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Economic Cycle

Computer Aided Production Businesses/

Companies
Businesses/
Companies

Management Produce
Receive Services to
Spend to buy Goods and
Dr Aparajithan Sivanathan Services Income Produce

Households/ Households/
People People

Adapted from “The Ten Day MBA”, Steven Silbiger, Piatkus, 1993

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Inventory Materials ‘Engineering a Product Cycle’

Sales/Marketing Design Plan Manufacture Deliver/Service

• Receive Orders • Conceptualise • Process Plan • Machine • Progress

• Sell • Specify • Materials • Cast • Deliver
• Advertise • Design Scheduling • Inspect • Package
• Identify Needs • Analyse • Work Scheduling • Fabricate • Service
• Detail • Materials Ordering • Assemble
• Works Dispatching

Customer

3 4

Computer Integrated Manufacturing (CIM)

• Stock control
• Job Costing
CAD Sales and
Marketing
• Sales / Order Processing
Production
• Purchase ordering
Control
Coverage • Material Requirement Planning
• Production Scheduling
CAPM
• Capacity Planning
Production
Scheduling • Bills-of-Materials
• Shop floor Management
Requirements
Purchasing

CAM
Planning

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CAPM within CIM

Production • Used for: • Opportunities
Management : Manual •
•
Strategic planning
Controlling
•
•
Advanced Analytics
Accurate Forecasts
• Optimisation • AI and Automation
• Decision making • Quick return on investment
• Problems • Online • “What-if” simulations
• Volume of information
• Frequency of updates
• Constant Routines
• “Fire fighting”
• Paper work

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Packages and Modules Package Hierarchy

Shop orders

Resource

Planning
Material Requirement
Planning

Scheduling
Forecasts Production Planning Planning
Requirements Planning
Capacity

Customer Master Production Rough-cut Capacity Simulation

Orders Scheduling Planning
Capacity Requirement
CAPM Equipment
Planning
Material Requirement Capacity Requirement
planning Planning Manpower

Machine Scheduling
Control

Machine Monitoring
Control

Purchasing Production Control Shop floor control

Tool Scheduling
Dispatching Input/output Control
Man-time monitoring

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Master Delivery Schedule (MDS)

• Identify • Characteristics
• What needs to be ordered • Forward Looking (No trends)
• When to be ordered • Time-phased replenishment
• Raw Materials and Purchases • Interrelationship between
 Product
• Advantages
 Assemblies
• Minimum Stocks  Components

Material Requirement Planning

• Correct <Parts | Place | Time>  Raw material
• Reduced Administration • Final Products  components
• Orders • Multiple product groups
• Purchases Dr Aparajithan Sivanathan

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A1 (L=2) S1 (L=4) S2 (L=3) S3 (L=2) C1 (L=2) C2 (L = 1) C3 (L=10) C4 (L=2) R1 (L=5) R2 (L=6) A1

S1
S3
S1 x 1 S3 x 1 C3 x 50 C1 x 10 R1 X 10 R2 X 50 C1
C2
S2 x 2 C1 x 10 C4 x 1 C2 x 10 C3

C1
C1 x 100 C3 x 50 C3 x 50 R1

C3
C2 x 20

S2
C3
C4

C1
R1
A1 (L=2) S1 (L=4) S2 (L=3) S3 (L=2) C1 (L=2) C2 (L = 1) C3 (L=10) C4 (L=2) R1 (L=5) R2 (L=6)

S1 x 1 S3 x 1 C3 x 50 C1 x 10 R1 X 10 R2 X 50

S2 x 2 C1 x 10 C4 x 1 C2 x 10
C2
C1 x 100 C3 x 50 C3 x 50 R2
C2 x 20

-20 -19 -18 -17 -15 -14 -13 -12 -11 -10 -9 -8 -7 -6 -5 -4 -3 -2 -1 0

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Master Delivery Schedule (MDS) – how to. MRP Flow

