONAL) LAYOUT - JOB SHOP Eg: Machine Shops, Hospitals, Tax Consultants

12. PRODUCT (LINE) LAYOUT Eg: Automobiles, Computers

13. PROCESS PLANNING CHARACTERISTICS

14. PRODUCT POSITIONING & PROCESS CHOICE Job Shop Batch Flow Low Volume /High Variety Medium Volume / Medium Variety High Volume /Low Variety High Volume / Standard Mixed Repetitive Dedicated Repetitive Continuous Process 1 2 3 4 5 Product Structure Group 2 Group 1 High Quality Group3 Group 4 Group 5 High Quality High Quality Competitive Cost Low Cost High Flexibility Some Flexibility Some Flexibility Low Flexibility Standardized High Cost High Cost Medium Cost Some Automation Automated General Purpose General Purpose General Purpose Specific Purpose MTO ATO ATO MTS MTS Specific Purpose

15. Elements & Links - MRP II

16. DEMAND MATCHED WITH SUPPLY MRP Inventory Forecast Sales Inventory Policy DEMAND SUPPLY Recommendation Inter W/house Transfer Stock Adjustment POP WOP

17. MRP II SYSTEM Business Plans Marketing Plans Production Plans Master Production Schedule Resource Plan RCCP Final Assembly Schedule Demand Management Forecasts Distribution Orders Requirements Plan Customer Orders Material Requirements Plan CRP Production Activity Control Order Release Operation Scheduling Dispatching Expediting Production Reporting Purchasing Vendor Selection Order Placement Vendor Scheduling Order Follow up Performance Reporting` Top Management Planning Operations Management Planning Operations Management Execution

18. ELEMENTS & DIFFERENCE - MRPII VS. MRP ROUGH CUT CAPACITY PLANNING WORK IN PROCESS MASTER PRODUCTION SCHEDULE MATERIAL REQUIREMENTS PLANNING SALES ORDERS PROCESSING FORECASTS WORKS ORDERS PURCHASE ORDERS WORK IN PROGRESS CAPACITY PLANNING ROUTING BILLS OF MATERIAL INVENTORY CONTROL

19. PLANNING LEVELS - 4 KEY CONCEPTS Business Plans Marketing Plans Production Plans Master Production Schedule Resource Plan RCCP Material Requirements Plan CRP PAC PLAN IMPLEMENT & CONTROL Priority Capacity Long Range Medium Range Short Range INPUT / OUTPUT CONTROL Short Range OPERATION SEQUENCE PURCHASE Engine Back End Front End

20. MRP CLOSED LOOP CONCEPT PERFORMANCE MEASURES MPS RCCP MRP CRP PAC PURCHASE Feedback Feedback Yes Yes No No

25. DISTRIBUTION GL AR COM PO REQ INV AP POP SCHED MRP WO MRP WO WIP BOM, WO MRP MRP Job Costing

26. MANUFACTURING SCHEDULED ORDERS PO REQS INV BOM MRP WO CRP WIP ROUTING RCCP AP AR GL GL AP AR COM POP Job Costing MPS

28. INVENTORY CONCEPTS

33. ABC INVENTORY / PARETO ANALYSIS 100 80 60 40 20 0 20 40 60 80 100 % Total Value % of Inventory Items Class A Class B Class C Exact quantity EOQ Batch Re-order level

34. MAKE TO STOCK COST CONSCIOUS SALES FORECAST MRP RECOMMENDATIONS BOM COST CONTROL INVENTORY FINANCE AND ACCOUNTS SYSTEMS COST CONTROL POP COST CONTROL WIP TRACK ROUTES OPTIONAL WORKS ORDERS MPS RCCP

