IE402 - Final Exam

What does SOP provide?

The basis to focus detailed production resources to achieve overall objective.

Name the four SOP Fundamentals

Demand, Supply, Volume, Mix

How do the fundamentals of SOP work together?

Balance supply and demand at the volume level to determine rates and inventories, then cope with individual products/ order mixes.

What drives Sales and Operations Planning?

Strategy! A new strategy may drive a new SOP

What drives Master Production Scheduling (MPS)?

SOP

What is the manufacturer’s job involving SOP?

Hit the schedule on time

What does the *how* to accomplish operations plans set up?

Detailed manufacturing and procurement decisions

What is the most fundamental linkage between SOP and MPC?

Master Production Schedule (MPS)

Another example of linkage between SOP and MPC?

Demand Management

What does demand management include?

order entry, order obligations, logistics, and forecasting

What does demand management monitor?

actual sales vs. forecasted demand

What does an effective MPS provide?

* manufacturing resources allocation
* meeting customer delivery promises
* resolving trade-off between sales and production
* attaining organizations SOP objectives

What does the MPS convert deaggregated SOP into?

A specific manufacturing schedule

What does the MPS translate the SOP into?

producible products with a given quantity and timing

Why should MPS records be kept up to date with ongoing transactions?

To insure manufacturing resources align with SOP

What does the MPS show?

when products will be produced, and thus provides expected delivery dates for the sales team to relay to customers

When can tradeoffs occur?

If conditions arise that are not acceptable to the customer

How is MPS crucial to the production process?

MPS is the communication link between marketing and manufacturing

What is MPS a statement of?

planned future output (production), with specific type, quantity, and schedule

Why is MPS considered the engine?

MPS drives all of the back-end systems for producing end items to meet SOP

What are examples of MPS being the engine?

* Disaggregate the SOP
* create statement of factory output
* information coordinates sales and manufacturing

Why does SOP constrain MPS?

The sum of detailed quantities must equal the whole defined by the SOP

What is SOP sometimes referred to as?

The company game plan

The MPS is the driver for…

… all detailed manufacturing activities needed to meet the SOP

MPS - Level Strategy

Steady capacity in each period that provides the timing of completion in order to meet demand

MPS - Lot Sizing

Items made in batches in minimize changeover time

What is safety stock?

additional inventory and capacity planned to protect against uncertainty

When is lot sized used?

When production has changeovers to different products on the same line, using **cycle stock**

MPS - Rolling Through Time

MPS is adjusted based on current conditions, so the line does not starve while matching demand

When is MPS - Rolling Through Time needed?

Sudden forecast increase due to projected increase in demand; created an issue where MPS is not prepared.

MPS change meets current demand **IF…**

… the company has the resources and capacity to implement the new schedule

What is MRP?

**A basic tool for detailed material planning** of components and subassemblies into the final manufacturing assembly of an end item

What does MRP do?

* accurately defines what needs to be produced
* quantifies the demand
* determines the supply

phrase to describe MRP

“the right part at the right time”

What is an example of a company the provides MRP software? Think Eastman

SAP

Product Structure Diagram and BOM

provide a visual diagram of the parent-child relationship between end item, subassemblies, and components

Explosion

The process of translating product requirements for any part number into component requirements, taking existing inventories and scheduled receipts into account

What question does an Explosion answer?

How many subassemblies and components are needed for the end item? You might not need to order everything!

What question does lead-time offsetting answer?

When do we need additional subassemblies and components to complete and end item?

What is the combination of back schedules and explosions and benefit to?

MRP

Two challenges capacity planning poses:

1. providing sufficient capacity to execute production plans or adjust plans to meet capacity constraints
2. consider market place demand of faster throughput times for making products, at expense of reduced capacity utilization

Capacity Planning in *The Goal*

Consider how Alex Rogo’s team continued to search for methods to find capacity to match market demand at UniCo

What must capacity be matched with?

requirements the evolve from out MPS and productions plans

Capacity Planning Using Overall Factors

only use accounting data and is simplest capacity planning and control technique

CPOF different tables

What does Capacity Bills require?

Since it accounts for product mixes, it requires a BOM, routing data, and machine direct labor-hour for each item

Capacity Bill

rough-cut method directly linking individual end products in MPS and the capacity required at individual work centers

What do Capacity Bill work centers estimates differ from?

