PPC Assignment

Production Planning & Control ASSIGNMENT
Centre Name: Engineering & Manufacturing Management Center
Course Name: M.Sc (Engg) in Engg & Mfg Management
Name of the Student
: Binto Lal P.K. : Mr. K.N.
Student Registration No : BUB0909025 Module Leader at MSRSAS Ganapathi
FULL-TIME 2009 BATCH
M. S. Ramaiah School of Advanced Studies

New BEL Road, Gnanagangothri Campus, MSR Nagar, Bangalore-560 054
Tel: 23605539 / 23601983 / 2360 4759. Fax: 2360 1923

Website: http://www.msrsas.org
POSTGRADUATE ENGINEERING AND MANAGEMENT PROGRAMME (PEMP)
M.S Ramaiah School of Advanced Studies Postgraduate Engineering and Management Programme (PEMP)
Declaration Sheet
Student Name Reg. No Course Module Code Module Title Module Start Date Module Leader
Binto Lal P.K. BUB0909025 MSc (Engg) - EMM EMM 517 Production Planning and Control 08-02-2010 Mr. K.N. Ganapathi Submission Date 06-03-2010 Batch FT 2009
Submission Arrangements This assignment must be submitted to Academic Records Office (ARO) by the submission date before 1730 hours for both Full-Time and Part-Time students. Extension requests Extensions can only be granted by the Head of the Department / Course Manager. Extensions granted by any other person will not be accepted and hence the assignment will incur a penalty. A copy of the extension approval must be attached to the assignment submitted. Late submission Penalties Unless you have submitted proof of Mitigating Circumstances or have been granted an extension, the penalties for a late submission of an assignment shall be as follows: Up to one week late: Penalty of one grade (5 marks) One-Two weeks late: Penalty of two grades (10 marks) More than Two weeks late: Fail - 0% recorded (F2) All late assignments must be submitted to Academic Records Office (ARO). It is your responsibility to ensure that the receipt of a late assignment is recorded in the ARO. If an extension was agreed, the authorization should be submitted to ARO during the submission of assignment. To ensure assignments are written concisely, the length should be restricted a limit indicated in the assignment questions. Each participant is required to retain a copy of the assignment in his or her record in case of any loss. Declaration The assignment submitted herewith is a result of my own investigations and that I have conformed to the guidelines against plagiarism as laid out in the PEMP Student Handbook. All sections of the text and results, which have been obtained from other sources, are fully referenced. I understand that cheating and plagiarism constitute a breach of University regulations and will be dealt with accordingly. Signature of Delegate Date Stamp from ARO Signature of Module Leader Production Planning and Control Date Signature of ARO Staff Signature of Course Manager 06-02-2010
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M. S. Ramaiah School of Advanced Studies

