Project work in Production Planning & Control

“Split Air Conditioner Production System”
MG 2205 OPERATIONS MANAGEMENT

Production Engineering & Management

Submitted By Sabih Zeb Ahmed Saad Naseem Thomas Hausmann Amin Guelil

Submitted To Dr. Daniel T. Semere

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Glossary
Actual Capacity (Total available hours – preventive maintenance – down time hours)/(time of process per product) Aggregate Plan The aggregate production plan specifies in intermediate term how to provide the capacity to meet the demand in the intermediate period. It is often done by trial and error in which as many possible scenario are tested and later compared. Assembly Assembly refers to the systematic assembly of components and/or modules onto products or modules, thus to form units of higher product levels. The reversal of assembly is called disassembly and uses also different techniques. Back Order Back orders occur, if customer needs in concern of orders are not met. BOM – Bill of Material List of all raw materials, parts, subassemblies and assemblies needed to produce one unit of a product. Capacity Planning In capacity planning the needed production capacity is determined to meet customer needs. In this context, the maximum amount of work which the company is capable is called “capacity”. Lead, lag and match strategy are differentiated: Lead strategy: aggressive strategy while adding capacity in prognosis of increased demand. This could lead to inventory, which might be costly and wasteful. Lag strategy: conservative strategy which is adding capacity only if full capacity is reached. On the one hand this minimizes the risk of waste. On the other hand customers could be lost. Match strategy: moderate strategy while adding only small amounts of capacity in response to increased demand. Changeover Time Time to set a machine from one setting to another. Customer order decoupling point This is a virtual point in the supply chain, where stocks are created in order to decouple orders and pre-fabrications. The choice of CODPs is a strategic matter and delivery times, inventories and the level of service should be considered. Cyclical component Mostly a seasonal move of measurements which occurs cyclical. Design Capacity (Total available hours a year)/(Number of hours the process needs per product)
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EOQ - Economic Order Quantity The EOQ is a number within the procurement logistics that minimizes the sum of variable and fix ordering and inventory cost for a given level of service. The EOQ calculation solves the trade-off between small ordernumbers (Inventory cost) and Order-to-order time (Ordering cost). Effective Capacity (total available hours – preventive maintenance) / (time for process per product) Efficiency Actual Capacity / Effectiv Capacity Gross requirements ( MRP) The total expected demand for an item during each time period. Holding cost Cost of handling and storing. Inventory Products, modules or components stored physically. Kanban Kanban (Japanese “card”, “table”, “document”) is a method of production process control. The pull principle is based solely on actual consumption of materials at the source and the sink. Lead time Lead time is the time from placing an order for a material until it is acquired. Each component has its own lead time, depending on the properties of the supply line. MPS – Master Production Schedule The master production schedule indicates the quantity and timing of planned production, taking into accountdesired delivery quantity and timing as well as on-hand inventory. Three basic inputs are used: beginning inventory, forecast for each period of the schedule, customer orders which have already committed. MRP – Material Requirement Planning MRP is an information processing system (often computer based) in which the finished product requirements of the MPS are translated into time-phased requirements of subassemblies, component parts and raw materials, working backward from the due date using lead times to determine how much and when to order. Net Requirement ( MRP) The actual amount needed in each time period. NR = Gross requirement – projected on hand + safety stock

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Ordering Cost ( EOQ) Cost related to order preparation, communication, receiving cost etc. Planned order receipt ( MRP) The quantity expected to be received by the beginning of the time period. Planned order releases The planned amount to order in each time period. Product structure tree PST is a visual depiction of the requirements in a bill of materials where all components are listed by levels. Some of the components in a product may be needed in multiples, for instance for symmetrical products you need duplication of the same component. Such depiction is called exploding the BOM. Production Planning This is a decision making process about what and how much to produce in the future. It’s based on the demand forecast and orders from customers, production capacities and inventory. Production Rate The number of units manufactured in a given period of time or the time required to produce a single article. Production System A production system defines next to resources and manufacturing also rules and the method by which certain processes are carried out in production. It is created out of specific company needs. Projected on hand ( MRP) POH is the expected amount of inventory at hand at the beginning of each time period. Projected Inventory PI = Inventory from previous week – current week requirement Pull-principle The pull principle is a system for process control, in which the orders are pulled through the production. The impulse for working on an order is given from the end of the supply chain. That means, it is done in opposite direction to the material flow. It establishes a demanddriven production. Push-principle The push principle is a production control system in which the orders are pushed through the supply chain. The impulse for the initiative of each step is triggered by a fixed plan. Scheduled receipts ( MRP) Open orders scheduled to arrive from suppliers by the beginning of the period.
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Scheduling It deals with the operational (short term), temporal, quantitative management and control of all operations that are necessary for the production of goods and commodities. Takt Time Total available time / Desired output rate Time horizon ( Capacity Planning, Aggregate Planning, Scheduling) In production planning three levels of time horizons are differentiated. Long term (years to decades), intermediate term (months to years), short term (hours to weeks) Trend A trend in a case of measurements in science, technology and economy is a systematic positive or negative effect on the whole measurement in time. Utilization Actual Capacity / Design Capacity

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Scheduling………………………………………………………. Forecasting Methods……………………………… 3. Variants…………………………………………………………... Aggregate Planning……………………………………………. 2.6..4.9. 3..1.3. Data Mining……………………………………………………. Capacity Planning………………………………………………. 3.2.1. Outdoor Unit Manufacturing Process………………………….. 3. CODP .TABLE OF CONTENTS 0. 0. 3. 3. References…………………………………………………………………… A2. 2..3. 2.Customer order decoupling point……………………… 3.. Air Conditioning and Air Conditioner…………………………. 3..7.. 2.. 1. Appendix……. Historical Data Trend…………………………………………… 3. 1.2. 3. Split Air Conditioner and associated parts……………………… 2. Introduction…………………………………………………………………… 0..2.8.2. Economic order quantity (EOQ).1. KanBan…………………………………………………………..2. Product presentation………………………………………………………….……………………………………………………………… 6 .5. Model Enhancement………………………………………………………….. Bill of Materials and Product Structure Tree…………………… 3..1..... A1. Indoor Unit Manufacturing Process…………………………….. Master Production Schedule……………………………………. Introduction…………………………………………………….4. Approach………………………………………………………. Manufacturing Process and Variants…………………………………………. 1.2.1.. 3. Our Forecasting…………………………………..2.……………………………….

