Management

HRM

Marketing

POM

Finance

Design

Forecasting, APP, MPS,MRP

Maintenance

Forecasting
APP

MPS

MRP

Aggregate planning : process of planning of the quantity and timing of output over the intermediate range (often 3-19 months) by adjusting the production rate, employment , inventory, and other controllable variables.
Week 1 2 3 4 5 6 7 8 9

No. of Generator

40

25

55

30

30

50

30

60

40

Aggregate Plan Month J F 25 M 55 A 30 M 30 J 50 J 30 A 60 S 40

No of 40 Motors

Master Production Schedule:

What end product,what quantity and at what time it is to be delivered to the customer.

Week (Generator)
5 hp 10hp

1
20 15

2
25

3
25 30

4
15

5
15

6
15 30

7
20

8
30

9
20 10

20hp

15

15

10

30

10

Variable used in aggregate planning

Decision variable 1. Varying size of work force Associated cost Hiring , training and layoff costs

2. Using overtime or accepting idle Wage premiums and nonproductive time time costs
3. Varying inventory levels 4. Accepting back orders 5. Subcontracting work to others Carrying and storage costs Stockout costs of lost orders Higher labor and material costs

6. Channing the use of existing Delayed response and higher fixed costs. facility

Ex.- A company has estimated its quarterly demand as shown below. It expects the next demand cycle to be similar to this one and wishes to restore ending inventory, employment, etc., to beginning levels accordingly.
Chart Title

Quarter Units I 500 II 900 III 700 IV 300

I II III IV

Vary work-force size: Each quarterly change of 200 units output has an incremental labor cost of Rs. 2000, and ending level must be restored to initial levels . What is the cost associated with changing the work-force size.

Chart Title

2 1

3 4 5 6
I II III IV

Employment change cost = 6*2000=12000

Overtime and idle time: Maintain a stable workforce capable of producing 600 units per quarter, and use OT (at Rs. 5 per unit) and IT (at Rs. 20 unit).
Quarter Units I 500 II 900 III 700 IV 300

Overtime and idle time: Maintain a stable workforce capable of producing 600 units per quarter, and use OT (at Rs. 5 per unit) and IT (at Rs. 20 unit).
OT IT

Quarter Units I 500 II 900 III 700 IV 300

I II III IV

OT+IT cost = 400*5+400*20=10000

Vary inventories:

Vary inventory levels, but maintain a stable workforce producing at an average requirement rate ( of 24000/4= 600 units per quarter) with no OT or IT. The carrying cost ( based on average inventory) is Rs.32 per unit per year, and the firm can arrange to have whatever inventory level is required before period 1 at no additional cost. Annual storage cost (based on maximum inventory) is Rs. 4 per unit.
Chart Title

Quarter Units I 500 II 900 III 700 IV 300

Deplete

Deplete
I

+Build +Build

II III IV

Qtr.

Fcst.

Production

Change in inventory 100 -300 -100 300

Prelim End Bal. End bal. w/300on 1/1 100 -200 -300 0 400 100 0 300 800

1 2 3 4

500 900 700 300

600 600 600 600 2400

Deplete

Deplete +Build +Build

I II

III
IV

Vary inventories: Vary inventory levels, but maintain a stable workforce

producing at an average requirement rate ( of 24000/4= 600 units per quarter) with no OT or IT. The carrying cost ( based on average inventory) is Rs.32 per unit per year, and the firm can arrange to have whatever inventory level is required before period 1 at no additional cost. Annual storage cost (based on maximum inventory) is Rs. 5 per unit. Sol. Qtr. Fcst. Production Change in inventory 100 -300 -100 300 Prelim End Bal. End bal. w/300on 1/1 100 -200 -300 0 400 100 0 300 800

1 2 3 4

500 900 700 300

600 600 600 600 2400

Carrying cost ( on avg. inventory) = (Rs.32 /unit-yr) (200 units)=6400 Storage cost ( on max . Inventory)= (Rs. 5 /unit) (400 units)=2000 Total inventory cost = 8400.

Back orders: Produce at a study rate of 500 units per period, and accept a limited number of back orders when demand exceeds 500. The stock out cost of lost sales is Rs. 20 per unit.

A back order is an arrangement to fill a current order during a later period. The stock out costs occur when some sales ( or customers) are lost because products are not immediately available.

Quarter Units I 500 II 900 III 700 IV 300

Back orders: Produce at a study rate of 500 units per period, and accept a limited number of back orders when demand exceeds 500. The stock out cost of lost sales is Rs. 20 per unit.
Lost sales

Quarter Units I 500 II 900 III 700 IV 300

Back order

Lost sales
I

200

II III IV

Stock out cost of lost sales = 400*20 = 8000

Subcontract: Produce at a study rate of 300 units per period , and subcontract for excess requirements at a marginal cost of Rs 8 per unit.

