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Introduction: JIT or in appropriate form, Just-in-time and Material Requirements planning (MRP) are two key concepts in supply

chain management for creating plans and production schedules for inventories. MRP focuses on production of finished goods based on forecast requirements, while JIT focuses on production as a response to actual orders. Both MRP and JIT rely heavily on computerized information processing. Thus for the perfect analysis of inventory management, this are key tools for better implementation. The emphasis in both MRP and JIT is on the reduction of waste in the production process. Both systems achieve improvements in inventory levels. It is the intent of MRP and JIT systems to prevent lost production time, although MRP is more responsive to fluctuations in production as it is a change-based system. Production under the JIT system may be hampered by lack of capacity if unexpected orders are received. Different goals of MRP and JIT mean that each system works better under certain conditions. MRP is well-suited to a production line that operates on a batch or special order basis. The system's ability to constantly adjust for changing requirements makes it react well to variable orders. The JIT system works well in an environment of repetitive orders of similar products. Suppliers can more easily respond to prompt delivery schedules for routine orders of similar materials.

Development of JIT concept: Historically, in some respects, the just-in-time (JIT) techniques were already operationalised during the late 1920s at Henry Fords great industrial complex in River Rouge, Michigan as he streamlined his moving assembly lines to make automobiles. In My life and Work, Henry Ford wrote: We have found in buying materials that it is not worthwhile to buy for other than immediate needs. We buy only enough to fit into the plan of production If transportation were perfect and an even flow of materials could be assured, it would not be necessary to carry any stock whatsoever (1922, p 56). However, JIT did not officially embark in its revolutionary track until the Toyota Motor Company of Japan paid attention to Fords operation techniques and based its production system on what it saw. Toyota learned a

great deal from studying how Fords plant operated and was even able to accomplish something that Ford could not: a system that could handle variety (Stevenson, 2005). The JIT approach started to be developed at Toyota by Taiichi Ohno, its vice president of manufacturing, and several of his colleagues since 1940s. At that time it was called the Toyota Production System (TPS). The system gradually evolved and became a success during the 1980s when Toyota created impressively high quality, yet lower priced cars compared to their American rivals. The development of JIT in Japan was probably influenced by Japan being a crowded country with few natural resources (Lim and Low, 1992). Not surprisingly, the Japanese are very sensitive to waste and inefficiency. They regard scrap and rework as waste and excess inventory as an evil because it takes up space and ties up resources.

The reason of MRP Concept: The earliest mechanism used to manage inventory was the reorder-point/reorder-quantity system. Under the reorder-point system, the depletion in the supply of each inventory item was monitored and a replenishment order was issued whenever the supply dropped to a predetermined quantity the reorder point (Orlicky, 1975). This system suffered from two main difficulties. One was the enormous task of setting up schedules, keeping track of large numbers of parts and components, and coping with schedule and order changes. The other was a lack of differentiation between independent demand (end-items or finished goods) and dependent demand (raw materials, subassemblies, components) (Stevenson, 2005). During the 1960s in the United States, led by computer manufacturers - in particular, IBM there was a wave of widespread use of computers in business. As a result, a new manufacturing planning and control system called material requirements planning (MRP) was disseminated among American manufacturers. Joseph Orlicky, one of the major MRP innovators, defined MRP as following: A material requirements planning (MRP) system, narrowly defined, consists of a set of logically related procedures, decision rules, and records (alternatively, records may be viewed as inputs to the system) designed to translate a master production schedule into time-phased net requirements, and the planned coverage of such requirements, for each component inventory item needed to implement this schedule (1975, p 21).

In other words, MRP is a computer-based information system that translates master schedule requirements for end items into time-phased requirements for sub-assemblies, components, and raw materials (Stevenson, 2005, p 576). It works backward from the due date using lead time and other information to determine when and how much to order. The main purposes of a basic MRP system are to control inventory levels, assign operating priorities for items, and plan capacity to load the production system (Chase et al.2006)

Advantages & Disadvantage of using JIT System: Just-in-time (JIT) is defined as a philosophy of manufacturing based on planned elimination of all waste and on continuous improvement of productivity. Just-in-time is a production strategy that some businesses use to improve their return on investment. This is achieved by reducing inprocess inventory and the cost of holding inventory. In JIT, excess capacity is not used to increase inventory, but it is instead used to prevent problems before they arise. The main pros of Just-in-time are: Reduced Setup Time. Cutting setup time to less than 10 minutes can be done by better planning, process redesigning and product redesigning. Reducing setup time allows you manufacture more efficiently and focus more on quality. Reduces Lot Sizes. JIT also allows for production of smaller lot sizes. A smaller lot size improves market timing and simplifies inventory flow. Flexible Work Force. Having workers who are trained in other areas of the manufacturing process allows you to move workers where they are needed most. Production Scheduling Synchronized with Demand. In JIT, if there is no demand, the product is not produced. The main problems within a just-in-time system are: Supply Shocks. JIT leaves manufacturers venerable to supply shocks. Both supply or demand shocks can cause a major problem in JIT. A large demand shock or a supply shock can lead to the inability to meet current demand.

