Published on May 7, 2008
Resource Planning: Resource Planning Chapter 15 How Resource Planning fits the Operations Management Philosophy : How Resource Planning fits the Operations Management Philosophy Operations As a Competitive Weapon Operations Strategy Project Management Process Strategy Process Analysis Process Performance and Quality Constraint Management Process Layout Lean Systems Supply Chain Strategy Location Inventory Management Forecasting Sales and Operations Planning Resource Planning Scheduling Resource Planning and ERP: Resource Planning and ERP Resource planning: A process that takes sales and operations plans; processes information in the way of time standards, routings, and other information on how the firm produces its services or products; and then plans the input requirements. Enterprise process: A companywide process that cuts across functional areas, business units, geographical regions, and product lines. Enterprise resource planning (ERP) systems: Large, integrated information systems that support many enterprise processes and data storage needs. ERP Application Modules: ERP Application Modules ERP Design: ERP Design ERP revolves around a single comprehensive database that can be made available across the entire organization (or enterprise). The database collects data and feeds them into the various modular applications (or suites). As new information is entered as a transaction in one application, related information is automatically updated in the other applications. The ERP system streamlines the data flows throughout the organization and provides employees with direct access to a wealth of real-time operating information. ERP eliminates many of the cross-functional coordination problems older nonintegrated systems suffered from. Possible Planningand Control Systems: Possible Planning and Control Systems The most prominent systems now in use are the material requirements planning (MRP) system, the Drum-Buffer-Rope (DBR) system, and lean systems. Dependent Demand: Dependent Demand Dependent demand: The demand for an item that occurs because the quantity required varies with the production plans for other items held in the firm’s inventory. Parent: Any product that is manufactured from one or more components. Component: An item that goes through one or more operations to be transformed into or become part of one or more parents. MRP Inputs: MRP Inputs Bill of Materials: A Ladder-back chair Bill of Materials Master Production Schedule: Master Production Schedule Master production schedule (MPS): A part of the material requirements plan that details how many end items will be produced within specified periods of time. MPS for a Family of chairs Master Production Scheduling Process: Master Production Scheduling Process Operations must first create a prospective MPS to test whether it meets the schedule with the resources. Developing a Master Production Schedule: Developing a Master Production Schedule MPS for Weeks 1 & 2 Available-To-Promise Inventory: Available-To-Promise Inventory Available-to-promise (ATP) inventory: The quantity of end items that marketing can promise to deliver on specified dates. It is the difference between the customer orders already booked and the quantity that operations is planning to produce. As new customer orders are accepted, the ATP inventory is reduced to reflect the commitment of the firm to ship those quantities Actual inventory stays unchanged until the order is removed from inventory and shipped to the customer. MPS Worksheet: MPS Worksheet Slide15: MPS Schedule with ATP MPS for Product AApplication 15.1: MPS for Product A Application 15.1 MPS for Product AApplication 15.1 : MPS for Product A Application 15.1 Inventory Record: Inventory Record Inventory record: A record that shows an item’s lot-size policy, lead time, and various time-phased data. Gross requirements: The total demand derived from all parent production plans. Scheduled Receipts (open orders) are orders that have been placed but not yet completed. Projected on-hand inventory: An estimate of the amount of inventory available each week after gross requirements have been satisfied. Planned receipts: Orders that are not yet released to the shop or supplier. Planned order release: An indication of when an order for a specified quantity of an item is to be issued. Slide19: Inventory Record Shows an item’s lot-size policy, lead time, and various time-phased data. Planning Factors: Planning Factors Planning lead time: An estimate of the time between placing an order for an item and receiving the item in inventory. Setup time Processing time Materials handling time between operations Waiting time Lot-sizing rules: A rule that determines the timing and size of order quantities. Comparing Lot-Sizing Rules: Comparing Lot-Sizing Rules FOQ, POQ, and L4L rules affect inventory costs and setup and ordering costs. In the example, each rule took effect in week 4, when the first order was placed. A comparison of projected on-hand inventory averaged over weeks 4 through 8 of the planning horizon for the ladder-back chair seat subassembly: FOQ: (227+227+77+187+187)/5 = 181 units POQ: (150+150+0+0+0)/5 = 60 units L4L: (0+0+0+0+0)/5 = 0 units FOQ generates high inventory because it creates remnants. POQ reduces on-hand inventory because it does a better job of matching order quantity to requirements. L4L minimizes inventory investment but maximizes the number of orders