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Approach The product we have chosen is Air conditioner.0. 2) Model building with verification/validation The already built model was taken into consideration and it was further modified for smoother results. the process of data mining consists of 3 stages (1) The initial exploration (2) model building with verification/validation (3) Deployment. Using the mentioned strategy we analyzed our model and enhanced its performance. assumptions had to be made of how much detail analysis was required for certain steps. The workload was divided amongst team members and regular meetings were held to make sure the progress was according to schedule. The following analysis and implementation of course knowledge is based on the Process Modeling project from last semester. The order of implementation of the methods learned in production planning and control is done according to the lecture. which is designed to explore data in search of consistent patterns and systematic relationships between variables. The main goal of data mining is prediction. and then to validate the findings by applying the detected patterns to new subsets of data. Data mining is basically an analytic process.2. 0. We modified the model many times until we got the desired result. 1) The initial exploration In the initial exploration stage we gathered further data for our Air conditioning manufacturing plant model which we designed using Extend6. The original data is acquired from PEL Pak Electron Limited which produces Air conditioners in Pakistan with collaboration with M/s AEG Germany. 3) Deployment In the third stage of data mining. The log at the end of this report documents this. 8 . Often. the selected model from the previous step was taken and now we applied forecasting techniques to the selected model for further improvements and in order to generate predictions or estimates of the expected forecast.1. Data Mining We start our process by using the three stages of data mining. Introduction 0.

packaged air conditioner. An air conditioner (AC) is a machine designed to stabilize the air temperature and humidity within an area (cooling as well as heating depending on the air properties at a given time) typically using a refrigeration cycle. 9 . Its use in the form of providing comfort can be found in houses. window air conditioner system. 1. For this unit you don’t have to make any slot in the wall of the room. The split air conditioner can be used to cool one or two rooms. ventilation or disinfection that modifies the condition of air. split air conditioner system.2. All work on the same basic principle of the refrigeration cycle. offices. Split Air Conditioner and associated parts: The split air conditioner comprises of two parts: the outdoor unit and the indoor unit.1. the present day split units have aesthetic looks and add to the beauty of the room. fitted outside the room. houses components like the compressor. Product presentation 1. motor vehicles etc. The indoor unit of the split air conditioner is a box type housing in which all the important parts of the air conditioner are enclosed. There are many types of air conditioners present namely. central air conditioning plants.1. heating. hospitals. Air Conditioning and Air Conditioner: The process of air conditioning refers to the removal of heat from indoor air for thermal comfort. The term can refer to any form of cooling. The outdoor unit. condenser and expansion valve. Our focus is concerned on split air conditioning systems. Further. The indoor unit comprises the evaporator or cooling coil and the cooling fan. Indoor Unit: It is the indoor unit that produces the cooling effect inside the room.

The air filter in the wall mounted type of the indoor unit is placed just before the cooling coil. The refrigerant from the tubing at very low temperature and very low pressure enters the cooling coil. When the fan speed is changed with the remote it is the speed of the blower that changes. which leads to the cooling of the air. thus the speed of the blower can be changed. Thus the clean air at low temperature is supplied into the room by the blower. 10 . This air is then blown to the room where the cooling effect has to be produced. 3) Cooling Fan or Blower: Inside the indoor unit there is also a long blower that sucks the room air or the atmospheric air. 2) Air Filter: The air filter is very important part of the indoor unit. 4) Drainpipe: To remove condensed water vapors from evaporator the drainpipe is connected to the some external place outside the room where water can be disposed of. The cooling coil is covered with the aluminum fins so that the maximum amount of heat can be transferred from the coil to the air inside the room. The shaft of the blower rotates inside the bushes and it is connected to a small multiple speed motor. It removes all the dirt particles from the room air and helps supplying clean air to the room. Thus the drainpipe helps removing dew water collected inside the indoor unit. It is an induced type of blower and while is sucks the room air it is passed over the cooling coil and the filter due to which the temperature of the air reduces and all the dirt from it is removed. The air.1) Evaporator Coil/Cooling Coil: The cooling coil is a copper coil made of number turns of the copper tubing with one or more rows depending on the capacity of the air conditioning system. The blower sucks the hot and unclean air from the room and supplies cool and clean air back. The blower absorbs the hot room air or the atmospheric air and in doing so the air passes over the cooling coil. When the blower sucks the hot room air. it is first passed through the air filter and then though the cooling coil. after producing the cooling effect is again sucked by the blower and the process of cooling the room continues.

8) Solenoid valve A solenoid valve is an electromechanical valve for use with liquid or gas. The valve is controlled by an electric current through a solenoid coil. With louvers one can easily change the direction in which the maximum amount of the cooled air has to be passed. The louvers help changing the angle or direction in which the air needs to be supplied into the room as per the requirements. Solenoid valves may have two or more ports: in the case of a two-port valve the flow is switched on or off. in the case of a three-port valve. The capillary tube transmits sensing bulb pressures to the top of the TXV valve’s diaphragm. A thermostat may be a control unit for a heating or cooling system or a component part of a heater or air conditioner. the outflow is switched between the two outlet ports. This valve maintains constant superheat in the evaporator. 6) Thermostat: A thermostat is a device for regulating the temperature of a system so that the system's temperature is maintained near a desired set point temperature. 11 .5) Louvers or grill: The cool air supplied by the blower is passed into the room through louvers. Thermal expansion valve has a sensing bulb. 7) Expansion valve The thermostatic expansion valve (TEV or TXV) is used for refrigerant flow control and operates at varying pressures resulting from varying temperatures. which is connected to TXV by a length of capillary tubing. There are two types of louvers: horizontal and vertical.

more quickly. This is used to transfer heat from the air inside of a home to the outside air. and with the same hardware 12 . the liquid's pressure drops. On the other side. high pressure gas and flows into the condenser. by the same means. 2) Reversing valve: A reversing valve is a component in a heat pump. the heat pump refrigeration cycle is changed from cooling to heating or vice versa. When it does it begins to evaporate into a gas. or dissipate. its temperature is much cooler and it has changed from a gas to a liquid under high pressure. When the working fluid leaves the condenser. By reversing the flow of refrigerant. The closer the molecules are together. The fins on coils act just like a radiator in a car and help the heat go away. narrow hole.Out Door Unit: 1) Condenser: Air conditioners use refrigerants that easily convert from a gas to a liquid and back again. The liquid goes into the evaporator through a very tiny. the higher its energy and its temperature. The working fluid leaves the compressor as a hot. The compressor squeezes the fluid. This packs the molecule of the fluid closer together. low-pressure gas. that reverses the direction of refrigerant flow. The working fluid arrives at the compressor as a cool. This allows a residence or facility to be heated and cooled by a single piece of equipment.

2) Compressor: A gas compressor is a mechanical device that increases the pressure of a gas by reducing its volume. Furthermore the outdoor unit also comprises of the solenoid valve. Compressors are similar to pumps: both increase the pressure on a fluid and both can transport the fluid through a pipe. As gases are compressible. thermostat. expansion valve and a fan which have already been discussed in the indoor unit parts above. the compressor also reduces the volume of a gas. Indoor and Outdoor Unit 13 .

2. quality issues and market competence the manufacturing is substituted by only assembly of parts and most of the components are purchased from suppliers or daughter companies. Indoor and outdoor unit. They manufacture all the non-electrical components in facility. The refrigeration cycle in both the cases remains the same.1. So there are two basic production lines which join at the end.2. Now a day’s due to high production load. Auxiliary components are assembled in between. The difference between a normal air conditioner and a hear pump is that a heat pump can be used to both heat and cool a particular area. A heat pump is a machine that moves heat from one location at a lower temperature to another location at a higher temperature using mechanical work. But we are modeling the whole manufacturing process. Conversion between cooling and heating is achieved by adding a single four way reversing valve to the normal air 14 . 2. Manufacturing Process and Variants 2. Introduction We have replicated the manufacturing processes used in LG Air conditioner Industries (Pvt) limited. Our product is made up of two major parts. Variants Four Variances are introduced Variance 1 2 3 4 1 TON with cooling 2 TON with cooling 1 TON with cooling and heating 2 TON with cooling and heating Production Volume (%) 25% 25% 25% 25% Variant 1: 1 Ton cooling capacity for normal air conditioner Variant 2: 2 Ton cooling capacity for normal air conditioner Variant 3: 1 Ton capacity reversible split Air conditioner acting like a heat pump.

