Material Requirements

Planning

Managing Inventories of Items With

Dependent Demand

1
Demand Types
Dependent Demand: Demand for items
that are component parts to be used in the
production of finished goods
Independent Demand: Demand generated
outside the system. Usually, demand for
end-items or items sold individually, e.g.
spare parts

2
Demand & MRP
Dependent demand should be handled
differently than independent demand
Production should be planned taking into
consideration the link between independent
demand and sub-assembly requirements
Material Requirements Planning (MRP) is the
universally accepted tool for managing
inventories of items with dependent demand

3
MRP Functionality
Material Requirements Planning:
Planning Calculate the
quantity of raw materials and sub-assemblies to
produce the necessary end-item quantities (as
expressed with independent demand)
Coordination of Purchase and Production
Orders (or Jobs): Determine and coordinate the
start times of all jobs so that end-items are
completed before due dates

4
Time in MRP
In MRP systems, time is divided in fixed
intervals or it is considered a continuous
variable

Item requirements within a specific time

interval are usually supposed to apply from
the beginning of the interval

5
 MRP Schematic

Master
Production
Schedule

Inventory Status Product Structure, i.e.,

Delivery data Bill of Material

Material
Requirements
Plan

Purchasing Production
Requirements Requirements
6
MRP Inputs
Master Production Schedule (MPS)
Gross Requirements (authorized)
Production Forecasts
Item Master File (BOM)
Lot Sizing Rule
Period order quantity (POQ) or (FOP)
Lot for lot (L4L)
Fixed order quantity (FOQ)
7
MRP Inputs

Planning Lead Time (Constant)

Inventory Status (on-hand Inventory)
Scheduled Receipts
Identifier (Purchase Order of Job number)
Due date and release date
Unit of measure and quantity

8
Item Master Data
Item master data contains:
Item code
Item description
Bill of Materials
Lot-size
Planned lead times

9
Bill of Materials
The relation between an end-item and its sub-assemblies
is described in the Bill of Materials (BOM). For
example for end items A and B, the BOM is:

BOM example for

end items A & B

10
 Bill of Materials
Usually, an end-item is composed of many
components and sometimes it is even linked to
several different BOMs

Production uses BOMs to calculate the load and

material requirements at each production stage in
order to produce an end-item

11
 Bill of Materials
For each BOM component, a Low Level Code (LLC)
is defined; this code indicates the lowest level a
specific component is found
End-items have LLCs equal to zero
A group of items used only for the assembly of end-
items has LLC equal to 1
A group used for the production of items with LLC
equal to 1, has LLC equal to 2 and so forth
Most commercial MRP packages integrate a BOM
processor which automatically attributes the LLC to
all items based on BOM data 12
 Master Production Schedule (MPS)

MPS contains information about:

Gross requirements
Due dates
Purchase and production orders and scheduled
receipts
On-hand inventory

13
MPS Example

14
MPS Vs. Forecasts
Forecasting MPS

Unit Product Families Product and sub-assemblies

Time frame Month - Quarter Day, Week, Month

Horizon Years Weeks to months

Updating Month - Quarter Week

Function General Management Planning/Production

15
 On-hand Inventory

Inventory records contain information about:

Storage location
Current available quantities
Raw material inventory status
Crib" inventory (pre-processed and stored inventory)
Sub-assembly inventory status
Allocation of reserved items to on-going processes

16
 Scheduled Receipts
A scheduled receipt refers to:
For purchased items: the issuance of a purchase
order and notification of the supplier
For produced items: the production routing and the
issuance of a production order
As soon as the purchase/production order is
issued, the scheduled order issuance is deleted
and a scheduled receipt is generated
17
 Lot-sizing
The lot sizing rule determines the balance
between two contradicting goals:
The decrease of on-hand inventory (small lot size)
The decrease of order intervals (large lot size)
Lot size rules are used to balance the costs of
high inventory levels and administration costs
induced by too many orders

