Supply chain planning

1
Supply chain planning scheduling classics

• Just In Time
• MRP

2
Just In Time setting

• Massa production
• Constant demand
• High quality of process steps
• Supplier integration
• Principles zero inventories, eliminate waste,
  lean manufacturing

3
Just In Time (logistics)

• Pull Principe

sup- plier
prod 1
prod 3
assem- bly
customer
sup- plier
prod 2
Where is the Customer Order Decoupling Point?
4
Forms of waste

• Excess production
• Waiting times
• Unnecessary transport
• Inventory
• Unnecessary process steps (inspection!)
• Unnecessary activity resulting from defects

5
Quality at the source

• All employees are responsible for quality
  Quality at the source.
• No inspection
• No fear
• No waste

6
Kanban systems

• Kanban means instruction card
• Kanban systems coordinate production and
  inventory replenishment by means of a card system

7
Kanban systems (2)
step 1 Assembly operator takes container type A
from assembly inventory and removes the card
use A from this A container step 2 He moves
to the end item inventory of the production
department and puts the card use kanban A to
an A container on which there is a card produce
A.
inventory
inventory
A
A
production
assembly
B
B
8
Kanban systemen (2)
step 3The assemblu operator removes the produce
A from the container and places in the rack.
step 4 A production operator takes the card
from the rack and starts producing a container of
A (inducing the same sequence of events.)
voorraad
voorraad
A
A
productie
assemblage
B
B
9
Characteristics of kanban systems

• Only produce when there was demand (pull)
• Always produce in the samen quantity
• Inventory position (safety stock?) never exceeds
  cards items per container
• Elimination of waste is this possible by reducing
  items per container or cards.

10

• MRP

11
History of production control

• 50s stone age
• 60s mainframe computers, conception of
  centralized planning, Materials requirements
  planning(MRP)
• 70s Just In Time80s Renewed interest in MRP,
  Manufacturing Resource Planning (MRPII)
• 90s ERP
• 00s Supply chain, Advanced Planning Scheduling

12
MRP principles

• Required data
• Aggregate plan, specifying demand
• Bill of Materials, recursively specificying how
  products (components) are comosed of components.
• Lead times, time required to perform each of the
  processing steps.

13
Bill Of Materials (BOM)
T
V(3)
U(2)
Y(2)
W(2)
X(2)
W(1)
14
Lead Times

• T 1 week
• U 2 weeks
• V 2 weeks
• W 3 weeks
• X 1 week
• Y 1 week

15
MRP Explosie
16
MRP principes

• Demand can be a mix of forecast and actual orders
• The process of computing the plan from forecast,
  BOM and lead times is called MRP explosion
• Planning horizon needs to be at least as long as
  the longest lead time path in the BOM tree
  (supply chain lead time).

17
MRP properties

• master production scheduling (MPS) is the process
  of determining end item demand which can be
  produced taking capacity restrictions into
  account.
• MRP itself has no machinery for capacity
  restrictions.
• Determining an MPS is therefore a nontrivial
  problem.

18
MRP versus JIT

• MRP responds well to setting with a variable
  demand, JIT performs well with low demand
• JIT has continuous improvement incentives
  (eliminate waste!) MPS has fixed lead times.
• JIT is self organizing and MRPis hierarchical
• MRP is technology driven, JIT uses cards and
  people.

19
MRP II (closed loop MRP)

• MRP II have the intelligence to check the
  capacity consequences of a master production
  schedule. They themselves cannot construct
  schedules which satisfy the capacity constraints.

20
Enterprise resource planning

• Some of the presentEnterprise resource planning
  systemen have grown out of MRP II systems.

21
Supply chain planning
g1
d1
g2
f1
d2
g3
f2
d3
g4
22
Parameters

• Capacity f1 500
• Capacity f2 1000
• Capacities d1,d2,d3 500
• Demand g1 200
• Demand g2 400
• Demand g3 400
• Demand g4 500

• Cost for transportation from factory i to
  distribution center j cij.
• Cost for transportation from distribution centre
  j to wholesaler k cjk.

Cement can only be transported and sold in
integer quantities
23
Problem

• Find the least cost plan such that all demand is
  satisfied and all capacity constraints are
  respected..

24
Questions

• Model the problem mathematically.
• What is the complexity of the problem?
• Is it effected by the integrality constraint?
• Suppose there is a third factory with capacity
  1000. Remodel the problem with the additional
  constraint that only two factories can be used.

25
Knock out question 1

• 5. Assume that the demand quantities are equally
  divided between two different product types A and
  B. A and B are identical, except for the fact
  that their production cost pAi and PBi, i1..3,
  are factory dependent.

26
Knock out question 2
6. The presented model is static, i.e. time does
not play a role in it. How must the model be
extended so that demand can be time indexed (as
for instance in the scheduling problem).
27
Additional question on the scheduling problem

• How can it be modelled and solved if there is
  more than one raw material, from which each of
  the jobs requires a certain subset?
• What is the complexity of the resulting problem?