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Materials Management & Maintenance Slides 109 To 145
Materials Management & Maintenance Slides 109 To 145
Materials Management & Maintenance Slides 109 To 145
Materials Management
A process encompassing acquisition, shipping, receiving, evaluation, warehousing and distribution of goods, supplies and equipment It is concerned with planning, organizing and controlling the flow of materials from their initial purchase through internal operations to the service point through distribution Material management is a scientific technique, concerned with Planning, Organizing &Control of flow of materials, from their initial purchase to destination
Materials Management
Enterprise
Orders
Purchase Requisition from Functional Dept
Finished-goods Storage
Receiving
Transformation Processes
In-process Storage
CRG @ AIM - Production Management 2012
DIstrIbutIon
Customers
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Suppliers
To gain economy in purchasing To satisfy the demand during period of replenishment To carry reserve stock to avoid stock out To stabilize fluctuations in consumption To provide reasonable level of client services
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Secondary
Forecasting
Inter-departmental harmony Product improvement Standardization Make or buy decision New materials & products Favorable reciprocal relationships
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Purchasing
Purchasing (also known as Procurement) is the acquisition of goods and services needed to support the various activities of an organization, at the optimum cost and from reliable suppliers Purchasing is the procuring of materials, supplies, machine tools & services required for the equipment, maintenance & operation of a manufacturing plant It is not a service function, but a profit making activity
Goal of Purchasing
Develop and implement purchasing plans for products and services that support operations strategies and cost objectives
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Make-or-Buy Analysis
Considerations in make-or-buy decisions: Lower cost : purchasing or production? Better quality: supplier or in-house? More-reliable deliveries: supplier or in-house? What degree of backward integration is desirable? Should distinctive competencies be outsourced?
5 Rs OF BUYING RIGHT SOURCE RIGHT TIME RIGHT PRICE RIGHT QUALITY RIGHT QUANTITY
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Purchasing
Data processing
Design
Suppliers Receiving
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Purchasing Cycle
Purchase REQUISITION
RECEIVE ORDER
MONITOR ORDER
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Inventory Management
Inventory refers to all the materials, parts, suppliers, expenses and in process or finished products recorded on the books by an organization and kept in its stocks, warehouses or plant for some period of time A physical resource that a firm holds in stock with the intent of selling it or transforming it into a more valuable state Raw Materials Works-in-Process Finished Goods Maintenance, Repair and Operating (MRO)
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Inventory System - A set of policies and controls that monitors levels of inventory and determines what levels should be maintained, when stock should be replenished, and how large orders should be Inventory control is the technique of maintaining the size of the inventory at some desired level keeping in view the best economic interest of an organization
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By Nature
Raw materials / Work in-process / Finished goods / Spare parts & Supplies CRG @ AIM - Production Management
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Stock of Raw materials, Components & Sub-assemblies depends on the demand for the end item
Stock of finished products, spares, etc. directly related to the uncertain market environment
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Inventory Costs
1. Ordering / Set up Cost (cost of placing order,
inspection, changing or setting up facilities to produce inhouse)
Minimum inventory 0
Time
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Important assumptions of Classical Inventory Model 1. Demand is known, constant, and independent 2. Lead time is known and constant 3. Receipt of inventory is instantaneous and complete 4. Quantity discounts are not possible 5. Only variable costs are setup and holding 6. Stock-outs can be completely avoided
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Optimal order Order quantity (Q) CRG @ AIM quantity - Production Management
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Ordering Cost = No. of Orders x Cost / Order OC = D/Q x Co Carrying Cost = No. of units carried / year x Carrying cost / unit/year CC = (Q/2) x Cc Cost of Material = No. of Units purchased / year x Cost of Material / unit COM = D x C
Applying Maxima-Minima method: differentiate the TC(I) w.r.to Q; dTC/dQ = (-D x Co) /Q2 ) + (Cc/2) + 0 To check the second differential is whether less or greater than 0 D2 TC/dQ2 = (2DCo)/Q2 ) > 0 (+ve) Hence the value of Q will minimize the TC function To obtain the value of Q: Equate the first derivative to 0, (-DCo) /Q2 ) + (Cc/2) = 0 i.e. (-DCo) /Q2 ) = (Cc/2) i.e. Q2 = (- 2DCo) / (-Cc) i.e.
Q =
(2DCo/Cc)
CRG @ AIM - Production Management 2012
EOQ
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Q-System
Order received Order received Order received Order received
On-hand inventory
OH ROP
OH
OH
Order placed L
Order placed L
Order placed
L
T1
T2
T3
Time
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P-System
Target stock level
Q4
Q2
On-hand inventory
Q1
Q3
P
CRG @ AIM - Production Management 2012
Time
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1
2 3 4 5
ABC
HML VED FSN SDE
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SOS
GOLF MUSIC3D
Seasonality of Items
Source of purchase Combined advantages of ABC, VED & FSN analyses
Maintenance Management
Upkeep of machinery, equipment, tools and other productive facilities in order for the smooth production operations
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MAINTENANCE APPROACHES
Planned Maintenance
Unplanned Maintenance
Emergency / Breakdown
Maintenance
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PLANNED MAINTENANCE
Total Productive Maintenance (TPM)
Preventive Maintenance
Scheduled Maintenance
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Reliability
Reliability is the probability that a machine will function accurately or properly for a specified time Principle of Redundancy
Provide backup components to increase reliability
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