Postgraduate Engineering and Management Programme- Coventry University (UK) Assessment Sheet
Department Course Module Code Module Leader Student Name Attendance Details Department of Mechanical & Manufacturing Engineering MSc (Engg) - EMM EMM 517 Mr. K.N. Ganapathi Binto Lal P.K. Theory Laboratory Module Title Batch FT 2009 Production Planning and Control Module Completion Date ID Number Fine Paid
(if any for shortage of attendance)
06-02-2010 BUB0909025 Remarks
Written Examination Marks Sheet (Assessor to Fill) Q. No 1 2 3 4 5 6 Marks Scored for 100 Marks Scored out of 50 FAIL Remarks Result PASS Assignment Marks-Sheet (Assessor to Fill) Part A B C Marks Scored for 100 Result PASS Yes PMAR- form completed for student feedback (Assessor has to mark) Overall-Result Components Written Examination (Max 50) Assignment (Max 50) Total Marks (Max 100) (Before Late Penalty) Total Marks (Max 100) (After Late Penalty) Assessor Marks Scored out of 50 FAIL No a b c d Total a b c d Total Remarks
Reviewer Pass / Fail Pass / Fail Grade Grade
IMPORTANT 1. The assignment and examination marks have to be rounded off to the nearest integer and entered in the respective fields 2. A minimum of 40% required for a pass in both assignment and written test individually 3. A student cannot fail on application of late penalty (i.e. on application of late penalty if the marks are below 40, cap at 40 marks)
Signature of Reviewer with date Production Planning and Control
Signature of Module Leader with date
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Abstract
Todays industry is so complex that it requires dedicated planning personal and information technologies. Without production planning and inventory management, our industries will be bringing in all the materials from suppliers required and not required. To sort out this issue, today latest technologies on MRP and ERP are coming up, and becoming more and more popular. Think about managing a small part with two or three components. It seems like easy. But if the product is a car, lacks of components will be listed on BOM. Not to mention if it was an airplane. If we are an OEM then the scenario becomes more challenging. Forecasting of the market demand requires a lot of survey and analysis. The first part of the assignment deals with a debate on the topic weather JIT is applicable for all mfg types other than repetitive manufacturing. It would be difficult to manage or implement JIT on a shop which makes variable and mixed models of products. There are evidences for this implementation. Though it is not fully pure JIT but can have most of the processes doing JIT. The second part of the assignment is a problem solving using Preactor software. The part comprises of a regular demand for a month. Then a rush order is encountered with planned maintenance. The scheduling is done by increasing the working hours rather than thinking of increasing the capacity of the plant by adding more resources, because a hire and fire is not a recommended strategy. It was required to do stimulated sequencing by critical ratio and lowest setup time apart from the forward scheduling. The third part if the assignment is about the survey and analysis of the MRP system and ERP. What were the necessary stimulations that made this evolution? It is the market that induced the changes. The assignment seems to test the theoretical knowledge on the concepts like MRP, ERP, JIT and all their integration on to the software, so that the whole plant activities are visible form a remote computer. The internet has made all this happen even between two opposite side of the earth.
Table of Contents
Abstract......................................................................................................................................1 Table of Contents.......................................................................................................................2 List of Figures............................................................................................................................4 List of Table...............................................................................................................................5 Nomenclature.............................................................................................................................6 CHAPTER 1...............................................................................................................................7 JUST-IN-TIME Production System .........................................................................................7 1.1 Introduction......................................................................................................................7 1.2 Case Reviews [1]..............................................................................................................7 1.3 Conclusion [2]..................................................................................................................9 CHAPTER 2.............................................................................................................................10 Production Planning & Scheduling using Preactor Software..................................................10 2.1 INTRODUCTION .........................................................................................................10 2.2 Problem Statement..........................................................................................................10 2.3 Question I Forward Scheduling...................................................................................11 2.3.1 Step I Enter Database...............................................................................................11 2.3.2 Step II Setup the Working Time .............................................................................16 2.3.3 Step III Generate Schedule .....................................................................................19 2.4 Question II Rush Order and Maintenance Plan...........................................................24 2.5 Question III APS by Critical Ratio and Shortest Setup time.......................................31 2.6 Conclusion......................................................................................................................33 CHAPTER 3.............................................................................................................................35 Evolution of PPC Systems.......................................................................................................35 3.1 Evolution of MRP [5]....................................................................................................35 3.1.1 Need for evolution...................................................................................................36 3.1.2 Latest Concepts........................................................................................................37 3.1.2 Conclusion...............................................................................................................38
Production Planning and Control
3.2 Evolution of Operation Planning Systems to ERP [6]...................................................39 3.2.1 Inventory control [4]................................................................................................39 3.2.2 MRP.........................................................................................................................40 3.2.3 Closed Loop MRP [4]..............................................................................................40 3.2.4 MRP II [6] [4]..........................................................................................................40 3.2.5 ERP [6].....................................................................................................................41 3.2.6 Extended ERP [6] [7]...............................................................................................41 3.3 Conclusion......................................................................................................................43 CHAPTER 4.............................................................................................................................44 4.1 Comments on Learning Outcome:..................................................................................44 4.2 Summary.........................................................................................................................44 REFERENCES.........................................................................................................................45 BIBILIOGRAPHY...................................................................................................................46 APPENDIX A.......................................................................................................................47
List of Figures
List of Table
Nomenclature
Acronyms MRP ERP MRP II OEM JIT TPS SMED CNC LVF MPS MES BOM WIP Material Requirement Planning Enterprise Resource Planning Manufacturing Resource Planning Original Equipment Manufacturer Just-In-Time Toyota Production System Single Minute Exchange of Die Computer Numerical Control Lowest Value First Master Production Schedule Manufacturing Execution System Bill Of Material Work In Process
CHAPTER 1 JUST-IN-TIME Production System

1.1 Introduction
In the todays ever growing population, competition has become a healthy war. Other than quality (is taken as granted), lead time and cost are squeezed by the market. And this has to be satisfied in order to be in the business. For Japanese, this became more vital after the World War 2 in 1945. They were economically backward and had to export to earn. Japanese car manufacturerToyota Motor Corporation was first to build a Just-in-time system later named as Toyota Production System (TPS). Taiichi Ohno, an engineer at Toyota, developed this system inspired by the works of Edward Deming and Henry Ford. JIT is a philosophy and also a production system. JIT production system is based on three fundamental principles: elimination of waste, continuous quality improvement, and encouragement of worker participation in operations planning and execution. The goal of this system is to eliminate all kinds of MUDA (wastes). There are seven types of wastes in any production system. They are (1) Over production (2) Over processing (3) Unwanted motion (4) Waiting time (5) Transportation (6) Work in process inventory (8) Defects. JIT ensures that the right material is delivered at the right place at right time in right quantity and quality. For a system to run as JIT there is some basic elements that have to be incorporated. They are; 1. Uniform plant loading ( load leveling)
2. Low setup time Quick change over (SMED)
3. Small lot size ( manufacturing and purchase)

4. Fast lead time (Production and deliver)
5. Total Productive Maintenance 6. Total Quality Management ( in process and brought-out items)
7. Flexible & Multi-skilled workforce with complete involvement(Trained in JIT) 8. Reliable and effective suppliers - Relation
1.2 Case Reviews [1]

