SCM 301 Lecture Notes - Lecture 4: Common Carrier, Freight Forwarder, Pagerank
10 May 2018
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Production - Chapter 12
1. Master scheduling: a detailed planning process that tracks production output and
matches this output to actual customer orders; link between S&OP Plan and the Master
Schedule; master schedule record tracks-
a. Forecasted demand: best estimate of demand in any period
b. Booked orders: confirmed demand for products
c. Production quantities (master production schedule): amount of product that
will be finished and available for sale at the beginning of each week
d. Projected ending inventory: the best estimate of what inv will look like at the
end of each week based on current info (example on slide 9)
i. Ending inv for week 2 = ending inv for week 1 + master production
schedule for week 2 – the higher of the forecast for this week or the
booked orders or this week (week 2)
e. Available to promise: units still available once everything is planned, once
booked orders are received, and once forecasted demand is accounted for;
available units once the units that have already been promised to customers are
accounted for (example in slide 13)
i. ATP for 1st week of master schedule = end inv for previous week +
MPS for current week - sum (orders booked from current week to next
period with production - 1)
ii. ATP for an subsequent week where production > 0 = MPS for current
week - sum (orders booked for current week to orders booked for next
week)
f. Planning horizon: the amount of time the master schedule record extends into
the future; longer production and lead times = longer planning horizon
2. Material requirements planning (MRP): translates the master production schedule into
planned orders for the actual parts needed to produce the items; used to manage
dependent demand inventory (demand levels tied to prod of another item)
a. Rough cut capacity planning: uses the master production schedule to monitor
key resource requirements (ex: making sure a company has the capacity to meet
a prod goal)
b. 3 main concepts of MRP:
i. Bill of material (BOM): a list of the parts and quantities of parts that are
required to make an assembly provides product structure (tree);
shows low level coding (ex: King Philip Chair diagram)
1. Structure tree: shows how the parts in the BOM are put together
to make the level 0 item (the complete item); and shows planning
lead time (time from when a part is ordered to when it arrives)
ii. Backward scheduling/exploding the BOM: working backward from the
master production schedule for a level 0 item to determine the quantity
and timing of orders for the various components
c. Lead times
i. For purchased items
ii. For production
find more resources at oneclass.com
find more resources at oneclass.com
d. MRP record: basic principle is working backward from the planned completion
date for the final item
i. Gross requirements: how many seats are needed each week
ii. Scheduled receipts: units already on order
iii. Projected ending inv= end inv from previous time period + schedule
receipts for current period + planned receipts for current period - gross
req for current period
iv. Net requirements= max of (0; gross req in current time period - end inv
of previous time period - scheduled receipts in current time period)
v. Planned receipts: amount that is planned to be ordered to be received at
the beginning of the period; if the lead time is greater than T −1, PR in
time period t = 0; if net requirement = 0, managers don't need to order
any more items (PR=0); otherwise, current PR can be found as the max
of the net requirement and the min order size
vi. Planned orders
e. MRP advantages
i. MRP is directly tied to the master production schedule and indicates the
exact timing and quantity of orders for all components.
ii. MRP allows managers to trace every order for lower-level items through
all the levels of the BOM, up to the Master Production Schedule (aka
parent child relationship)
iii. MRP tells a firm and its suppliers precisely what needs to be made when
3. Production activity control
a. Job sequencing rules: used to determine the order in which jobs should be
processed when resources are limited and multiple jobs are waiting to be done
i. 1- First come first serve: processes job orders that arrive at a work
center first
ii. 2- Earliest due date: places the highest priority on processing jobs with
the earliest due date
iii. 3- Critical ratio = days until due/total task time remaining
1. CR = 1 indicates that the amount of task time equals the amount
of time left, hence any time spent waiting will make the job late
2. CR < 1 indicates that the job is going to be late unless something
changes
3. Jobs with the lowest Critical Ratio are scheduled to go first
iv. Days late formula = total late days / # of jobs
1. Days late = finish time - days until due
4. Synchronizing planning and control across the SC
a. Distributions requirements planning: time phased planning approach that
uses planned orders at the point of demand (customer, warehouse, etc) to
determine forecasted demand at the source level (a plant)
find more resources at oneclass.com
find more resources at oneclass.com
JIT/Lean - Chapter 13
1. Just in time/lean: philosophy based on planned elimination of all waste and on
continuous improvement of productivity; minimization of amount of resources and of
non-value adding activities
a. Waste: any activity that does not add value in the eyes of the consumer
i. 8 commonly recognized sources of waste:
1. Overproduction: producing goods before it’s required → creates
inventory
2. Waiting: facility layouts could be inefficient and cause things to
wait around
3. Unnecessary transportation: bad b/c expensive to move things
4. Inappropriate process: companies sometimes use overly
complex processes
5. Inappropriate inventory: can be caused by uncertainty in quality
levels, delivery lead time, etc
6. Unnecessary or excess motion: can be caused by poorly
designed processes
7. Defects: create uncertainty in process and decrease prod
capacity by creating products that require rework
8. Underutilization of employees: need to use skills that
employees have an empower them to make decisions
b. Lean perspective on inventory: inventory can cover up wasteful business
practices and lowering inventory through lean philosophy forces firms to address
these poor practices
c. Recent developments in lean thinking:
i. Lean six sigma: a methodology that combines the org elements and
tools of six sigma with lean’s focus on waste reduction
ii. Lean SCM: an extension of the lean philosophy that seeks to minimize
the level of resources required to carry out all SC activities; not just prod
2. Kanbans
a. Kanban system: relies on pull system (pulling stuff when it’s needed); approach
that uses containers to control the prod and movement of goods through the SC
i. Pull system: actual downstream demand sets off a chain of events that
pulls materials through the various steps
b. Key characteristics:
i. Uses simple signaling mechanisms to indicate when specific items should
be produced or moved
ii. Can be used to synchronize activities within a plant or between different
SC partners
iii. Are considered control mechanisms that are designed to pull parts
through the SC based on downstream demand
c. Two card kanban system: special form that uses one card to control prod and
another card to control movement of materials **know diagram pg 411**
find more resources at oneclass.com
find more resources at oneclass.com
Document Summary
Production - chapter 12: master scheduling: a detailed planning process that tracks production output and matches this output to actual customer orders; link between s&op plan and the master. For production: mrp record: basic principle is working backward from the planned completion date for the final item, gross requirements: how many seats are needed each week. 1- first come first serve: processes job orders that arrive at a work center first. 2- earliest due date: places the highest priority on processing jobs with the earliest due date. Lean six sigma: a methodology that combines the org elements and tools of six sigma with lean"s focus on waste reduction. # of hours worth demand = y * container size / demand. Advances in info systems: globalization of markets. Planning systems: help managers to select carriers for an outgoing shipment, develop a weekly schedule of deliveries, etc.