18
Planning Lead Time
Planning lead time (PLT) is used to determine
the start time of each operation
Start time is calculated by subtracting the PLT
from the due date
If PLTs were accurate, MRP would result in Just-
in-Time production
Usually, PLTs cannot be known a priori and most
of the times they are purposely elongated

19
 MRP Procedure
For each BOM level (starting from level 0),
MRP performs:
Netting: Calculation of net requirements
Gross requirements are subtracted from on-hand inventory
and scheduled receipts
Gross requirements for items with LLC=0 derive from
MPS while for items with LLC>0 derive from previously
executed MRP calculations
Lot sizing: The material requirements are divided in
lots according to the lot-sizing rule used
20
MRP Procedure

Time phasing: Start times for each job is

calculated by subtracting lead times from due
dates
BOM explosion: Based on start times, the lot
size and BOM, gross requirements are calculated
for the lower LLC
Iteration: All steps are repeated until all BOM
levels are processed
21
 MRP Netting

Netting performs mainly two functions:

Adjust Scheduled Receipts
Calculate net requirements
MRP assumes that all Scheduled Receipts (SR)
will be delivered before any other is placed
MRP assumes that gross requirements will be first
met by current inventory, then by adjusting SRs
and finally by placing new production/purchase
orders
22
 MRP Netting
Gross requirements that cannot be met by current inventory and/or
adjusted SRs are net requirements
If t* is the first time bucket where SRs and current inventory cannot
meet gross requirements, net requirements are calculated as follows:
Equal to zero for t< t*,
Equal to negative inventory (It) for period t*
Equal to gross requirements (Dt) after period t*
0 for t < t *

N t = I t for t = t *
D for t > t *
t
Net requirements are used in the next level of MRP calculations (lot
sizing) 23
 Netting Example
Gross requirement of 15 units in week 1 can be met by current inventory
and so the SR of 10 units can be delayed
In week 2, gross requirement (20) cannot be met by inventory (5) - The
SR of week1 is transferred to week1
The first negative inventory is observed in week 6 - Its value represents
the net requirements for this period
For weeks 6-8, the net requirements are equal to the gross requirements

PART A 1 2 3 4 5 6 7 8
Gross requirements 15 20 50 10 30 30 30 30
Scheduled receipts 10 10 100
Adjusted SRs 20 100
Projected on-hand 20 5 5 55 45 15 -15
Net requirements 15 30 2430
 Lot-sizing
After net requirements, the production lots must be
determined
MRP assumes that requirements are deterministic and
non-constant
Most common lot-sizing policies:
Lot-for-lot, production lot for a period equals net
requirements for this period
Fixed order period (FOP) or period order quantity - This
policy aims at the reduction of the number of orders by
combining net requirements of adjacent periods
Fixed order quantity (FOQ) - This policy aims at the
reduction of the number of orders by ordering a fixed
amount of items, independent of the net requirements
25
 Lot-sizing Example
Suppose the lot-sizing policy for Item A is fixed order
period (for P=2 periods)
Net requirements of period 6 and 7 are combined

PART A 1 2 3 4 5 6 7 8
Gross requirements 15 20 50 10 30 30 30 30
Scheduled receipts 10 10 100
Adjusted SRs 20 100
Projected on-hand 20 5 5 55 45 15 -15
Net requirements 15 30 30
Planned order receipts 45 30
26
 Time phasing
Almost all MRP packages assume that time to perform some
processes is strictly predetermined although some systems allow
planned lead time increase with job size
MRP treats lead times as properties of the items and sometimes of
the jobs/operations but not of the shop floor
For item A, assume that the lead time to assemble it is two periods
PART A 1 2 3 4 5 6 7 8
Gross requirements 15 20 50 10 30 30 30 30
Scheduled receipts 10 10 100
Adjusted SRs 20 100
Projected on-hand 20 5 5 55 45 15 -15
Net requirements 15 30 30
Planned order receipts 45 30
Planned order releases 45 30 27
 BOM explosion
Based on planned order releases for Item A, gross requirements for
items 100 and 200 can be calculated
As a result, for item 100, 90 units for period 4 and 60 units for period
6 are required. For item 200, 45 units for period 4 and 30 for period
6 are required.
These requirements must be added to any other requirements already
generated by other higher level items (such as A)
The next step is to iterate this procedure for items at the lower BOM
levels
PART A 1 2 3 4 5 6 7 8
Planned order releases 45 30
28
 BOM explosion
MPS for item B is presented as well as
current inventory for items B, 100, 300
and 500.

