Production Management Group Project Chapter 6 – Resource Planning.pdf

VIETNAM NATIONAL UNIVERSITY – HO CHI MINH CITY

Module code : IS019IU

Lecturer : M.Eng Tran Van Ly

Student Name & ID : Trương Quang Khải – IEIEIU22077 Đặng Hoàng Nam – IEIEIU22078 Võ Thị Thanh Nhã – IELSIU22330 Nguyễn Ngọc Uyên Phương – IEIEIU22030 Nguyễn Trần Anh Thư – IEIEIU22038

Doãn Trần Minh Thư – IEIEIU22101

Nguyễn Thị Hà Trang – IELSIU22256 Nguyễn Ngọc Phương Uyên – IEIEIU22088

Lê Thị Hoàng Yến – IELSIU22260

Ho Chi Minh City, Vietnam

ABSTRACT

The goal of the workshop is to disseminate information related to resource planning Resource planning is a common process that is important to the success of all projects It gives our group great knowledge and opportunities to learn more about how to manage resources in a project Resource planning plays a crucial role in the field of production management, is an effort to ensure the most optimal efficiency, limiting risks such as a lack of human resources and materials, which can slow down success, cause loss of time and costs, or an excess of human resources and materials, which make the cost of spending for resources increases, harm to the project This plan supports calculating appropriate resources before starting each production step and helps address major risks During the research and presentation process, we internalized and applied resource management and planning skills along with many other skills such as time management, teamwork, and presentation for professional work in the future

KEYWORDS: Resource Planning, MRP Process, MRP Matrix, Lot-for-lot

ACKNOWLEDGEMENT

During the implementation of the project, despite facing some difficulties due to interruptions, our group was able to complete the work thanks to the assistance of various people Especially, this lesson can not be completed successfully without guidance from the beloved supervisor

First of all, our group would like to especially thank the advisor M.Eng.Tran van Ly for the support, valuable advice and ideas throughout the project, for his patience, motivation, enthusiasm and extensive knowledge

We would like to express our sincere thanks to the members of the class for spending time to listen, and for all the feedback to make our group more accomplishable The presence of our classmates contributed to making the presentation more meaningful and successful

Finally, the group member's helpful contribution to the project must be recognized The group went through many discussions, with members contributing their documents, knowledge and skills to build the lesson Despite considerable effort, each member remains accountable and on track The knowledge and skills we have gained in inventory management through this Production Management course will surely have a good impact on our future employment and our capacity to contribute successfully to businesses

TABLES OF CONTENT

ABSTRACT IACKNOWLEDGEMENT IITABLES OF CONTENT IIILISTS OF FIGURES VLISTS OF TABLES VI

2.2.1.2.1 Dependent demand items 4

2.2.1.2.2 Discrete demand items 5

2.2.1.2.3 Complex products (requiring) 5

2.2.1.2.4 Erratic Orders (complex and uncertain) 6

2.2.2 Lot Sizing in MRP Systems 18

2.2.2.1 Lot-for-lot ordering policy 18

2.2.2.2 Fixed–size lot ordering policy 18

2.2.2.2.1 Advanced Lot Sizing Rules: L4L 18

2.2.2.2.2 Advanced Lot Sizing Rules: EOQ 19

2.2.2.2.3 Advanced Lot Sizing Rules: POQ 19

CHAPTER 3: RESULT 20

3.1 Presentation and feedback 20

3.1.1 Presentation 20

3.1.2 Feedback on the Teamwork Process 20

3.2 Knowledge and skill 21

LISTS OF FIGURES

Figure 2 1 Demand Characteristics 5

Figure 2 2 Example of the master production schedule 6

Figure 2 3 BOM of clipboard 7

Figure 2 4 An example of item master file MRP 8

Figure 2 5 An example of item master file MRP 8

Figure 2 6 The time-phased Bills of clipboard 9

Figure 2 7 The definitions in MRP Matrix 10

Figure 2 8 Example of Master production schedule 10

Figure 2 9 Example of the MRP Product Structure Record 11

LISTS OF TABLES

Table 2 1 Job assignment 3

Table 2 2 Content distribution 3

Table 2 3 Timeline 4

Table 5 1 Team members’ contributions 25

CHAPTER 1: INTRODUCTION

1.1 Objective

The fundamental purpose of the project is to use Material Requirement Planning which is based on the information and data available to manage the inventory in a way to predict the timing and quantity of materials needed to complete a production process

Conveying knowledge in the most intuitive and complete way about Material Requirement Planning to participants in class through present chapter activities