Most people think just-in-time production is impractical in the unpredictable environment of a job shop. But this sheet metal fabricator shows how the smaller shop can do
it too. Arizona Precision Sheet Metal, a 120-person job shop in Phoenix was able to implement JIS successfully. The company had been a successful manufacturer of precision sheet metal parts of all types, and developed a strong niche in producing cabinets for gaming equipment such as slot machines. Although it was not a pure JIT system, Arizona's JIT program was able to reduce inventory from eight weeks worth of cushion to less than three days with fifty percent reduction of the work-in-process from their shop floor. Throughput and Quality improved providing flexibility to the customer. In 1988 company attended a JIT seminar put on by Technical Change Associates, a consultant in Salt Lake City that specializes in the management of both technical and behavioral change in manufacturing organizations. This inspired them to get committed to implement JIT in their plant too. Arizona Precision's JIT objectives would be difficult to achieve without the understanding of customers, and cooperation of suppliers. The training was expanded to include all people in the shop, customers and suppliers. The plant had been laid out largely in functional groupings, with press brakes in one area, welding in another, and so on, For JIT, they rearranged all equipment into three cells where products are produced complete in one continuous process. This layout makes particular sense for the gaming products, since there is a high degree of similarity among the pans. The first cell is dedicated to large cabinet parts. The second is for a family of small parts which typically are geometrically intricate with multiple angles. The third one handles anything that doesn't fit into the first two cells, and consequently is more traditionally batchoriented. Within the first two cells a Kanban pull system is designed. The workforce here is more flexible and multi-skilled and works for a common goal instead of working the process he is in. they help each other in needs to meet the demands. The obvious advantage of such a system is less work-in-process. This close grouping of processes has reduced the physical distance travel of a product by 90%.They also looked in for reducing the setup time which is the key to JIT system. In several cases, two-hour setups were reduced to 40 minutes, and in others, to less than 10 minutes. Truly successful application of JIT requires a relatively stable production schedule, which is extremely difficult in a job shop. That is not to say, however, that a degree of stability cannot be achieved through other means. They analysed all the work going through the plant, and sensibly categorize parts, found that they do have a stable schedule. They now only run one month's worth of production at a time, where they once ran three or four month's production and made to stock. Finished goods inventory alone would
run as high as $500,000 which turns to $20,000 now. The racks that were used to hold the entire inventory were removed, and the 7,000 sq ft of space that was saved made room for a new powder coating line, which brings a critical process in house, and under control.
1.3 Conclusion [2]

JIT production has been defined as a system that attacks provides smooth, orderly flow of product, and seeks to eliminate all kinds of waste that occurs in the manufacturing process. Although tools used by JIT to accomplish the corporate goals are easily understood by most large manufacturers, small job shops operate with constraints that affect the ways they can successfully implement JIT concepts. The size of the small manufacturer and job oriented plants limits its ability to empower its relationships with its customers while attempting to achieve the level of co-operation necessary for JIT system. In addition, the very nature of a job shop's intermittent processes and fluctuating demand with variable product families creates a resistance to the simplified Kanban production control system. JIT production can and does work for the job oriented manufacturer despite the limitations. A small job shop, by its very nature, can learn to be both flexible and adaptable. It is an important fact that the JIT production system need not be implemented entirety all at once in a job shop. They should initiate the JIT system through small steps in the form of education and training of its employees in the JIT philosophy. With these steps, some of the shop floor personnel, on a selective basis, could be cross-trained to reduce the setup time. Setup time reduction can also be achieved through inexpensive mechanisms such as decentralizing some of the tooling, video-taping and counter acting complex setups. A JIT system should also induce continuous process and product improvement. We cannot expect to include all the elements of actual JIT that have been identified here. This modified JIT system that emphasizes continuous improvement results in immediate and long-term gains for the job work plants. Each firm must ultimately craft its own version, its own interpretation of the underlying principles of JIT. When implemented successfully it would eliminate waste, make the company more productive and more efficient. Although there are many companies that are successful, many companies are not. Even though there are enormous risks many still consider implementing JIT for it many advantages.
CHAPTER 2 Production Planning & Scheduling using Preactor Software

2.1 INTRODUCTION
It is not just enough to invest and site back to make money. The customers should be satisfied to be in the business. If in frustration, a fake promise is given, the customer gets in to trouble. It is because the performance of a company depends on the performance of its suppliers too. To be accurate in production planning, earlier we used loads of calculations and hard charts which eats away precious time. These Nan-value adding activities are now taken care by the computers through software. Preactor is one such software. Preactor International
[3]
is the World Leader in Production Planning and Scheduling software. The benefits that can
be obtained after installation offer a return in investment measured in months, sometimes weeks. Their service is used by companies small and medium sized as well as large corporations located in 67 countries. Preactor is translated into 30 languages. Excellent software with a network of system implementation and training services offers a unique combination in the planning and scheduling software market. The accuracy of current and required capacity utilisation provides valuable information for production to feedback (promise) to the Sales team. For example, production can now identify a specific lead time when it knows it can comfortably beat the industry average for a certain product. On time delivery performance and machine utilisation has been increased satisfactorily.
2.2 Problem Statement

A 25 year old
Automobile Ancillary Industry manufactures crank shafts for Engineering Industries Limited. The working pattern of the company is shown in the Table 2.1. The processes involved in the making of crank shaft are shown in the Table 2.2. Table 2. 1 Timings of the Company
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Table 2. 2 Sequence and allocations of operations
2.3 Question I Forward Scheduling

