chapter 14 n.
Skip this Video
Loading SlideShow in 5 Seconds..
Chapter 14 PowerPoint Presentation
Download Presentation
Chapter 14

Loading in 2 Seconds...

play fullscreen
1 / 66

Chapter 14 - PowerPoint PPT Presentation

  • Uploaded on

Chapter 14. Resource Planning. Enterprise Resource Planning (ERP). Organizes and manages a company’s business processes by sharing information across functional areas Connects with supply-chain and customer management applications Largest ERP provider SAP. ERP Implementation.

I am the owner, or an agent authorized to act on behalf of the owner, of the copyrighted work described.
Download Presentation

PowerPoint Slideshow about 'Chapter 14' - dieter

An Image/Link below is provided (as is) to download presentation

Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author.While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server.

- - - - - - - - - - - - - - - - - - - - - - - - - - E N D - - - - - - - - - - - - - - - - - - - - - - - - - -
Presentation Transcript
chapter 14

Chapter 14

Resource Planning

enterprise resource planning erp
Enterprise Resource Planning (ERP)
  • Organizes and manages a company’s business processes by sharing information across functional areas
  • Connects with supply-chain and customer management applications
  • Largest ERP provider SAP
erp implementation
ERP Implementation
  • First step is to analyze business processes
    • Which processes have the biggest impact on customer relations?
    • Which process would benefit the most from integration?
    • Which processes should be standardized?
customer relationship management crm
Customer Relationship Management (CRM)
  • Plans and executes business processes that involve customer interaction
  • Changes focus from managing products to managing customers
  • Point-of-sale data is analyzed for patterns used to predict future behavior
supply chain management
Supply Chain Management
  • Supply chain planning
  • Supply chain execution
  • Supplier relationships
  • Distinctions between ERP and SCM are becoming increasingly blurred
erp and mrp
  • MRP (material requirements planning) was the precursor to ERP
  • Primarily a production planning and control system
  • MRP evolved to MRP II (manufacturing resource planning)
  • ERP and ERP II continue to extend the links through all business processes
material requirements planning
Material Requirements Planning
  • Computerized inventory control & production planning system
  • Schedules component items when they are needed - no earlier and no later
when to use mrp
When to Use MRP
  • Dependent and discrete items
  • Complex products
  • Job shop production
  • Assemble-to-order environments
material requirements planning1

Master production schedule










Planned order releases

Work orders

Purchase orders

Rescheduling notices

Material Requirements Planning
master production schedule
Master Production Schedule
  • Drives MRP process with a schedule of finished products
  • Quantities represent production not demand
  • Quantities may consist of a combination of customer orders & demand forecasts
  • Quantities represent what needs to be produced, not what can be produced
basic mrp processes
Basic MRP Processes

Exploding the bill of material

Netting out inventory

Lot sizing

Time-phasing requirements

mrp outputs
MRP Outputs
  • Planned orders
    • Work orders
    • Purchase orders
  • Changes to previous plans or existing schedules
    • Action notices
    • Rescheduling notices
capacity requirements planning crp
Capacity Requirements Planning (CRP)
  • Computerized system that projects load from material plan
  • Creates load profile
  • Identifies underloads and overloads
capacity terms
Capacity Terms
  • Load profile
    • Compares released and planned orders with work center capacity
  • Capacity
    • Productive capability; includes utilization and efficiency
  • Utilization
    • % of available working time spent working
more capacity terms
More Capacity Terms
  • Efficiency – how well the machine or worker performs compared to a standard output
  • Load
    • The standard hours of work assigned to a facility
  • Load percent
    • The ratio of load to capacityLoad % = (load/capacity)x100%
capacity requirements planning

MRP planned











Load profile for

each machine center

Capacity Requirements Planning
initial load profile

120 –

110 –

100 –

90 –

80 –

70 –

60 –

50 –

40 –

30 –

20 –

10 –

0 –

Hours of capacity



1 2 3 4 5 6

Time (weeks)

Initial Load Profile
remedies for underloads
Remedies for Underloads

Acquire more work

Pull work ahead that is scheduled for later time periods

Reduce normal capacity

remedies for overloads
Remedies for Overloads

Eliminate unnecessary requirements

Reroute jobs to alternative machines or work centers

Split lots between two or more machines

Increase normal capacity


Increase the efficiency of the operation

Push work back to later time periods

Revise master schedule

adjusted load profile

120 –

110 –

100 –

90 –

80 –

70 –

60 –

50 –

40 –

30 –

20 –

10 –

0 –

Work an extra shift

Hours of capacity

Push back

Pull ahead

Push back




1 2 3 4 5 6

Time (weeks)

