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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 Ford’s 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 Ford’s operation techniques and based its production system on what it saw. Toyota learned a
1975). narrowly defined.in particular.” . Joseph Orlicky.great deal from studying how Ford’s plant operated and was even able to accomplish something that Ford could not: a system that could handle variety (Stevenson. The other was a lack of differentiation between independent demand (end-items or finished goods) and dependent demand (raw materials. and coping with schedule and order changes. They regard scrap and rework as waste and excess inventory as an evil because it takes up space and ties up resources. 1992). IBM– there was a wave of widespread use of computers in business. Not surprisingly. the Japanese are very sensitive to waste and inefficiency. records may be viewed as inputs to the system) designed to translate a master production schedule into time-phased net requirements. During the 1960s in the United States. 2005). and the planned coverage of such requirements. one of the major MRP innovators. consists of a set of logically related procedures. keeping track of large numbers of parts and components. defined MRP as following: “A material requirements planning (MRP) system. The development of JIT in Japan was probably influenced by Japan being a crowded country with few natural resources (Lim and Low. components) (Stevenson. 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. 2005). As a result. its vice president of manufacturing. for each component inventory item needed to implement this schedule (1975. Under the reorder-point system. This system suffered from two main difficulties. The system gradually evolved and became a success during the 1980s when Toyota created impressively high quality. led by computer manufacturers . yet lower priced cars compared to their American rivals. At that time it was called the Toyota Production System (TPS). p 21). decision rules. and records (alternatively.” The JIT approach started to be developed at Toyota by Taiichi Ohno. subassemblies. and several of his colleagues since 1940s. a new manufacturing planning and control system called material requirements planning (MRP) was disseminated among American manufacturers. One was the enormous task of setting up schedules. The reason of MRP Concept: The earliest mechanism used to manage inventory was the reorder-point/reorder-quantity system.
excess capacity is not used to increase inventory. process redesigning and product redesigning. Both supply or demand shocks can cause a major problem in JIT. In JIT.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. but it is instead used to prevent problems before they arise. Production Scheduling Synchronized with Demand. The main purposes of a basic MRP system are to control inventory levels. In JIT. the product is not produced. and plan capacity to load the production system (Chase et al. A large demand shock or a supply shock can lead to the inability to meet current demand. Flexible Work Force. 2005. Having workers who are trained in other areas of the manufacturing process allows you to move workers where they are needed most. JIT also allows for production of smaller lot sizes. and raw materials” (Stevenson. . assign operating priorities for items.In other words. The main problems within a just-in-time system are: Supply Shocks. The main pros of Just-in-time are: Reduced Setup Time. if there is no demand. p 576). This is achieved by reducing inprocess inventory and the cost of holding inventory. Reducing setup time allows you manufacture more efficiently and focus more on quality. Reduces Lot Sizes. Cutting setup time to less than 10 minutes can be done by better planning. It works backward from the due date using lead time and other information to determine when and how much to order. MRP is a “computer-based information system that translates master schedule requirements for end items into time-phased requirements for sub-assemblies. JIT leaves manufacturers venerable to supply shocks. components. Just-in-time is a production strategy that some businesses use to improve their return on investment. A smaller lot size improves market timing and simplifies inventory flow.
thus can easily measured the required output needed. In JIT. part numbers. it needs to schedule and place the order to organize production process smoothly. the company’s profit margin can be greatly affected. Costly to implement: The system is much expensive to set up. When there are price shocks. Advantages & Disadvantage of using MRP System: Since Materials Requirement Planning (MRP) is the computer or software based inventory planning system. It helps to track material requirements at every interval phases. prices for parts involved in the production process are assumed to remain constant. and thus cost may arise in the beginning for such reason. 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. Information output of MRP system is totally depends on the information input Accurate bills of materials. and inventory records is required . Price Shocks. MRP has some benefits or advantages over the conventional methods of planning. 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. 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.
N. Maintained to cover the market uncertainty (safety stock) 3. 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. Efforts to minimize 3. JIT reacts to MRP plans for uncertainty. 1 Factors Inventory Pull System 1. Kanban cards: simple visual control 1. Treated as asset 2. exposes the production problem 2 3 Information Processing Set-ups 1. When a problem arises the line is shut down. Reduced inventory. calculated for each time-bucket. Rapid change-over is needed for small lot size production. Treated as liability 2. Thus.Difference between JIT and MRP: JIT System S. It should balance set-up cost and holding cost. Planned inventory keeps production problem under inventory cover. 2. In case a problem develops. 1. It is not a reactive system. MRP is not so . 5 System It is a reactive system. Computationally extensive processing of records Set-ups reduction in a low priority area Requisitioned for a schedule.
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. It permits smooth operation in case of problems. Effort on having multi-sources to take advantage of competitors.uncertainty. Works poorly 1. and assemble one or more final products. 2. 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. and production. 11 Queues A sign of inefficiency. while maintaining the ability of the system to satisfy demand" (p 436). fabricate some parts. purchasing. Treated as co-worker 2. They might use a pull . 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. Long lead time is desirable as most supervisors and purchasing agents want more lead time. Hybrid systems can be classified into two categories: vertically integrated hybrid system (VIHS) or horizontally integrated hybrid system (HIHS). Tolerant on scrap by building formula for predicting it. hence eliminate it Works well effective. 6 7 Demand variations Vendors 1. A typical application of this concept would be in a firm that procures raw material and components form a geographically diverse supplier base. Treated as adversaries. Not a critical issue as queues are admissible.
It can be expected that many of these variants will be seen in practice. et al. 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. L. A.60. C. many other variations are possible. but the reconciliation can be done infrequently and in the aggregate. Rotterdam. part of the purchasing system might be driven by an MRP system with fairly coarse "buckets" of a week to a month. Bonney. M. (1999) Are push and pull systems really so different?. Bennett. Here. International Journal of Production Economics. and it was noted that some pull systems actually have a push component. p. where MRP is used to control a parts "bank". D. (Ed. Foo et a!. 32 (3). (1991) JIT software. the MRP system must eventually be informed of the adjustments. J. parts might be pulled for final assembly several times a day. They might also use a pull approach to pull parts into final assembly from parts banks or a parts warehouse. 13 (15). The evolution of these control schemes was discussed. 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. (1994) Implementing MRPII: Leadership. Carboy. References: Alarcon. Brown. W. T. (1990) describe an application at an AT&T plant. from which material is pulled to subassembly and assembly stages. Rites and Cognitive Change. Of course. D.A. . Transportation & Distribution. The order release process and resulting information flows can be used to characterize push and pull control schemes. Balkema. It will tend to be the case that parts supply to final assembly can be controlled in this manner. since control schemes can be designed to fit the particular characteristics of specific cases. 55-58.approach for components from nearby suppliers to feed parts directly to assembly. Netherlands: A. Andel. CIO Magazine. At the other end of the spectrum. 53-64. (2000) The big risk for small fry. Conclusion: This paper has compared the procedural distinctions between push and pull system. 59.) (1997) Lean construction.
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