Developing a corporate planning model for a small company

This article describes the development and implementation of a corporate simulation model for a medium-sized New Zealand firm producing a range of medium density fiberboard products. Problems associated with the design and implementation of a planning model in a relatively young, capital-intensive company are highlighted in terms of changing objectives and model requirements. An assessment of costs and benefits is included.     

A modified hierarchical production planning system integrated with MRP: A case study

In this paper, a hierarchical planning system is proposed which integrates aggregate capacity planning with MRP. This system is to be implemented in a metal box manufacturing company which multi-user MRP system covering manufacturing activities as well as procurement sales order processing and accounting systems. The hierarchical planning system includes a medium-range aggregate planning model adapted to the firm's requirements and strategies. The model consists of a mathematical formulation which covers labour capacity has already installed a constraints and includes certain cost estimations in the objective function. The planning horizon of the medium range planning is taken as twelve months in order to cover sales seasonality. The aggregate production quantities resulting from the optimized medium-range planning model are disaggregated according to procedures already found in the literature. Furthermore, the theoretical infeasibilities pertaining to the disaggregation procedures are also resolved in an heuristic manner. Using the latter modified disaggregation procedure, a feasible disaggregated plan is generated for the whole planning horizon. The proposed plan is compared with the current production policy of the firm and it is observed that the proposed plan leads to backorder reduction.     

Production planning in a MRP/JIT repetitive manufacturing environment

Some literature suggests that the best approach to production planning is a complete implementation of just-in-time. It has also been suggested that JIT replaces material requirements planning, and computerized procedures are an unnecessary complex burden on management especially in a highly repetitive environment. This article examines the JIT programme at the John Deere Engine factory. In 1985 the factory began a JIT programme with the belief that it would replace their MRP system. The results of the JIT programme are examined and management's conclusion that the best approach is a blend of JIT and MRP is explored.     

A hierarchical approach to multi-project planning under uncertainty

We survey several viewpoints on the management of the planning complexity of multi-project organisations under uncertainty. Based on these viewpoints we propose a positioning framework to distinguish between different types of project-driven organisations. This framework is meant to aid project management in the choice between the various existing planning approaches. We also discuss the current state of the art of hierarchical planning approaches both for traditional manufacturing and for project environments. Next, we introduce a generic hierarchical project planning-and-control framework that serves to position planning methods for multi-project planning under uncertainty. We discuss various techniques for dealing with the uncertainty inherent to the different hierarchical stages in a multi-project organisation. In the last part of this paper we discuss two cases from practice and relate these to the positioning framework that is put forward in the paper.     

Hierarchical model to design manufacturing systems applied to a metal-mechanic company

This paper describes the application of a model to design and manage the manufacturing process through an integrated system, using a Hierarchical methodology-by means of different aggregation and disaggregation stages with an appropriate time horizon. The hierarchical model obtained allows interfacing between the master schedule and the schedule of the orders. At each level of the hierarchical model some decisions have to be made in order to design the manufacturing system, but having a model that also takes into consideration the management of the system. To do this it is necessary to use aggregated information concerned with the level at which decisions are made. It is obtained from the database, which contains the information at the highest level of aggregation. This model has been applied to a metal mechanic company, that makes final products such as car washers, etc. The benefits of this approach for the company are addressed in this paper.     

How to design a financial planning model.

Corporate planning models frequently consist of integrated pro forma income statements, statements of financial position, and cashflow statements. When implemented by utilizing computer-based planning systems, these models allow managers to explore potential decisions in ‘what if?’ planning analyses.The logic of an integrated financial statement planning model can be arranged following either a ‘funds needed to balance approach’ or a ‘direct approach’. With a funds needed to balance approach total assets are set equal to total liabilities plus equities to satisfy this fundamental accounting identity. Logic in such models is often difficult to validate. In the direct approach, total assets are calculated independently of total liabilities plus equities providing an extremely strong test for model validation prior to using the model to assess ‘what if’ alternatives.In this paper, the author discusses the logic of integrated financial planning models and their implementation with computer-based planning systems. The funds need to balance approach and the direct approach are described and contrasted to assist corporate planners in evaluating and selecting a method for constructing the logic of corporate planning models.     