35. MAKE TO ORDER CAPACITY CONSCIOUS SALES ORDERS WIP POP INV MRP RECOMMENDATIONS MPS BOM ROUTES WORKS ORDERS CRP RCCP

37. DELIVERY LEAD TIMES Purchase Manufacture Assemble Ship Manufacture Assemble Inventory Ship Inventory Manufacture Assemble Ship Manufacture Inventory Assemble Ship M T S M T O A T O Cumulative Lead Time Delivery Lead Time Design Engineer to Order

38. RE-ORDER LEVEL TIME S T O C K L E V E L SAFETY STOCK LEVEL (SS) R O Q ROL LT EXAMPLE- USAGE ( U) = 10 UNITS / DAY LEAD TIME ( LT) = 5 DAYS SAFETY STOCK (SS) = 20 UNITS REORDER LEVEL (ROL) = SS + ( LT x U ) = 20 + ( 5 X 10 ) = 70 UNITS ROQ = user defined 20 40 70

39. ECONOMIC ORDER QUANTITY C O S T ORDER QUANTITY E.O.Q . ORDER PLACEMENT/ SETUP COST (OC) STOCK HOLDING COST (SHC )

40. ECONOMIC ORDER QUANTITY E.O.Q. Occurs Where : Cost of stock holding = cost of placing order setup cost Cost of buying / making EOQ (1) cost of placing a purchase order will be the administration cost x the number of orders ( oc ) (2) the cost of setting up a machine will be the setup time x setup rate x number of batches. The number of orders will be the annual demand ( a ), divided by the order quantity ( oq ). Cost of buying/making will be = ( a / oq ) x oc

41. ECONOMIC ORDER QUANTITY Cost of holding stock Money tied up in stock holding per year will incur an opportunity cost based on the annual cost of capital ( r ) and have a unit cost ( cs ). Average stock holding assuming no safety stock = ( oq/2 ) . Cost of holding stock will be - ( oq x cs x r) / 2 Total cost for any order = (a / oq) x oc + (oq x cs x r) / 2

42. ECONOMIC ORDER QUANTITY EOQ = 2 x OC x A CS x R (minimum of total cost, differentiating with respect to OQ and setting derivative = 0)

44. BILLS OF MATERIAL CONCEPTS

45. BILLS OF MATERIAL BOM Inventory Components Assemblies Bulk Issue Recipes & Formulas Explosion Add material at stages in production PRODUCTION LINE Explosion is the process of translating product requirements into component requirements, taking existing inventories & scheduled receipts into account

50. WORKS ORDER (WO) / (MO) - CONCEPTS

52. WORKS ORDER COMPLETION INSTANT ISSUE PICKING LIST WORKS ORDER ISSUES WORKS ORDER COMPLETION BACKFLUSHING WORKS ORDER PROCESSING MATERIAL ISSUES WORKS ORDER COMPLETION

53. CREATE WO / PO FROM CUSTOMER ORDER CUSTOMER ORDER BACK TO BACK RAISE WO M.R.P. PURCHASE FROM ORDERS SALES ORDERS RAISE WO

54. WO INTEGRATION - CONCEPTUAL OVERVIEW Inventory Job Costing Routing BOM MRP WORKS ORDERS RCCP CRP WIP Issues & Completions Input to MRP MRP creates WO and re-schedules Costs post to Job Route copied to WO BOM Copied to WO Load input Load input for WO scheduling Schedule written back to WO Records Operations Posts Costs to WO

55. ROUTING CONCEPTS

57. ROUTING WORK IN PROGRESS WORKS ORDERS HOW LONG WHAT WHO WHERE Set time Operations Operator Work Centres Op. time Tools Skills group Machines Delay time CAPACITY PLANNING

59. FACTORY PATTERNS SHIFT PATTERNS Capacity planning will work within the Shift Pattern ( ie availability). But will not plan during periods covered by Holiday or Downtime Patterns. (ie non -availability) Maintenance Pattern Downtime Holiday Pattern

