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MBA 2nd Sem Lacture Note - 05

This document provides an overview of topics that will be covered in an Operations Research lecture for an MBA program, including layout design, aggregate planning, inventory management, quality management, and world class manufacturing. Specific topics discussed include material requirements planning (MRP), manufacturing resource planning (MRP II), reasons for and strategies of aggregate planning, and the inputs and outputs of aggregate planning.

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0% found this document useful (0 votes)
61 views4 pages

MBA 2nd Sem Lacture Note - 05

This document provides an overview of topics that will be covered in an Operations Research lecture for an MBA program, including layout design, aggregate planning, inventory management, quality management, and world class manufacturing. Specific topics discussed include material requirements planning (MRP), manufacturing resource planning (MRP II), reasons for and strategies of aggregate planning, and the inputs and outputs of aggregate planning.

Uploaded by

GOURAB ROY
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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National Institute of Technology Agartala

Department of Mathematics

Lecture Note number 05


On
Operations Research for MBA 2nd Semester

The following topics I will teach you and rest of the syllabus will be covered by Dr. Abhijit Baidya Sir.

1. Layout designing, product, process & cellular layout, assembly line balancing, service layouts.
2. Aggregate plans and master production schedules, MRP, MRP II, lot-sizing, MPS, operations scheduling,
priority rules & techniques, work centre & personnel scheduling.
3. Inventory management, types, models, systems, inventory control.
4. Fundamentals of quality management, TQM philosophy, introduction to six-sigma
5. Design and use SQC charts [process capability, x-bar, R, p and c-charts, acceptance sampling.
6. Facets of world class manufacturing, lean manufacturing aspects

1. Explain the term MRP – 1. What are the scope and objective of MRP – 1?

Material Requirements Planning (MRP) is a software based production planning and inventory control system
used to manage manufacturing processes. Although it is not common nowadays, it is possible to conduct MRP by
hand as well.

MRP is a tool to deal with these problems. It provides answers for several questions:
 What items are required?
 How many are required?
 When are they required?

MRP can be applied both to items that are purchased from outside suppliers and to sub-assemblies, produced
internally, that are components of more complex items. The data that must be considered include:
 The end item (or items) being created. This is sometimes called Independent Demand.
 How much is required at a time.
 When the quantities are required to meet demand.
 Shelf life of stored materials.
 Inventory status records.
 Bills of materials i.e. details of the materials, components and subassemblies required to
make each product.
 Planning Data i.e. this includes all the restraints and directions to produce the end items.
This includes such items as: Routings, Labor and Machine Standards, Quality and Testing
Standards, Pull/Work Cell and Push commands, Lot sizing techniques (i.e. Fixed Lot
Size, Lot-For-Lot, Economic Order Quantity), Scrap Percentages, and other inputs.

An MRP system is intended to simultaneously meet three objectives:


 Ensure materials and products are available for production and delivery to customers.
 Maintain the lowest possible level of inventory.
 Plan manufacturing activities, delivery schedules and purchasing activities

The scope of MRP in manufacturing:


Manufacturing organizations, whatever their products, face the same daily practical problem - that customers
want products to be available in a shorter time than it takes to make them. This means that some level of planning
is required.
Companies need to control the types and quantities of materials they purchase, plan which products are to be
produced and in what quantities and ensure that they are able to meet current and future customer demand, all at the
lowest possible cost. Making a bad decision in any of these areas will make the company lose money. A few
examples are given below:
 If a company purchases insufficient quantities of an item used in manufacturing, or the wrong
item, they may be unable to meet contracts to supply products by the agreed date.
 If a company purchases excessive quantities of an item, money is being wasted - the excess
quantity ties up cash while it remains as stock and may never even be used at all. This is a
particularly severe problem for food manufacturers and companies with very short product
life cycles. However, some purchased items will have a minimum quantity that must be met,
therefore, purchasing excess is necessary.
 Beginning production of an order at the wrong time can cause customer deadlines to be
missed.

2. Explain the term MRP – II. What is the purpose, key functions and features of MRP – II?

Manufacturing Resource Planning (MRP II) is defined by APICS (American Production and Inventory
Control Society, Estd. 1957) as a method for the effective planning of all resources of a manufacturing company.
Ideally, it addresses operational planning in units, financial planning in dollars, and has a simulation capability to
answer "what-if" questions and extension of closed-loop MRP.

