Strategy and MPC System Design

Question 1

Two key issues in the design of a firm’s MPC system are:

Answer 1

(i) linking MPC system design to the firm’s competitive strategy and (ii) integrating MRP and JIT systems.

Question 2

MPC System Design in MTS Environment

Answer 2

MPS is stated in end items, which are produced to forecast demands

Customer orders are filled directly from stock

Procedures for monitoring accuracy of demand forecasts are required

Main source of uncertainty is forecast errors

Question 3

MPC System Design in ATO Environment

Answer 3

Planning BOM is used to represent “average” product

Component production is controlled by the MPS with planning BOM, while final assembly is controlled by the FAS (Final Assembly Schedule)

Main source of uncertainty is product mix

Question 4

MPC System Design in MTO Environment

Answer 4

MPC system needs to encompass preproduction engineering design activities as well as manufacturing and supplier operations

Customer orders are the MPS unit

The backlog of customer orders is used for:Estimating material and capacity requirementsCustomer order promising

Major source of uncertainty is the time requirements to complete each customer order

Question 5

Integrating MRP and JIT

Answer 5

MRP is a push system, where we plan production and produce according to the planEffective system in a volatile environment represented by frequent design changes and/or volatile demandsRequires timely and accurate data collection as well as computational requirements

JIT uses a pull system, where production is triggered by actual consumptionsOperate effectively in a stable environment

MRP and JIT can be combined in various ways

Question 6

Hybrid System #1: Kanban with MRP Planning

Answer 6

Can be used to deal with design changes and some degree of demand volatility while taking advantage of a pull system

Perform MRP for a short planning horizon (e.g., 2~3 weeks)

Determine total component demand during the planning horizon and calculate the number of kanban cards needed

Dispatch two outputs to the shop floor
Kanban cards
Dispatch list (i.e., normal output of an MRP system)

Question 7

Hybrid System #1: Kanban with MRP Planning Part 2

Answer 7

A work center is authorized to produce a part only if it has a kanban card and the part is on the dispatch list

The work center does not produce the part if

The part is on the dispatch list but a kanban card is not received •It means the part will be needed but has not yet been consumed

It receives a kanban card but the part is not on the dispatch list•It means the part has been consumed but should be phased out due to a design change

Question 8

Hybrid System #2: MRP for Capacity and Long Leadtime Items

Answer 8

Can be used when the design of the product is relatively stable but the demand patterns are still too volatile to allow for using a pure pull system

Control production by using a pull system (such as kanban)

Use MRP for
Planning for long leadtime items
Calculating capacity requirements and determining capacity levels/types accordingly
Calculating the number of kanban cards needed