60. WORK- IN - PROGRESS CONCEPTS

63. WO FLOW WITH W.I.P TRACKING WO Entry Trial Kitting Picking List Mat. Issue WIP Tracking WO Completion Trial Kitting WIP Tracking WO Completion Trial Kitting WIP Tracking WO Completion Backflush Material Trial Kitting WIP Tracking Issue Material WO Completion WO Entry Trial Kitting WIP Tracking Backflush Milestones WO Completion Backflush Material WO Entry WO Entry WO Entry Mat. Issue

65. GROSS REQUIREMENTS PLANNING

67. GRP PROCESS Decide on the Planning Horizon & enter Forecasts Generate Requirements from Forecasts Review Reports & check Projected Stocks Check Report for Results & check Projected Stock Make Adjustments to Forecasts If satisfied with results raise Works Orders

68. FORECASTING TECHNIQUES

69. FORECASTING ROLE IN PRODUCTION PLANNING Business Planning Production Planning (Aggregate Plan) Rough Cut Capacity Planning Material Planning Capacity Planning Material Control Capacity Control Demand Management Master Schedule Forecast Long Range Short Range Physical Plant Capacity Equipment Capacity Products Critical Equipment Availability Equipment & Labour Scheduling

70. PLC - EFFECT ON FORECASTING METHOD

71. FORECASTING METHOD - TIME SERIES

72. FORECASTING - OPINIONS & JUDGEMENT

73. FORECASTING METHOD - OTHERS L = low: M = medium: H = high: SR = short range: MR = medium range: LR = long range

75. MASTER PRODUTION SCHEDULING

77. MPS - PROCEDURE Enter and amend MPS Produce MPS Report up to a specified horizon Incorporate MPS results directly into MRP Recommendations Create MPS directly from MRP recommendation Create Products

79. MPS & BOM LEVEL # of Components / Raw Materials # of End Products - FAS # of Sub-Assemblies The MPS level need not be the top level, but should be the level in the BOM that gives the greatest control and simplicity of use. MPS MPS MPS Make to Stock Make to Order Assemble to Order

85. CREATE MPS FROM MRP MASTER PRODUCTION SCHEDULE Works Orders MPS Report CREATE MPS FROM MRP Current Sales Orders Forecast (Sales) Forecast (Spares) Reorder

87. ROUGH CUT CAPACITY PLANNING

97. MATERIAL REQUIREMENTS PLANNING

99. MATERIAL REQUIREMENTS PLANNING PURCHASE ORDERS WORKS ORDERS MATERIAL REQUIREMENTS PLANNING

100. MRP PROCESS Prepare for MRP Generate MRP Recommendations Print WO & PO from their respective Modules Review, adjust, & Approve Recommendations Raise approved Orders Re-generate Recommendations Report

102. MRP - CHARACTERISTICS - DEPENDENT DEMAND - TIME PHASED DELIVERIES - CAPACITY INDEPENDENT

104. MRP - INPUTS & OUPUTS

109. PURCHASING FILTERS N N N N N N N Y Y Y N Y Y Y Y N Y Y Y Y Y Y Y Y Y LINE VALUE $ 5 10 50 100 500 DELAY ORDER BY DAYS 1 5 10 15 30

120. MRP CALCULATION - CONCEPT OVERVIEW BILL OF MATERIALS A B (X 2) C (X 1) D (X 1) STATIC DATA A B C D PRODUCT LEAD TIME (WEEKS) 2 5 1 1 A sales order has been placed for 100 of product ‘A’ to be delivered in week 10. Assuming there was no stock or scheduled orders for any product in the BOM. An MRP explosion would produce the following requirements: SUGGESTION PRODUCT QUANTITY START FINISH WEEK WEEK WORKS ORDER A 100 08 10 WORKS ORDER B 200 03 08 PURCHASE ORDER C 200 02 03 PURCHASE ORDER D 100 07 08