Transforming an MRP plan into a short-term schedule

A new approach for transforming MRP orders, planned periodically, e.g. on a weekly base, into a detailed sequence of jobs is presented. In this model for a single machine environment, the jobs are partitioned into families and a family specific set-up time is required at the start of each period and of each batch, where a batch is a maximal set of jobs in the same family, that are processed consecutively. An integer program is formulated for both the problem of minimizing the number of overloaded periods and the problem of minimizing the total overtime. These programs generate benchmark results for the heuristic approach. A heuristic model is developed that constructs a schedule in which overloaded periods are relieved and set-up time is saved. In this approach, the job sequence is constructed by repeatedly solving a knapsack problem. The weights used in this knapsack problem relate to the preferred priorities of the jobs not yet scheduled and determine the quality of the final sequence. The different features of the heuristic model are compared using a large set of test problems. The results show that the quality of the final sequence depends on an appropriate choice for the weights.     

Introducing corporate planning in a medium-size company—A case history

Within an organization pursuing a participative style of management, the organizational effort required to implement a corporate planning process—as against a corporate plan—is not generally recognized. In this article the author describes the mechanisms adopted in one company to establish and control the planning process. These include the use of network analysis, the creation of questionnaires to obtain information and necessary data, and the construction of a set of computer models. A full assessment of the success and failures during the first year of the process is given, together with an account of the turning away from planning that has taken place in subsequent years.     

A case study of production expansion planning in a soft-drink manufacturing company

This paper discusses the problem of production expansion planning in a soft-drink manufacturing company. We first formulate the problem as a large-scale transportation problem by making some realistic simplifications. We then program the transportation algorithm on a spreadsheet software to help solve the problem on a microcomputer. Through this case study we demonstrate how some standard OR technique can be combined with low-cost microcomputers to become an effective management tool to handle complex management decision problems.     

Reference model for implementing an MRP system in a highly diverse component and seasonal lean production environment

Companies are currently choosing to integrate logics and systems to achieve better solutions. These combinations also include companies striving to join the logic of material requirement planning (MRP) system with the systems of lean production. The purpose of this article was to design an MRP as part of the implementation of an enterprise resource planning (ERP) in a company that produces agricultural implements, which has used the lean production system since 1998. This proposal is based on the innovation theory, theory networks, lean production systems, ERP systems and the hybrid production systems, which use both components and MRP systems, as concepts of lean production systems. The analytical approach of innovation networks enables verification of the links and relationships among the companies and departments of the same corporation. The analysis begins with the MRP implementation project carried out in a Brazilian metallurgical company and follows through the operationalisation of the MRP project, until its production stabilisation. The main point is that the MRP system should help the company's operations with regard to its effective agility to respond in time to demand fluctuations, facilitating the creation process and controlling the branch offices in other countries that use components produced in the matrix, hence ensuring more accurate estimates of stockpiles. Consequently, it presents the enterprise knowledge development organisational modelling methodology in order to represent further models (goals, actors and resources, business rules, business process and concepts) that should be included in this MRP implementation process for the new configuration of the production system.     

Computational complexity of algorithms for MRP and JIT production planning problems in enterprise resource planning systems

An enterprise resource planning system (ERP) is the information backbone of many manufacturing companies. At the core of ERP is a conventional material requirements planning (MRP) production planning system or a variation of MRP when just-in-time (JIT) principles are used in manufacturing. MRP and JIT both organize production planning into a hierarchy of long-, medium- and short-range problems. In all there are eight different problems. Some are common to MRP and JIT, others are specialized for a particular system. This paper analyses the computational requirements of these problems. This is important for ERP because it plans for large numbers of products (e.g. 50 000 products at 3M Company and 44 000 products at States Industries in Oregon) at large numbers of locations (e.g. 82 locations in 21 countries for Visteon Automotive Systems of Michigan and 19 locations at Boeing). We show that adequate algorithms exist for some problems, but better algorithms are needed for other problems if ERP is to provide useful production plans.     

MRP in a job shop environment using a resource constrained project scheduling model

One of the most difficult tasks in a job shop manufacturing environment is to balance schedule and capacity in an ongoing basis. MRP systems are commonly used for scheduling, although their inability to deal with capacity constraints adequately is a severe drawback. In this study, we show that material requirements planning can be done more effectively in a job shop environment using a resource constrained project scheduling model. The proposed model augments MRP models by incorporating capacity constraints and using variable lead time lengths. The efficacy of this approach is tested on MRP systems by comparing the inventory carrying costs and resource allocation of the solutions obtained by the proposed model to those obtained by using a traditional MRP model. In general, it is concluded that the proposed model provides improved schedules with considerable reductions in inventory carrying costs.     