placed. Safety Stock: Safety Stock The usual policy is to use safety stock for end items and purchased items to protect against fluctuating customer orders and unreliable suppliers of components but to avoid using it as much as possible for intermediate items. Schedule a planned receipt whenever the projected on-hand inventory balance drops below the desired safety stock level. Ladder-back Chair Seat subassembly Slide24: MRP translates, or explodes, the MPS and other sources of demand into the requirements needed for all of the subassemblies, components, and raw materials the firm needs to produce parent items. This process generates the material requirements plan for each component item. Slide25: 117 117 117 300 Slide26: 117 117 117 230 230 227 227 300 Slide27: 117 117 117 230 230 187 187 300 Slide29: 230 230 40 on-hand is carried from previous plan to week one. 40 40 on hand plus 300 in receipts minus demand of 230 = 110 110 110 is carried in inventory until week 5 when more is needed. 110 110 Lot of 300 must be scheduled to start production in week 4 and arrives as planned receipt in week 5. 300 300 Slide30: 300 300 180 180 180 180 On-Hand for week 5 is 300 + 110 - 230 = 180 The 180 in inventory is carried until the next gross requirements. Slide31: 230 230 230 230 0 Planned order releases are sized to gross requirements. Projected on-hand inventory remains at zero. Two planned order releases of 230 units are scheduled. Slide32: Gross requirements for seat-frame boards will be 1200 units (or 4 x 300) in week 3. Other Important Reports: Other Important Reports Action notice: A computer-generated memo alerting planners about releasing new orders and adjusting the due dates of scheduled receipts. Capacity requirements planning (CRP): A technique used for projecting time-phased capacity requirements for workstations; its purpose is to match the material requirements plan with the capacity of key processes. Manufacturing resource planning (MRP II): A system that ties the basic MRP system to the company’s financial system and to other core and supporting processes. Drum-Buffer-Rope System: Drum-Buffer-Rope System Drum-Buffer-Rope (DBR): A planning and control system that regulates the flow of work-in-process materials at the bottleneck or the capacity constrained resource (CCR) in a productive system. Market Demand 650 units/week Drum-Buffer-Rope System with a Capacity Constrained Resource (CCR) Resource Planning for Service Providers: Resource Planning for Service Providers Dependent demand for services Restaurant Airlines Hospitals Hotels Bill of Resources: A record of a firm’s parent-component relationships and all of the materials, equipment time, staff, and other resources. Slide36: Bill of Resources (BOR) A record of a service firm’s parent– component relationships and all of the materials, equipment time, staff, and other resources associated with them, including usage quantities. BOR for Treating an Aneurysm Scheduling: Scheduling Chapter 16 How Scheduling fits the Operations Management Philosophy : How Scheduling fits the Operations Management Philosophy Operations As a Competitive Weapon Operations Strategy Project Management Process Strategy Process Analysis Process Performance and Quality Constraint Management Process Layout Lean Systems Supply Chain Strategy Location Inventory Management Forecasting Sales and Operations Planning Resource Planning Scheduling Scheduling: Scheduling Scheduling: The allocation of resources over time to accomplish specific tasks. Demand scheduling: A type of scheduling whereby customers are assigned to a definite time for order fulfillment. Workforce scheduling: A type of scheduling that determines when employees work. Operations scheduling: A type of scheduling in which jobs are assigned to workstations or employees are assigned to jobs for specified time periods. Performance Measures: Performance Measures Job flow time: The amount of time a job spends in the service or manufacturing system. Also referred to as throughput time or time spent in the system, including service. Makespan: The total amount of time required to complete a group of jobs. Past due (Tardiness): The amount of time by which a job missed its due date or the percentage of total jobs processed over some period of time that missed their due dates. Work-in-process (WIP) inventory: Any job that is waiting in line, moving from one operation to the next, being delayed, being processed, or residing in a semi-finished state. Total inventory: The sum of scheduled receipts and on-hand inventories. Utilization: The percentage of work time that is productively spent by an employee or machine. Gantt Charts: Gantt Charts Gantt chart: Used as a tool to monitor the progress of work and to view the load on workstations. The chart takes two basic forms: (1) the job or activity progress chart, and (2) the workstation chart. The Gantt progress chart graphically displays the current status of each job or activity relative to its scheduled completion date. The Gantt workstation chart shows the load on the workstations and the nonproductive time. Slide42: Gantt Progress Chart Gantt Progress Chart for an Auto Parts Company Slide43: Gantt Workstation Chart Gantt Workstation Chart for Hospital Operating Rooms Scheduling Customer Demand: Scheduling Customer Demand Three methods are commonly used to schedule customer demand: Appointments assign specific times for service to customers. Reservations are