An order is recieved from Engineering Industries Limited for the month of April 2010. The order( CSS1) is to supply 800 numbers of Cranck shaft. The problem was solved through the following steps 2.3.1 Step I Enter Database First step is to feed in the data about the company in to the software database. It includes all the resources. The Figure 2.1 shows the resources been entered in to the database. Then these resources are grouped according to the type of machines as shown in the Figure 2.2. The Details of the Product -- Crank shaft is added including the process sequence, resources used, cycle time, etc. Figure 2.3 shows the product entered linked to the corresponding resources.
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Figure 2. 1 Resources Data Entry
Figure 2. 2 Resources Groups
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Figure 2. 4 Configuration Extended
Figure 2. 3 Product Details Entered
2.3.2 Step II Setup the Working Time There are 4 sub steps to set up the calendar timings. Firstly the shift
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Figure 2. 5 New Calendar States
types has to be entered. This is called the calendar states. Figure 2.5 shows the calendar states entered like the Shifts and breaks. After this the day shift pattern is entered. This is the primary calendar used to link the working times of the resources. Figure 2.6 shows the Day time table been entered. This day calendar is then used to plot the week timings. Figure 2.7 shows the week time table been entered. Finally this week calendar state is linked to the machine resource calendar so that they work according to the planned weekly timings. Figure 2.8 shows the machine resources linked to the week schedule.
Figure 2. 6 Day Primary Calendar
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Figure 2. 7 Week Primary Calendar
Figure 2. 8 Primary Resources Calendar Updated to Week calendar state
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2.3.3 Step III Generate Schedule To generate a schedule, first an order is placed through order entry. The due date and the quantity are entered here to get the analysis done in latter stage. Figure 2.9 shows the Order entry window.
Figure 2. 9 Order Entry window

The schedule is then generated on to the Gantt chart of the overview window. The Figure 2.10 shows the Statistical analysis of the generated schedule. The analysis shows that the lead time is 175 days 1 hour and 34 minutes and will be completed on 23 September 2010. This is not acceptable. With a closer look at the Gantt chart in Figure 2.11, it can be noticed that only one out of the machine group are utilized. No parallel loading was done. And also the whole shop floor waits for a machine to complete all 800 numbers of the product to complete one process. It is now clear that a split
batching is to be applied.
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Figure 2. 10 Statistical Analysis of Scheduling without splitting batch
Figure 2. 11 Schedule Gantt chart without split batching
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Figure 2. 12 Applying Split Batching to processes To apply split batch method, the product database is edited. Here as shown in the Figure 2.12 operation attribute option is used to add the splitting. The lot size is given on trial basis and assumed to be 25 crank shafts. After this is done the schedule cleared and again generated. This time the statistical analysis shows, see Figure 2.13 the lead time of 25 days 12hours and 24 minutes. And the product can be shipped on 26 th April 2010. The regenerated gantt chart is shown in the Figure 2.14
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Figure 2. 13 Statistical Analysis with split batches
Figure 2. 14 Gantt chart of Schedule after applying split batch On 19th April another order is recieved from Engineering Industries Limited. They had requested to supply an urgent requirement of additional 500 numbers of same Crank
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shafts in the same month of April. At the same time the plant has planned an important maintenanance work of half an hour on all resources on 19th, 20th and 21st of April itself. Now the first step is to enter the Maintenance work of half an hour on 19, 20, 21 from morning 8am to 8:30am. See Figure 2.15 showing the addition of maintenance on the primary resource calendar and Figure 2.16 showing the maintenance added on the Gantt chart.
Figure 2. 15 Addition of Maintenance on all Primary Resource Calendars
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Figure 2. 16 Schedule Gantt chart with Maintenance added
Figure 2. 17 Schedule statistics after adding Maintenance After adding maintenance the lead time was changed from 25 days 12:24 to 25 days 14:24 as shown in the Figure 2.17. That is an increase of two hours inspite of adding only one and a half hour maintenance. This is because the resource may be or may not be idle when calls for the maintenance and tow or more machine maintenance may be over lapping, or
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resource will be under maintenance ever time it calls for a maintenance. The result will be a combination all. After this, the rush order was entered in to the order entry dialogue box as shown in the Figure 2.18. The start date is given on 19th April and with the same due date of 30th April 2010. The quantity required by the customer was 500 numbers and is entered there.
Figure 2. 18 Rush Order Entry When the order is placed and the schedule is regenerated, the lead time shown as per the Schedule statistics is 40 days 3 hours and 45 minutes and could be shipped on 11 th May 2010. Shown in the Figure 2.19 the current schedule will not be meeting the customer requirement and will be late by 11 days. If the customer is not convinced with this in anyway, the capacity of the plant has to be raised. This can be done by adding the over time works for all the operators from 19th night onwards. The decision can be taken only after the over time updated schedule is analysed.
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Figure 2. 19 Schedule Statistics with Rush order and Maintenance Figure 2.20 shows the addition of over time for 2nd shift from 11pm to next day 3am and for 1st shift from 3am to 6am. It has to be noted that the following Saturday and Sunday is kept as full shift overtime. Usually those would have been off days but for rush order received they are to work over time. After the addition of these over time to the primary resource calendar, the schedule is regenerated again to get the Gantt chart. Figure 2.21 shows the new schedule statistics. It say that the full order can be shipped including the rush order received on 30th April after 14:16 with a total lead time of 29 days 8 hour and 16 minutes. Also see the Figure 2.22 showing the new schedule Gantt chart.
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Figure 2. 20 Over time assigned to all Primary Resource Calendar
Figure 2. 21 Schedule statistics after adding over time