T 1 2 3 4 5 6 7 8
Demand 10 15 10 20 20 15 15 15

PART CURRENT SRS LOT-SIZING

LEAD TIME
NUMBER ON-HAND Due Quantity RULE
B 40 0 FOP, 2 weeks 2 weeks
100 40 0 Lot-for-lot 2 weeks
300 50 2 100 Lot-for-lot 1 week
500 40 0 Lot-for-lot 4 weeks29
 BOM explosion
MRP results for item B

PART B 1 2 3 4 5 6 7 8
Gross requirements 10 15 10 20 20 15 15 15
Scheduled receipts
Adjusted SRs
Projected on-hand 40 30 15 5 -15
Net requirements 15 20 15 15 15
Planned order receipts 35 30 15
Planned order releases 35 30 15
30
 BOM explosion
For each unit of B, one unit of 500 is required. Thus,
scheduled order releases for item B are equivalent to
gross requirements for item 500.
There is no SR
As lead time for item 500 is 4 weeks, there is not
enough time to prepare 25 units before week4.
PART 500 1 2 3 4 5 6 7 8
As a result, a planned order release is generated
Gross requirements by MRP35 30
with the warning that 15
it might be late.
Scheduled receipts
Adjusted SRs
Projected on-hand 40 40 5 5 -25
Net requirements 25 15
Planned order receipts 25 15
31
Planned order releases 25* 15
 BOM explosion
At the lower level (LLC=2) and for item 100, there are two sources of
requirements: 2 units for each A and 1 unit for each 500
There is no SR

PART 100 1 2 3 4 5 6
Required from A 90 60
Required from 500 25 15
Gross requirements 25 15 90 60
Projected on-hand 40 15 0 0 -90
Net requirements 90 60
Planned order receipts 90 60
Planned order releases 90 60
32
 BOM explosion
The only item with LLC=3 is item 300. Its requirements are generated by
items B and 100.
There is a scheduled receipt of 100 units on week2. No adjusting is needed
since this SR may cover the requirements for this period.

PART 300 1 2 3 4 5 6 7 8
Required from B 35 30 15
Required from 100 90 60
Gross requirements 125 90 15
Scheduled receipts 100
Adjusted SRs 100
Projected on-hand 50 50 25 25 -65
Net requirements 65 15
Planned order receipts 65 15
33
Planned order releases 65 15
 BOM explosion Summary
Old Due Date or New Due
Transaction Part Number Quantity Notice
Release Date Date
Change notice A 1 2 10 Defer
Change notice 4 3 100 Expedite
Planned order release A 4 6 45 OK
Planned order release A 6 8 30 OK
Planned order release B 2 4 35 OK
Planned order release B 4 6 30 OK
Planned order release B 6 8 15 OK
Planned order release 100 2 4 90 OK
Planned order release 100 4 6 60 OK
Planned order release 300 3 4 65 OK
Planned order release 300 5 6 15 OK
Planned order release 500 1 4 25 Late
Planned order release 500 2 6 15 34 OK
MRP Outputs

Planned Order Release

Part Number
Number of Units
Due date
Change Notices
Expediting (move earlier)
Deferring (making due date later)
35
MRP Outputs
Exception Reports, i.e., discrepancies
between what is expected and what
will transpire:
Job count differences
Inventory discrepancies
Imminently tardy jobs