metal sheets are first sheared on metal cutting machine according to the dimensions 2. 3. One another line aluminum strips from large rolls are punched slightly with diameter slightly smaller than copper tube Dia. 8-10 strokes per minute Punching machine: 1500 kN. In cooler climates it is common to have heat pumps Variant 4: 2 Ton capacity reversible split Air conditioner acting like a heat pump. It is then punched to produce slots and holes for assembly and mountings.3. 5. 2. 3 strokes per minute Powder coating /painting: 1 part per minute Evaporator coils: 1. On one line copper tubes from supplier are passed through straightening machine. For casing. 10 strokes per minute Bending/folding machine: stroke length 50 inch. Finally they are powder coated and dried under UV light to give an aesthetic look and corrosion resistance. 15 . 2. Indoor metal casing manufacturing steps Specifications: Hydraulic Shearing machine: 2000 kN. 4. Indoor Unit Manufacturing Process Steps in the production of our indoor unit are mentioned below: Metal casing: 1. by reversing the direction of the valve one can choose between cooling and heating. Sheet metal casing is then conveyed to the assembly station. 3. Then square blanks are produced from them to make a single fin. Punched sheets are then bended to produce corners and sides of casing.conditioning unit.

5. Plastic granules are used in injection molding machine to produce front grill of air conditioner cast depending on the model under manufacturing.5 – 8mm. Then fins are stacked on copper tube at assembly station. shot. The ends are then soldered. 2. 1 part/ minute Evaporator coils manufacturing steps Front grill: 1. 500 kN. 7. speed 18 m/min Hi speed punching n blanking machine. they are removed in trimming process. 10 stokes per minute Soldering: soldering is manually done to assure leak proof quality. Machine specification: Tube straightener: Capacity Range Tube OD 1. 16 . Machine specification: Injection molding. The size depends upon the capacity of air conditioner. 6. 80 oz. The molded panel has sharp corners and plastic hangovers.(Aluminum fins can be produced on double action punching and blanking machine or two different machines) 4.02 BTB Trimming is usually done by hand. 30 parts per stroke. The tubes are bended to produce evaporator or condenser.

3. 4. It is then punched to produce slots and holes for assembly and mountings.Front grill manufacturing steps Expansion Valve: Expansion valve is a precise electrical component and usually purchased from suppliers.4. Outdoor Unit Manufacturing Process Metal casing: Outdoor unit case has same manufacturing process as indoor unit case except the size is different. Thermostat: This component is also purchased. Control panel: It is sophisticated electronic circuit and usually purchased from supplier. For casing. Punched sheets are then bended to produce corners and sides of casing. Outdoor metal casing manufacturing steps 17 . metal sheets are first sheared on metal cutting machine according to the dimensions 2. 5. Air filters: Air filters can be produced by plastic injection molding and then assembly with filter fabric. Sheet metal casing is then conveyed to the assembly station. 1. 2. but usually these are also purchased in AC manufacturing as air filters are usually cheap. Finally they are powder coated and dried under UV light to give an aesthetic look and corrosion resistance.

1 part/ minute Condenser coil manufacturing steps 18 . 5.5 – 8mm. One another line aluminum strips from large rolls are punched slightly with diameter slightly smaller than copper tube Dia. speed 18 m/min Hi speed punching n blanking machine. Then fins are stacked on copper tube at assembly station. (Aluminum fins can be produced on double action punching and blanking machine or two different machines) 4. 8-10 strokes per minute Punching machine: 1500 kN. 2.Specifications: Hydraulic Shearing machine: 2000 kN. Machine specification: Tube straightener: Capacity Range Tube OD 1. The ends are then soldered. 500 kN. On one line copper tubes from supplier are passed through straightening machine. The size depends upon the capacity of air conditioner. except the dimensions are different 1. 30 parts per stroke. 6. The tubes are bended to produce evaporator or condenser. 10 stokes per minute Soldering: soldering is manually done to assure leak proof quality. 3 strokes per minute Powder coating /painting: 1 part per minute Condenser coils: This process is same as evaporator manufacturing. Then square blanks are produced from them to make a single fin. 10 strokes per minute Bending/folding machine: stroke length 50 inch. 3.

Cooling fan: 1. 21 oz. it is purchased from supplier. Plastic granules are used in injection molding machine to produce cooling fan blades of air conditioner depending on the model under manufacturing. 14 BTB Fan manufacturing steps Compressor: Hermetically sealed compressor is purchased from dealer or Daughter Company. Machine specification: Injection molding. 19 . 3. Reversing valve: In heating and cooling AC models reversing valve is installed. Pressure switch: Safety pressure switch is purchased from supplier to ensure high quality. If the molded panel has sharp corners and plastic hangovers. they are removed in trimming process. 2. Fan motor is purchased from supplier and conveyed to assembly station where it is joined with fan blades. shot.

we define capacity as the maximum amount of work that an organization is capable of completing in a given period of time.3 Efficiency (%) 97. Design Capacity 58400 Effective Capacity 56600 Actual Capacity 55100 Utilization (%) 94.1 To summarize in the form of a table we achieve the following results after applying the above mentioned formulas to our production system. Model Enhancement 3.3 55100 𝐴𝑐𝑡𝑢𝑎𝑙 𝐶𝑎𝑝𝑎𝑐𝑖𝑡𝑦 = = 97.3% 𝐸𝑓𝑓𝑒𝑐𝑡𝑖𝑣𝑒 𝐶𝑎𝑝𝑎𝑐𝑖𝑡𝑦 56600 20 . The capacity planning for our whole production system is carried out as using the following formulas: 𝐷𝑒𝑠𝑖𝑔𝑛 𝐶𝑎𝑝𝑎𝑐𝑖𝑡𝑦 = 5840 𝑇𝑜𝑡𝑎𝑙 𝐻𝑜𝑢𝑟𝑠 𝑎𝑣𝑎𝑖𝑙𝑏𝑙𝑒 𝑖𝑛 𝑎 𝑦𝑒𝑎𝑟 = = 58400 0.3. Capacity Planning 1) Initial Calculations Capacity planning is basically the process of determining the production capacity needed by an organization to meet changing demands for its products.1 𝑁𝑢𝑚𝑏𝑒𝑟 𝑜𝑓 ℎ𝑜𝑢𝑟𝑠 𝑡ℎ𝑒 𝑝𝑟𝑜𝑐𝑒𝑠𝑠 𝑛𝑒𝑒𝑑𝑠 𝑝𝑒𝑟 𝑝𝑟𝑜𝑑𝑢𝑐𝑡 𝐸𝑓𝑓𝑒𝑐𝑡𝑖𝑣𝑒 𝐶𝑎𝑝𝑎𝑐𝑖𝑡𝑦 = 𝐴𝑐𝑡𝑢𝑎𝑙 𝐶𝑎𝑝𝑎𝑐𝑖𝑡𝑦 = 𝑈𝑡𝑖𝑙𝑖𝑧𝑎𝑡𝑖𝑜𝑛 = 𝐸𝑓𝑓𝑖𝑐𝑖𝑒𝑛𝑐𝑦 = 𝑇𝑜𝑡𝑎𝑙 𝑎𝑣𝑎𝑖𝑙𝑏𝑙𝑒 ℎ𝑜𝑢𝑟𝑠 − 𝑝𝑟𝑒𝑣𝑒𝑛𝑡𝑖𝑣𝑒 𝑚𝑎𝑖𝑛𝑡𝑒𝑛𝑎𝑛𝑐𝑒 − 𝑑𝑜𝑤𝑛 𝑡𝑖𝑚𝑒 𝑁𝑢𝑚𝑏𝑒𝑟 𝑜𝑓 ℎ𝑜𝑢𝑟𝑠 𝑡ℎ𝑒 𝑝𝑟𝑜𝑐𝑒𝑠𝑠 𝑛𝑒𝑒𝑑𝑠 𝑝𝑒𝑟 𝑝𝑟𝑜𝑑𝑢𝑐𝑡 5840 − 180 − 150 = = 55100 0. whereas.3 % 𝐷𝑒𝑠𝑖𝑔𝑛 𝐶𝑎𝑝𝑎𝑐𝑖𝑡𝑦 58400 𝑇𝑜𝑡𝑎𝑙 𝑎𝑣𝑎𝑖𝑙𝑏𝑙𝑒 ℎ𝑜𝑢𝑟𝑠 − 𝑝𝑟𝑒𝑣𝑒𝑛𝑡𝑖𝑣𝑒 𝑚𝑎𝑖𝑛𝑡𝑒𝑛𝑎𝑛𝑐𝑒 5840 − 180 = = 56600 𝑁𝑢𝑚𝑏𝑒𝑟 𝑜𝑓 ℎ𝑜𝑢𝑟𝑠 𝑡ℎ𝑒 𝑝𝑟𝑜𝑐𝑒𝑠𝑠 𝑛𝑒𝑒𝑑𝑠 𝑝𝑒𝑟 𝑝𝑟𝑜𝑑𝑢𝑐𝑡 0.1.1 𝐴𝑐𝑡𝑢𝑎𝑙 𝐶𝑎𝑝𝑎𝑐𝑖𝑡𝑦 55100 = = 94.