This is not exclusively a software function, but a marriage of people skills, dedication to data base accuracy,
and computer resources. It is a total company management concept for using human resources more productively.
Following are the lists of basic modules which are part of an MRP – II:
 A computer system
 Bill of Materials (BOM) (Technical Data)
 Capacity planning or Capacity Requirements Planning (CRP)
 Cost Reporting / Management (Cost Control)
 Distribution Resource Planning (DRP)
 Inventories & Orders (Inventory Control)
 Item Master Data (Technical Data)
 Manufacturing control system
 Master Production Scheduling (MPS)
 Material Requirements Planning (MRP)
 Production Resources Data (Manufacturing Technical Data)
 Purchasing Management
 Sales & Purchase System
 Shop Floor Control (SFC)
 Standard Costing (Cost Control)

Purpose of MRP – II
MRP II integrates many areas of the manufacturing enterprise into a single entity for planning and control
purposes, from board level to operative and from five-year plan to individual shop-floor operation. It builds on
closed-loop Material Requirements Planning (MRP) by adopting the feedback principle but extending it to
additional areas of the enterprise, primarily manufacturing-related.

Key functions and Features


MRP II is not a proprietary software system and can thus take many forms. It is almost impossible to visualise
an MRP II system that does not use a computer, but an MRP II system can be based on either purchased / licensed
or in-house software.
3. Why aggregate planning is necessary? Write the aggregate planning Strategies?

Following are the reasons for which aggregate planning is required:


 Fully load facilities and minimize overloading and under-loading.
 To make sure for enough capacity available to satisfy expected demand.
 Plan for the orderly and systematic change of production capacity to meet the peaks and
valleys of expected customer demand.
 To get the most output for the amount of resources available.

Following are the aggregate planning Strategies


 Pure strategies for the informal approach:
 Matching Demand
 Capacity or production in each time period is varied to exactly match the forecasted
aggregate demand in that time period.
 Capacity is varied by changing the workforce level.
 Finished-goods inventories are minimal.
 Labour and materials costs tend to be high due to the frequent changes.
 Production rate is decided by the forecasted aggregate demand.
 Convert the forecasted aggregate demand into the required workforce level using
production time information.
 The primary costs o this strategy are the costs of changing workforce levels from
period to period.
 Level Capacity
 Buffering with inventory
 Buffering with backlog
 Buffering with overtime or subcontracting.

4. Write down the approaches for aggregate planning? What are the inputs and outputs of aggregate planning?

Following are the approaches for aggregate planning:


 Top down approach
 Bottom up approach
 Informal or Trial-and-error approach
 Mathematically Optimal approach
 Linear Programming
 Linear Decision Rules.
 Computer Search.
 Heuristics approach

Following are the inputs for aggregate planning:


 A forecast of aggregate demand covering the selected planning horizon.
 The alternative means available to adjust short to medium-term capacity, to what extent each
alternative could impact capacity and the related costs.
 The current status o the system in terms of workforce level, inventory level and production rate.

Following are the outputs for aggregate planning:


 A production plan: aggregate decision for each period in the planning horizon about
 Workforce level
 Inventory level
 Production rate
 Projected costs if the production plan was implemented
5. Write the comparison of aggregate planning methods?(Advantages and Limitations)

Method Advantages Limitation


 Simple, easy to use and understand o Many Solutions; solutions need not
Graphical
be optimal
 Provides optimal solution o Mathematical functions must be
 Popular in many industries linear and deterministic, not
Linear Programming  Sensitivity & Dual analysis provide necessarily a realistic assumptions.
useful information.
 Constraints readily added.
 Provides optimal solution o Incorporates some non-standard
 Handle non-deterministic demand costs.
o Skilled personal required.
o Quadratic models are not always
Linear Decision Rule realistic.
o Values of variables are
unconstrained.
o Feasible solution is optimal if it exist
– not guaranteed
 Simple, easy to use and understand o solutions need not be optimal
 Attempts to duplicate manager’s o Assumes past decisions are good
Management Coefficient o Built on individual’s invalidate
decision-making process.
Model model.
 Simplest, least disruptive, easiest to
implement.
 Places no restrictions on o No optimal solution guaranteed
Mathematical structure or cost o Often a long, costly process.
Simulation
functions.
 Can test many relationships

6. What are the guidelines for master scheduling? Write down the symptoms of a poor designed MPS?

Following guidelines must be followed for master scheduling:


 Work from an aggregate production plan.
 Schedule common modules when possible.
 Load facilities realistically.
 Release orders on timely basis.
 Monitor inventory levels closely.
 Reschedule as required.

Following are the symptoms of a poor designed MPS:


 Overloaded facilities
 Under loaded facilities
 Excessive inventory levels on some end items and frequent stock outs on others.
 Unrealistic schedules that production personal do not follow.
 Excessive expediting or follow up.

Assignment problems:

1. What are the drawbacks of MRP – 1?


2. Write Short note on MRP – III.
3. Write short note on Aggregate plans.
4. What do you mean by Operations Scheduling?

************

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