36
MRP Problems
Capacity Infeasibility
Assumption = production line with fixed
lead time
Lead time does not depend upon WIP
Result = infinite capacity
Problem when production levels near
capacity
37
MRP Problems
Long Planned Lead Times
Pressure to increase planned lead times
Penalties for late jobs assumed greater
than excess inventories
WIP with accumulate & lead times will
further increase
Irresponsive approach by production
managers
38
MRP Problems
Constant Lead Times
Pessimistic values (inflation) to secure
due-dates
System Nervousness
Small change in MPS leads to large
change in Planned Releases
Strange effects, e.g.: Decrease in demand
may result in a feasible MRP Plan to
become infeasible!!!
39
MRP Problems
Nervousness example
Two parts, A & B
Part A:
Lead Time of two weeks
Fixed Order Period (five weeks)
Part B (1 required for each Part A):
Lead Time of four weeks
Fixed Order Period (five weeks)
40
 MRP Problems
Nervousness example (continued)
Table 1: MRP Calculations for Item A Before Change in Demand Table 3: MRP Calculations for Item A After Change in Demand

Week Week
Item A 1 2 3 4 5 6 7 8 Item A 1 2 3 4 5 6 7 8
Gross Requirements 2 24 3 5 1 3 4 50 Gross Requirements 2 23 3 5 1 3 4 50
Scheduled Receipts Scheduled Receipts
Projected On-hand Inventory 28 26 2 -1 0 0 0 0 0 Projected On-hand Inventory 28 26 3 0 -5
Net Requirements 1 5 1 3 4 50 Net Requirements 5 1 3 4 50
Planned Order Receipts 14 Planned Order Receipts 63
Planned Order Releases 14 50 Planned Order Releases 63

Table 2: MRP Calculations for Item B Before Change in Demand Table 4: MRP Calculations for Item B After Change in Demand

Week Week
Item B 1 2 3 4 5 6 7 8 Item B 1 2 3 4 5 6 7 8
Gross Requirements 14 50 Gross Requirements 63
Scheduled Receipts 14 Scheduled Receipts 14
Projected On-hand Inventory 2 2 2 2 2 2 -48 0 0 Projected On-hand Inventory 2 16 -47
Net Requirements 48 Net Requirements 47
Planned Order Receipts 48 Planned Order Receipts 47
Planned Order Releases 48 Planned Order Releases 47*
*Indicates a late start
41
MRP Problems
Nervousness can be reduced by:
Different lot-sizing rules for different
BOM levels
FOQ for end items
FOQ or L4L for intermediate BOM
levels
FOP for the lowest levels
42
MRP Problems
Nervousness can be reduced by:
Proper use of lot-sizing rules
E.g., in L4L magnitude of change no larger than MPS
Freezing the early part of the MPS (Frozen
Zones)
Time Fences (gradual freezing)
Firm Planned Orders (not allowed to change
early PO)
43
 MRP Problems
Revisit the example nervousness
eliminated!
Table 1: MRP Calculations for Item A Before Change in Demand Table 5: MRP Calculations for Item A After Change for Firm Planned Orders

Week Week
Item A 1 2 3 4 5 6 7 8 Item A 1 2 3 4 5 6 7 8
Gross Requirements 2 24 3 5 1 3 4 50 Gross Requirements 2 23 3 5 1 3 4 50
Scheduled Receipts Scheduled Receipts 14
Projected On-hand Inventory 28 26 2 -1 0 0 0 0 0 Projected On-hand Inventory 28 26 3 14 9 8 5 1 -49
Net Requirements 1 5 1 3 4 50 Net Requirements 49
Planned Order Receipts 14 Planned Order Receipts [14] 49
Planned Order Releases 14 50 Planned Order Releases [14] 49

Table 2: MRP Calculations for Item B Before Change in Demand Table 6: MRP Calculations for Item B After Change for Firm Planned Orders