effective capacity. breakage. setups. Because of this reason our system runs smoothly enough to produce a high efficiency and rate of utilization. 21 . D – Production demand per time unit C – Fixed and variable costs associated to the machine/resource.From the table we see that the Utilization rate and Efficiency are both very high. 2) Machine requirements Number of machines and capacity requirement: The Machine requirement will be calculated as follows: Te . For each machine we have carried out the same process using the above formulas and calculated the design capacity. actual capacity. this is due to the fact that in an air conditioning production system majority machines are either hydraulically operated or are molding machines and hence for duration of one year they do not require high preventive maintenance times or frequent breakdowns. and other disruptions. utilization and efficiency which have been summarized in the following table.the machine or resource process time that includes the actual process time.

So the Machines Will be M > Te X D In the table below we have calculated our machine requirement considering realistic data from our extend model and have achieved the following results summarized in the table below. therefore. The machine requirement table also indicates that we have used the right amount of machines in our production system and therefore achieve quite realistic results. 22 . that is due to the fact that in an air conditioning production plant most machines are hydraulically operated as mentioned above in this report as well. In the next step of capacity planning we calculate the Takt Time for our production system. during the production time span of one year very less breakdowns are encountered which keeps the machine utilization and efficiency above 95%. By taking a look at the results of the above two tables we conclude that both the efficiency and utilization of our machines are high.

e. e. T= Takt time.2.g.3) Takt Time: Takt Time is determined by the following formula T= 𝑇𝑎 𝑇𝑑 Here. [units required / day] For our production system. [minutes of work / unit produced] Ta= Net time available to work. [minutes of work / day] Td = Time demand (customer demand). e. Ta = 960 Mins/day Td = 156 Units/day T= 𝑇𝑎 960 = = 6.g. Historical Data Trend 60 50 Production Volume 40 30 20 10 0 2010 2009 2008 2007 2006 2005 Historical Data Trend 1 23 .g.1 𝑇𝑑 156 3.

Since the demand of an air conditioner increases during the summer season therefore it is categorized as a seasonal time series model. The concept of trend comes from the fact that over the years the demand of air conditioners are increasing more and more compared to the previous years as the population is increasing rapidly and ongoing constructions are in progress which causes the demand of air conditioners to increase more as the years progress. This can be shown by the following graph 14 12 10 8 6 4 2 0 Jan/04 May/05 Oct/06 Time Feb/08 Jul/09 Nov/10 Apr/12 Production Volume Thousands Historical Data Trend 2 3. It can be clearly seen that the sales of the units were very high during the months of May. from October till March the sales were relatively less as compared to that in the summers.e. an Air Conditioner has a Seasonal plus Trend characteristic.The table and graph show the sales of split type air conditioner for a span of 5 years from 2005 to 2010. June and July the weather is extremely hot and hence the demand of air conditioners significantly increases in summers. The graph drawn above shows a clear trend in its pattern. which manufactures its air conditioners in Pakistan. This is due to the fact that in winters since the use of air conditioners is not required therefore the sales drop. This is due to the fact that during May. 24 . From the above data we can conclude that over a span of 5 years an average of 64914 unit were produced.1. Another interesting fact that can be seen from the above data is that year to year the sales increase more and more. whereas.2. Our Forecasting From the given data that we have presented above we can conclude that our product i. This can be explained by the fact that since the population is increasing and constructions are ongoing therefore the demand and hence the sales of the air conditioners are increasing as the years progress. June and July. The data given above shows the sales of the air conditioner in Pakistan during 2005 to 2010. The data is realistic and taken from a German affiliated company PEL.

To do this we have used 4 different forecasting methods and compared them to one another.2. Naïve Forecast: The first method that we tried for forecasting was a relatively simple method known as the naïve forecast.2. But since we follow a seasonal pattern along with a trend the naïve forecast method cannot be applied to our system and hence we would not consider the results produced by this method suitable for forecasting the demand for 2011.In our next task using the historical data presented above we forecast the production of air conditioners for the year 2011. According to the naïve forecast method the forecasted value of our air conditioners in 2011 would be equal to the demand of 2010. Weighted Moving Average 4. Naïve Forecast 2. The naïve forecast method is a time series method in which the forecast for the next period equals the demand for the current period. Simple Moving Average 3. The results which we achieved from this method along with the graph are shown below. Forecasting Methods Following are the 4 forecasting methods that we have used for our model 1. Exponential Smoothing (Halt Winters Method) or Triple Exponential Smoothing 1. Production Volume 14000 12000 10000 8000 6000 4000 2000 0 Jan/04 May/05 Oct/06 Feb/08 Time Jul/09 Nov/10 Apr/12 Aug/13 Naive Forecast 25 . 3.

26 . To show the behavior of the data. It’s a time series method used to estimate the average of a demand time series by averaging the demand for the n most recent time periods. a graph for the simple moving average method is also drawn. Simple Moving Average: The 2nd forecasting method used is the simple moving average method.From the data and graph it is clearly seen that the forecast of 2011 is exactly the same as 2010 and no trend has been followed. 𝐷𝑡 = Actual demand in period t n = Total number of periods in the average 𝐹𝑡+1 = Forecast for period t+1 𝐸𝑡 = 𝐷𝑡 . 𝐸𝑡 = Forecast error for period t 𝐹𝑡 = Forecast for period t 𝐷𝑡 = Actual demand in period t Using the historical data presented above in this report along with the mentioned formulas of simple moving average we calculated our forecasted value for 2011.𝐹𝑡 The error in forecast is then calculated using Where. The table below indicates the detailed results which we obtained. Hence in our case the naïve forecast method is not an ideal method. 2. The following formula was used to calculate the forecasted value 𝐹𝑡+1 = 𝑠𝑢𝑚 𝑜𝑓 𝑙𝑎𝑠𝑡 𝑛 𝑑𝑒𝑚𝑎𝑛𝑑𝑠 𝐷𝑡 + 𝐷𝑡−1 + ⋯ … . 𝐷𝑡−𝑛+1 = 𝑛 𝑛 Where.