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Figure 2. 22 Schedule Gantt chart with rush order, maintenance and over time
2.5 Question III APS by Critical Ratio and Shortest Setup time
Critical ratio is the index number used to determine how much a task is on schedule [4]. A value of 1.0 is "on schedule." anything less than 1.0 is behind and larger than is ahead of schedule. The critical ratio is calculated by dividing Time remaining to sue date to Work remaining to be finished in hours. This can be forced on the sequencing methord of the scheduling by adding the Critical Ratio on to the prefered sequencing methord list. Figure 2.23 shows the resource database been edited to add Lowest Value First (L.V.F) of Critical Ratio. The Gantt chart of the scheduling done as per the critical ratio sequencing is shown in the Figure 2.24
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Figure 2. 23 Adding Preferred Sequence to Resources Critical Ratio
When these two of the schedule is saved as critical ratio and Setup time, it is possible
Figure 2. 24 APS Preferred Sequence Scheduling Gantt chart Critical Ratio

32 Figure 2. 25 Adding Preferred Sequence to Resources Shortest setup time
Figure 2. 26 APS Preferred Sequence Scheduling Gantt chart Shortest Setup Time
2.6 Conclusion
The final conclusion can be made by the comparison report shown in the Figure 2.27. The problem was successfully and easily solved with the help of Preactor software. The rush order was the only concern. There was two way to increase the capacity to meet the rush order. One is by investing on new machines but this requires new strategic planning and approval. The second one is much easier only thing is that the work force should be encouraged with incentives or rewards. That is the same resources are used but the secondary resources are utilized more by working 24x7 till the rush production is over. The lead time generated is at the edge which possesses a risk in case of operator leaves, breakdowns, material shortage etc. So it is recommended to give some buffing time with some work off loading.
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Shortest setup time
Critical Ratio
Shortest setup time
Critical Ratio
Figure 2. 28 Gantt Chart Comparison Critical Ratio Vs Shortest Setup Time
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CHAPTER 3 Evolution of PPC Systems

3.1 Evolution of MRP
[5]
Material Requirement Planning is inventory management tool used in all manufacturing businesses. With the flood flow of computer technology and software, today it is lot more easy to plan MRP compared to the traditional tedious calculation and experience predictions. MRP was officially helping the Manufacturing and business from around 50 years for now. It helps the manufacturing line to produce as much as the demand on time by providing or arranging all raw materials and buy in items at the appropriate time. Earlier there was a buy and store kind of attitude which is very unwise for ever changing market with short product life cycle. More over it eats up the cash flow preventing the organization to invest that cash in other productive activities. Keeping no stock is of high risk in case the supplier fails. So a safety stock of minimum is carried by the plants. Standard traditional MRP systems is fed with all the data like the processing time of resources, BOM of all products in detail, Master Production Schedule, lead time for material delivery of all item and suppliers. MRP does not solve any problems instead it high lights and interpreted mismatch to meet the demands. It gives optional recommendations which should
Figure 3. 1 MRP I [5] be decided by the planner. Figure 3.1 shows a flow chart of the main actions performed by
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the MRP. The basic four relevant questions that are at the heart of MRP are what are we going to make? What does it take to make it? What have we got? What do we have to get? These information allows to conclude weather the companys resources are capable of meeting the demand or not. 3.1.1 Need for evolution In MRP, the Front office only knows what is required to be done about the demand and recommends and plans the schedules. This is given to the shop floor. But the system is not looking on whether they are moving as per the schedule or not. So a feedback system is missing. The planner should be able to update the schedule to find out we up-to date status of the order. In most cases there will be rejections at the processes and the lost number of material should be reordered if the stock is not there. This activity of back flushing is not there in the MRP [5]. This gave birth to the closed loop MRP system which is often referred to as the MRP II, but MRP II has more responsibilities. It gives importance not only to the material but also to the resources available and their capacities.
Figure 3. 2 MRP II [5] MRP were helpful in manufacturing process but their benefits did not extend to other Sectors like human resource, finance, marketing and so on were out of the box [4]. The MRP solutions did not render the expected results due to exorbitant costs and practical work problems. In addition it also called for a huge pool of technical expertise in terms of manpower and machines. MRP II otherwise referred to as Manufacturing Resource Planning enabled to overcome the drawbacks of MRP. The analysis of MRP 1 reveals that it is made
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on the basis of finding out the quantum of materials that have to be given inorder to gain the said optimum productivity levels depending on other parameters like production capacity and factors. MRP II carries out all the features of MRP I. See Figure 3.2 showing the added activities to the MRP to make it MRP II. 3.1.2 Latest Concepts
Figure 3. 3 MRP III [5] MRP III basically requires an accurate demand forecast which will be the trunk card for the rest of the activities. Using this demand forecast, a Master Production Schedule is generated. It is also recommended to minimize the total number of MPSs, so that MRP could generate the production schedule directly with respect to the Demand forecast with aptness. Like the MRP, MRP III also retrieves the BOM and recommends the purchase of raw materials. It also generates rescheduled material requirements and automatically reschedules the non-master Scheduled assemblies based on component stock, availability and requirements, like the MRP II. It also generates performance reports of the suppliers. With the integration with order management systems, MRP will be capable of telling the available
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to promise quantity based on the running WIP, Finished and Raw material inventories and projected availability of the good over time. So any delivery rescheduling becomes easy to manage, since the available to promise amount is visible to the order management department and they can make a positive negotiation with the customers. This has all the capabilities of MRP and MRP II. The identified advantages of these new concepts are; [5] 1. Reduced Inventory. 2. Improved Communication throughout the organization. 3. Improved Customer Service.
4. Improved Direct Labor Productivity.
5. Reduced Purchase Costs. 6. Reduced Cost of processing. 7. Reduced Obsolescence of stock.