Week Week
Item B 1 2 3 4 5 6 7 8 Item B 1 2 3 4 5 6 7 8
Gross Requirements 14 50 Gross Requirements 14 49
Scheduled Receipts 14 Scheduled Receipts 14
Projected On-hand Inventory 2 2 2 2 2 2 -48 0 0 Projected On-hand Inventory 2 2 2 2 2 2 -47
Net Requirements 48 Net Requirements 47
Planned Order Receipts 48 Planned Order Receipts 47
Planned Order Releases 48 Planned Order Releases 47
44
 MRP
Infeasible plans, long planned lead times, system
nervousness jeopardize the successful execution of
MRP
In order to confront these problems, additional
functionalities have been added to the main MRP
procedure
These functionalities were implemented in a wider
information system known as Manufacturing Resource
Planning or MRP II
45
MRP II
Manufacturing Resource Planning
Additional Functions:
Demand Management
Forecasting
Rough-cut Capacity Planning
Capacity Requirements Planning
Dispatching
Input and Output Control
46
MRP II Long-term forecast

Aggregate Long Range

Resource
production
Planning Planning
planning

Rough-cut Master Production Firm Orders Short-term forecast

Capacity Planning Scheduling
(RCCP) (MPS)

Demand
Bill-of-materials
Material Management
(BOM)
Requirements
Planning (MRP) Intermediate Range
On-hand inventory Planning
Scheduled
receipts Capacity
Job pool Requirements
Planning (CRP)

Routing data
Job Release

Short-term
Control
Job Dispatching I/O control 47
MRP hierarchy
Long term planning
Long term planning includes:
resource planning
aggregate planning
forecasting
The planning horizon length for long term planning is
usually from six months to five years
The re-planning interval usually varies from once a
month to once every six months
Detail level is low. Usually, long term planning deals
with families of products 48
 MRP hierarchy
Forecasting
The forecasting functionality aims at future demand
prediction
Long term forecasts are very important since they
determine availability, general production planning
and staff requirements
Short-term forecasting transforms a long term
forecast for a family of products to short-term
forecast for individual products
Both functions belong to the demand management
module at the medium term planning level 49
 MRP hierarchy
Resource planning

Resource planning is the procedure during which

capacity requirements are calculated during medium
term planning
Decisions like infrastructure expansion or the purchase
of new facilities belong to resource planning
Future resource availability can be forecasted through
resource planning
This data is then entered to the aggregate planning level

50
 MRP hierarchy
Aggregate planning
Aggregate planning is used to determine:
Production levels
Staffing level (human resources)
Inventory levels
Overtime
Anything concerning medium term production planning
Detail level is usually one month and aggregate planning
deals with families of products
Optimization methods like linear programming are
frequently used to aid aggregate planning
51
Medium term planning

Main functions of production planning

Includes:
demand management
rough-cut capacity planning
master production scheduling
material requirements planning
capacity requirements planning

52
Medium term planning
Demand management

Demand management is about translating

aggregate long term forecasts in detailed forecasts by
also taking into account individual customer orders
Based on this function, a set of real customer orders
and a forecast of anticipated orders are created
As time goes by, anticipated orders must be replaced
by actual customer orders

53
 Medium term planning
Available to promise (ATP)
Demand management is finalized with a technique known as
Available to Promise-ATP
This function allows the planner to know which MPS orders are
already linked to customer orders and which are available for the
fulfillment of new customer needs
If the ATP function is coupled with a feasible MPS (in terms of
resource availability) the realistic due date assignment is simplified
If more than anticipated orders are placed so as lead times become
very large, then additional capacity (e.g. overtime) might be
required
If incoming orders are less than anticipated, sales might want to
offer discounts or some other motivations to stimulate demand
In each case, the forecast and most likely, the aggregate plan must
be revised 54
Medium term planning
Production planning