CPOF estimates that relied upon historical percentages

Resource Profiles

consider production lead time data to provide time-phased projections of capacity requirements individual work centers

Just-In-Time (JIT)

developed at Toyota as a set of principles, tools, and techniques to produce and deliver products in small quantities, with short lead times, to meet customer needs

JIT attributes include:

* produce what is needed, when it is needed, in the amount needed
* take time planning
* continuous (one-piece) flow
* pull system
* quick changeover
* integrated logistics

Pillars in Toyota Production System

JIT and Jidoka (Built in Quality)

Benefits of JIT

greatly reduces complexity of detailed material planning, need for shop-floor tracking, WIP inventories, and transactions associated with shop-floor and purchasing systems

JIT requires…

… tightly coordinated manufacturing processes, inside and with suppliers

Single Minute Exchange of Dies (SMED)

reduce time between setups between product changes

Poka-Yoke

Error (mistake) proof process steps

Total Productive Maintenance

Clean, inspect, and maintain equipment to reduce (eliminate) down time

Push System

a station continues to work according to their schedule and fill the queue of the next station downstream

Pull System

a station produces only when a signal is received for more parts downstream

Benefits of pull system

* lot size reductions
* limited WIP
* faster throughput
* quality improvements

Kanban Board

example of pull system; can be used to trigger the need for more components from a process

Distribution Requirements Planning (DRP)

central role to coordinate material flows through a complicated physical system of warehouses, distribution centers, central suppliers and customer locations

DRP Key Task

managing the required flow of goods and inventories between the firm and the market

Links between Demand Management and DRP

* gateway between the plant and the market
* distribution center order fulfillment to meet demand
* feeds into logistic system module planning
* compares real-time demand to forecasts
* extends MPC visibility to the distribution system
* DRP shipping plans provide the master scheduler the ability to match manufacturing output with shipping needs

Economic Order Quantity (EOQ) Assumptions

* demand is known, constant, and independent
* lead time is known and consistent
* receipt of inventory is instantaneous and complete
* the only variable costs are setup and holding costs
* shortages are avoided
* production and inventory capacity are unlimited

Which two costs do we consider in EOQ?

* setup costs
* inventory holding costs

Which cost do we ignore in EOQ?

Purchase cost since demand is known, and it doesn’t vary with lot size

The EOQ Model

describes relationship between the costs of placing orders (setup), the cost of carrying inventory (holding) and the order quantity

EOQ Theorem

at the optimum order quantity, the annual ordering (setup) cost will equal the annual holding (carrying cost)

EOQ Model Equation (Q\*)

answers the question “how much to order?”

EOQ with Quantity Discount

finding best decision if suppliers offer different prices based on quantity discount

Statistical Process Control (SPC)

all process are subject to variability; uses statistics within a control chart to inform management of when to adjust a process

Objective of Statistical Process Control (SPC)

identify assignable causes and take corrective actions

Control

refers to operating without impact from special causes

Control Limits

statistically calculated boundaries within which a process should operate when in control

Control Chart

a time plot showing performance, mean (average) and control limits

Control charts are the voice of…

… THE PROCESS

When a process is ‘in control’

* implies stable, predictable amount of variation


* does not necessarily mean a good or desirable amount; voice of the process

When a process is “out of control”

* implies unstable, unpredictable amount of variation
* subject to both command and special causes of variation

A process can still be statistically in control and…

…not capable of consistently producing good output within specification limits

How much of data is 1 Sigma level, 2 Sigma level, and 3 Sigma level?

68%, 95%, and 99.8% (respectively)

R-chart looks at:

precision

X-bar chart looks at:

accuracy

Should you look at an X-bar or R-chart first?

R-chart! If R-chart is in control, then the x-bar chart is usable

How do you determine sample size (*n*) for Control Chart Factors?

determine values based on sample size per subgroup, not on the number of sample subgroups takes

How do you determine if R-chart or X-bar is in control?

All values should be within the upper and lower control limits

What does process capability measure?

how far the average of the process is from the target specification

Process Capability Ratio (Cp)

use when mean is easily adjusted and monitored

Process Capability Index (Cpk)

most used, such as when mean cannot be easily adjusted

Process Capability is the voice of…

… THE CUSTOMER

Drum-Buffer-Rope

* drum: sets the pace
* rope: enforces the pace
* buffer: protects the pace

\
Balances the flow of production

Five Focusing Steps

1. Identify the constraint
2. Exploit the constraint
3. Subordinate everything else to the constraint
4. Elevate the constraint
5. Go back to step #1

Inventory, Operating Expenses, and Throughput

* Inventory: money inside the system
* throughput: money coming in
* operating expense: money spent to turn inventory into throughput

\
Increase throughput while reducing inventory and operating expenses

Why do queues / delays occur?

Statistical fluctuations and dependent events

Statistical Fluctuations

variability

Dependent Events

consecutive events in a system that directly affect one another

Bottlenecks and constraints

resource which limits overall throughput, capacity less/ equal to the demand

What does resource profiling consider that COPF nor capacity bill procedure does not?

**Specific timing** of projected work loads at individual work centers