8. Reduce overtime and fire fighting. 9. Having accountability throughout the organization regarding the activities done.
10. Improved quality of life of employees. 3.1.2 Conclusion The success of MRP II is determined by a set of factors. Firstly there should be 100% accuracy in the calculations that are performed. The technique adopted to follow the operations is another factor that decides the success of MRP. Manufacturing Resource Planning (MRP II) has evolved out of Material Requirements Planning (MRP) into a company game plan. It has been demonstrated that efficient use of these tools can dramatically increase the level of professionalism in conducting manufacturing businesses. This professionalism gives organizations a competitive advantage by reducing inventory costs and integrating a holistic corporate attitude. Still, with all of the potential for automating the manufacturing planning process, people still need to use their skills and judgement within critical points in the planning process. Using exception planning will minimize the amount of items that people need to look at. This exception planning process is derived directly
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from capacity, so that only those items that need attention will be addressed. It is still the planners responsibility to implement purchase order re-scheduling or crash buy programs, outside contracting, and so forth, and any manufacturing schedules oriented around a process or equipment that is considered a constraint in the manufacturing process. The MRP system supplies as much useful information to the planner as possible, to help him make informed decisions, yet also limit this information to only those items that may actually require his attention.
3.2 Evolution of Operation Planning Systems to ERP [6]