Similar to the simple moving average method. a graph has been plotted using the above data.14000 12000 10000 Production Volume 8000 6000 4000 2000 0 Jan/04 May/05 Oct/06 Feb/08 Time Jul/09 Nov/10 Apr/12 Aug/13 From the above graph it can be clearly seen that. The results of this method are shown in the table below. The forecasted error for this method has still been calculated and displayed in the following table Forecast for 2011 Demand for 2010 Forecast for 2010 Error in forecasting 3.17 97540 58389 39151 For better illustration of what we achieve. we applied this method on our historical data. the sum of the weights equal to 1. for a seasonal plus trend characteristic type data. In this method each historical demand in the average can have its own weight. This type of method can be used when the demand has no pronounced trend or seasonal influences. This method does not follow the trend line as seen. 27 . Weighted Moving Average: The 3rd time series method which we applied to our data is the weighted moving average method. the simple moving average method is not suitable and therefore must be avoided for such data sets. 64914.

This lag is noticeable because of the presence of a trend. 4. Double exponential smoothing is designed to address this type of data series by taking into account any trend in the data. The exponential smoothing method is a sophisticated weighted moving average method that calculates the average of a time series by giving recent demands more weights than earlier demands. 28 . we used the Triple Exponential Smoothing method. One advantage of this method is that it allows emphasizing recent demands over earlier demands. simple exponential smoothing forecasts tend to lag behind observations. Simple exponential smoothing models work best with data where there are no trend or seasonality components to the data. However. neither of these exponential smoothing models addresses any seasonality in the data therefore. Triple exponential smoothing also known as the Winters method is a refinement of the popular double exponential smoothing model but adds another component which takes into account any seasonality or periodicity in the data.14000 12000 Production Volume 10000 8000 6000 4000 2000 0 Jan/04 May/05 Oct/06 Feb/08 Time Jul/09 Nov/10 Apr/12 Aug/13 By taking a look at the graph we conclude that the weighted moving average method produced better results for our case as compared to the simple moving average method but still it does not produce what is required by a seasonal plus trend characteristic. Therefore we can say that for a seasonal plus trend type data the weighted moving average method is not particularly suited. Exponential Smoothing (Halt Winters Method) or Triple Exponential Smoothing: The 4rth and final forecasting method that we have used for our system is the Halt Winters Method. The weighted moving average forecast lags behind demand because it merely averages past demands. When the data exhibits either an increasing or decreasing trend over time. It is also known as triple exponential smoothing and is considered a part of Exponential smoothing.

with a value between 0 and 1 c) Smoothing of the seasonal factor: 𝑆𝑡 = 𝛾( 𝑋𝑡 ) + (1 − 𝛾)𝑆𝑡−𝑐 𝐴𝑡 Where. 29 𝐹𝑡 = forecasted value at time t . 𝐴𝑡 = exponentially smoothed average of the series in period t 𝑇𝑡−1 = Trend estimate last period 𝛼 = smoothing parameter for the average. 𝑇𝑡 = exponentially smoothed average of the trend in period t 𝐴𝑡 = exponentially smoothed average of the series in period t 𝑇𝑡−1 = Trend estimate last period 𝐴𝑡−1 = Average 𝛽 = smoothing parameter for the trend. After using the above formulas on our historical data.The following formulas are used in the Triple exponential smoothing method 𝐴𝑡 = 𝛼𝐷𝑡 + (1 − 𝛼)(𝐴𝑡−1 + 𝑇𝑡−1 ) a) Overall Smoothing: Where. with a value between 0 and 1 b) Smoothing of the trend factor: 𝑇𝑡 = 𝛽(𝐴𝑡 − 𝐴𝑡−1 ) + (1 − 𝛽)𝑇𝑡−1 Where. we achieve the following forecasted values for our system which is shown below along with its graph. with a value between 0 and 1 c = the number of periods in the seasonal pattern The forecast for the next period is then calculated using 𝐹𝑡 = (𝐴𝑡 + 𝑇𝑡 )𝑆𝑡 Where. 𝑆𝑡 = seasonal index factor 𝑋𝑡 = observed value at time t 𝛾 = smoothing parameter for the seasonality.

0.6. 0.9 and a slight difference can be visible on the above graph. 0.5 - The forecasted data in the form of a plot are shown below 25000 Production Volume 20000 15000 10000 5000 0 Jan/04 May/05 Oct/06 Feb/08 Time Jul/09 Nov/10 Apr/12 Aug/13 From the graph it can be clearly seen that while using the triple exponential smoothing method our forecasted value for 2011 follows the same trend pattern that has been adopted over the recent years and hence we can conclude that the Halt Winters methods is the ideal method to use for a seasonal data which follows a trend.5 alpha 0. 25000 20000 15000 10000 5000 0 Jan/04 alpha 0.4.7.4 May/05 Oct/06 Feb/08 Jul/09 Nov/10 Apr/12 Aug/13 30 . We used the values of alpha 0.6 alpha 0.9 aplha 0. The following graph shows the effect the smoothing parameters have. Using this method we have forecasted a demand of 115062.6 0.7 alpha 0.5 units for the year 2011.5.4 alpha 0.smoothing parameters α β γ 0. 0.

we used EXCEL SOLVER. in advance of 2 to 18 months.3. Case 1: Even Production with no out sourcing.5 2. But this method causes backlog and which in turn increases customer dissatisfaction and total cost. the extra parts go into inventory to be used in peak months to compensate for high demand. In this we evenly divided the entire annual forecast into 12 months. Aggregate Planning Aggregate planning is an operational activity that does an aggregate plan for the production process. 31 . to give an idea to management as to what quantity of materials and other resources are to be procured and when.5 0. To get zero backlog and minimum inventory.3 0. The aggregate planning for our system is given below. so that the total cost of operations of the organization is kept to the minimum over that period.6 =ABS(MIN(0.((F41+F46+F42+F43)-F39))) Case 2: Out sourcing and zero backlog.9 3. We did this by increasing the number of shifts of production and Out sourcing the manufacturing to daughter or privet producer. Now our main concern is to plan according to forecast and capacity to remove backlog and decrease the amount of inventory.3. Cost (Krones) Production cost Regular time Over Time Subcontract Inventory Back orders All values are multiple of 1000 2. in initial months when demand is less than production.

Bill of Materials and Product Structure Tree A bill of materials (BOM) is a list of the raw materials. 32 . parts and the quantities of each needed to manufacture an end product.3. We have two product structure trees as our outdoor air conditioning unit and indoor air conditioning unit are both manufactured and packaged separately. In our case we have made a Bill of material along with the Product structure tree for our air conditioning system. The Product structure tree of our air conditioning system is shown below.4. components. sub-components. intermediate assemblies. sub-assemblies. A product structure tree is a visual depiction of the requirements in a bill of materials where all components are listed by levels.

Air conditioner Outdoor Unit Product Structure Tree Level 0 Level 1 Level 2 Level 3 Level 4 Casing CasCon Assembly Compressor Pressure Switch Fan Outdoor Unit Motor Assembly Motor Referigerant Solenoid Valve Valves Expansion Valve Thermostat Pakaging Condenser Paint Bent Tubes Aluminium Fins Plastic Aluminum Sheets Copper Tubes Aluminium Strips 33 .

