Supply Chaın Management (ENG) — Ünite 4 Soru-Cevap

The manufacturer should create a plan for a period, which states what to produce, when to produce and how much to produce in order to achieve the company goals. A plan answering these questions is known as a production plan.

Production planning can be broadly defined as a management process in manufacturing industries which focuses on the decisions regarding the procurement of components and raw materials and adjustment of workforce level, machines and other necessary resources to make sure that company goals are achieved.

In order to make a production plan, it is necessary to know the demand of the final product.However, in real life, demand of the finished goods (final products) is generally not known certainly, but this does not mean that the company does not have any clue about the selling quantities in the following years. By using the previous data, at least an estimation can be made about the next year’s demand.This process is called forecasting. A typical production planning process generally begins with forecasting. By this way, estimations of demands for the final product are determined.

We can classify forecasting methods as subjective ones and objective ones. A subjective forecasting method is based on human judgment. There are several techniques for soliciting opinions for forecasting purposes. Customer surveys, the Delphi method and jury of executive opinion can be examples to these techniques. On the other hand, objective forecasting methods are those in which the forecast is derived from an analysis of data.

Time series forecasting is a technique which uses the historical data as input and presents data about the future as output. For example, if we want to make a demand forecast, our inputs will be demands in previous years and our output will be demands in next years.

Based on Nahmias and Olsen (2015) forecasts have the following characteristics.

• They are almost always going to be wrong.

• A good forecast also gives some measure of error.

• Forecasting aggregate units is generally easier than forecasting individual units.

• Forecasts made further out into the future are less accurate.

• A forecasting technique should not be used to the exclusion of known information.

We will use these two approaches to evaluate the forecasts made by different methods. These two approaches are the Mean Absolute Deviation (MAD) and the Mean Squared Error (MSE).

(38+22+10)/3

= 23.33

Moving average can be considered as one of the simplest and mostly used forecasting methods. In this approach, only N most recent observations are put into account and arithmetic average of these N observations is determined as the forecast value. Note that here N can be an arbitrary value that is determined by the person who makes the forecast.

Holt’s method is a forecasting technique that is generally used when the data has a certain trend, such as the values either increase or decrease over time. This method requires two smoothing constants, α and β and has two smoothing equations.

There are mainly two philosophies for the movement of products in a factory as push system and pull system. In the push system, production plans are done for all levels before the observation of actual demand. Once the production is completed, they are pushed to the next level.

Different from the push systems, in pull systems, products are moved to the next level only when they are requested. In pull systems, first the orders are received from the customers and then the manufacturing is started based on the customer orders.

We can summarize some of the advantages of JIT as follows:

1. Reduce work-in-process inventories, thus decreasing inventory costs and waste,

2. Easy to quickly identify quality problems before large inventories of defective parts are manufactured

3. When coordinated with a JIT purchasing program, ensures the smooth flow of materials throughout the entire production process.

Net requirements: These are the requirements after netting of on-hand inventory and scheduled receipts. Assume that your gross requirement for period 1 is 450, you have 40 units of scheduled receipt and 80 units of on hand inventory for period 1. Then, your net requirement will be 450 - 40 - 80 = 330 units.

Nahmias and Olsen (2018) state that MRP has various shortcomings which can be summarized as follows:

• Uncertainty: MRP ignores demand uncertainty, supply uncertainty, and internal uncertainties that arise in the manufacturing process.

• Capacity Planning: Basic MRP does not take capacity constraints into account.

• Rolling Horizons: MRP is treated as a static system with a fixed horizon of periods. The choice of is arbitrary and can affect the results.

• Lead Times Dependent on Lot Sizes: In MRP, lead times are assumed fixed, but they clearly depend on the size of the lot required.

• Quality Problems: Defective items can destroy the linking of the levels in an MRP system.

• Data Integrity: Real MRP systems are big (perhaps more than 20 levels deep) and the integrity of the data can be a serious problem.

• Order Pegging: A single component may be used in multiple end items, and each lot must then be pegged to the appropriate item.

Under zero inventory plan, the main aim of the company is to manufacture as close as possible to the existing demand pattern. For example, if the demands in the first month and second month are 200 units and 500 units, respectively, the company should manufacture as close as possible to 200 units in the first month and as close as possible to 500 units in the second month. Since 200 units and 500 units are very different quantities, they need very different capacities (i.e. workers). Hence, in zero inventory plan, workers can be hired or fired frequently to adjust the capacity to existing demand.

In addition, in this plan, inventory will be accumulated over time at periods when demand is less than the manufactured quantity and that inventory will be used later on at periods when demand is higher than the manufactured amount.

On the other hand, under constant workforce plan, the main aim of the company is to keep the capacity (i.e. the number of workers) constant during the entire planning period. Hence, once the number of workers is determined in the beginning, no workers are hired or fired during the planning period. Of course, different demand and different capacity needs may be observed in different periods and since no hiring is allowed, the number of existing workers must ensure that no shortages are observed in any period. In addition, in this plan, inventory will be accumulated over time at periods when demand is less than the manufactured quantity and that inventory will be used later on at periods when demand is higher than the manufactured amount.

In chase strategy, our aim is closely matching the demand in each period and adjusting the workforce according to the demand. Hence, we need to determine the minimum number of workers that can satisfy the demand in each month.For example, for January, we know that forecasted net demand is 2000 units and the number of units produced per worker is 33 units. Hence, when we divide 2000 by 33 we can obtain how many workers are needed, 2000/33 =60.606 but note that the number of workers must be an integer. Hence, we must always round it to upper integer value (rounding to lower integer value brings infeasible production plans). In this context, minimum number of workers in February can be determined as 61.

The ultimate objective of PPC is to contribute to the profit of organization accomplished by keeping the customers satisfied through the meeting of delivery schedules. The specific objective is to establish routes and schedules for work that will ensure the optimum utilization of materials, workers and machines.

Factors affecting production planning and control can be summarized as follows.

• Market Forecast: It will indicate future trends in demand for manufactured products. Work shift policies, plans for an increase or decrease in manufacturing activity are based on the market forecast and in turn affect the production planning and control.

• Sales Order: It is a rewrite of the customer order specifying what has been purchased (product, quantity and authorizing shipment of the goods to the customer). Variation or changes in sales order will drastically affect production planning and control.

• Standard Process Sheet: It is prepared by process engineering group or process owner and it is the source of basic data which may include type of machine to be used, time required for processing, etc. For example, if any machine is under breakdown, the standard process sheet will be disturbed which in turn affect production planning and control.

• Load Charts: These charts are prepared for each workstation or machine in the plant or may be for groups of machines or departments.

• Project Planning Method: The product to be produced are manufactured in quantities and their total processing time can be measured. The best-known methods are Critical Path Method (CPM) and Program Evaluation and Review Technique (PERT).

The following questions can be considered while scheduling MPS:

• How to make initial MPS that is as feasible as possible?

• How to limit the number of re-planning activities?

• How to be reactive to disturbances in materials flow?

• How to provide planners accurate information about material resources available?