Adjusted Load Profile
chapter 16

Chapter 16


  • Specifies when labor, equipment, facilities are needed to produce a product or provide a service
  • Last stage of planning before production occurs
scheduling by process type
Scheduling by Process Type
  • Process Industry
    • Linear programming
    • EOQ with noninstantaneous replenishment
  • Mass Production
    • Assembly line balancing
  • Project
    • Project -scheduling techniques (PERT, CPM)
objectives in scheduling
Objectives in Scheduling
  • Meet customer due dates
  • Minimize job lateness
  • Minimize response time
  • Minimize completion time
  • Minimize time in the system
  • Minimize overtime
  • Maximize machine or labor utilization
  • Minimize idle time
  • Minimize work-in-process inventory
  • Efficiency
shop floor control
Shop Floor Control

Scheduling and monitoring day to day production of a job

Loading - Check availability of material, machines & labor

Sequencing - Release work orders to shop & issue dispatch lists for individual machines

Monitoring - Maintain progress reports on each job until it is complete

  • Allocate work to machines (resources)
  • Perform work on most efficient resources
  • Use assignment method of linear programming to determine allocation
  • Prioritize jobs assigned to a resource
  • If no order specified use first-come first-served (FCFS)
  • Many other sequencing rules exist
  • Each attempts to achieve to an objective
sequencing rules
Sequencing Rules
  • FCFS - first-come, first-served
  • LCFS - last come, first served
  • DDATE - earliest due date
  • CUSTPR - highest customer priority
  • SETUP - similar required setups
  • SLACK - smallest slack
  • CR - critical ratio
  • SPT - shortest processing time
  • LPT - longest processing time
critical ratio rule

CR considers both time and work remaining

CR = =

If CR > 1, job ahead of schedule

If CR < 1, job behind schedule

If CR = 1, job on schedule

time remaining due date - today’s date

work remaining remaining processing time

Critical Ratio Rule

Ties scheduling to Gantt Chart or PERT/CPM

and project crashing

sequencing jobs through many machines processes
Sequencing Jobs Through Many Machines/Processes
  • Facility is dynamic, new jobs added
  • Develop global sequencing rules
    • First-in-system, first-served (FISFS)
    • Work-in-next-queue (WINQ)
    • Fewest # remaining operations (NOPN)
    • Slack per remaining operation (S/OPN)
    • Remaining work (RWK)
  • Study system via simulation
  • Gantt Chart
    • Shows both planned and completed activities against a time scale
  • Input / Output Control
    • Monitors the input and output from each work center
advanced planning and scheduling systems
Advanced Planning and Scheduling Systems
  • Infinite - assumes infinite capacity
    • Loads without regard to capacity
    • Then levels the load and sequences jobs
  • Finite - assumes finite (limited) capacity
    • Sequences jobs as part of the loading decision
    • Resources are never loaded beyond capacity
advanced planning and scheduling systems1
Advanced Planning and Scheduling Systems
  • Advanced planning and scheduling (APS)
    • Add-ins to ERP systems
    • Constraint-based programming (CBP) identifies a solution space and evaluates alternatives
    • Genetic algorithms based on natural selection properties of genetics
    • Manufacturing execution system (MES) monitors status, usage, availability, quality
theory of constraints
Theory of Constraints
  • Not all resources are used evenly
  • Concentrate on the “bottleneck” resource
  • Synchronize flow through the bottleneck
  • Use process and transfer batch sizes to move product through facility
theory of constraints1
Theory of Constraints
  • What to Change
  • What to Change to
  • How to cause the change
quality management
Quality Management

Quality is a measure of goodness that is

inherent to a product or service.

Bottom line: perspective has to be from the

Customer – fitness for use

what is quality
What Is Quality?
  • “The degree of excellence of a thing” (Webster’s Dictionary)
  • “The totality of features and characteristics that satisfy needs” (ASQ)
  • Fitness for use
  • Quality of design
  • Quality Management – not owned by any functional area – cross functional
  • Measure of goodness that is inherent to a product or service
fedex and quality
FedEx and Quality
  • Digitally Assisted Dispatch System – communicate with 30K couriers
  • 1-10-100 rule  1 – if caught and fixed as soon as it occurs, it costs a certain amount of time and money to fix  10 – if caught later in different department or location = as much as 10X cost  100 – if mistake is caught by the customer = as much as 100X to fix
product quality dimensions
Product Quality Dimensions
  • Product Based – found in the product attributes
  • User Based – if customer satisfied
  • Manufacturing Based – conform to specs
  • Value Based – perceived as providing good value for the price
dimensions of quality garvin
Dimensions of Quality (Garvin)
  • Performance
    • Basic operating characteristics
  • Features
    • “Extra” items added to basic features
  • Reliability
    • Probability product will operate over time
dimensions of quality garvin1
Dimensions of Quality (Garvin)
  • Conformance
    • Meeting pre-established standards
  • Durability
    • Life span before replacement
  • Serviceability
    • Ease of getting repairs, speed & competence of repairs
dimensions of quality garvin2
Dimensions of Quality (Garvin)
  • Aesthetics
    • Look, feel, sound, smell or taste
  • Safety
    • Freedom from injury or harm
  • Other perceptions
    • Subjective perceptions based on brand name, advertising, etc
service quality
Service Quality
  • Time & Timeliness
    • Customer waiting time, completed on time
  • Completeness
    • Customer gets all they asked for
  • Courtesy
    • Treatment by employees
service quality1
Service Quality
  • Consistency
    • Same level of service for all customers
  • Accessibility & Convenience
    • Ease of obtaining service
  • Accuracy
    • Performed right every time
  • Responsiveness
    • Reactions to unusual situations
quality of conformance
Quality of Conformance
  • Ensuring product or service produced according to design
  • Depends on
    • Design of production process
    • Performance of machinery
    • Materials
    • Training
quality philosophers
Quality Philosophers
  • Walter Shewhart – Statistical Process Control
  • W. Edwards Deming
  • Joseph Juran – strategic and planning based
  • Armand Fiegenbaum – total quality control “entire business must be involved in quality improvement”
deming s 14 points
Deming’s 14 Points

