Cycle time reduction by improved MRP-based production planning

The important practical problem of planning the production of large assemblies employing an MRP-based system is considered. The objective is to produce products on-time, with minimal cycle time and low work-in-process costs. The approach is based on the determination of accurate lead-time estimates and on the introduction and use of lead-time offsets in the solution methodology. An effective Lead-time Evaluation and Scheduling Algorithm (LETSA) is employed that can perform detailed backward scheduling of operations belonging to a large assembly on a given facility with an objective of minimizing the cycle time. A scaling procedure is used to account for capacity sharing effects by multiple products in a common facility. These scaled lead-time estimates are then employed by an MRP-based system to release work-orders on the shop-floor. The effectiveness of these lead-times and lead-time offsets are evaluated by simulating production using the MRP generated order release times and verifying on-time completion of the multiple assemblies in the common facility. Numerical experiments are presented to validate the performance of the approach. Optimized batch sizes for minimal work-in-process (WIP) costs can also be obtained using LETSA. Thus, the important objectives of minimizing cycle time for on-time delivery and minimizing schedule costs can be accomplished simultaneously.