5 Berger Bent Tubes 200 cm One star Aluminum Fins 150 cm One star Aluminum Sheets 200 sq. Lvl ID Description 1 0 OU0001 Outdoor Unit 2 3 4 5 6 7 8 9 10 11 12 1 2 2 3 3 3 4 4 4 1 1 CC0001 CA0001 CN0001 PA0001 BT0001 AF0001 AS0001 CT0001 AS0001 CO0001 PS0001 Specification Supplier Assembled ASTS Sub CasCon Assembly Assembly Casing Condenser Paint 0.Air conditioner Indoor Unit Product Structure Tree Level 0 Level 1 Level 2 Level 3 Level 4 Casing CasEvap Assembly Blower Pressure Switch Plastic Grill Indoor Unit Air Filter Solenoid Valve Valves Drainage Pipe Remote Control Expansion Valve Evaporator Paint Bent Tubes Aluminium Fins Aluminum Sheets Copper Tubes Aluminium Strips No. 1 1 1 1 1 1 1 1 1 1 1 1 34 . cm One star Copper Tubes 200 cm One star Aluminum Strips 150 cm One star Compressor Kiloskar Pressure Switch Kiloskar Each Pcs Pcs Pcs Pcs Liters Pcs Pcs Pcs Pcs Pcs Pcs Pcs Qty/Pcs.

5 150 cm 150 cm 200 cm 150 cm 150 cm 230 Volts 200 800 m - - Pcs 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 - Full tech Pcs Shenzhen Power Motor Pcs Rich forth Pcs Camec Bars Vstar Pcs Vstar Pcs Vstar Pcs Kiloskar Pcs Golden Star Meters Golden Star Pcs Golden Star Pcs Golden Star Pcs TPak Pcs ASTS Pcs Berger One star One star One star One star One star Fulltech Kiloskar Rich forth One star Vstar Vstar Vstar ADS Universal Electronics Golden Star Golden Star Golden Star Golden Star Pcs Pcs Pcs Liters Pcs Pcs Pcs Pcs Pcs Pcs Pcs Pcs Pcs Pcs Pcs Pcs Pcs Meters Pcs Meters Pcs Pcs Pcs 35 .13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 45 46 47 48 49 1 2 2 3 1 1 2 2 1 1 1 1 1 1 0 1 2 2 3 3 3 4 4 4 1 1 2 3 3 1 2 2 1 1 1 1 1 1 M0001 FA0001 MO0001 PL0001 Rf0001 V0001 SV0001 EV0001 TH0001 W0001 R0001 N0001 B0001 PK0001 IU0001 Motor Assembly Fan Motor Plastic Refrigerant Valves Solenoid Valve Expansion Valve Thermostat Wiring Rivets Nuts Bolts Packaging Indoor Unit CasEvap CE0001 Assembly CA0002 Casing EV0001 Evaporator PA0002 Paint BT0002 Bent Tubes AF0002 Aluminum Fins AS0002 Aluminum Sheets CT0002 Copper Tubes AS0002 Aluminum Strips BW0001 Blower PS0002 Pressure Switch G0001 Grill PL0002 Plastic AF0001 Air Filter V0002 Valves SV0002 Solenoid Valve EV0002 Expansion Valve DR0001 Drainage Pipe RC0001 Remote Control W0002 Wiring R0002 Rivets N0002 Nuts B0002 Bolts Sub Assembly 27 cm dia 230 Volts 5 800 m Assembled Sub Assembly 0.

etc. and other resources in order to optimize production. It is usually linked to manufacturing where the plan indicates when and how much of each product will be demanded. A master production schedule may be necessary for organizations to synchronize their operations and become more efficient. 36 . Plan manufacturing activities. With the use bill of material we will get the part level and with MPS we will plan the receipt of individual parts to make sub-assemblies and then final product. The time bucket is taken as one week. inventory.3. On hand= 12290 Forecast Orders projected inventory MPS Quantity April 1 3081 2700 6128 0 2 3081 2500 3047 0 3 3081 3150 2897 3000 4 3081 3200 2697 3000 1 3744 2600 1953 3000 2 May 3 3744 465 3000 4 3744 3850 615 4000 1 4830 3850 285 4500 2 June 3 4830 3500 625 5000 4 4830 795 5000 1 4275 4200 1020 4500 2 July 3 4275 4400 280 4000 4 4275 3800 5 4000 3744 2950 1209 3000 4830 455 5000 4275 4340 680 4000 MRP: Material requirements planning (MRP) is a production planning and inventory control system used to manage manufacturing processes An MRP system is intended to simultaneously meet three objectives: • • • Ensure materials are available for production and products are available for delivery to customers. staffing. Maintain the lowest possible level of inventory. Master Production Schedule A master production schedule (MPS) is a plan for production. MPS accuracy and viability dramatically affect profitability. purchasing. parts. delivery schedules and purchasing activities. Enable marketing to make legitimate delivery commitments to warehouses and customers Increase the efficiency and accuracy of a company's manufacturing Given Below is our MPS table for next four months. An effective MPS ultimately will: • • • • Give production.5. This plan quantifies significant processes. Tie overall business planning and forecasting to detail operations. The MPS quantity is selected to satisfy the inventory so its level must remain above zero to avoid backlog and delay. and management the information to plan and control manufacturing. planning. And on hand inventory from last month is 12290 units.

MRP for next four months is given below. Rather than ordering for each receipt. 37 . There are many software tools available for assisting MRP. for small parts we can order a batch requirement of two receipts and store in inventory. the planned release time goes back to 4. They provide different solutions to make understanding easy. 5 weeks from final planned product receipt.With the use of excel we have developed MRP for every part required for the final receipt of product at different points on timeline. We have used SMART DRAW to produce a time line that contains the material planned releases and receipts to provide visual demonstration of first order. For parts in level 4.

𝐴𝑛𝑛𝑢𝑎𝑙 𝑜𝑟𝑑𝑒𝑟𝑖𝑛𝑔 𝑐𝑜𝑠𝑡 (𝐴𝑂𝐶) = 𝐴𝑛𝑛𝑢𝑎𝑙 𝐻𝑜𝑙𝑑𝑖𝑛𝑔 𝑐𝑜𝑠𝑡 (𝐴𝐻𝐶) = 𝑂𝑟𝑑𝑒𝑟 𝑆𝑖𝑧𝑒 (𝑄) × 𝐴𝑛𝑛𝑢𝑎𝑙 ℎ𝑜𝑙𝑑𝑖𝑛𝑔 𝑐𝑜𝑠𝑡 𝑝𝑒𝑟 𝑢𝑛𝑖𝑡 (𝐻) 2 𝑄 = � 2𝐷𝑆 𝐻 𝐴𝑛𝑛𝑢𝑎𝑙 𝐷𝑒𝑚𝑎𝑛𝑑 (𝐷) × 𝑂𝑟𝑑𝑒𝑟𝑖𝑛𝑔 𝑐𝑜𝑠𝑡 𝑝𝑒𝑟 𝑜𝑟𝑑𝑒𝑟 (𝑆) 𝑂𝑟𝑑𝑒𝑟 𝑆𝑖𝑧𝑒 (𝑄) To get the optimum order size. which reveals the following result. (often in unit cost) • The ordering cost . receiving costs etc • The holding cost – the storing and handling cost. Economic order quantity (EOQ) Economic order quantity is the level of inventory that minimizes the total inventory holding costs and ordering costs. we equate AOC vs. In order to decrease our cost we determine the optimum order size that can balance inventory holding cost and re-ordering cost. In our model we have selected five annual demands. 38 .related to order preparation. It is one of the oldest classical production scheduling models. There are three cost components in ordering process • The purchase cost of the material.3.6. and compares it with different order size to get AOC and AHC for every product. AHC. communication.