The focus is on bringing learners as close and practical as possible by giving examples and detailed briefs for questions as well as using Excel software to implement them, also reviewing at the end of the lesson in the game activity – Quizizz

The most important part of the planning is to read the data accurately to give an effective plan for product items and control the inventory

The objective of teamwork in the project is to achieve the improvement in time management and coordination skills between members, along with responsibility, trust and hard work; fostering inspiring individuals to express their ability and exchange knowledge with each other

1.2 Benefits

Implementing an MRP system can be extremely beneficial to your production facility Many benefits come from using an MRP software within a manufacturing operation However, the software is not enough by itself A common practice among manufacturers is to use an Advanced Planning and Scheduling Receipts system that has MRP functionality to enhance their production

In our lecture, MRP can be used to generate jobs and/or purchase orders when inventory levels fall below a certain point When demand for an item is entered in Planet Together and MRP is generated, it will first look at the on-hand quantity If there is not enough on-hand inventory to supply the demand, MRP will generate a job (to produce more of the item) or create a purchase order to buy more of that item

1.3 Scope and limitations

1.3.1 Scope

In this report, we have analyzed that our object is resource planning and MRP systems The scale of our topic is a workshop The goal of the workshop is to disseminate information related to resource planning Besides, we also try to make clear barriers in MRP Additionally, this paper was created using academic research, and real examples were acquired from inside academic sources

1.3.2 Limitations

The analysis and conclusions drawn from this research are therefore likely to be correct but less critical of the MRP model in reality There is a lack of clarity and precision to build an effective analysis that even though they may not be as precise as they could be

Uyên

Phương Anh Thư Minh Thư Trang Hà

Phương Uyên

Hoàng Yến

Table 2 2 Content distribution

2.2.1.2 When to use MRP

MRP principles may be applied in a range of manufacturing settings They can also be used for service providers, such as employment agencies Production environments might include things like sophisticated products, products that are only assembled upon request, or demand items that are reliant and discrete

2.2.1.2.1 Dependent demand items

Dependent Demand Item refers to the item whose demand is required by the one-by-one calculation based on the independent demand items such as

products and service parts and includes assemblies, subassemblies, processed parts, purchased parts, and raw materials

Example: Suppose the demand for an electric golf cart, consisting of four tires and a motor, is 100 units per week Then, the demand for motors would also be 100 per week, and the demand for tires would be 400 per week The demand for tires is dependent on the demand for electric golf carts

*The electric golf carts are an example of independent demand The motors and tires exhibit dependent demand

2.2.1.2.2 Discrete demand items

Figure 2 1 Demand Characteristics

2.2.1.2.3 Complex products (requiring)

A "complex product" is described as an investment product with a complicated structure that makes it unlikely for a retail investor to understand its terms, characteristics, and dangers It is required of intermediaries to use reasonable expertise, caution, and investigation when assessing whether a product qualifies as complicated We would also want to clarify that the expanded standards do not always need a retail investor as the client in issue; rather, they

are intended to be taken into consideration from the standpoint of a retail, "person on the street."

There are numerous ways to define product complexity, but the most straightforward definition is the number of distinct components or characteristics that a product is made up of The way a product works, how it is made and built, how it is marketed and sold—all these factors should be taken into account when defining product complexity for a particular organization A product's complexity is further influenced by its physical dimensions, degree of integration with current systems, need for technical assistance, and degree of customization

2.2.1.2.4 Erratic Orders (complex and uncertain) 2.2.1.2.5 Assemble-to-Order (useful)

A manufacturer that uses the "assemble-to-order" manufacturing method keeps an inventory of subassembly parts and assembles them into the finished product when a client places an order The plan depends on the business's capacity to swiftly assemble and distribute goods

2.2.1.3 Inputs and Outputs in MRP Process 2.2.1.3.1 Inputs

Master schedules, bill of materials, and inventory status records Master production schedule

Example:

Figure 2 2 Example of the 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 and demand forecasts

• Quantities represent what needs to be produced, not what can be produced • Quantities represent end items that may or may not be finished products

Product structure file

A bill of material for a product lists the items that go into the product, includes a brief description of each item, and specifies when and in what quantity each item is needed in the assembly process

Figure 2 3 BOM of clipboard

Item master file

• Provides a detailed description of the item • Specifies the inventory policy

• Updates the physical inventory count

• Summarizes the item’s year-to-date or month-to-date usage

• Provides internal codes to link this file with other related information in the MRP database

Example

Figure 2 4 An example of item master file MRP

Figure 2 5 An example of item master file MRP

Figure 2 9 Example of the MRP Product Structure Record

Since the clipboard and lapdesk are finished products, the gross requirements row is simply copied from the master production schedule for those items

