Manufacturing environment

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Manufacturing Resource Planning Models under Uncertainty and Commonality for Multi-products Multi-period Multistage Production Environment

Chapter 3: Literature Review

In this chapter, the following areas of research are investigated to lay the foundation for the intended mathematical models: manufacturing resources planning – background, benefits and limitations; manufacturing resources planning models under different uncertainties; and commonality in manufacturing resources planning models.

3.1 Evolution of manufacturing environment

The field of production planning and control has undergone tremendous change in the last 50 years. Prior to the 1960s, inventory was controlled by a manual system, utilizing various techniques: stock replenishment, reorder points, EOQ (economic order quantity) (McGarrie, 1998), and ABC classifications, to name a few (Ptak, 1991). Gilbert and Schonberger (1983) provide a history of production control, while Lee (1993) comments that by the mid-1970s, enough experience of material requirements planning (MRP) had been gained and the importance of the master production schedule (MPS) was realized.

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In the 1950’s, MRP were the first off-the-shelf business applications to support the creation and maintenance of material master data and bill-of-materials (demand-based 14 planning) across all products and parts in one or more plants. These early packages were able to process mass data but only with limited processing depth (Klaus et al., 2000). From the 1940s to the early 1960s, material control consisted of basic ‘order point’ formulae used to maintain a level average inventory balance. In 1965, Joseph Orlicky of the J. I. Case Company devised a new approach to material management, called material requirement planning (MRP) to serve as a platform to answer four questions, known as the ‘Universal Manufacturing Equation’ (Towers et al., 2005): What are we going to make, What does it take to make, What do we have and What do we have to get.

The respective answer of the first three questions lie in the blueprint of production plan: the master production schedule (MPS), the bill of material (BOM) and the physical inventory records themselves. While MRP was certainly a vast improvement over simple manual method, the potential to stretch its boundary even further was soon recognized. A company’s production is constrained by not only its inventory need but also by equipment and personnel capacity, facet of the plant not considered in the Universal Manufacturing Equation. MRP at its core is a time phased order release system that schedules and releases manufacturing work orders and purchase orders, so that sub-assemblies and components arrive at the assembly station just as they are required. As competitive pressures increased and users became more sophisticated, MRP evolved and expanded to include more business functions such as product costing and marketing.

In 1975 the next generation system, Closed-Loop MRP, integrated capacity factors into the MRP structure and used feedback on production status to maintain the validity of planning decisions as requirements changed.

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