39 .

3. so this method is not feasible for our model at the moment for any part. This first part follows a kind of forecast-based push-strategy whereas the second part is kind of customer-order driven pullstrategy. “make to order”. Two logistic control loops meet here. 40 . And we will stick to our MRP schedule. CODP .7. “assemble to order” and “engineer to order” there is a customerindependent production of parts or subassemblies to stock. Based on the principles of “make to stock”.AHC 450000 400000 350000 300000 250000 200000 150000 100000 50000 0 0 4500 4000 3500 3000 2500 2000 1500 1000 500 0 0 2000 4000 6000 8000 10000 12000 AOC 1 AOC 2 AOC 3 AOC 4 AOC 5 2000 4000 6000 8000 10000 12000 AHC Because our demand is much more than the EOQ.Customer order decoupling point The CODP defines a point of time when an order of anonymous-stock production becomes a customer order. Physically the decoupling point defines the last stock where parts or assemblies are stored without a certain reference to an order.

” The following graphic shows possible points in the production process including their designation. Many companies prefer this type of setting the CODP with their more popular products. 41 .The APICS dictionary defines the CODP as follows: “The locations in the product structure or distribution network where inventory is placed to create independence between processes or entities. life cycle and other reasons that could lead to demand fluctuation. Dell is a good example for a company that has its CODP set at a more early stage in the production process. The decision about which strategic point to chose results in a trade-off between increased lead times/lost opportunities and increased inventory/risk obsolescence. Selection of decoupling points is a strategic decision that determines customer lead times and inventory investment. because there is usually a stable demand for Cheese Burgers. It is therefor necessary to evaluate factors such as product popularity. McDonalds will make Veggie Burgers to order but always have a stock of finished Cheese Burgers. e. the more inventory has to be kept to be able to offer the whole product variety. In order to make a good choice for the CODP placement for our production of air conditioners we are presenting three possible solutions. which are depicted in the next pictures. This results in a very high responsiveness and is very useful if demand is stable and predictable. we can reduce our whole inventory by waiting with the assemblies until we have an actual customer order.g. it would be a very reasonable decision to assemble the components and store the finished products. Solution 1: CODP after final assembly If we had less variety in our production program. PCs and Laptops are assembled according to customer orders resulting in high flexibility and lower inventories. The later the CODP is set within the production process. As we deal with products from a product family consisting of some similar parts.

The amount of parts has to be determined before manufacturing their components and by not assembling them afterwards response time would increase without any gain. 42 . By waiting with the assembly of the outdoor and indoor unit we do not change anything regarding overall inventories as the parts need to be assembled to the units regardless what model is to be produced.Solution 2: CODP before assembly one Placing the CODP before the first assembly is the least reasonable alternative.

3. An aggregated demand for the subparts is much easier to forecast and demand fluctuations between different models can be met. Furthermore there is a high probability of bad planning. the costumer order decoupling point should be placed there to ensure the meet of customer needs in case of demand variations. one can use KanBan: The principle of the Kanban system is simple. With the aim of high capacity utilization there are often high batch sizes and long lead times. If material is needed (i. because a stock falls below minimum) – and only then – 43 . The system is to simplify communication by unique labels with information about what is needed and in which quantity – the so called KanBan. that the individualization of the four variants start at the assembly of the indoor and outdoor units.Solution 3: CODP before Subassembly two In consideration of the fact. Planning is based on sales and order forecasts. To get over this. because planning and doing units are not the same. Response time does not change significantly but the inventory is kept lower then before.8. In the centrally organized production planning and control all tasks are performed – by name – by central agencies. which was created in a Taylorist oriented environment. what not implicates that the implementation is easy as well: KanBan is a system that performs. In cause of complex interactions between the elements of the PPS there is mostly a high coordination effort and a lack of flexibility in this so called “push” system. KanBan KanBan differs in essential elements of the commonly used central production planning and control.e. in contrast to the traditional method where material is passed on to subsequent operations. When an order for a specific model arrives the second assembly can be initiated and due to its lower complexity and shorter assembly time. the transfer in the opposite direction. the order can be fulfilled in a reasonable time. As a kind of Just-in-time method the downstream operation takes items from the upstream just in the time and in the number where it is currently a need.

whether our production is able to use KanBan or which changes have to be done to meet the requirements: 1. This would lead to stocks (and furthermore waste). No overproduction should be made. Build a flow production The production program must be placed in uniform flow. the conventional time-based management methods are replaced by a demand-oriented control – a pull system. 2. Smoothed production Because KanBan systems take part on several stages of production. 4. Within our air conditioner production line we meet this condition. As one can see out of the model. 3. this has to be implemented first in our production line. Because there is now no optimized transport flow in use. paper). we have to implement a planning unit at the last stage of the production. the production is strictly timed. avoiding large fluctuations and the detailed pilling of production on the last stage is extremely important. Thus. Reducing batch sizes In order to achieve just-in-time production the conventional optimization of lot sizes must be waived. which is generally transported with the goods with each batch and is returned at the dawn of the lot to the new delivery. especially the principle that there should be manufacturing only in the case. Strict rules apply to the production. This asking is represented by using a Kanban (card. In our production we can easily adopt this condition.the upstream process is asked to provide new material. Reduction and harmonization of transport cycles The reduction of inventory requires increased transportation effort. That means the degree of standardization has to be increased and the production must be strictly timed. Only correct parts may be transported. In case of our production line. before using KanBan. which leads to high standardization. Before implementing a KanBan system one has to identify whether the specific conditions for the use of KanBan are met. a new effective system requires a large amount of changes within the company. Any unforeseen change would be apllied to the upstream stages and lead to stress. Mostly. 44 . We have only a small variety in the products. We will have a look. Takeda lists seven essential conditions that must be met. If there is no intervene the KanBan system is a self-controlled cycle system. when a KanBan is coming up. To avoid a lack of material at the sinks the transportation of the material has to be guaranteed.

Start the KanBan f. Design the KanBan (questions to concider: How is material controlled? What are the visual signals? Who is responsible? What training will be required? What is the implementation schedule?) d. subassemblies in moveable pallets. Conduct data collection (necessary to characterize your production process) b. For implementation of KanBan there are a lot of things to do. Smaller parts of our production are transported in containers. seems to fit very well to the conditions of KanBan. This has to be done by suitable sizing and standardizing of the KanBan System. Audit and maintain the KanBan g. Currently we have just one quality control at the end of the line. Consistent container management Containers perform several tasks in transportation. Continuous production By using KanBan a consistent utilization of the production units is reached. there is another important condition: the quality issue. which is not applying to our production.5. Improve the KanBan 45 . The determination of names and addresses is shown in the figure at the end of this chapter. The production of air conditioners. Generally. special orders have to be handed as well. every consuming and producing unit as well as buffer stocks and all items need a unique name. 7. The variance of products is due to simplification in MRP not given anymore. Determination of the addresses Since the material flow is controlled by cards. Additionally to the seven steps of Takeda. Thus a precise allocation of the cards. The container should be as small as possible. consisting of automatic quality control. A long-term relationship has to be established to ensure quality and quantity at the required time. Calculate the KanBan Size (calculate out of current conditions) c. They ensure the damage-free transportation of the products and give the number and type of content. A quality management system. like we are doing in our model and changed it to the new conditions. materials and containers is possible. whether they are able to work with us in this just-in-time environment. The system must be kept as transparent and simple as possible in order to avoid mistakes. While choosing a container one has to watch the needs of the next process. 6. Train everyone e. Following roadmap gives an overview about upcoming tasks for implementation: a. self control by labor worker and process controls has to be implemented to ensure the transportation of correct parts to the downstream unit. Because our solution involves the suppliers as well while working with KanBan we have to check the suppliers.