Traditionally in manufacturing there was no concept of planning in advance. The order was given to the foreman, who will plan and execute how to make the product by using what and who will do it. There was a reactive response to the problems in the shop floor. This was applicable and working in old days when all that was made was sold and the suppliers was at the dictating position. So the time was not a factor those days. Then, when the market paced up with more competitors and they were surpassed by other companies, they realized there was a need to break up the responsibilities at the manufacturing. The foremen can expertise the manufacturing and the inventory can be handled by another expert in that field. 3.2.1 Inventory control [4] The first methodology that was evolved was called the inventory control using Bill of Material approach. Instead of buying all the required and may require items and storing it in the warehouse, company can buy only that was needed to push out the products to the customer. This was done by studying the BOM of the product and finding the required materials and subassemblies for a particular product. It basically requires the input data like the BOM of the product on demand, how much is the demand etc. For many years, Inventory control was thought as sufficient in manufacturing planning and execution. However when the manufacturing activities were gradually growing complex, the Shop floor people realized that just knowing Bill of material does not help the total planning, because of the fact that Bill of Materials tells only the information about material requirements.
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3.2.2 MRP An important factor of processes of manufacturing activities to be performed, time taken, sequence of operations etc was missing in the inventory control system. It was clear that the process parameters and sequences will remain same for a product irrespective of the demand quantity. So the process definition, which is also known as routing, became an input to Planning. In 1970s the concept was known as Material requirement planning MRP. A refined MRP briefly takes the demand, important item related information such as Ordering rules, safety stock, Inventory information etc, Bill of Material, routing and existing Shop floor schedule as inputs. Based on the demand and other supporting information MRP tells the requirements for each component item that is required to make the order quantity of end item, Calculates the time taken to make the order quantity, Calculates the needed hours of Man, tools and Machines for making the Order quantity of end item. It takes care of any reschedule recommendations to the existing shop floor schedule by comparing the demand quantities and dates with the current scheduled dates and quantities product and net requirements of each component item. But still there was a lack of proper monitoring system and recommend any pace change in the schedule planned earlier in case of a order change. 3.2.3 Closed Loop MRP [4] In this stage the system accounts and tracks the performance of the company as well as the suppliers. This is done through a feedback system. This also allows the company to make safety measures in case of any resource potential to give poor performance. It also got linked to the activities like capacity planning, shop scheduling and vendor scheduling. This was often the referred to as the primitive stage of MRP II 3.2.4 MRP II [6] [4] In MRP some more inputs were identified as essential for realistic planning. The standard or closed loop MRP as defined was looking at the Material requirements and Process requirements as the major area of concern from the planning process. However this information is not sufficient for a smooth production. For example, when the company does not have sufficient finance to perform the Production to meet the demand there will be no use of having the material and machines to make the item. If any breakdown of bottleneck resources happens, the schedule will be demolished. In fact the planning needs the output information from the shop floor to replan according to the current shop floor condition.
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Based on such realizations, MRP was continuously refined. After a decade MRP reached such as stage that it was entirely different from what was originally defined as MRP. So a new name MRP II defined as manufacturing resource Planning came up. Major identification of MRP II is through the integrated planning involving all possible functions in an Industry. MRP II focused on ensuring the integration between various functions such as Planning, Engineering design, Production, Purchase, Sales, Marketing, Finance, and Human resources. The seamless integration that was the main feature of MRPII ensured that the planning was more meaningful with more transparency to all the stakeholders of the business. 3.2.5 ERP [6] In the early 1990s, increased complexity of businesses and the need to integrate all the functions within an enterprise to sustain in the dynamic environment lead to development of what is called Enterprise Resource planning. Enterprise Resource Planning is a companywide business management system that integrates all the activities and resources including planning, manufacturing, sales and market. An ERP system differs from the typical MRP II system in technical requirements such as graphical user interface, relational database, use of fourthgeneration language, and computeraided software engineering tools in development, client/server architecture, and opensystem portability. It is helps the organization to manage business activities like inventory control, order tracking, customer service, finance and human resources. The aim of ERP is to link all the departments and functions across the company onto a single computer system that can communicate with each other and can take care of the departmental quires. This provides a transparency not only for the insiders but for customers and suppliers too. ERP is an accountingoriented information system for identifying and planning the enterprise wide resources needed to take, make, ship, and account for customer orders. But the competitive advantage never stays forever. Many performance capabilities that previously provided distinct competitive advantage became normal expectations. Capabilities such as reliable delivery commitments, high quality, and low prices became the minimum to participate, not the Order winners previously experienced. 3.2.6 Extended ERP [6] [7] The competition within manufacturing industry has created many new concepts, business models, and techniques that have influenced the evolution of Extended ERP. Extended ERP or ERP II takes standard ERP and extends it by providing for closer
41
relationships between an enterprise and its customers and suppliers. An example of this closer relationship is that an enterprise will allow customers to directly interact with its computer system so allowing them to place orders and investigate the status of its account, outstanding deliveries and orders. Suppliers can be permitted to monitor stock levels and suggest when items need replenishing. Due to the level of system integration needed between enterprises to achieve ERP II, this remains, for the moment, the preserve of large companies with the I.T. resources to make it possible. Major factors that contributed the evolution of Extended ERP are;
1. Need to focus on the core strength and grow partners that work together to deliver the
end product. It was encouraged to share directly or indirectly the revenue and competitive advantages. Nobody can be the master of everything. So they have to rely on each other for expertise.
2. Required to adapt to Mass customizations. Customers expect more with faster
response and delivery. Updating of this system to take care of the changes in the scheduling rules and generate the best schedule.
3. Customized BOM of customer demand. If the supplier knows of what are the
combinations of features that can be offered for a computer, it must generate the BOM list separately to make the item as per the options.
4. Requirement of Work flow based applications. Once the logistic processes were
matured enough the focus shifted to improving the administrative processes. Rule based work flow mechanisms were expected to take care of routine administrative activities and only interference on exception was required.
5. In the mid 1990s, people quickly became Internet literate and Internet became part of
life for them. The demand for the business systems to utilize these browsers started to grow and continue. Manufacturing Industry recognized the cost reduction possibilities of using the Internet. The possibility of cost effective Electronic Data Interchange (EDI) seemed possible. Visionaries saw the possibility of speeding up the businessto business (B2B) buying and selling processes and reducing the cost of each business transaction. The Internet made SupplyChain Management to be simpler. Those who wanted to grab the market early started making applications compatible to Internet and instrumental in making extended ERPs.
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3.3 Conclusion
Even if theoretically it is possible to plan manually, it was realized that the practice of applying the principles of MRP, MRP II and ERP was almost impossible without the help of software. The integration among all the functions was also made easy through planning software. They got interlinked using internet and intranets. Extended ERP is a subsequent outcome of progressive refinement of planning systems through MRP, MRPII, and ERP. In addition, it reflects the influences of relatively modern philosophies such as JIT, Lean manufacturing. Since it is based on proven business practice, adapting to Extended ERP is an opportunity to reexamine and compare an enterprise in terms of competitiveness and world class performance. Extended ERP is the result of years of trial and error, innovative thinking and leveraging of ever growing technology. The business concepts incorporated in ERP II continue to produce tremendous competitive advantage and economic benefit to the manufacturing industries. Likewise there is a scope for this system to improve more by bringing together all the aspects of business.
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CHAPTER 4
4.1 Comments on Learning Outcome:
The major outcome of the assignment is the understanding of the importance of Production Planning in the long run of Business in the market. The history of Resource planning from reactive ones to the latest ERP through the phase change of MRP, MRP II are clear and inspires to develop them to integrate more activities of business to it. This will bring up an artificial intelligence. Customer voice can be directly converted to the schedule and shop floor language. Also it gave a chance to indulge is monk scheduling using the Preactor software. This gave an idea of how the intellectual scheduling is done with ease. The software do not make any decisions. Its the planner who tells what is to be done when struck up in a dilemma.
4.2 Summary
It is not so that the lean manufacturing philosophy is applicable for only
repetitive manufacturing. Though it is not possible to make an exact JIT system with the entire concerned rule, some deviation is necessary to make the plant which has a variety and fluctuating demand. The case review depicts that clearly.
The production planning and scheduling software is used and solved the rush
order situation in an actual scenario. Apart from the forward scheduling, scheduling with respect to Critical ratio and shortest lead time is done and compared. The history of ERP and evolution from a primitive reactive type of planning is
researched. The life span of all MRP, MRP II, ERP, ERP II, the stages of explained. The cause of this evolution is also depicted in detail. More updated concepts like MRP III is new evolution which is briefed in the comprehension.
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REFERENCES
[1]
Unknown, JIT and the job shop, http://findarticles.com/p/articles/mi_m3101/is_n11_v64/ai_12371843/, Retrieved on March 01th 2010. Unknown, Just-in-time production in small job shop, http://www.allbusiness.com/management/business-support-services/453317-1.html, Retrieved on March 01th 2010. Unknown, Preactor software over view, http://www.preactor.com/Home.aspx?lang=en-IN, Retrieved on March 01th 2010. K.N. Ganapathi, Production Planning and Control, Course Notes, M.S. Ramaiah School of Advanced Studies, Bangalore, February 2010. Unknown, MRP II Fundamentals, http://www.erpwire.com/erp-articles/mrp2th fundamentals.htm, Retrieved on March 01 2010. Unknown, Evolution of ERP, http://www.scribd.com/doc/7331821/The-Evolution-of-ERP, Retrieved on March 01th 2010. Unknown, ERP II Next Generation, http://faculty.ksu.edu.sa/nizarhussain/Documents/ERP %20II-%20Next%20generation%20ERP.doc, Retrieved on March 01th 2010.
[2]
[3]
[4]
[5]
[6] [7]
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BIBILIOGRAPHY
[1]. [2]. [3]. [4]. [5]. [6].
Eliyahu M. Goldratt , Jeff Cox, The Goal, Third Edition, North River Press , Massachusetts, 2004. Vollmann, Berry, Whybark , Manufacturing planning and control systems, Fourth Edition, McGraw-Hills Books , New york, 2005. Eliyahu M. Goldratt , What is this thing called Theory of Constraints and how should it be implemented, First Edition, North River Press , Massachusetts, 1990. Eliyahu M. Goldratt , What is this thing called Theory of Constraints and how should it be implemented, First Edition, North River Press , Massachusetts, 2003. Unknown, MRP II Education, http://www.scribd.com/doc/7010328/MRPIIEducation1 , Retrieved on March 01th 2010. Unknown, Enterprise Resource Planning Notes, http://www.scribd.com/doc/19251359/CHAPTER-1-Enterprise-Resource-PlanningNotes , Retrieved on March 01th 2010. Unknown, Enterprise Resource Planning ERP, http://www.scribd.com/doc/16630729/Enterprise-Resource-Planing-ERP , Retrieved on March 01th 2010. Nigel slack, Operations Management, Financial times Pitman Publishing, second edition, Long acre London, 1998
[7].
[8].
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APPENDIX A
The class presentation of Theory of Constrains is attached.
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Production Planning & Control ASSIGNMENT