• Product Structure / Bill of Materials (BOM) Customer Orders
Master Delivery
• Separate Data File records for/including constituent parts Demand Forecast Schedule
Spares, Service
- Requirements

• Final Product  Subassemblies  Components  Raw materials

• Exploding BOMs
• Timing Operations – by offsetting by the lead time
• Trigger orders Product Design MRP Package Inventory
• Exploding • On-hand
• Bills-of-Materials
• Purchases • Lead times
•
•
Aggregating
Scheduling
•
•
On-order
Work-in-progress

Order Release Order Rescheduling

•
•
In-house
Suppliers
Expediting

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MRP Scheduling (A1) MRP Scheduling (S2)

Time (week) 1 2 3 4 5 6 7 8 9 10 Time (week) 1 2 3 4 5 6 7 8 9 10

Gross Requirement 50 80 Gross Requirement 80 160
Scheduled Receipts Scheduled Receipts 20
Inventory 10 10 10 10 10 10 10 0 0 0 Inventory 40 40 60 60 60 0 0 0 0 0
Net Requirement 0 0 0 0 0 0 40 0 0 80 Net Requirement 0 0 0 0 20 0 0 160 0 0
EOQ 1 Planned Order Receipts 0 0 0 0 0 0 40 0 0 80 EOQ 1 Planned Order Receipts 0 0 0 0 20 0 0 160 0 0
Lead-Time 2 Planned Order (EOQ) 0 0 0 0 40 0 0 80 0 0 Lead-Time 3 Planned Order (EOQ) 0 20 0 0 160 0 0 0 0 0

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MRP Scheduling (S2 - v2) MRP Scheduling (S2 - v2 with EOQ)

Time (week) 1 2 3 4 5 6 7 8 9 10 Time (week) 1 2 3 4 5 6 7 8 9 10

Gross Requirement 40 80 160 40 Gross Requirement 40 80 160 40
Scheduled Receipts 20 Scheduled Receipts 20
Inventory 40 40 60 60 20 0 0 0 0 0 Inventory 40 40 60 60 20 140 140 140 180 140
Net Requirement 0 0 0 0 60 0 0 160 40 0 Net Requirement 0 0 0 0 60 0 0 20 0 0
EOQ 1 Planned Order Receipts 0 0 0 0 60 0 0 160 40 0 EOQ 200 Planned Order Receipts 0 0 0 0 200 0 0 200 0 0
Lead-Time 3 Planned Order (EOQ) 0 60 0 0 160 40 0 0 0 0 Lead-Time 3 Planned Order (EOQ) 0 200 0 0 200 0 0 0 0 0

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Improvements Purchase order release

• Time buckets - flexibility T = mean Lead time + 𝑘 σ
weeks  days  hours  shorter  continuous/bucketless

Service level= 1 − 𝑠𝑡𝑜𝑐𝑘𝑜𝑢𝑡 𝑟𝑖𝑠𝑘

• Safety stock
n = no. of separate products in an order
Deviations from master schedule, demand fluctuations, variable lead times
let’s say,
• EOQ make-to-order the stockout risk for each product = 0.02
Smaller batch sizes – predictable lead times 1 product
Service level = 1 − 0.02 = 98%

12 products
Service level = 1 − 0.02 = 78%

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Drawbacks and Improvements Drawbacks and Improvements

• Lead-time • Make to order
• Are lead-times really fixed? • Smaller Batches
• Can lead times be reduced? • Smaller 𝛿 – predictable lead times
• Batch size vs lead time • Multi cycle ordering
• Production vs shipping batch size • Inaccurate MSDs
• Transfer batch • forecasting errors
• Overlapping operations • unplanned reallocation of resources
• Splitting batches - priority • inaccurate inventory
• unreliable lead times from suppliers
• variability of lead times internal & external
• infrequent updating of MRP
• heavy computations

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Capacity Requirements Planning

• For Internal orders, once • machines & sequences
• Requirements are known • Setup times
• Delivery dates are known
• Unit machining times
• Raw material requirements

