This document discusses key concepts for measuring manufacturing system performance and planning operations and capacity. It defines throughput, inventory, and operating expenses as key business indicators. It also explains tools for operations planning like the bill of materials, master production schedule, rough-cut capacity planning, and forward/backward scheduling. The goal of operations is to maximize throughput while minimizing inventory and expenses. Infinite and finite capacity planning help identify required capacity and potential overloads.
This document discusses key concepts for measuring manufacturing system performance and planning operations and capacity. It defines throughput, inventory, and operating expenses as key business indicators. It also explains tools for operations planning like the bill of materials, master production schedule, rough-cut capacity planning, and forward/backward scheduling. The goal of operations is to maximize throughput while minimizing inventory and expenses. Infinite and finite capacity planning help identify required capacity and potential overloads.
This document discusses key concepts for measuring manufacturing system performance and planning operations and capacity. It defines throughput, inventory, and operating expenses as key business indicators. It also explains tools for operations planning like the bill of materials, master production schedule, rough-cut capacity planning, and forward/backward scheduling. The goal of operations is to maximize throughput while minimizing inventory and expenses. Infinite and finite capacity planning help identify required capacity and potential overloads.
This document discusses key concepts for measuring manufacturing system performance and planning operations and capacity. It defines throughput, inventory, and operating expenses as key business indicators. It also explains tools for operations planning like the bill of materials, master production schedule, rough-cut capacity planning, and forward/backward scheduling. The goal of operations is to maximize throughput while minimizing inventory and expenses. Infinite and finite capacity planning help identify required capacity and potential overloads.
Download as PPTX, PDF, TXT or read online from Scribd
Download as pptx, pdf, or txt
You are on page 1/ 46
Performance Measures,
Capacity Planning & Scheduling
Lean, JIT and 7 Wastes
What is the point of the business? Measuring the performance of a manufacturing system
The goal of all manufacturing
companies is to make money now and in the future Goldratt E, The Goal, 1989 Business indicators Throughput (T) The amount of income generated by sales. Generally sales revenue - material cost
By this definition work can only be
counted as throughput if it has been sold to generate income. Business indicators Inventory (I) The net value of all assets, including work in progress, raw materials, finished parts, machines, buildings.
Operational Expense (OE)
All the costs incurred in operating the business, including wages, maintenance, inventory holding costs, rents/rates, service charges, raw materials etc. Net profit (NP)
NetProfit = Throughput - Operating Expenses
Financial measures Return on investment (ROI) how much profit has been produced per the money invested or tied up in the business. Similar to return on capital employed (ROCE). (Throughput - Operating Expenses) Return On Investment = Inventory Financial measures
Cash flow The flow of cash into the business to cover expenses. The goal
The goal of manufacturing is defined
by Goldratt and Cox (1989) as simultaneously increasing net profit, return on investment and cash flow. How increase increase increase
Net Profit Return on Cash Flow
Investmen t
Throughput Inventory Operating
Expenses increase reduce reduce How Decrease inventory Decrease operating expense Increase throughput Decrease inventory After an initial reduction to a low work in progress (WIP) environment it is difficult to make a significant difference to profits solely by reducing inventory. Sell tools? Sell factory area or storage space? Dangers for the future. Decrease operating expense Many of a company's operating expenses are fixed. wages are unchanged regardless of workload
'hire and fire' allows reduction in
operational expenses at times of low demand. Zero-hours contracts? Reduce use of overtime, reduce Increase throughput There is no limit to the amount by which throughput can be increased! You can always sell more! The objective of the Operations Manager and the management system should be: Greatest throughput, increasing Minimum operating expense Minimum inventory Elements of Operations / Production Bill of Materials (BOM) A list of components required to assemble a finished product. used in calculating the requirements for sub-assemblies and components from the known demand for the finished goods. requirements for component parts can be calculated. Product: a Bulldog Clip Spring Clip sides ProductStructureTreeforaboxofBulldogclips
10
IndentedBillofMaterialsforaboxofBulldogclips 1 Boxof10bulldogclipsN1 1 BoxN2 10 ClipcompleteN3 2 ClipsideN4 1 SpringN5 Master production schedule (MPS) requirements for finished goods and dates for their completion A mixture of firm orders and sales forecasts - a list of due dates. generally whole-product and whole-factory MPS Product Lat Nov Dec Jan Feb Mar Apr May e SuperCom Firm 3 12 6 4 2 1 0 0 p order Under - 2 3 5 9 8 6 7 contract Expecte - 0 0 2 4 5 8 8 d Total 3 14 9 11 15 14 14 15 CompMax Firm 6 18 21 12 9 4 1 0 order Under - 2 3 4 6 9 9 6 contract Expecte - 2 4 4 7 8 9 d Total 6 20 26 20 19 20 18 15 MPS
SlacketalOperationsManagement4ep490 Rough-cut capacity planning (RCCP) Calculates the load on each resource area which will be required during each pre- determined time period.