46 .

Because the Compressors are just taken from the stock. After implementation we are sure that we can reach the following advantages with using the KanBan System: • • • • • • adaptive potential for short-term changes in demand inventory reductions increase in volume efficiency transition of nested production systems to self-running loops increase in transparency of process relations increase in motivation of employees through responsibility in control loops 47 . there should be 2 KanBan as well.Instead of using 1 KanBan like calculated one should chose 2 KanBan in this situation.

Tools often provide graphical interfaces. Scheduling Even though it was not part of the lecture. While manufacturing is aiming to minimize the production time and cost by schedule processes in time. we wanted to round off the picture of production planning by looking into scheduling as well. leveling Reduced scheduling effort (rescheduling) Increased production efficiency Labor load leveling Accurate delivery date quotes Real time information 48 . the better the production scheduling. it is a time consuming.3. An easy rule applies for scheduling: the better the information and the model. Project scheduling is currently under great focus within the manufacturing planning research. tedious task. resources and labors. A current trend shows up. which can be easily used to improve real-time workloads. that the conventional shop scheduling turns into project scheduling while associating every process as an own project. Heavy algorithms are used here to solve the minimization/maximization problems. Benefits of production scheduling show up as follows: • • • • • • • Process changeover reduction Inventory reduction. Tools are used in all the cases – because scheduling always shows up as a mathematical complex optimization problem. production scheduling’s purpose is to maximize the efficiency of the operation and to reduce costs.8. Scheduling is a very powerful tool in manufacturing and engineering that has a major impact on the productivity of a process. Even with the use of computers.

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com/textbook/time-series-analysis/#seasonal Operation Management 8e Process and value chains by Krajewski.wikipedia.com/blog/bid/48679/Exponential-smoothing-and-Sales-forecasting-software http://www.edu/~rnau/411outbd.it. References Data Mining: http://www.com/textbook/time-series-analysis/#seasonal Operation Management 8e Process and value chains by Krajewski.org/wiki/Aggregate_planning 50 .htm Aggregate planning: Aggregate Planning by Utdallas. Kanwal Rekhi School of Information Technology holt-winters forecasting: some practical issues by Chatfield and Yar http://www.iitb.110mb.htm http://www.duke.pdf http://vbautomation. Kalekar.edu (presentation) http://en. Ritzman and Malhotra http://www.statsoft.com/FORECASTING/exponential_smoothing_with_seasonality.ac. Ritzman and Malhotra Forecasting: Operation Management 8e Process and value chains by Krajewski.mxisoft.A1. Ritzman and Malhotra Time series Forecasting using Holt-Winters Exponential Smoothing by Prajakta S.statsoft.in/~praj/acads/seminar/04329008_ExponentialSmoothing.

CFPIM.gr/pagesuk/technicalissues/management/production-management/production_managment_production_management. Haythornthwaite. J.wikipedia.” Lunn.com/doc/24340782/Master-Production-Scheduling CODP: http://www.scribd. Effective Placement of Manufacturing Inventories.ifm.htm James F. “The Master Schedule.html 51 .html http://www.vnl.competence-site.transtutors. Cox._p11.de/news-infocenter/logistik-lexikon/word/customer_order_decoupling_point.. Terry.at/Entkopplungspunkt.ac. J. MRP: Integrating Material Requirements Planning and Modern Business http://www.eng.MPS: http://www.org/wiki/Order_fulfillment http://www.217.html Chopra and Meindl: Supply Chain Management.com/homework-help/Industrial+Management/Production+Planning+And+Control/master-production-schedule.uk/dstools/process/mrp.de/pps-systeme/Customer-order-decoupling-point-CODP http://thalys.net/company-activities/master-production-schedule/ http://en. 1989 APICS International Conference Proceedings http://en.aspx http://exceltemplates.cam.org/wiki/Master_production_schedule MRP: Bruggeman. and Susan Neff. and S. Pearson 2007 http://www.ssi-schaefer.0.wikipedia.

at (Verein Netzwerk Logistic) competence-site.org/wiki/scheduling_(production_processes) giraffeproductionssystems.lepros.kanbanconsult. in Engineering Managment International. p.made simple.htm VORTEILE http://www.de/hybrides-kanban.de/kanban. 1995.de 52 .wikipedia. Issue 4.php VORTEILE und Einsatzgebiete Kanban .it-production.org vln.php?seite=einzel_artikel_ansicht&id=20220 FUNKTIONSWEISE http://www.com/index.the japanese just in time production system. Gross and Mcinnis. 143-150 Horst Wildemann (1995): Implementation strategies for the integration of japanese Kanban principles in German companies. 305-319 Scheduling: en. Isue 9. p. in: Engineering costs and production economics.KanBan: http://www. Reda (1987): A review of kanban . American Managment Association 2003 USA Hussein M.net Glossary: Lecture Notes Wikipedia. 1987.

02.11 2 hour group discussion on the forecasting methods and research on different methods which could suit our model. All group members were present. Appendix Capacity Planning 2 hour discussion on capacity planning and extend model.A2. 53 . All group members were present and rough calculations were made 22.11 Brief discussion on forecasting again and the Halt Winters method was analyzed in detail after reading the literature the previous night. 24. Brain storming was carried out and literature was searched for reading.02.11 Group discussion on aggregate planning on how to implement it to our system.02. Meeting held around 2 pm in KTH Library Forecasting Aggregate Planning MPS and MRP Kanban 18. Meeting took place at KTH Library at 3 pm.

Almost 3 hr group discussion 01. Had a detailed study of both in the KTH Library. 02. Meeting took place in M block/ Literature collected to precede MPS and MRP.11 28.03.03.11 Compilation of Capacity planning into report was Compilation of forecasting carried out here we worked in carried out by the other two group of two. Two people group members.02.02. capacity planning successfully completed. End result necessary feedbacks. In the end the worked on writing capacity parts were interchanged planning in report format between the groups to have a whereas the other two worked look and provide with on forecasting. All members were present.11 Aggregate planning finalized after reading the literature over the weekend and all group members sat down and gave their input as to how it should be preceded.11 54 .25.

03. Amins input was taken through Skype Kanban put into report in its final format.03. The tables and results for formulated on excel but yet to be placed in the final report. All members present at KTH Lib. All members were present. Literature review on kanban started at 3 pm in M block.03. MPS and MRP Tables developed on excel.11 09. All group members present.03.11 06. Kanban model built and discussed with a few complications but still solved. Work carried out at KTH Library.03. All group members were present Aggregate planning finalized and put into report. MPS and MRP Finalized. 05. Put into report format.11 Another group meeting on aggregate planning.11 55 .03. The complete report finalized.04.11 07.11 10.

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