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Supply Management,MRP 1 & Just-in-time : 

Supply Management,MRP 1 & Just-in-time

Issues : 

Issues Quality Speed Reliabiity Flexibility Cost Performance objectives Resource Usage make or buy (contract out market-based purchasing? supply partnerships? Process technology Supply network relationships Capacity Market competitiveness Decisions

On being a supply network manager : 

On being a supply network manager

What are Supply Networks? : 

What are Supply Networks? supply networks vs. supply chains buyer-supplier relationship a supply network is a system of organisations connected by server-client links - upstream/downstream - that service processes & activities (operations) bringing added value to each client and ultimately the end customer.

Flows of products, services & information : 

Flows of products, services & information second-tier suppliers first-tier suppliers first-tier customers second-tier customers For Company A Internal supply network Immediate supply network Total supply network Company B Company C X X X X X Supply side Demand side Up stream Down stream

Measuring Supply Chain Performance : 

Measuring Supply Chain Performance Delivery Quality Time Cost

Structural Improvement : 

Structural Improvement Basic Ways to Improve Supply Chain Structure: Change structure Capacity, Facilities, Process technology, vertical integration Change infrastructure People, Information systems, Organization, Production and inventory control, Quality control systems

Forms of Structural Change : 

Forms of Structural Change Forward and Backward Integration Major process simplification Changing the configuration of factories, warehouses, or retail locations Major product redesign Outsourcing logistics to a third party.

Supply relationships : 

Supply relationships a company can trade with first tier and second tier customers at the same time - but consider the % balance of each immediate suppliers vs suppliers of suppliers in the total network relationships between companies in the network need not be exclusive - multi-sourcing. Company C - seems to single source (exclusive supply) item X Types of relationship: close and intimate? Make or contract in (outsource)? What items: strategic, trivial? Many suppliers or a few. Keiretsu? Transactional (arms-length only) or collaborative? Loyalty in buyers and sellers markets?

From Aggregate to MPS to MRP1 : 

Forecast random orders Master production schedule (MPS) MRP1 Design changes Bill of material Stock movements Inventory record Reports 10 Aggregate Plan (product groups) Firm orders From Aggregate to MPS to MRP1 Time-phased plan how many + when we will build each end item. MRP2

Slide 11: 

Material Requirements Planning dependent demand info. system to determine No. of parts, components, materials needed for a product order scheduling information - dates when orders for materials should be released, based on lead times. batches of materials, parts, components should be ordered/produced based on a master production schedule (MPS)

Inventory Records Data : 

Inventory Records Data Bill of Materials complete product description materials parts components production sequence modular BOM subassemblies planning BOM fractional options Inventory record status according to “time windows or buckets” identify each parent item that created demand

Slide 13: 

Product Structure Tree for Assembly A from bill of materials Lead Times A 1 week B 2 wks C 1 wk D 3 wks E 4 wks F 1 wk Demand wk 10 50 A wk 8 20 B (Spares) wk 6 15 D (Spares) No. of components for each product + when needed. Product Structure Tree

Material Requirements Planning : 

LT = 1 week Week: 1 2 3 4 5 6 7 8 9 10 A Required 50 Order Placement 50 Material Requirements Planning 1. Schedule no. of units of “A” backwards to allow for lead time. 2. place order for 50 of “A” at week 8 to receive in week 10 Lot sizing Lot-for-lot (L4L) Economic order quantity (EOQ) Least total cost (LTC) Least unit cost (LUC)

Slide 15: 

Week: 1 2 3 4 5 6 7 8 9 10 A Required 50 Order Placement 50 B Required 20 200 Order Placement 20 200 surplus LT = 2 MRP schedule components of “A”. 4 B’s in each A (50x4) = 200Bs. back the schedule up for 2 weeks lead time.

MRP : 

MRP Week: 1 2 3 4 5 6 7 8 9 10 A Required 50 LT=1 Order Placement 50 B Required 20 200 LT=2 Order Placement 20 200 C Required 100 LT=1 Order Placement 100 D Required 55 400 300 LT=3 Order Placement 55 400 300 E Required 20 200 LT=4 Order Placement 20 200 F Required 200 LT=1 Order Placement 200 B(4) E(1) D(2) C(2) F(2) D(3) A Part D: Wk 6 40 + 15 spares 16 Repeat for all components ==> final MRP

Slide 17: 

Frozen No schedule changes allowed within the time frame Moderately Firm Specific changes allowed within product groups as long as parts are available. Flexible Significant variation allowed as long as overall capacity requirements remain at the same levels. Time Fencing

MRP Reports & Information : 

MRP Reports & Information Primary Planned orders - to release at a future time. Order release notices - execute planned orders Changes in due dates of open orders due to rescheduling Cancellations or suspensions of open orders due to cancellation or suspension in the MPS. Stock status data Secondary Planning reports e.g. forecasting inventory requirements over time. Performance reports e.g. actual vs. planned usage and costs. Exception reports e.g. serious discrepancies, late/overdue orders. Gross Requirements On-hand Net requirements Planned order receipt Planned order release

MRP Example : 

MRP Example Item On-Hand Lead Time (Weeks) X 50 2 A 75 3 B 25 1 C 10 2 D 20 2 Requirements include 95 units (80 firm orders and 15 forecast) of X in wk 10 plus the following spares: Spares 1 2 3 4 5 6 7 8 9 10 A 12 B 7 C 10 D 15

MRP Example : 

MRP Example

Operating an MRP System : 

Operating an MRP System Should MRP carry “safety stock”? How much “safety stock” should be carried? Issue of “safety lead time” Danger of “informal” system driving out the “formal” system Expansion of MRP to other functions (finance, HRM, etc.) of business

Slide 23: 

Goal: Plan & monitor all resources of a manufacturing firm (closed loop): manufacturing marketing finance engineering Simulate the manufacturing system Manufacturing Resource Planning - MRP 2 ERP

JIT Requirements : 

JIT Requirements Product Design Improvement DFM & process design Modules & fewer parts Quality standards Reduce inventory including stores WIP + W in transit carousels & conveyors Work with suppliers reduce lead times frequent deliveries project usage requirements quality standards Problem-solving Root problem Long-term solution Team contribution Line-specialist cooperation Learning Measure performance CQI Monitor & report

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