Lesson-7

1.      Discuss the importance of the master production schedule in a MRP system.

A master production schedule (MPS) is a plan for individual commodities to produce in each time period such as production, staffing, inventory, etc. Material Production Scheduling is a fairly standard tool within manufacturing companies its usually administered through the operations/planning function and controlled by a team headed by a Master Production Scheduler. It's typically administered through the MRP system. The MPS process stops the business being led by the "he who shouts loudest gets their parts syndrome” and delivers a manufacturing plan that not only targets meeting the needs of the customer but also the broader capabilities of the manufacturing organization (Key benefit of Master Production Scheduling).

The importance of the master production schedule in a MRP system is as follow:

·         It can be used to give production, planning, purchasing, and management the information to plan and control manufacturing.

·         It will be very useful to tie overall business planning and forecasting to detail operations.

·         It enables marketing to make legitimate delivery commitments to warehouses and customers.

·         It increases the efficiency and accuracy of a company's manufacturing.

In short, Master Production Schedule is critical in guiding all other activities that follows a MRP system. Without Master Production Schedule, it would not be possible to check other how and when to order other related parts.  It serves as a guide and provides the end picture as well as the big picture, and is a critical part of the entire planning process. Thus, MPS is very important to make and implement the plan for productions and operation of business activities.

References

Russell & Taylor. (2011). Operations Management: Creating Value Along The Supply Chain. USA: JOHN WILEY & SONS.INC.

Stevenson, W. J. (2015). Operation s Management. Penn Plaza, New York: McGraw- Hill Education.

2. Suppose you work for a furniture manufacturer, one of those products is the chair depicted in Figure 14.5 in Chapter. Finished goods inventory is held in a control warehouse in anticipation of customer orders. Finished goods are controlled using EOQ/ROQ methods. The warehouse manager, Juan Villa, has suggested using the same methods for controlling component inventory. Write him a brief memo outlining your opinion on doing that.

To: Juan Villa, Warehouse Manager

From: Mani Kumar Budathoki

Date: 14th August, 2015.

Subject: EOQ method for controlling finished goods

Inventory management or inventory control tends to make a balance inventory needs and requirements with the need to minimize costs resulting from obtaining and holding inventory (Rea). Firms that carry hundreds or even thousands of different part numbers can be faced with the impossible task of monitoring the inventory levels of each part number. In order to facilitate this, many firm's use an ABC approach. ABC analysis is based on Pareto Analysis, also known as the "80/20" rule. The 80/20 comes from Pareto's finding that 20 percent people may possess 80 percent of the wealth for generating revenue for the company. From an inventory perspective it can restated thus: approximately 20 percent of all inventory items represent 80 percent of inventory costs. Therefore, a firm can control 80 percent of its inventory costs by monitoring and controlling 20 percent of its inventory. But, it has to be the correct 20 percent.

The EOQ model assumes that the finished goods are sold at constant rate overtime. The important decision in inventory management is to balance the cost of holding inventories with the cost of placing inventory replenishment orders. When the holding costs and ordering costs are balanced, the inventory costs are minimized and resulting order quantity is called the economic order quantity (EOQ).

As long as manufacturing produces according to the MPS and sales makes commitments according to the ATP information, this method increase customer service and reduce inventory carrying cost (www.docs.oracle.com). Production capacity the ATP process allows companies to commit to both order quantities and delivery schedules in upcoming weekly periods. Conceptually similar to the MRP concepts of gross to net exploding and lead time offsetting, ATP uses unallocated inventories and available future production capacity to determine the quantities of product that can be committed to clients in approaching period as well as the timing of delivery of each order.

References

Russell & Taylor. (2011). Operations Management: Creating Value Along The Supply Chain. USA: JOHN WILEY & SONS.INC.

Stevenson, W. J. (2015). Operation s Management. Penn Plaza, New York: McGraw- Hill Education.

3.      In operations management, as in life, a balanced approach is often the best policy. One of the best examples of the benefits of this in operations management is the lean approach. Explain the basic factors that must be in place in order to achieve a balanced lean system

The main purpose of a lean system is to create a system that is demand driven, and provides supply based on demand at any given point. Lean systems tend to concentrate on waste reduction and have continuous improvement. The lean operation manufacturing system helps to create a balance between cost minimization and profit maximization. More concisely, it is a balanced system that promotes rapid flow of materials and work throughout the entire system. In order to make it the best policy, major elements such as Product design, process design, organizational elements, manufacturing planning need to be done effective, Disruptions and waste need to be kept as low as possible, and Layout and employees should be placed properly. There are four basic factors or building blocks that that must be in place in order to achieve a balanced lean system:

1.       Product Design: Product design consists of standard parts (workers have fewer parts to deal with), modular design (an extension of standard parts, they are separate parts clustered together and treated as one unit), highly capable production systems with quality built in (JIT requires highly capable production systems), and concurrent engineering (keeping engineering practices shouldn't change to avoid disruptions).

2.      Process Design: Process Design consists of small lot sizes (optimal one unit), setup time reductions, manufacturing cells (specialized and efficient production centers, quality improvement, production flexibility, a balanced system (distributing workload evenly among the workstations), little inventory storage, and fail safe methods (incorporate ways to reduce or eliminate the potential for errors during the process). Lean systems have an extremely effective production method.

3.      Personal/Organizational Elements: Personnel/organizational elements includes workers as assets (A JIT philosophy), Cross-trained workers (perform several parts of the process and operate several machines), cost accounting, and leadership/project management (a two-way communication process between managers and workers).

4.      Manufacturing Planning and control: It includes level loading,(achieving stable, level daily mix schedules) pull systems (work moves on in response to demand from the next stage in the process), visual systems (A kanban card used as authorization to move or work on parts), limited work-in-process, close vendor relationships, reduced transaction processing(logistical, balancing, quality, or change transactions), preventive maintenance and housekeeping(keeping the workplace clean and free of unneeded material. .

References                                                           

Russell & Taylor. (2011). Operations Management: Creating Value Along The Supply Chain. USA: JOHN WILEY & SONS.INC.

Stevenson, W. J. (2015). Operation s Management. Penn Plaza, New York: McGraw- Hill Education.

4. Discuss ways to use lean to improve one of the following: a pizza restaurant, a hospital, and an auto dealership.

Lean has become very successful in lots of service environments.  As services identify their components that resemble an assembly line and are repetitive in nature, the concepts will work. It is obviously true that the philosophy of reducing waste and streamlining flows to eliminate waste can work in any setting. For example, a pizza restaurant will be perusing the following ways to use the lean:

·         5S (sort, set, shine, standardize and sustain) - workplace improvements based on tidiness, cleanliness and orderliness.

·         Just In Time (JIT) - strategy that strives to cut inventory by delivering components or materials where needed, when needed and in the amount needed.

·         Zero-defect - quality control procedures that aim to eliminate every defect as soon as it is identified.

·         Balancing efficiency and environment.

·         Reducing waste and using Lean methods involve the same language and tools.

In addition to above, in a pizza restaurant, streamlining the pizza preparation and baking operations would speed the product to the customer.  Fast and efficient customer ordering and payment would allow the system to process more customers. Possibly letting customers refill their own drinks or serve themselves would speed processing.  In a hospital or automobile dealership, procedures can be streamlined and altered to serve the customer.

References

Russell & Taylor. (2011). Operations Management: Creating Value Along The Supply Chain. USA: JOHN WILEY & SONS.INC.

Stevenson, W. J. (2015). Operation s Management. Penn Plaza, New York: McGraw- Hill Education.