Quarter Units I 500 II 900 III 700 IV 300

I II III

IV

Subcontract cost =?

Subcontract: Produce at a study rate of 300 units per period , and subcontract for excess requirements at a marginal cost of Rs 8 per unit.

Quarter Units I 500 II 900 III 700 IV 300

I II III

IV

Subcontract cost = 200+600+400 = 1200*8 = 9600

Master Production Schedule:

Master Schedule Month J F M 30 A M

What end product, what quantity and at what time it is to be delivered to the customer.

J 30

S 10

AC 15 motor s (5hp) (25hp) DC motor s (20hp) 10hp 5 20 25

25

15

15

15

20 10

30 10

20

15

15

20

10

Inputs to MPS:

Forecasting
Inter plant requirements Engineering Prototype

APP

Field warehouse requirements

MPS

Safety stock

MRP

Demand Time Fence : is the firm or frozen portion of the MPS, during which no changes can be made without approval of top management
Planning Time Fence: Changes can be done at lower level
Month
AC motors (5hp) (25hp) DC motors (20hp) 10hp

J 15

M 30

J 30

S 10

20

25

25

15

15

15

20 10

30 10

20

5 Frozen

15

15

20 Open

10

Firm

Full

Time Fences in MPS

2-4 weeks
+/- 5% Change

4-6 weeks
+/- 10%
Change

6+ weeks

1-2 weeks
No Change

+/- 20% Change

Frozen

Firm

Full
Open

Materials Requirement Planning: Computer based technique for determining the quantity
and timing for the acquisition of dependent demand items.

Terminology of MRP
1. Dependent demand: when the demand of an item depends on some other item - The demand of tires depends on no of cars, tyre is a dependent demand item. - Finished products are independent demand items and what about spare parts??? 2. Parent and component items: A parent is an assembly made up of basic parts, or components

( part no and qty).

3. Bill of material (BOM): listing of components that go into an assembled item.

Bracket z-100
(1)

Level 0 Level 1 Clamp C20

(4)

Base
(1)

A-10

Spring B11
(2)

Clamp C20(4)

Housing
D21 (2)

Level 2

Handle
E30 (1)

Bearing
F31 (2)

Shaft
G32 (1)

Handle
E30 (1)

Level 3

BOM: (a) Product structure tree

Bracket z-100
(1)

Level 0 Level 1 Clamp C20

(4)

Base
(1)

A-10

Spring B11
(2)

Clamp C20(1)

Housing
D21 (2)

Level 2

Handle
E30 (1)

Bearing
F31 (2)

Shaft
G32 (1)

Handle
E30 (1)

Level 3
Level 0 No. 2 1 2 4 1 1 1 2 1 Level 1 1 2 2 2 3 3 3 3

BOM:Item Z-100 Bracket Part No. B11 A10 D21 C20 C20 E30 E30 F31 G32 Description Spring Base Housing Clamp Clamp Handle Handle Bearing Shaft

BOM: (b) Indented BOM

Bracket z-100
(1)

Level 0 Level 1 Clamp C20

(4)

Base
(1)

A-10

Spring B11
(2)

Clamp C20(1)

Housing
D21 (2)

Level 2

Handle
E30 (1)

Bearing
F31 (2) Number Z100 A10 (1) B11 (2) C20 (4) A10 C20 (1) D21(2) C20 E30 (1) D21 F31(2) G32 (1)

Shaft
G32 (1)

Handle
E30 (1) Description Bracket Base Spring Clamp Base Clamp Housing Clamp Handle Housing Bearing Shaft

Level 3

BOM (c) : Single level BOM

4. Level code: The level on which an item occurs in the structure. 5 Requirements explosion: The breaking down of parent items into component parts that can be individually planed and scheduled. 6. Time phasing : Schedule to produce or receive in time not before or after. 7. Time bucket : The time period used for planning purposes in MRP usually a week. 8. Lot size: The quantity of items required for an order. The order may be purchased from vendor or produced in house. 9. Lot sizing: The process of specifying the order size. 10. Lead-time offset : The supply time, or number of time buckets b/w releasing an order and receiving the material.

11. Gross Requirement: requirements of raw materials & components -from MPS.

12. Scheduled receipt: Materials already on order from vendor, to be received.

13. On hand: materials & components already available.

14: Net requirements: Gross requirements ( on hand + scheduled receipt).

15 Planned order receipt: : Material that will be ordered from vendor to be received at some period., other wise similar to scheduled receipt.