121. MRP - GROSS TO NET EXPLOSION GROSS REQUIREMENTS 200 STOCK ON HAND 50 50 50 50 50 50 50 SCHEDULED ORDERS 100 NET REQUIREMENTS 50 SUGGESTED ORDERS 50 GROSS REQUIREMENTS 100 STOCK ON HAND 0 SCHEDULED ORDERS NET REQUIREMENTS 100 SUGGESTED ORDERS 100 02 03 04 05 06 07 08 09 10 02 03 04 05 06 07 08 09 10 GROSS REQUIREMENTS 50 STOCK ON HAND 20 20 SCHEDULED ORDERS 100 NET REQUIREMENTS 30 -100 SUGGESTED ORDERS 30 -100 02 03 04 05 06 07 08 09 10 WEEK NUMBER A B C PRODUCT

122. MRP - GROSS TO NET EXPLOSION GROSS REQUIREMENTS 100 STOCK ON HAND 10 20 20 50 50 50 50 SCHEDULED ORDERS 10 30 50 NET REQUIREMENTS 50 SUGGESTED ORDERS 02 03 04 05 06 07 08 09 10 WEEK NUMBER D PRODUCT From A

123. MRP - SUGGESTIONS GROSS REQUIREMENTS 100 STOCK ON HAND 10 20 20 50 50 50 50 SCHEDULED ORDERS 10 30 50 NET REQUIREMENTS 50 SUGGESTED ORDERS 02 03 04 05 06 07 08 09 10 WEEK NUMBER D PRODUCT From A (1) CANCEL ORDERS DUE ON WEEKS - 02 AND 04. RAISE A NEW ORDER DUE ON WEEK 08.

124. MRP - SUGGESTIONS GROSS REQUIREMENTS 100 STOCK ON HAND 10 10 10 10 10 10 10 SCHEDULED ORDERS 10 30 NET REQUIREMENTS -10 -30 90 SUGGESTED ORDERS -10 -30 90 02 03 04 05 06 07 08 09 10 WEEK NUMBER D PRODUCT From A (2) CANCEL ORDER DUE ON WEEK 02. DELAY ORDER DUE ON WEEK 04 AND INCREASE IT TO 90 UNITS.

125. MRP - FILTERS GROSS REQUIREMENTS 100 STOCK ON HAND 10 20 20 50 50 50 50 SCHEDULED ORDERS 10 30 NET REQUIREMENTS 50 SUGGESTED ORDERS 50 02 03 04 05 06 07 08 09 10 WEEK NUMBER D PRODUCT (1) USE MRP FILTERS TO SUPPRESS RESCHEDULING SUGGESTIONS WITHIN A CERTAIN TIME WINDOW. (2) USE MRP FILTERS TO PREVENT RESCHEDULING OR CANCELLATION ALTOGETHER.

126. MRP - SUGGESTIONS GROSS REQUIREMENTS 100 STOCK ON HAND 10 10 10 10 10 10 10 110 110 110 SCHEDULED ORDERS 10 30 NET REQUIREMENTS -10 -30 200 SUGGESTED ORDERS -10 -30 200 02 03 04 05 06 07 08 09 10 WEEK NUMBER D PRODUCT MRP SUGGESTIONS: (1) CANCEL ORDERS DUE ON WEEKS 02 AND WEEKS 04. RAISE A NEW ORDER DUE ON WEEK 08. PRODUCT ‘D’ HAS A MINIMUM ORDER QUANTITY OF 200. (2) CANCEL ORDER DUE ON WEEK 02. DELAY ORDER DUE ON WEEK 04 AND INCREASE IT TO 90 UNITS. PRODUCT ‘D’ HAS A MINIMUM ORDER QUANTITY OF 200.