Capacity Requirement Planning

Dr Aparajithan Sivanathan

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Operation Times Operation Times + Queuing Times

1. 𝑂𝑇 = 𝑆𝑇 + 𝑄 × 𝑈𝑉
2. 𝑂𝑇 = 𝑇𝐹 − 𝑈𝑉 + 𝑄 × 𝑈𝑉 𝐿𝑒𝑎𝑑 𝑡𝑖𝑚𝑒 = 𝑜𝑝𝑒𝑟𝑎𝑡𝑖𝑜𝑛 𝑡𝑖𝑚𝑒 + 𝑞𝑢𝑒𝑢𝑒𝑖𝑛𝑔 𝑡𝑖𝑚𝑒
3. 𝑈𝑉 = If, queuing time turning operations = 3 days and all other operations = 5 days.

Operation Machine Setting Time Unit Value (UV) Time Allowed Pieces/Pack Operation Time
OP ST TF TP P UV TA OT (days) QT days
(ST) (TA) (P) (OT)
# Code Mins Code Mins Days Mins Days 10 20.00 1.00 38 (0.08) 5

10 Raw Material ST 20.00 UV 1.00 20 + 18 × 1 38 20 25.00 12.00 241 (0.53) 3

20 Centre Lathe ST 25.00 UV 12.00 25 + 18 × 12 241 30 25.00 3.00 76 (0.17) 3

30 Centre Lathe TF 25.00 TF 3.00 25 − 3 + 18 × 3 76 40 30.00 12.00 6 2.0 66 (0.15) 5

40 Vertical Mill ST 30.00 TP 12.00 6 30 + 18 × 12⁄6 66 50 3.0 1350 (3.00) 5

50 Paint TA 3.0 3 60 3.0 1350 (3.00) 5

60 Inspection TA 3.0 3 3121 6.93 26

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Capacity Scheduling and Planning Backward Scheduling

Infinite Finite
• Assuming enough capacity • Limited capacity available to do
available to do all work the work & priorities
• No rescheduling of old orders – • Regularly reschedule new and
only new orders are scheduled old orders to fit within capacity
• Detailed scheduling, on regular • Local control (shop floor) in
basis by the shop floor scheduling is taken away
• No need for recalculations • Some times schedules go
immediately out-of-date (why?)

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Operation Work Centre Latest Start Date Week Number

Number
10 Raw Material 31st October 44
20 Centre Lathe 3rd November 44
30 Centre Lathe 8th November 45
40 Mill 16th November 46
50 Painting 24th November 47/48
60 Inspection 6th December 4

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Realities of Infinite and Finite Scheduling Load profiles

• breakdowns, holidays, absences, new priorities, etc
• Infinite: assumes most of the time infinite resources available
• regardless of the amount of work
• If not: Shot-term scheduling
• sub-let work to similar machines
• plan overtime
• double/triple shift
• externally sub-contract
• re-plan for other facilities

Accumulated time buckets (hourly/daily/weekly/monthly)

Can be “online”
Shared across all shop floor

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A Closed Loop Approach for MRP

• Work centre loads checked and balanced beforehand
• Incorporates CRP loop after MRP run
• Involves a rough – cut planning
Manufacturing • Requires a broad strategic planning exercise
Resource • Computer Simulation
Planning’
(MRPII) • Heavy dependence on software, accurate data, expensive
• Philosophical approach: people, management and involvement
• employee participation, education and training, overall manufacturing systems strategy,
goals, etc. as well as integrating inventory control with MRP

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Forward Scheduling Lot Sizing

• Opposite of backword scheduling
• Companies not working on
• MRP based scheduling
• Not customer driven delivery dates
• IF used within MRP
• Products in the wrong order
• High finished stocks
• IF overall lead time cannot be fit
within backward schedule
• Customer has to adjust their MRP
in the future
• Calculate slack time
• More the overlap : higher the priority

Assume: Stocks are used at a linear rate

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Economic Order Quantity Cost vs Batch Size