Create constancy of purpose

Adopt philosophy of prevention

Cease mass inspection

Select a few suppliers based on quality

Constantly improve system and workers

Institute worker training

deming s 14 points1
Deming’s 14 Points

Instill leadership among supervisors

Eliminate fear among employees

Eliminate barriers between departments

Eliminate slogans

Remove numerical quotas

deming s 14 points2
Deming’s 14 Points

Enhance worker pride

Institute vigorous training and education programs

Develop a commitment from top management to implement these 13 points

the deming wheel or pdca cycle

1. Plan

Identify the problem and develop the plan for improvement.

4. Act

Institutionalize improvement; continue the cycle.

3. Study/Check

Assess the plan; is it working?

2. Do

Implement the plan on a test basis.

The Deming Wheel(or PDCA Cycle)

Also known as the Shewart Cycle

six sigma
Six Sigma
  • Quality management program that measures and improves the operational performance of a company by identifying and correcting defects in the company’s processes and products
six sigma started by motorola
Six SigmaStarted By Motorola
  • Define
  • Measure
  • Analyze
  • Improve
  • Control

Made Famous by

General Electric

40% of GE executives’

bonuses tied to 6 sigma


malcolm baldrige national quality award
Malcolm Baldrige National Quality Award
  • Category 3 – determine requirements, expectations, preferences of customers and markets
  • Category 4 – what is important to the customer and the company; how does company improve
total quality management
Total Quality Management

Customer defined quality

Top management leadership

Quality as a strategic issue

All employees responsible for quality

Continuous improvement

Shared problem solving

Statistical quality control

Training & education for all employees

strategic implications of tqm
Strategic Implications of TQM
  • Quality is key to effective strategy
  • Clear strategic goal, vision, mission
  • High quality goals
  • Operational plans & policies
  • Feedback mechanism
  • Strong leadership
tqm in service companies
TQM in Service Companies
  • Inputs similar to manufacturing
  • Processes & outputs are different
  • Services tend to be labor intensive
  • Quality measurement is harder
  • Timeliness is important measure
  • TQM principles apply to services
cost of quality
Cost of Quality
  • Cost of achieving good quality
    • Prevention
      • Planning, Product design, Process, Training, Information
    • Appraisal
      • Inspection and testing, Test equipment, Operator
cost of quality1
Cost of Quality
  • Cost of poor quality
    • Internal failure costs
      • Scrap, Rework, Process failure, Process downtime, Price-downgrading
    • External failure costs
      • Customer complaints, Product return, Warranty, Product liability, Lost sales
employees and quality improvement
Employees and Quality Improvement
  • Employee involvement
  • Quality circles
  • Process improvement teams
  • Employee suggestions
cause and effect diagram





testing equipment

Out of adjustment

Poor supervision

Tooling problems

Incorrect specifications

Lack of concentration

Improper methods

Old / worn

Inadequate training






Defective from vendor

Poor process design

Ineffective quality


Not to specifications

Dust and Dirt


in product design


handling problems




Cause-and-Effect Diagram

Also known as Ishikawa Diagram or Fish Bone

hot house quality
Hot House Quality

Lots of Hoopla and no follow through

iso 9000 2000
ISO 9000:2000
  • Customer focus
  • Leadership
  • Involvement of the people
  • Process approach
  • Systems approach to management
  • Continual process improvement – GAO
  • Factual approach to decision making
  • Mutually beneficial supplier relationships
implications of iso 9000
Implications Of ISO 9000
  • Truly international in scope
  • Certification required by many foreign firms
  • U.S. firms export more than $150 billion annually to Europe
  • Adopted by U.S. Navy, DuPont, 3M, AT&T, and others
iso accreditation
ISO Accreditation
  • European registration
    • 3rd party registrar assesses quality program
    • European Conformity (CE) mark authorized
  • United States 3rd party registrars
    • American National Standards Institute (ANSI)
    • American Society for Quality (ASQ)
    • Registrar Accreditation Board (RAB)
  • Final Exam
  • Harley Paper