Centre Name: Engineering & Manufacturing Management Center

Course Name: M.Sc (Engg) in Engg & Mfg Management

Name of the Student

: Binto Lal P.K. : Mr. K.N.

Student Registration No : BUB0909025 Module Leader at MSRSAS Ganapathi

FULL-TIME 2009 BATCH

M. S. Ramaiah School of Advanced Studies

Tel: 23605539 / 23601983 / 2360 4759. Fax: 2360 1923

POSTGRADUATE ENGINEERING AND MANAGEMENT PROGRAMME (PEMP)

M. S. Ramaiah School of Advanced Studies

06-02-2010 BUB0909025 Remarks

Reviewer Pass / Fail Pass / Fail Grade Grade

Signature of Reviewer with date Production Planning and Control

Signature of Module Leader with date

Production Planning and Control

Production Planning and Control

Production Planning and Control

Production Planning and Control

CHAPTER 1 JUST-IN-TIME Production System

3. Small lot size ( manufacturing and purchase)

1.2 Case Reviews [1]

Production Planning and Control

1.3 Conclusion [2]

Production Planning and Control

CHAPTER 2 Production Planning & Scheduling using Preactor Software

2.2 Problem Statement

Production Planning and Control

Table 2. 2 Sequence and allocations of operations

2.3 Question I Forward Scheduling

Production Planning and Control

Figure 2. 1 Resources Data Entry

Figure 2. 2 Resources Groups

Production Planning and Control

Production Planning and Control

Production Planning and Control

Production Planning and Control

Figure 2. 4 Configuration Extended

Figure 2. 3 Product Details Entered

Production Planning and Control

Figure 2. 5 New Calendar States

Figure 2. 6 Day Primary Calendar

Production Planning and Control

Figure 2. 7 Week Primary Calendar

Figure 2. 8 Primary Resources Calendar Updated to Week calendar state

Production Planning and Control

Figure 2. 9 Order Entry window

Production Planning and Control

Production Planning and Control

Figure 2. 10 Statistical Analysis of Scheduling without splitting batch

Figure 2. 11 Schedule Gantt chart without split batching

Production Planning and Control

Production Planning and Control

Production Planning and Control

Figure 2. 13 Statistical Analysis with split batches

Production Planning and Control

Figure 2. 15 Addition of Maintenance on all Primary Resource Calendars

Production Planning and Control

Figure 2. 16 Schedule Gantt chart with Maintenance added

Production Planning and Control

Production Planning and Control

Production Planning and Control

Production Planning and Control