Engineering Changes

MPS

Inventory transactions Inventory Status

BOM

MRP- Processor

MRP Reports

MRP Reports

MRP Reports

Inputs and outputs - MRP processor

MPS

Week P1 P2

7 70

8 50 80

9 25

10 100

LT for P1- 1 week LT for P2- 1 week

LT for S2- 1 week

LT for S3- 1 week LT for C4- 2 weeks LT for M4- 3 weeks

Material (M4) Gross Requirement Scheduled Receipts On hand (50)

40

BOM

P1

BOM

P2

P- Product

S1(1)

S2 (2)

S3 (1)

S4(1)

S- Sub assembly

C1 (1)

C2 (4)

C3 (1)

C4(2) M4 (1)

C5(2)

C6 (1)

C4(1) M4(1)

C6(2)

C2(2)

C8(1)

C7(2)

C- Component

M- Material

How many units of M4 material is to be ordered and at what time??

Week
P1 P2

8
50

10
100

70 P1

80

25

LT for P1- 1 week

S1(1)

S2 (2)

C1 (1)

C2 (4)

C3 (1)

C4(2) M4 (1)

C5(2)

C6 (1)

Period Gross Requirement ( P1) Scheduled Receipt On hand Net Requirement Planned Order Releases

8 50

10 100

50 50 100

100

Week

7 70

9 25

10

P1
P2
P2

50
80

100

S3 (1)

S4(1)

LT for P2- 1 week

C7(2)

C4(1) M4(1)

C6(2)

C2(2)

C8(1)

Period

10

Gross Requirement ( P2) Scheduled Receipt

70

80

25

On hand
Net Requirement Planned Order Releases 70 70 80 80 25 25

P1

S1(1)

S2 (2)

LT for S2- 1 week

C1 (1) C2 (4) C3 (1) C4(2) M4 (1) C5(2) C6 (1)

Period Gross Requirement ( P1) Scheduled Receipt On hand Net Requirement Planned Order Releases Gross Requirement ( S2) Scheduled Receipt On hand Net Requirement Planned Order Releases

8 50

10 100

50 50 100 100 200

100

100 100 200

200

P2

S3 (1)

S4(1)

LT for S3- 1 week

C7(2)

C4(1) M4(1)

C6(2)

C2(2)

C8(1)

Period

10

Gross Requirement ( P2)

Scheduled Receipt On hand Net Requirement Planned Order Releases Gross Requirement ( S3) Scheduled Receipt On hand Net Requirement Planned Order Releases 70 70 80 70 70

70

80

25

70 80 80

80 25 25

25

80 25

25

P1

P2

LT for C4- 2 weeks

S1(1)

S2 (2)

S3 (1)

S4(1)

C1 (1)

C2 (4)

C3 (1)

C4(2) M4 (1)

C5(2)

C6 (1)

C4(1)
M4(1)
1 2

C6(2)

C2(2)

C8(1)

C7(2)

Period

10

Gross Requirement ( S2)

Scheduled Receipt On hand Net Requirement Planned Order Releases 100

100

200

100 200

200

Gross Requirement ( S3)

Scheduled Receipt On hand Net Requirement Planned Order Releases Gross Requirement ( C4) 70 70

70

80

25

70 80 200+80

80 25 25

25

400

Scheduled Receipt
On hand Net Requirement Planned Order Releases 70 280 70 25 280 400 25 400

Material (M4) Gross Requirement Scheduled Receipts On hand (50)

40

LT for M4- 3 weeks

P1

P2

S1(1)

S2 (2)

S3 (1)

S4(1)

C1 (1)

C2 (4)

C3 (1)

C4(2) M4 (1)

C5(2)

C6 (1)

C4(1)

C6(2)

C2(2)

C8(1)

C7(2)

M4(1)
1 2 3 4 5 70 200+80 6 7 25 8 400 9 10

Period Gross Requirement ( C4) Scheduled Receipt On hand Net Requirement Planned Order Releases Gross Requirement (M4) Scheduled Receipt On hand (50) Net Requirement Planned Order Releases

70 70 70 40 50 50 90 -20 260 25 400 20 260 25 280 280 25 25

280 400 400

25

400

400

Period Gross Requirement ( P1) Scheduled Receipt On hand Net Requirement

8 50

10 100

50

100

Planned Order Releases

Gross Requirement ( P2) Scheduled Receipt On hand Net Requirement Planned Order Releases Gross Requirement ( S2) 70

50
70 80

100
25

70 80 100

80 25

25

200

Scheduled Receipt
On hand Net Requirement Planned Order Releases Gross Requirement ( S3) Scheduled Receipt On hand Net Requirement Planned Order Releases Gross Requirement ( C4) Scheduled Receipt On hand Net Requirement Planned Order Releases Gross Requirement (M4) Scheduled Receipt On hand (50) Net Requirement Planned Order Releases 260 25 50 50 70 70 40 90 -20 400 20 260 25 400 280 280 70 25 25 280 400 400 25 400 70 70 70 80 200+80 80 25 25 400 25 100 70 80 100 200 25 200

Ex. Week no.

