PRODUCTION PLANNING AND CONTROL

Topics
•Aggregate Production Planning
•Master production schedule (MPS)
• material Requirement Planning (MRP)
• Manufacturing Resource Planning (MRP II)
•Capacity Planning
•Shop Floor Control (SFC)
• Just – in – Time (JIT) Manufacturing Philosophy
• Enterprise Resource Planning (ERP)
Manufacturing Resource Planning (MRP II)

• Goal: Plan and monitor all resources of a

manufacturing firm (closed loop):
– manufacturing
– marketing
– finance
– engineering
• Simulate the manufacturing system
 MRP II

Market Master
Finance Manufacturing production schedule
Demand

Marketing

Adjust master schedule

Production
plan MRP

Rough-cut Capacity req.

capacity planning planning
Adjust
production plan
Yes No Requirements No Yes
Problems? schedules Problems?
 Just-in-Time

• JIT philosophy means getting the right quantity of

goods at the right place and the right time
• JIT exceeds the concept of inventory reduction; it is an
all-encompassing philosophy geared to eliminate
waste, anything that does not add value
• A broad JIT view – or lean production/lean systems - is
one that encompasses the entire organization

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 JIT → Lean → Agile
• Just In Time (JIT)
– Inventory management strategy aimed at reducing
inventory
• Lean
– Philosophy of eliminating waste
• Agile
– Ability to respond quickly to changing conditions

Copyright 2008 Health Administration

2-27
Press. All rights reserved.
 Objective of JIT
• JIT Manufacturing tries to smooth the flow of materials from the
suppliers to the customers, thereby increasing the speed of the
manufacturing process.
• The objectives of JIT is to change the manufacturing system
gradually rather than drastically:
• 1. To be more responsive to customers,
• 2. To have better communication among departments and
suppliers,
• 3. To be more flexible,
• 4. To achieve better quality,
• 5. To reduce product cost.

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 JIT as a Philosophy
• Elimination of waste
– Waste of overproduction
– Waste of waiting
– Waste of movement
– Waste of inventories
– Waste of motion
– Waste of making defects
– Waste of process itself

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 Enterprise Resource Planning (ERP)

• A computer system that integrates application

programs in accounting, sales, manufacturing,
and other functions in the firm
• This integration is accomplished through a
common database shared by all the
application programs
• Produces information in real time and ties in
customers and suppliers
Typical ERP System
Enterprise Resource Planning (ERP)

 ERP modules include

 Basic MRP
 Finance
 Human resources
 Supply chain management (SCM)
 Customer relationship management
(CRM)

© 2011 Pearson Education, Inc. publishing

as Prentice Hall
 Major ERP Providers
2004 Share of
Firm HQ
$23.6B Market
SAP Germany 40%
Oracle US
22%

Sage Group UK 7%
Microsoft US 3%
Infor US

Source: AMR Research

 Advantages of ERP Systems
1. Provides integration of the supply chain,
production, and administration
2. Creates commonality of databases
3. Improves information quality
4. May provide a strategic advantage

© 2011 Pearson Education, Inc. publishing

as Prentice Hall
 Philosophy of Just-in-Time
 JIT originated in Japan at Toyota Motor Co,
fueled by a need to survive the devastation post
WWII
 JIT gained worldwide prominence in the 1970s
 Often termed “Lean Production” or “Lean
Systems”
 Broad view that entire organization has the same
goal - to serve customers

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Three Elements of JIT

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Three Elements of JIT con’t
 JIT manufacturing focuses on production
system to achieve value-added manufacturing
 TQM is an integrated effort designed to
improve quality performance at every level
 Respect for people rests on the philosophy
that human resources are an essential part of
JIT philosophy

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 Role of Inventory Reduction
 Inventory = Lead Time (less is better)
 Inventory hides problems

© Wiley 2010 38
JIT Manufacturing:
The Pull System

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