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Figure 1. Main Screen of the Simulator You can view the current inventory, work in progress, and vendor orders at this time. Next you need to decide on orders to place for next week, their priorities, and overtime to authorise for the next week. Once you have made the decisions, communicate it to the simulator by clicking on the button Make/Alter Decisions. In placing the shop orders, it is important to take into consideration the product structure (the Bill of Materials). If the components needed for your order are not available in the inventory, the order cannot be processed until all the components are available. The remaining on-hand inventory is updated and displayed as you enter your decisions. Obviously, this does not apply to the purchased components, of which you can order as many as you like. If you change your mind before the week is simulated, you can change your decisions using the same button. The Use MRP button in the order form permits you to use MRP decision support. You need to build the MRP tables first to use this button! You can always override the MRP table suggestions. Once the decisions are entered, you may press the Simulate! button to let the production for the week begin, and to let the time advance to the next week. The queues of the machines, the finishing of the work, the inventory position, the arrival of orders, and the filling of the orders are animated on the screen. You can adjust the speed of animation by moving the scroll bar at the middle right of the screen. Profits are accumulated for every item in the order that is filled. For every item in the order that is late (back-ordered), a penalty is charged per day. There are also costs associated with holding inventory (both finished and work in process) and with overtime work. These and other details of the model may be viewed by pressing the button View Model Details. At the end of the week your financial performance is shown at the top right of the screen. This shows both your current
and cumulative performance. You are now ready to make decisions for the next week and to repeat the cycle. This cycle consists of making the decisions, simulating the system, monitoring the result, then making the decisions again ... ... until week 32. Your objective is to maximise your cumulative profit at the end of the game. Assignment For the purpose of this assignment, please play the game for a while until you have a good understanding of what is happening. The game is designed to enhance your understanding of: Bill of Materials Routing Order review and release Priority setting Production capacity Variability in production Work in process Queuing Inventory costs Customer service Forecasting Master production scheduling (MPS) Material requirements planning (MRP) Capacity requirements planning (CRP) After playing the game for a while you may wish to have some sort of computer support to make your decisions. You can create this for yourself. Past data may be used for forecasting, which leads to a MPS, and this MPS, when broken into the components through MRP, should help you in deciding how many parts / products to order and when. A CRP module can help you decide how much overtime to order. Your specific assignment is to create a decision support system (DSS) using these concepts. Please follow the following instructions exactly as given.
Step 1. Familiarise yourself with the simulator. Play the game in an ad-hoc manner, guessing the decisions. What is the highest profit you made while playing in an ad-hoc manner? ________________ Step 2. Play the game on a reorder point basis. The idea of a reorder point (ROP) is to set a minimum level of inventory at which you order inventories, choosing your own order size. Try different ROPs and order sizes. Enter your best reorder policy: Item Alpha Beta Comma Delta Epsilon Fi Gamma Reorder point Order size
What is the highest profit you made while playing on a reorder point basis? ________________ Step 3. The next step is playing the game with a DSS, built by you. To do this, you need a forecasting model to forecast demand of products Alpha and Beta. This should be fed into the master production schedule (MPS) of the MRP worksheet. Next you need to explode this MPS into the MRP, which will then tell you what order to release each week. When you create the CRP model from the MRP model, you can decide how much overtime to use. Remember though, that the decision support system is there to help in decisionmaking. It suggests things for you to do, but it does not dictate your decisions. You can override it any time. Here are the steps to create the DSS. A. Forecasting. I suggest you use linear regression for forecasting. Use the menu item Tools | Data Analysis | Regression. The Y-Range is of course the demand, and the XRange is the number of weeks. Use the output of this analysis to create your forecast. The forecast formula is: Intercept + (X Variable 1) * (Number of weeks). This should create the forecast up to week 35. You need to forecast the demand for both Alpha and Beta. B. Master Production Scheduling. You need to link your forecasts to the MPS (in the worksheet MRP). Use the VLOOKUP function provided in EXCEL to do this. This function will look up from the forecast table (called Forecast1 and Forecast2 for Alpha and Beta respectively) appropriate Forecast (column D) and insert into the MPS table. (Hint: You need to insert something like VLOOKUP (week, Forecast1, column No.) into
the MPS). The scheduled receipt row needs to be linked to the appropriate work-in-process information in the Main Screen. The current on hand needs to be linked obviously to the current inventory from the Main Screen. C. Material Requirements Planning. The MRP explosion should of course be based on the BOM. Do your work in the worksheet MRP. Make sure the gross requirements are always derived from the parent, not necessarily from the finished product. I suggest you use the lot for lot policy for all MRP explosions, with a lead-time of one week. D. Capacity Requirements Planning. The CRP should be based of course on the Routing information in the workbook. Combine the requirements of work for each of the work centres. Make sure you take into account the work requirements for order in progress (scheduled receipts). I suggest you use the full work requirements for these. E. Decision Support System. The summary information at the bottom of the worksheet summarises the order releases for the current week. The overtime should come from CRP, if more than the available 40 hours are needed. Insert the appropriate formulas to gather this information from the appropriate places. Your DSS is now complete. You can now use this DSS when using the button Make/Alter Decisions to make your decisions. The Use MRP button will get the order releases and the overtimes from the MRP worksheet. Remember though that this is always just a suggestion, you can change the decisions manually particularly in view of the component availabilities and work-inprogress. F. Play! See if your DSS is any good. Play the game using your MRP models to make the decisions. What is the highest profit you made while playing with your DSS? ________________