Assume:
preparation costs fall rapidly as batch size increases; Theoretical EOQ model is an “Ideal” model – only in specialised cases
carrying costs are directly proportional to batch size; Other techniques based on: make-to-order, transfer quantity, period batching,
EOQ calculated for every part therefore the overall costs are minimised. set-up quantity, lot size of one

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Shop-floor information Production control

• order approval and release
Data Paper vs Digital
• operation scheduling work loading
• Bach record Card / Job card / • Batch record card archived for
traveller upstream analysis • material staging and issuing
• Individual Operation Cards • Paper records - use and throw • WIP priority control
• Part process plan downstream • capacity control of WIP
• Drawing • Wholistic digital data records • quality control of WIP
• Material List • Instantaneous update
• process evaluation
• Queue prints, priorities • Online displays in each station
• CAPP information interfacing
• Load capacity prints • Overall system monitoring
• stock control.
• Late work, WIP chasing

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Production control - Goals

• Work-in-Progress
• reduced investment
• balanced work load
• improved delivery
• reduced lead times
• Quality
• reduced defects and scrap
• reduced appraisal costs
• Labour
• improved efficiency
• improved utilisation
• increased operator satisfaction
• Equipment
• improved utilisation
• improved availability
• reduced set-up costs

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CAPM systems: Input CAPM systems: Output

Manufacturing Engineering Manufacturing Engineering

Process plan, operation sequences, set-up times, machining times, NC data Performance measurement on men and resources, tooling/work centre availability,
references, tooling references, Manufacturing resource and layout information. modification to times and methods, job/contract status

Sales/Marketing Sales/Marketing
Master production schedule, future requirements, cost enquiries Estimates and quotes, job/contract status, job/contract performance
Shop Floor/Production Shop Floor/Production
Job status, updating of WIP, stock control data, feedback on manufacturing times, Priorities, control data/documentation, capacity schedules and plans, resource
machine feeds, and methods availability, job/contract/stock/tooling status, performance feedback
Vendors Vendors
Order status and delivery, stock control data, feedback on ordering lead times. Order requirements, delivery dates and quantities

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Enterprise Resource Planning

Dr Aparajithan Sivanathan

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Digital Manufacturing – HWU research ERP # tags

# an enterprise-wide strategy # computerised information system

# internal and external processes # avoiding data duplication
# data dependency # transparent information # responsibility
# share # functional integration # both suppliers and customers
# large organisations # across departments & across the enterprise
# integrate with other organisations

Digital Design and Analysis Digital Assembly Planning Digital Supply Chain Digital Customer Relations
Digital DFMA/DFX Digital Production Planning Digital Asset Management Repair Maintenance
Digital Design Reviews Digital Process Planning Digital Service-life data

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ERP Reality

BOM on average, implementation costs equal software costs and modifying the
‘source code’ can take 6-12 months
MRP
people must be educated and trained to understand what the system is
providing for the company as well as being involved in the detailed
MRP/CRP implementation process
MRP 2
People fail to understand that it is not enough just to buy an ERP package.
ERP
Your whole business has to change around it

SAP does not sell software - it sells best-practice business processes

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ERP Vendors Reasons for Failures

SAP, BAAN, ORACLE, People-soft, J.D.Edwards, Microsoft » Operating strategy did not drive business process design and deployment.
» The implementation took much longer than expected.
» Pre-implementation preparation activities were done poorly.
» People were not well prepared to accept and operate with new system.
» People had high expectations of, what is, an inherently complex system.
» Budget overruns, the cost to implement was much greater than anticipated.
» High level commitment required but not forthcoming.

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Evaluation ERP System

» functional fit with business processes

» integration between components { internally / externally }
» flexibility, modularity and scalability
» complexity, user friendliness
» quick implementation, ROI period The end.
» support multi-site planning and control Dr Aparajithan Sivanathan

» technology capabilities, database independence, securities

» upgrades, customisation, support, reference sites

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