Manufacturing Inventory
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One of the production manager's greatest challenges is having the right amount of manufacturing inventory on hand. Manufacturing inventory are goods used to support production, rather than finished goods. Having too small a manufacturing inventory results in production shut downs and costly delays. Carrying too much in manufacturing inventory results in increased procurement cost. The optimum solution is to strike a balance which provides the right amount of manufacturing inventory at the right time. Several methods have developed for managing this process, and this paper focuses on three such methods: Just-In-Time management (JIT); Material Requirements Planning (MRP); and, Optimized Production Technology (OPT). Each of these will be explained and their relative strengths and weaknesses examined. Finally, this paper will explore when it is appropriate to implement each of these production management techniques. JIT was originally developed by the Japanese and is generally applied to repetitive manufacturing processes. The goal of JIT is the production of precisely the necessary units in the necessary quantities at the necessary time with a scheduling variance of plus or minus zero (Tersine, 1985, p. 571). Following this technique, anything over the minimum amount necessary is performance equally negative to anything less than the minimum amount. A fundamental difference between JIT and traditional American manufacturing techniques is the lack of keeping stock on h
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tlenecks busy and can be controlled by where the bottlenecks are located. MRP suggests that inventories serve a useful purpose as safety stock and does not strive to control them at certain points. JIT takes the view that work in process should always be zero, and so strives to eliminate inventory altogether.
Transfer batches are the amounts of items transferred from one operation to another; product batches are the amounts processed at any operation. Traditional inventory philosophy holds that these batches should not be split. OPT holds not only that the transfer batch may not match the process batch, but that there are instances when such a situation is desirable. In keeping with this, OPT suggests that the process batch should not be a fixed amount. Thus, process batches are a function of the schedule and are not arbitrarily assigned. This is in keeping with JIT.
Finally, OPT is based on the idea that schedules should be developed by considering all constraints. Lead times in particular should be considered as dependent on the schedule and not as independent entities. This is in direct opposition to MRP, which assumes predetermined lead times. OPT's variable lead times can be illustrated in the following manner.
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Approximate Word count = 2457
Approximate Pages = 10 (250 words per page)
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