used when the customer actually occupies or uses facilities associated with the service. Backlogs: The customer is given a due date for the fulfillment a product order, or Allow a backlog to develop as customers arrive at the system. Customers may never know exactly when their orders will be fulfilled Scheduling Employees: Scheduling Employees Rotating schedule: A schedule that rotates employees through a series of workdays or hours. Fixed schedule: A schedule that calls for each employee to work the same days and hours each week. Constraints: The technical constraints imposed on the workforce schedule are the resources provided by the staffing plan and the requirements placed on the operating system. Other constraints, including legal and behavioral considerations, also can be imposed. Slide46: The Amalgamated Parcel Service is open 7 days a week. The schedule of requirements is: The manager needs a workforce schedule that provides two consecutive days off and minimizes the amount of total slack capacity. To break ties in the selection of off days, the scheduler gives preference to Saturday and Sunday if it is one of the tied pairs. If not, she selects one of the tied pairs arbitrarily. Workforce Scheduling Example 16.1 Slide47: Required employees Workforce Scheduling Example 16.1 Steps 1 & 2 Step 1. Find all the pairs of consecutive days that exclude the maximum daily requirements. Select the unique pair that has the lowest total requirements for the 2 days. Friday contains the maximum requirements (10), and the pair S–Su has the lowest total requirements. Therefore, Employee 1 is scheduled to work Monday through Friday. Step 2. If a tie occurs, choose one of the tied pairs or ask the employee to make a choice. Slide48: Required employees Step 3. Subtract the requirements satisfied by the Employee 1 from the net requirements for each day the employee is to work and repeat step one. Again the pair S–Su has the lowest total requirements. Therefore, Employee 2 is scheduled to work Monday through Friday. Workforce Scheduling Example 16.1 Step 3 Slide49: Required employees Workforce Scheduling Example 16.1 Step 4 Step 4. Repeat steps 1 through 3 until all the requirements have been satisfied. After Employees 1, 2, and 3 have reduced the requirements, the pair with the lowest requirements changes, and Employee 4 will be scheduled for Wednesday through Sunday. Slide50: Workforce Scheduling Example 16.1 Step 4 continued Slide51: Workforce Scheduling Example 16.1 Step 4 continued Slide52: Workforce Scheduling Example 16.1 Slide53: M T W Th F S Su Employee 1 X X X X X off off Employee 2 X X X X X off off Employee 3 X X X X X off off Employee 4 off off X X X X X Employee 5 X X X X X off off Employee 6 off off X X X X X Employee 7 X X X X X off off Employee 8 X X X X X off off Employee 9 off X X X X X off Employee 10 X X X X X off off Workforce Scheduling Example 16.1 Final Schedule Operations Scheduling: Operations Scheduling Operations schedules are short-term plans designed to implement the master production schedule. Operations scheduling focuses on how best to use existing capacity. Often, several jobs must be processed at one or more workstations. Typically, a variety of tasks can be performed at each workstation. Job shop: A firm that specializes in low- to medium-volume production and utilizes job or batch processes. Flow shop: A firm that specializes in medium- to high-volume production and utilizes line or continuous processes. Slide55: Manufacturing Process Job Shop Dispatching: Job Shop Dispatching Dispatching: A method of generating schedules in job shops whereby the decision about which job to process next is made using simple priority rules whenever the workstation becomes available for further processing. Priority sequencing rules: The rules that specify the job processing sequence when several jobs are waiting in line at a workstation. Critical ratio (CR): A ratio that is calculated by dividing the time remaining until a job’s due date by the total shop time remaining for the job. CR = (Due date – Today’s date)/Total shop time remaining Total Shop Time = Setup, processing, move, and expected waiting times of all remaining operations, including the operation being scheduled. Slide57: Earliest due date (EDD): A priority sequencing rule that specifies that the job with the earliest due date is the next job to be processed. First-come, first-served (FCFS): A priority sequencing rule that specifies that the job arriving at the workstation first has the highest priority. Shortest processing time (SPT): A priority sequencing rule that specifies that the job requiring the shortest processing time is the next job to be processed. Job Shop Dispatching Job Shop Dispatching: Slack per remaining operations (S/RO): A priority sequencing rule that determines priority by dividing the slack by the number of operations that remain, including the one being scheduled. Job Shop Dispatching Scheduling Jobs for One Workstation: Single-dimension rules: A set of rules such as FCFS, EDD, and SPT, that bases the priority of a job on a single aspect of the job, such as arrival time at the workstation, the due date, or the processing time. Priority rules, such as CR and S/RO, incorporate information about the remaining workstations at which the job must be processed. We call these rules multiple-dimension rules. Multiple-dimension rules: A set of rules that apply to more than one aspect of a job. Scheduling