Price Shocks. In JIT, prices for parts involved in the production process are assumed to remain constant. When there are price shocks, the companys profit margin can be greatly affected.

Advantages & Disadvantage of using MRP System: Since Materials Requirement Planning (MRP) is the computer or software based inventory planning system, it needs to schedule and place the order to organize production process smoothly. MRP has some benefits or advantages over the conventional methods of planning. The advantage of using this computer based systems are: Minimize Inventory Cost: It helps to minimize inventory levels and the associated carrying costs by creating an accurate measurement of how much stock we will need in required time. It helps to track material requirements at every interval phases, thus can easily measured the required output needed. Helps to determine the most economical lot sizes for orders It helps to compute quantities needed as safety stock Helps to allocate production time among various products, and plan for future capacity needs To maintain right balance between Demand and Supply

The limitation of using this computer based systems are: Time consuming: It requires a lot of time to measurement thus production time elapsed as time passes for planning. Costly to implement: The system is much expensive to set up, and thus cost may arise in the beginning for such reason. Information output of MRP system is totally depends on the information input Accurate bills of materials, part numbers, and inventory records is required

Difference between JIT and MRP:

JIT System S.N. 1 Factors Inventory Pull System 1. Treated as liability 2. Efforts to minimize 3. Reduced inventory, exposes the production problem 2 3 Information Processing Set-ups 1. Kanban cards: simple visual control 1. Rapid change-over is needed for small lot size production. 2. Wide variety and high frequency of changeover is possible through low set-ups 4 Lot sizes Requisitioned for immediate use

MRP System Push System 1. Treated as asset 2. Maintained to cover the market uncertainty (safety stock) 3. Planned inventory keeps production problem under inventory cover. 1. Computationally extensive processing of records Set-ups reduction in a low priority area

Requisitioned for a schedule, calculated for each time-bucket. It should balance set-up cost and holding cost.

System

It is a reactive system. When a problem arises the line is shut down. Thus, JIT reacts to

MRP plans for uncertainty. It is not a reactive system. In case a problem develops, MRP is not so

uncertainty. 6 7 Demand variations Vendors 1. Treated as co-worker 2. Effort on developing one reliable vendor at a location nearest to plant 8 9 10 Quality Machine maintenance Lead Time Efforts on zero-defect Critical activity as no machine failure is desirable Short lead time is desirable as this would simplify the job of marketing, purchasing, and production. 11 Queues A sign of inefficiency, hence eliminate it Works well

effective. Works poorly 1. Treated as adversaries. 2. Effort on having multi-sources to take advantage of competitors. Tolerant on scrap by building formula for predicting it. Not a critical issue as queues are admissible. Long lead time is desirable as most supervisors and purchasing agents want more lead time. It permits smooth operation in case of problems.

Business Environment where Hybrid is applicable: Geraghty and Heavey (2005) defined that "A hybrid production system could be characterized as a production system that combines elements of the two philosophies in order to minimize inventory and unmask flaws in the system, while maintaining the ability of the system to satisfy demand" (p 436). Hybrid systems can be classified into two categories: vertically integrated hybrid system (VIHS) or horizontally integrated hybrid system (HIHS). A typical application of this concept would be in a firm that procures raw material and components form a geographically diverse supplier base, fabricate some parts, and assemble one or more final products. Such a firm might use a push approach for purchase orders from distant suppliers particularly in categories (such as castings) where lead times are long. They might use a pull

approach for components from nearby suppliers to feed parts directly to assembly. They might also use a pull approach to pull parts into final assembly from parts banks or a parts warehouse. Here, part of the purchasing system might be driven by an MRP system with fairly coarse "buckets" of a week to a month. At the other end of the spectrum, parts might be pulled for final assembly several times a day. It will tend to be the case that parts supply to final assembly can be controlled in this manner. This creates flexibility in adapting final assembly schedules in the short term without incurring a high transactions cost and without running the entire MRP system every time small changes are made. Of course, the MRP system must eventually be informed of the adjustments, but the reconciliation can be done infrequently and in the aggregate. Carboy, Foo et a!, (1990) describe an application at an AT&T plant, where MRP is used to control a parts "bank", from which material is pulled to subassembly and assembly stages.

Conclusion: This paper has compared the procedural distinctions between push and pull system. The order release process and resulting information flows can be used to characterize push and pull control schemes. The evolution of these control schemes was discussed, and it was noted that some pull systems actually have a push component. Comparing the characteristics of various types of push and pull control schemes makes it apparent that various combinations or hybrid forms of these schemes are possible. Examples of such schemes were discussed; many other variations are possible. It can be expected that many of these variants will be seen in practice, since control schemes can be designed to fit the particular characteristics of specific cases.

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