Wheelbarrows
Part Handlebars Wheel assembly* 300 200

1 40 Order Quantity

4 60

6 60

8 50

Lead Time (wk) 2 3

Inventory on hand 100 220

Tires

400

50

Ex.* 90 wheel assemblies are also needed in 5th week

Wheel Barrow
Handlebars( 2) Wheel Assembly(1) Tire (1)

Week no Gross Requirement (wheel barrow) Scheduled Receipt On hand Net Requirement

1 40

4 60

6 60

8 50

Planned Order Releases

40

60

60

50

Week no.
Wheelbarrows
Part Handlebars Wheel assembly* Tires

1 40 Order Quantity 300 200 400 Wheel Barrow

4 60

6 60

8 50

Lead Time (wk) 2 3 1

Inventory on hand 100 220 50

Handlebars ( 2)

Wheel Assembly (1) Tire (1)

Week no Gross Requirement (Handlebar) Scheduled Receipt On hand (100) Net Requirement Planned Order Releases

1 80

4 120 300

6 120

8 100 300

20

20

20

200 100

200

80

80

280 20

300

300

Week no.
Wheelbarrows
Part Handlebars Wheel assembly* Tires

1 40 Order Quantity 300 200 400

4 60

6 60

8 50

Lead Time (wk) 2 3 1

Inventory on hand 100 220 50

* 90 wheel assemblies are also needed in 5th.

Wheel Barrow Handlebars ( 2) Wheel Assembly (1) Tire (1) Week no Gross Requirement (Wheel assembly) Scheduled Receipt On hand (220) Net Requirement Planned Order Releases 200 180 180 180 120 30 1 40 2 3 4 60 5 90* 6 60 200 170 30 170 120 7 8 50

Part Handlebars Wheel assembly* Tires

Order Quantity 300 200 400

Lead Time (wk) 2 3 1

Inventory on hand 100 220 50

* 90 wheel assemblies are also needed in 5th. Wheel Barrow Handlebars ( 2) Wheel Assembly (1) Tire (1) Week no Gross Requirement (Wheel assembly) Scheduled Receipt On hand (220) 180 180 180 120 30 1 40 2 3 4 60 5 90* 6 60 200 170 170 120 7 8 50

Net Requirement
Planned Order Releases Week no Gross Requirement (Tire) Scheduled Receipt On hand (50) Net Requirement 50 50 1 2 200 3 200 400 250 150 250 250 4 5

30

250

250

250

Planned Order Releases

400

Week no.
Wheelbarrows
Part Handlebars Wheel assembly* 300 200

1 10 Order Quantity

4 20

6 30

7 25

Lead Time (wk) 2 3

Inventory on hand 100 220

Tires

400

50

Ex.* 90 wheel assemblies are also needed in 5th.

Wheel Barrow
Handlebars( 2) Wheel Assembly(1) Tire (1)

Week no Gross Requirement (wheel barrow) Scheduled Receipt On hand Net Requirement

Planned Order Releases

Prepare MRP from given MPS and BOM.

Inventory types and general control procedure:

1. RM 2. WIP 3. FP

4. Maintenance tools: in case of breakdown

Basic MRP concepts: 1.Independent V/s Dependent demand 2.Lumpy demand 3.Lead times: MLT and ordering lead time. 4.Common use items. Evolution of MRP:

1.Improved ordering system

2.Priority planning 3.Close loop MRP- Existence of MRP system that includes information from APS,MPS, and CRP, plus feed back from production activity control functions

4.MRPII- Planning and controlling of an organizations engineering , operational and financial resources.

% of Rupees value in inventory 100 90 80 70 A 20 % material 75 % value B 30 % material 20% value 40 C 50% material 5 % value 1 2 3 4 5 10 6 10 20 30 40 50 Total % material 7 8 Ite m Ann ual cons umpt ion (unit) 4000 600 2000 3500 50 6000 2400 4200 50 100 80 Price / unit (Rs.) Annual consu mption (Rs) Rank Wise con Cum %

10 /lit 10/kg 16/pc 1/kg 8/kg 6/kg 5/kg 1/lit 10/kg 7/kg 40/kg

40000 6000 32000 3500 400 36000 12000 4200 500 700 3200

40000 36000 32000 12000 6000 4200 3500 3200 3000 2100 700

40000 27 76000 51 108000 73 120000 A 15%

VED GOLF FSN

9 10 11

12
13 14 15 16 17 18 19 20

50
20 2000 30 80 200 750 350 20

8/kg
10/kg .15/pc 6/kg .25/kg .50/kg 4/kg 6/kg 10/kg

400
200 300 180 20 100 3000 2100 200

500
400 400 300 200 200 100 80 20 147000