Location of Inventories in an MRP Environment

Previous research on MRP systems has rarely considered at what level in a modular sub-assembly product structure to hold inventories. Based on a simulation study of an MRP environment, we show that the correct decision concerning where to hold inventory depends on the variance in end-item demand, the amount of inventory investment, and concomitantly, the desired level of customer service. In particular, for small investment in inventories and moderate end-item demand variance, it is equally effective to hold inventories at the subassembly level or the end-item level. But when end-item demand variance is high, subassembly level inventories are better. As inventory investment grows, however, it is best to use a diversified approach of holding both subassembly and end-item inventories, irrespective of end-item demand variance. The robustness of these conclusions is validated by simulating a hypothetical firm that also uses safety time to hedge against uncertainties.     

Experience with a multi-year fleet planning model

The fleet planning problem requires determination of the changing airline fleet mix based on existing traffic levels and projected growth, on the existing fleet, various aircraft types available in the future, and other operational and financial considerations. Several applicable mathematical formulations have been reported. One of these has been programmed for the computer and used by the authors for several years. This paper discusses the application of that model to real airline planning situations. Such practical experience has effected changes in the program and the manner it is used in fleet planning studies.     

Production planning and inventory control in a company manufacturing PC parts: A case study

In this paper, we present a case study on the production planning and inventory system in a company manufacturing personal computer (PC) parts. In the case study, the targets are specified for developing a system for production planning and inventory control. The current state of the company is analysed for clarifying the points necessary to achieve the targets. Also, a system based on the analysis is proposed and its effects are estimated.     

Evaluation of safety stock methods in multilevel material requirements planning (MRP) systems

This paper evaluates alternative methods of establishing the safety stock level taking into consideration of historical measures of forecasting accuracy and the needs for master production scheduling and material requirement planning under a rolling time horizon. A computer model is used to simulate the forecasting, master production scheduling and material planning activities in a company that produces to stock and the production activities are managed by multilevel MRP systems. The simulation output is analysed to evaluate the impact of safety stock methods on MRP system performance. The result of the study shows that using safety stock can help to reduce total cost, schedule instability and improve service level in the MRP systems. Guidelines are developed to help managers select methods to determine safety stock in MRP system operations.     

Application of hybrid framework to facilitate lean six sigma implementation: a manufacturing company case experience

This study aims to propose a hybrid framework for lean six sigma (LSS) based on the prioritisation of barriers and solution approaches, to facilitate hassles free applications for handling the challenges of wastes reduction and quality improvement. The study identifies 27 LSS barriers and 22 solution approaches through literature review and utilises feedback from industry experts. For framework, study uses fuzzy AHP-PROMETHEE to prioritise LSS barriers and solution approaches. Incorporating fuzzy sets in analytical hierarchy process (AHP) ensures the optimality of barrier weights. Whereas, preference ranking organisation method for enrichment of evaluations (PROMETHEE) helps in pairwise comparisons of solution approaches with respect to each LSS barrier, facilitating fair judgements. This research guides regarding the development of framework and checks its suitability and robustness through case application of an Indian manufacturing organisation. Authors expect that researchers and practitioners will find study useful for LSS and multi criteria decision making(MCDM) domains.     

A generalized hierarchical model of resource allocation

This study presents a three-level, linear version of the Generalized Hierarchical Model (GHM) and demonstrates how the model can be used in allocating resources for a hypothetical university. The GHM uses a composition approach to organizational modeling. By applying the model to a rather large university planning problem, it is demonstrated that the composition approach can serve as a planning tool that may be useful in allocating resources within hierarchical organizations.     

A review of hierarchical production planning and its applicability for modern manufacturing

The hierarchical production planning (HPP) paradigm has become an accepted planning and control strategy for many medium-to-large manufacturing situations. While the paradigm appears intuitively obvious and appropriate for many factories, there are a number of modern manufacturing situations where the application of the HPP approach may not be appropriate. By understanding the fundamental principles and concepts inherent in the HPP approach, it is possible to identify situations suitable for HPP with little or no adaptation, and situations where HPP must be extensively modified before use. A poor understanding of HPP