We begin with the clipboard In period 1, we have 25 units on hand and 175 scheduled to be received

Figure 2 10 MRP – 1

That gives us (25 + 175) = 200 units available We use 85 of them to satisfy demand, leaving (200 – 85) = 115 units in inventory at the end of period 1

Figure 2 11 MRP – 2

In period 2, we can meet demand from stock, leaving (115 – 95) = 20 units in inventory at the end of the period

Figure 2 12 MRP – 3

In period 3, the 20 units on hand is not enough to cover our demand of 120 units We need to make 100 more Thus, our net requirements are 100 units Since our lot sizing rule is lot-for-lot, we order exactly what we need, 100 units Recall that our lead time is one week If we wish to receive our order for 100 units in period 3, we must place the order one week in advance, in period 2

Figure 2 13 MRP – 4

To meet demand in periods 4 and 5, we order 100 units in weeks 3 and 4, one week in advance of when we need them

Figure 2 14 MRP – 5

Next, we’ll go on to the MRP matrix for lapdesks To meet our demand for 60 units in period 2, we’ll use the 20 units in stock and make 40 more

Figure 2 15 MRP – 6

Before we release our work order for production, we check our lot sizing rule It says we should make 50 lapdesks at a time If the 50 desks are to be ready by week 2, we need to start production in week 1 When the desks are completed, we’ll use 40 of them to meet demand and place 10 back in inventory Those 10 remain in inventory until period 4 when we use them to partially satisfy the demand for 60 desks We’ll need to make 50 more, and since 50 is our lot size quantity, that’s what we make If the desks are to be completed by week 4, we need to start production in week 3

Pressboard is a purchased component cut to size and used in both the clipboard and the lapdesk As shown, its gross requirements are calculated by multiplying the planned order releases of each parent times the quantity per

assembly contained in the bill of material This process is called explosion(*)

Explosion: the process of determining requirements for lower-level items

Figure 2 16 MRP – 7

Since one pressboard is needed for every clipboard and two for every lapdesk, period 1 gross requirements are (50 x 2) = 100; period 2, (100 x 1) = 100; period 3, (100 x 1) + (50 x 2) = 200; and period 4, (100 x 1) = 100

Figure 2 17 MRP – 8

With 150 units on hand, we can satisfy the demand in period 1 with 50 units left over

Figure 2 18 MRP – 9

For period 2, we use the 50 in inventory and need 50 more Because our lot sizing rule says we must order at least 100 units and it takes 1 week to process an order, we place an order for 100 pressboards in week 1 When the 100 boards come in, we use 50 of them and put 50 back in stock To meet our demand in period 3, we use the 50 boards in stock and order 150 more The order is placed in week 2 to arrive in week 3 To meet period 4’s demand, we order 100 boards in week 3, one week in advance of delivery

Figure 2 19 MRP – 10

We have now completed the MRP calculations To summarize the results, we construct a planned order report from the planned order release row of each matrix, as follows

Figure 2 20 MRP – 11

2.2.2 Lot Sizing in MRP Systems

2.2.2.1 Lot-for-lot ordering policy

A method that orders or produces exactly the amount of each item that is needed to meet the demand for each period This means that there is no excess inventory or shortage of materials, and the inventory level is minimized

2.2.2.2 Fixed–size lot ordering policy • Minimum order quantities

A manufacturer that uses the "assemble-to-order" manufacturing method keeps inventory of subassembly parts and assembles them into the finished product when a client places an order The plan depends on the business's capacity to assemble and distribute goods swiftly

• Maximum ordering quantities

is the smallest quantity of merchandise a supplier will sell in a single order The minimum order quantity (MOQ), which is usually established by manufacturers or suppliers, is meant to guarantee that the provider can turn a profit on the sale and cover the expenses incurred in creating or delivering the goods

• Multiple order quantities

Certain items such as flatware, glassware, and dinnerware will only be available for rental in multiples instead of per piece

• Economic order quantity

Economic order quantity (EOQ) is a calculation companies perform that represents their ideal order size, allowing them to meet demand without overspending Inventory managers calculate EOQ to minimize holding costs and excess inventory

• Periodic order quantity

The period order quantity is a standard number of units to be ordered over a fixed period This approach is used when the number of raw materials or supplies usage is consistent and predictable

2.2.2.2.1 Advanced Lot Sizing Rules: L4L

Formula: Total cost = (number of orders*ordering cost) + (total projected

on hand*carrying cost