Master production schedule uses forecasts

along with confirmed production orders from
the demand management module and by using
the total resource availability limits, develops a
plan at the highest level of planning detail
Consequently, master production schedule
contains the quantities of orders for each time
bucket for each component with independent
demand, for each planning date
55
 Medium term planning
Production planning
For most enterprises, order quantities are given in the
end-item level. However, for some cases it is more
practical to group end-items to product families.
Such an example is automotive industries where the
exact type and specification of a vehicle are
determined in the last stage, during its final assembly.
In these cases, a final assembly plan determines
when end-items are produced while MPS is used to
determine the models to be produced.
A basic input for this type of planning is items
super-bill which is a description for the various
options of each model. 56
 Medium term planning
Rough-cut capacity planning
Rough-cut capacity planning (RCCP) is used to
provide a fast estimation of whether critical
production resources are adequate for a given MPS
Generally, RCCP uses a bill of resources for each
MPS item
Bill of resources is a database of the critical resource
requirements for producing one unit of an end-item
Apart from the end-item itself, resource requirements
include all requirements for lower level items in order
to produce one end-product
57
 RCCP Example
For example, let item A be produced by using A1 and A2. Product A
requires 1h in resource 21 while A1 and A2 require 0.5h and 1h
respectively
As a result, the bill of resources of item A would indicate that item A
requires 2.5h at resource 21 in order to be produced
Also let item B that requires 2h at resource 21 in order to be produced
(with no lower level items)

PROCESS CENTRE PART A PART B

21 2.5 2.0
WEEK 1 2 3 4 5 6 7 8
Part A 10 10 10 20 20 20 20 10
Part B 5 25 5 15 10 25 15 10
58
 RCCP Run
WEEK 1 2 3 4 5 6 7 8
Part A (hour) 25 25 25 50 50 50 50 25
Part B (hour) 10 50 10 30 20 50 30 10
Total (hour) 35 75 35 80 70 100 8O 35
Available 65 65 65 65 65 65 65 65
Over(+)/under(-) 30 -10 30 -15 -5 -35 -15 30

After running RCCP, it is obvious that in some periods, resource

availability is inadequate while in others it is more than enough
It depends on the production manager to act accordingly aiming at
the reduction of this fluctuation; the choices are:
Adjust MPS by changing due dates
Adjust resource availability by adding resources or by using overtime or
some sort of outsourcing for various stages of the production process 59
 Medium term planning
RCCP
RCCP does not perform offsetting. As a result, periods
used must be long enough so as end-items can be
produced (from raw materials to end product) in one
single period.
Moreover, RCCP supposes that requirements can be
performed without taking into account actual shop floor
status. Hence, what can be really produced is frequently
overestimated.
RCCP does not perform netting. While this is acceptable
for end items, it creates many problems when there are
many common items among end products and work-in-
progress level is high. 60
 Medium term planning
CRP
Capacity Requirements Planning (CRP) is a more detailed (in comparison to
RCCP) check of whether resources are adequate for a given production
schedule.
Necessary CRP inputs include:
All planned order releases
Current work-in-progress
Routing information
Lead times and capacity for all resources
CRP does not optimize resource allocation but performs a process also known
as infinite forward loading:
It forecasts finish times of each job for all resources by using predetermined
constant lead times.
It then calculates the forecasted load of each resource for all periods
All loads are then compared to actual resource availability
Overloads are not confronted. The system just informs the production manager for
the potential overload.
61
 CRP Example
Suppose a resource with a lead time of three days and
capacity of 400 units per day.
At the beginning of the current day, 400 units were
just released, 500 units had been released for one day
and 300 units had been released for two days.
The planned order releases for the next five days are:

DAY 1 2 3 4 5
Planned order releases 300 350 400 350 300

62
 CRP Example

By using the three day lead time, we can calculate when items
will leave this specific resource
If more than 400 units are calculated to leave the resource, then
the resource will be considered overloaded for this specific
period.
In the resource utilization graph:
During the first day, total load is 300 (300 units already entered into the
resource)
During the second day, the load is 500 indicating an overload. This load
comes from orders already entered into the system
63
 CRP Drawbacks
CRP assumes that processing time is irrelevant to the
resource load even if the latter one is above capacity. As a
result, calculating load after an overloaded period might not
be accurate.
Typically, CRP does not forecast accurately the load in
periods close to the current date.
Another CRP drawback is that it just indicates overloads
without proposing a solution to this problem
A major inconsistency of CRP is that, just like MRP,
supposes infinite resource availability. This assumption
stems from the constant lead time assumption which is not
linked to resource load.
64
 Medium term planning
Material Requirements Planning

Material requirements planning (MRP)

functionality is exactly the same with the typical
MRP.
As already mentioned, MRP creates a job pool which
is consists of planned order releases.
Finally, these requirements are released to the shop
floor through a process called job release.

