Calculation exercise 1 MRP, JIT, TOC and SOP. Dr Jussi Heikkilä

Transcription

1 Calculation exercise 1 MRP, JIT, TOC and SOP Dr Jussi Heikkilä

2 Problem 1: MRP in XYZ Company fixed lot size Item A Period Gross requirements Scheduled receipts Projected available balance Planned order release Q = 150, LT = 1, SS = 0 Average inventory 79,1 Item B Period Gross requirements Scheduled receipts Projected available balance Planned order release Q = 150, LT = 1, SS = 0 Average inventory 69,5

3 Problem 1: MRP in XYZ Company variable lot size Item A Period Gross requirements Scheduled receipts Projected available balance Planned order release Q = 3 weeks, LT = 1, SS = 0 Average inventory 46,9 Item B Period Gross requirements Scheduled receipts Projected available balance Planned order release Q = 3 weeks, LT = 1, SS = 0 Average inventory 43,4

4 Problem 2: JIT in BCD Company Calculating the number of Kanbans DL (1 + α) Y = a Y = number of Kanban card sets D = demand per unit of time L = lead time a = container capacity α = policy variable (safety stock) 4

5 Problem 2: JIT in BCD Company a. Q/2 x EUR 150 = (6000 * 150) / 2 = EUR 450,000 No of Kanbans = (250 x 10 x 1.1) / 100 = 28 Average inventory = 28 * 100 units = 2800 units x 150 EUR = EUR 420,000 b. Reducing lead time from 10 to 5 days No of Kanbans = (250 x 5 x 1.1) / 100 = 14 Average inventory = 14 * 100 units = 1400 units x 150 EUR = EUR 210,000 The investment in inventory decreases from EUR 420,000 to EUR 210,000 The inventory carrying cost, therefore, is reduced by 0,24%* x EUR 210,000 = EUR 50,400 c. The return on investment per year is EUR 50,400 / EUR 100,00 = 50% => The investment is worth doing! *The average true cost of inventory for an average American manufacturing company.

6 Problem 3: TOC and transfer batches in OPQ Company Operation 1 S 1 Run Q t Run (800-Q t ) Transfer T T Operation 2 S 2 Run Q t Run (800-Q t ) A B C Q 90 8Q 14Q Q t t t t 6 (800 Q Q t t ) 20 6

7 Problem 3: TOC and transfer batches in OPQ Company Total lead time by not having transfer batch (60 min + 90 min) + 20 min * (6 min + 8min) = min = 189,5 hrs total lead time with transfer batch (60 min + 90 min) + (337)*6 min + 20 min * 8 min = min = 143,2 hrs. Savings (189,5-143,27)/189,5 = 24,4%. There was a question in class last year about using several much smaller transfer batches, even going down to a transfer batch size of 6. The limiting factor here is the transfer time. With small transfer batches multiple transfer times start slowing down the process. For those of you who are interested in studying this issue further, I advise you to look at Chapter 8A Advanced Scheduling and particularly the part Group Scheduling and Transfer Batches. 7

8 Problem 4: SOP in EFG Company a) Producing a chase plan Chase plan: All the demand must be fulfilled (no stockouts) Ending inventory = 0 Capacity = Demand - Beginning Inventory How much to produce each quarter and what is the overall cost? Assumption: Cost of laying-off includes all the settle payments 8

9 Problem 4: SOP in EFG Company a) Producing a chase plan Quarter 1: Demand - Beginning inventory = = Required production = pcs Required number of employees = / 100 = 40 Number of employees on hand = 60 reduce 20 Quarter 2: Required production = Required number of employees = / 100 = 100 Number of employees on hand = 40 hire 60 etc. 9

10 Problem 4: SOP in EFG Company a) Producing a chase plan Period Q1 Q2 Q3 Q4 Demand Beginning Inventory Production Unit cost Total cost Ending Inventory Employees required Employees on hand Hire Lay off SUM

11 Problem 4: SOP in EFG Company b) Producing a level plan Level capacity Number of employees = constant In case of fluctuating demand, overtime and stockouts might occur (unless excess capacity is held) In this case No ending inventory allowed What is the production rate, inventories at each quarter, stockouts and total costs? 11

12 Problem 4: SOP in EFG Company b) Producing a level plan Level capacity = constant =? Total production according to demand forecast - beginning inventory = Level capacity = average required capacity = / (4 * 100) = 60 employees Quarter 1: Demand - Beginning inventory = = Required production = pcs Number of employees on hand = 60 production Ending inventory = Quarter 2: Required production = Beginning inventory = 2 000, production stockouts = Quarter 3: Beginning inventory , demand 8 000, production stockouts Quarter 4: Beginning inventory , demand 2 000, production ending inventory 0 12

13 Problem 4: SOP in EFG Company b) Producing a level plan Period Q1 Q2 Q3 Q4 Demand Beginning Inventory Production Stock-outs Ending Inventory Employees required Employees on hand Hire Lay off SUM What additional factors need to be considered in SOP to decide which plan to use? 13