128. EXERCISE - RECOMMENDATION RAISE NEW ORDERS AMEND EXISTING ORDERS CANCEL EXISTING ORDERS RECOMMENDATIONS TO :- rec.. supply demand r s d r s d r s d r s d r s d r s d Week 1 2 3 4 5 6 7 8 9 A B C D E F G 0 2 0 5 4 5 3 2 10 10 20 10 10 10 10 DUE 6 2 6 2 1 18 4 7 10 13

130. CAPACITY PLANNING CONCEPTS

131. CAPACITY PLANNING Work in Progress Work Orders

132. CRP - INPUTS & OUPUTS

133. CAPACITY PLANNING RCCP FINITE & INFINITE PLANNING MACHINES WORK CENTRES SKILL GROUPS OPERATORS Hours available Holiday / Sick Efficiency % Hours throughput Worked Capacity Maintenance Manufacturing Schedule

135. PRODUCTION ACTIVITY CONTROL CONCEPTS

138. Input Control is the control over the work being sent to a supplying facility when it is shop floor or vendor. Output Control is the control exercised over the dispatching, expediting & follow up necessary to get scheduled work from a work centre or vendor. Loading is assigning hours of work to work centres in accordance with the available capacity of the work centres. Line Balancing is a charting technique that uses lead-time & assembly sequencing to compare planned component completions with actual component completions. INPUT & OUPUT, LOADING, & LINE BALANCING

139. PURE INFINITE : LOAD ASSESSMENT BASED ON BACKWARD SCHEDULING . THIS IS SIMILAR TO ROUGH CUT CAPACITY PLANNING. INFINITE : AS ABOVE BUT THE DIFFERENCE BEING THAT THE PROCESS WILL ALIGN WITH THE SHIFT PATTERN’S SET UP. FINITE : TAKING THE CURRENT WORKS ORDERS IN NUMBER ORDER AND SUBJECT TO THE SCHEDULING PARAMETERS THIS PROCESS WILL FORWARD SCHEDULE THE WORKS ORDERS . PRIORITISED FINITE : AS ABOVE BUT TAKES THE WORKS ORDERS IN THE ORDER OF ‘SLACK TIME PER REMAINING OPERATION’ OR ‘CRITICAL RATIO’. THESE ARE USED TO PRIORITISE THE WORKS ORDER. TYPES OF SCHEDULING

141. FORWARD & BACKWARD SCHEDULING Due Date Work Centre Mon Tue Wed Thu Fri Mon Tue Wed Thu Fri 1 2 3 4 5 1 2 3 4 5

142. CRP - PRIORITIZED FINITE CAPACITY PLAN Prioritized Finite Capacity Planning Work Hours Works Order 1 Works Order 2 00:00 08:00 13:00 17:00 23:59 Sunday - No Capacity 15/8/97 16/8/97 17/8/97 18/8/97 19/8/97 20/8/97 21/8/97 Prioritised Decision Rules are rules used by a dispatcher to determine the sequence in which jobs will be done.

143. CRITICAL RATIO CALCULATION Order Due Date Lead time Remaining Present Day Actual Time A B C 18/5 19/5 20/5 17/5 17/5 17/5 20 days 2 days 2 days 1 day 2 days 3 days Critical Ratio 0.05 behind Schd Critical Ratio = Actual Time Remaining Lead Time Remaining 1.00 On Schd 1.5 Ahead Schd Main Objective being to prioritise work orders

145. CHARACTERSTICS OF SCHEDULING

148. IMPLEMENTATION TIME FRAME Cost Control Finance CRP INV BOM WO POP MPS SOP RCCP Route WIP MRP MONTHS = 6 1 2 2 1 } } } } 4 3 2 1 STAGE

149. COMPETENCY MATRIX Production Planner Senior Planner Master Scheduler Inventory Planner Logistics Management Accountant General Manager Master Scheduler Bills Of Material POSITION COMPETENCY AREAS Material Requirement Planning Capacity Requirement Planning Order Release 2 2 2 2 2 2 2 2 2 1 1 1 1 1 1 1 1 1 3 3 3 3 3 1 1 1 1 1 1 1 1 1 1 1 1 1 = requires expertise : 2 = requires working knowledge : 3 = requires understanding as to why & how decisions are made by others & how it relates to other areas of the firm: