PAGE6-SessionTwo–InventoryPlanningOrderReviewMethods#Commonlyusedmethods>Orderpoint(fixedorderquantity)Orderpointsystem–Theinventorymethodthatplacesanorderforalotwheneverthequantityonhandisreducedtoapredeterminedlevelknowsastheorderpoint.OP=DDLT+SS>>UsesofOrderPoint:1)Primarilyforindependentdemanditems(finishedgoods,MRO)2)Fordependentdemanditemssuchasrawmaterialswhendemandisstableandcontinuous3)Notforhigh-valueclassAitemsbecauseofinventorycosts4)Forlimitinglotsizesduetotruckloadandstoragecapacityatthereceivingwarehouse>Periodicreview(knownasafixed-internalordersystem|independentdemandmanagementmodel)Q=T–IWhereT=targetinventory=demandfor(reviewperiod+leadtime)I=inventoryathand>>ApplicationsofPeriodReviewSystem1)Receivingdeliveriesofmanydifferentitemsfromonesourceatonetimeiseconomical2)Trackingandpostingtransactionofmanysmallissuesfrominventoryisexpensive3)Itissafetoassumethatthesufficientinventoryhasbeenorderedtolastuntilthenextreviewinterval4)Itemshavealimitedshelflife,suchasfarmproduce,chemicals,andfoodproducts5)Orderingcostsarelow;orderingonceaweekormonthisnotacostissue*DifferencebetweentheorderpointandperiodicreviewmethodsCharacteristicPeriodicReviewSystemOrderPointSystemIntervalbetweenordersFixedandconstantVariesdependingonactualusageOrderquantityVariesbyperiodUsuallyfixed>ConsignmentandVMI(usedtoreplenishbothindependentanddependentdemand)Seeadditionalmaterials?Describethebestorderreviewmethodsfordependentdemand*TypesofdemandIndependentDemandInventoriesDependentDemandInventoriesRetailAssembliesWholesalesfinishedgoodsSubassembliesManufacturingfinishedgoodsFabricatedcomponentsService/replacementpartsPurchasedcomponentsMROsuppliesRawmaterials>MaterialrequirementsplanningThejobofMRPistoplanthereleaseoforderstopurchase,make,andassemblecomponentsofdependentdemanditems.*Inservicemanagement,thereisaprocesssimilarinapproachtoMRP.Itiscalled“ServiceRequirementsPlanning”(SRP).SRPisapplicabletoserviceactivitiesofmanufacturingaswellasserviceindustrycompanies.>Visualreview(Min-Maxsystem)Invisualreview,theorderpointisbasedonlookingatthequantityonhand.Itassumesthatminimumandmaximumlevelshavebeenestablished.Whentheminimumlevelisreached,inventoryisreplenishedtothemaximumlevel.Theminimumcouldbedeterminedbytheorderpointformula.Themaximummightbedeterminedbyshelfspaceoreconomicorderconsiderations.>KanbanThekanbansystemisanimportantfeatureofpullsystemsthatarecharacteristicoflean/JITenvironments.Akanbanisasignaltoanupstreamworkstationtostartproducingparts.AggregateandDisaggregatePlanningAggregateplanning:Conversionofstrategic-levelplansintotheresourcecapacityafirmwillneedtomeetdemand(onetothreeyears)Disaggregateplanning:Decisionsoncapacityandtimingnecessaryforproductlinestomeetdemand(uptoonyear)Resourcescheduling:Weekly,monthly,andquarterly(orrollingthree-month)planstomatchcapacitywith(fluctuationsin)demand

>ManufacturingPlanningandControlBusinessPlanningBusinessPlanningExecutiontion CapacityPlanning ResourceSchedulingAggregatePlanningDisaggregatePlanningExecutionPriorityPlanningProductionActivityControlMaterialsRequirementsPlanning MasterSchedulingExecutiontion CapacityPlanning ResourceSchedulingAggregatePlanningDisaggregatePlanningExecutionPriorityPlanningProductionActivityControlMaterialsRequirementsPlanning MasterSchedulingSalesandOperationsPlanningInput/OutputControlOperationSequencingCapacityRequirementsPlanningRough-CutCapacityPlanning ResourcePlanning>MRPIIforServiceBusinessPlanningBusinessPlanningResourceSchedulingDisaggregatePlanningAggregatePlanningMonitorPerformanceCapacityRequirementsPlanningRough-CutCapacityPlanning ResourceSchedulingDisaggregatePlanningAggregatePlanningMonitorPerformanceCapacityRequirementsPlanningRough-CutCapacityPlanning ResourcePlanningShopFloorandInventoryControlServiceRequirementsPlanningMasterServiceSchedulingAggregateServicePlanning?ExplainthesignificanceofaggregateanddisaggregateplanningImpactofLeanProductionConcepts>Shorteningleadtime>>PutamaximumcapontheamountofWIPtopredictleadtime>>MaintainsupplychainvelocitybymaintaininganevenflowofWIP,andensuringthatWIPisrelatedtocurrentdemand>>ReleasematerialintothelineinamountsconsistentwithappropriatebatchsizestopreventexcessWIP>Implementingtheprinciples–toreduceWIPandthereforeleadtime>>UseaPULLsystem>>Determinethestrategic(finishedgoods)buffer>>Increaseflexibilitytodealwithproductlinecomplexity.Thisrequirestheabilitytochangevolumesandproductmixquicklyusingflexiblemachinery,cross-trainedemployees,andquickchangeovers.>>Implementingsynchronousflow>Listanddescribefourleanproductiontoolsthatincreasesupplychainvelocity>>ValuestreammappingValuestreammappingisatechniqueusedtovisualizetheflowofthevaluestream.Avaluestreammapisagraphicrepresentationoftheprocessstepsfromrawmaterialtofinishedgoods(ordeliveryofservicetothecustomer),showingmultipleprocesslevelsandthelinkagesamongthem.Thecompaniesneedtoanalyzethevalue-addedquestionsandthenonvalue-addedquestions.>>PULLsystem(seeadditionalmaterials)>>Setupreduction(foursteps)SeparateexternalandinternalsetupInternalsetupwhenthemachineisshutdown;ExternalsetupwhenthemachineisrunningConvertinternalsetuptoexternalsetupStreamlineinternalsetupEliminate(wastein)adjustment>>TotalproductionmaintenanceGoalsofTPMarereducingdowntimeandincreasingprocessflow;Schedulepreventionmaintenancebeforeproblemoccurs;Trainandempoweroperatorstoperformroutinemaintenanceontheirequipment;Giveoperatorsasenseofresponsibilityfortheirmachinesandforreducingdowntime.>Explainthelogicofreducingworkinprocess(WIP)toshortenproductionleadtimeAccuracy,HandlingandStorage#Inventoryaccuracy>InventoryRecordaccuracy–threetypesofinformationmustbeaccuratePartdescriptionorpartnumberQuantityLocation>NegativeconsequenceofinaccuraterecordsLostsales;excessproduction;lowproductivity;excessiveexpediting;highinventorylevels;shortage;missedschedules;latedelivery;excessfreightcosts;highlevelsofobsolescence#Typesofinventoryaccuracymethods>Cyclecountvs.Periodicinventory CycleCountingPeriodicCountingEfficientuseofafewexperiencedpeoplecontinuouslythroughouttheyearInefficientuseofmanyinexperiencedpeopleinashort,hecticperiodonceayearResultTimelydetection(rootcauseanalysis)andcorrectionoferrorsNocorrectionofdetectionofcausesoferrorsFewermistakesinitemidentificationManymistakesinitemidentificationMinimallossproductiontimePlantandwarehouseshutdownforinventorySystematicimprovementofrecordaccuracyOne-timeimprovementofrecordaccuracy>>CycleCounting->SourcesofproblemsPoordesignofformsCarelessnessInaccuratesupplierreceiptsInadequatestoragespaceTimingforcutoffoftransactionUntrainedpersonnelPoordocumentcontrolItemsnotidentifiedproperlyLackofdiscipline/accountability->TriggersABCclassification–ItemsAshouldbecountedmoreWhenareorderisindicatedWhenareplenishmentlotisreceivedWhenarecordbalancebecomesnegativeAfterasetnumberoftransactions>ApplyABCclassificationtocyclecounting(seeadditionalmaterialsP2-49to55P.G.)#Storageandlocationofinventoryitems>Bins->Materialsininventoryarestoredinareasusuallyreferredtoas“bins”,andeachbinshouldhavealocationcodetoidentify.Binlocationcodesareusedwithapicklisttoidentifylocationofgoodstoberetrievedfrominventory.>Inventorylocationsystems>>Fixedlocationsystem->Eachbinisdesignatedtoholdaparticularitemnumber.Binsareassignedbasedonphysical