Jobs for One Workstation Slide60: Five engine blocks are waiting for processing. The processing times have been estimated. Expected completion times have been agreed. The table shows the situation as of Monday morning. Customer pickup times are measured in business hours from Monday morning. Determine the schedule by using the EDD rule and then the SPT rule. Calculate the average hours early, hours past due, WIP inventory, and total inventory for each method. If low job flow times and WIP inventories are critical, which rule should be chosen? Example 16.2 Single-Dimension Rule Sequencing Slide61: Average hours early = 0.6 hour Example 16.2 Single-Dimension Rule – EDD Average job flow time = 23 hours Average hours past due = 7.2 hours Average WIP = 2.61 blocks Average total inventory = 2.68 engine blocks Slide62: Average hours early = 3.6 hour Example 16.2 Single-Dimension Rule – SPT Average job flow time = 20.4 hours Average hours past due = 7.6 hours Average WIP = 2.32 blocks Average total inventory = 2.73 engine blocks Econoline 150 Explorer Ranger Thunderbird Bronco 0 3 9 17 29 3 6 8 12 15 18 12 10 22 20 Comparing the EDD and SPT Rules: Comparing the EDD and SPT Rules Using the previous example, a comparison of the EDD and SPT sequencing is shown below. The SPT schedule has a lower average job flow time and lower WIP inventory. The EDD schedule has better customer service, (average hours past due) and lower maximum hours past due. EDD also has a lower total inventory because fewer hours were spent waiting for customers to pick up their engine blocks after they had been completed. Slide64: Example 16.3 Multiple-Dimension Rule – CR Slide65: Example 16.3 Multiple-Dimension Rule – S/RO Slide66: Comparing the CR and S/RO Rules Priority Rule Summary: Priority Rule Summary FCFS = 1 – 2 – 3 – 4 SPT = 1 – 3 – 2 – 4 EDD = 4 – 2 – 1 – 3 CR = 4 – 2 – 3 – 1 S/RO = 4 – 3 – 1 – 2 The S/RO rule is better than the EDD rule and the CR rule but it is much worse than the SPT rule and the FCFS rule for this example. S/RO has the advantage of allowing schedule changes when due dates change. These results cannot be generalized to other situations because only four jobs are being processed. Scheduling Jobs for Multiple Workstations: Scheduling Jobs for Multiple Workstations Priority sequencing rules can be used to schedule more than one operation. Each operation is treated independently. Identifying the best priority rule to use at a particular operation in a process is a complex problem because the output from one process becomes the input for another. Computer simulation models are effective tools to determine which priority rules work best in a given situation. When a workstation becomes idle, the priority rule is applied to the jobs waiting for that operation, and the job with the highest priority is selected. When that operation is finished, the job is moved to the next operation in its routing, where it waits until it again has the highest priority. Johnson’s Rule: Johnson’s Rule Johnson’s rule: A procedure that minimizes makespan when scheduling a group of jobs on two workstations. Step 1. Find the shortest processing time among the jobs not yet scheduled. If two or more jobs are tied, choose one job arbitrarily. Step 2. If the shortest processing time is on workstation 1, schedule the corresponding job as early as possible. If the shortest processing time is on workstation 2, schedule the corresponding job as late as possible. Step 3. Eliminate the last job scheduled from further consideration. Repeat steps 1 and 2 until all jobs have been scheduled. Slide70: Example 16.5 Johnson’s Rule at the Morris Machine Co. Sequence = M1 M2 M3 M4 M5 Slide71: The schedule minimizes the idle time of workstation 2 and gives the fastest repair time for all five motors. No other sequence will produce a lower makespan. Example 16.5 Johnson’s Rule at the Morris Machine Co. Labor-limited Environments: Labor-limited Environments The limiting resource thus far has been the number of machines or workstations available. A more typical constraint is the amount of labor available. Labor-limited environment: An environment in which the resource constraint is the amount of labor available, not the number of machines or workstations. Assign personnel to the workstation with the job that has been in the system longest. Assign personnel to the workstation with the most jobs waiting for processing. Assign personnel to the workstation with the largest standard work content. Assign personnel to the workstation with the job that has the earliest due date. Linking Operations Scheduling to the Supply Chain: Linking Operations Scheduling to the Supply Chain Advanced planning and scheduling (APS) systems: Systems that seek to optimize resources across the supply chain and align daily operations with strategic goals. Four characteristics of these systems are: Demand Planning. This capability enables companies in a supply chain to share demand forecasts. Supply Network Planning. Optimization models based on linear programming can be used to make long-term decisions. Available-to-Promise. Firms can use this capability to promise delivery to customers by checking the availability of components and materials at its suppliers. Manufacturing Scheduling. This module attempts to determine an optimal grouping and sequencing of manufacturing orders based on detailed product attributes, production line capacities, and material flows.