This is re-scheduled to allow the best use
of available capacity.
Generally major items / subassemblies and
critical resources RCCP
Childe Intro CAPM p44
Scheduling The planning of when each operation on each part should take place. Based upon: Run time or op time - time taken to perform an operation; Set up time - time taken to set up machinery etc to perform an operation; Process time time for a batch in a process such as heat treat / acid dip Queue time - waiting time before any operation, sometimes included in set up time; Movement time - to move work from one operation to the next; Lead time - total of the above times for a whole part or product. Scheduling works Forward or Backward .
Forward Scheduling
Backward Scheduling Forward scheduling Forward scheduling starts at the current date and adds the time for each of the operations which is to take place (including queue and move times).
This theoretically gives the earliest
date that the component can be completed. Forward scheduling
ChildeIntroCAPMp41 Forward scheduling Everybody busy no waiting for work low operating cost(?)
Components wait for their partners high
inventory
End date might be too late but at least
you know in advance good for throughput Backward scheduling From the requirements date the system schedules backwards the time required for each operation and includes queuing time and movement time.
This type of scheduling should
theoretically give the date that the component should be started in order to be completed on time. Backward scheduling
ChildeIntroCAPMp41 Backward scheduling Low inventory material not committed or bought until necessary
Everyone knows the due date (?)
High risk if a component or operation goes
late danger for throughput everything is critical
Start date might be before now - high expense
to catch up by overtime or subcontract Combined Backwards and Forwards Scheduling
ChildeIntroCAPMp41 Capacity planning In simple systems it is common to ignore capacity and deal with overloads by working overtime or sub-contracting some of the load.
But to plan for capacity.
Infinite Capacity Planning Finite Capacity Planning Infinite capacity planning also known as Capacity Requirements Planning (CRP) (Schedule either forwards or backwards) Calculate total capacity required in each period. Easy to see when the work centre will be overloaded and by how much shows how much capacity is REQUIRED Infinite capacity planning
30 25 20 Hours
15 10 5 0 Mon Tues Wed Thur Fri Infinite capacity planning Overloads are visible and can be planned for Overloads must be dealt with by Reschedule the work by hand Extra working (overtime or extra shift) Move work to alternative resource (sub- con?) Re-plan the MPS (possibly change delivery date to customer) Finite capacity planning (Schedule forward or backward) Book time on the required machines for each operation. Finds the next available slot Finite capacity planning
30 25 20 Hours
15 10 5 0 Mon Tues Wed Thur Fri Finite capacity planning No overloads can be planned Automatic move to available time Manager cannot see load, only lead time Lead time is a result not an input of the capacity planning process Errors are cumulative Summary Aim of Operations / Production Mgt Performance measures T, OE, I Elements of Operations Management and how they are used Sources / Reading
Goldratt E, 1993, The Goal, North River Press
Childe S J, 1997, Introduction to Computer Aided Production Management, Chapman & Hall Slack N, Brandon-Jones A, Johnston R, 2013, Operations Management, 7th Ed. Pearson