65
 Short term planning

Plans that were processed during the long and

medium term planning functions, are then executed
by short term control functions.
These function are:
Job release
job dispatching
input/output production control

66
Short term planning
Job Release

The job release function converts the planned order

release to schedule receipts
One of job releases most important functions is
allocation
When some products are composed of common
materials, there might be a conflict in case of
inadequate material supply
Job release might rationally organize such conflicts

67
Short term planning
Job Release
For example, suppose there are two planned order
releases (POR) that both require item A and there is not
enough inventory of item A for both of them
Moreover, the first POR requires item B of which there
is enough inventory while the other POR requires item C
the inventory of which is inadequate
The Job release function will proceed with the release of
the first POR since there is enough inventory for all of
its stages
A shortage notification would be created for the second
POR which would remain in the job pool until sufficient
inventory existed for all production stages
68
Short term planning
As soon as a production or purchase order is released,
the prompt completion must be monitored. Moreover,
the final quantity and quality must comply with initial
specifications.
Purchase orders can be tracked. Production orders are
controlled through two functions:
shop floor control (SFC) with two sub-functions:
job dispatching
input/output control
production activity control (PAC)
69
Short term planning
Job Dispatching

Job Dispatching deals with the rules that

determine the operation sequence in a
resource. These rules should:
Respect due dates
Keep resource utilization high
Reduce production times

70
 Job Dispatching Rules
One of the simplest rules is also known as the shortest
process time (SPT) rule. Based on SPT, operations are
ordered in such a way that orders with shortest processing
are executed first.
SPT use decreases mean production times and increases
resource utilization - Mean due date is also very good
SPT does not perform very well when there are operations
with long processing times
An alternative to SPT is SPTx where the next operation to be
performed is the one with the shortest processing time unless
an operation has been queued for more than x time units.
71
 Job Dispatching Rules

If all jobs have almost the same size and routings are
consistent, a good dispatching rule is the earliest due
date (EDD) rule. According to this rule, the operation
which is closer to its due date is performed first.
EDD performs well under the assumptions mentioned
above but generally it does not perform better than SPT.
The least slack rule: The slack of an operation is
defined as its due date minus the remaining processing
time (including setups). The highest priority operation is
the one with the least slack.
72
 Job Dispatching Rules
The Least slack per remaining operation rule:
This rule is similar to the least slack rule but the
slack is divided with the number of jobs that are not
scheduled yet. The smaller this ratio is, the higher
the priority of the job.
The Critical ratio (Cr) rule: According to this rule,
operations are scheduled based on the ratio (due
date current date)/processing time remaining. If:
Cr >1, the job will most likely finish early.
If Cr <1, the job might finish late
If Cr <0, the job is already late
73
 Short term planning
Input/Output Control
Input/Output production control was introduced at first as a
method to keep lead times under control. I/O control
functions in the following way:
WIP level is checked at all resources
If WIP is above a predefined level, the amount of released
orders is too high and must be reduced
If WIP is below a predefined level, the amount of released
orders is too low and must be increased
If WIP is in between the low and high level thresholds, the
amount of released orders is acceptable
Reductions and increases of released orders must be
74
performed by altering the MPS
 Short term planning
Input/Output Control
I/O control is an efficient way to control job release in
respect to capacity. However, after WIP levels have
increased, the system is most likely out of control.
This is why pull systems often perform better than push
systems like MRP, MRP II and ERP.
While push systems control releases (through MPS) by
measuring WIP levels, pull systems measure WIP and
production activity on a more frequent basis.
As a result, pull systems do not allow WIP levels to
become exceedingly high and indicate potential problems
75
fairly quick