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Chapter 7 Chapter 7
Push and Pull Production Push and Pull Production
Control Systems Control Systems
McCraw-Hill/Irwin
Copyright 25 by 1he McCraw-Hill Companies, Inc. All rights reserved.
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Basic DeIinitions Basic DeIinitions
#! #! aterials Requirements Planning). RP is aterials Requirements Planning). RP is
the basic process oI translating a production the basic process oI translating a production
schedule Ior an end product PS or aster schedule Ior an end product PS or aster
Production Schedule) to a set oI requirements Ior Production Schedule) to a set oI requirements Ior
all oI the subassemblies and parts needed to make all oI the subassemblies and parts needed to make
that item. that item.
% % ust ust- -in in- -Time. Derived Irom the original Time. Derived Irom the original
apanese Kanban system developed at Toyota. T apanese Kanban system developed at Toyota. T
seeks to deliver the right amount oI product at the seeks to deliver the right amount oI product at the
right time. The goal is to reduce WP ork right time. The goal is to reduce WP ork- -in in- -
process) inventories to an absolute minimum. process) inventories to an absolute minimum.
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Why Push and Pull? Why Push and Pull?
RP is the classic RP is the classic 5:8 5:8 system. The RP system system. The RP system
computes computes production schedules Ior all levels based production schedules Ior all levels based
on Iorecasts oI sales oI end items. Once produced, on Iorecasts oI sales oI end items. Once produced,
subassemblies are subassemblies are 5:80/ 5:80/ to next level hether to next level hether
needed or not. needed or not.
T is the classic T is the classic 5: 5: system. The basic system. The basic
mechanism is that production at one level only mechanism is that production at one level only
happens hen initiated by a request at the higher happens hen initiated by a request at the higher
level. That is, units are level. That is, units are 5:0/ 5:0/ through the system through the system
by request. by request.
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Comparison Comparison
These methods oIIer to completely diIIerent approaches to basic These methods oIIer to completely diIIerent approaches to basic
production planning in a manuIacturing environment. Each has production planning in a manuIacturing environment. Each has
advantages over the other, but neither seems to be suIIicient on advantages over the other, but neither seems to be suIIicient on
its on. Both have advantages and disadvantages, suggesting its on. Both have advantages and disadvantages, suggesting
that both methods could be useIul in the same organization. that both methods could be useIul in the same organization.
ain Advantage oI RP over T ain Advantage oI RP over T: RP takes Iorecasts Ior end : RP takes Iorecasts Ior end
product demand into account. n an environment in hich product demand into account. n an environment in hich
substantial variation oI sales are anticipated and can be substantial variation oI sales are anticipated and can be
Iorecasted accurately), RP has a substantial advantage. Iorecasted accurately), RP has a substantial advantage.
ain Advantage oI T over RP ain Advantage oI T over RP: T reduces inventories to a : T reduces inventories to a
minimum. n addition to saving direct inventory carrying costs, minimum. n addition to saving direct inventory carrying costs,
there are substantial side beneIits, such as improvement in there are substantial side beneIits, such as improvement in
quality and plant eIIiciency. quality and plant eIIiciency.
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RP Basics RP Basics
The RP system starts ith the PS or aster The RP system starts ith the PS or aster
Production Schedule. This is the Iorecast Ior the Production Schedule. This is the Iorecast Ior the
sales oI the end item over the planning horizon. sales oI the end item over the planning horizon.
The data sources Ior determining the PS The data sources Ior determining the PS
include: include:
Firm customer orders Firm customer orders
Forecasts oI Iuture demand by item Forecasts oI Iuture demand by item
SaIety stock requirements SaIety stock requirements
Seasonal variations Seasonal variations
nternal orders Irom other parts oI the organization. nternal orders Irom other parts oI the organization.
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The Explosion Calculus The Explosion Calculus
The explosion calculus is a set oI rules Ior The explosion calculus is a set oI rules Ior
converting the master production schedule to a converting the master production schedule to a
requirements schedule Ior all subassemblies, requirements schedule Ior all subassemblies,
components, and ra materials necessary to components, and ra materials necessary to
produce the end item. produce the end item.
There are to basic operations comprising the There are to basic operations comprising the
explosion calculus: explosion calculus:
Time phasing. Requirements Ior loer level items must Time phasing. Requirements Ior loer level items must
be shiIted backards by the lead time required to be shiIted backards by the lead time required to
produce the items produce the items
ultiplication. A multiplicative Iactor must be applied ultiplication. A multiplicative Iactor must be applied
hen more than one subassembly is required Ior each hen more than one subassembly is required Ior each
higher level item. higher level item.
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The Product Structure Diagram The Product Structure Diagram
The product structure diagram is a graphical The product structure diagram is a graphical
representation oI the relationship beteen representation oI the relationship beteen
the various levels oI the productive system. the various levels oI the productive system.
t incorporates all oI the inIormation t incorporates all oI the inIormation
necessary to implement the explosion necessary to implement the explosion
calculus. Figure 7 calculus. Figure 7- -3 next slide) depicts an 3 next slide) depicts an
end item ith to levels oI subassemblies. end item ith to levels oI subassemblies.
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Typical Product Structure Typical Product Structure
Diagram Diagram
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Lot Sizing For RP Systems Lot Sizing For RP Systems
The simplest lot sizing scheme Ior RP systems is The simplest lot sizing scheme Ior RP systems is
lot lot- -Ior Ior- -lot abbreviated L4L). This means that lot abbreviated L4L). This means that
requirements are met on a period by period basis requirements are met on a period by period basis
as they arise in the explosion calculus. Hoever, as they arise in the explosion calculus. Hoever,
more cost eIIective lot sizing plans are possible. more cost eIIective lot sizing plans are possible.
These ould require knoledge oI the cost oI These ould require knoledge oI the cost oI
setting up Ior production and the cost oI holding setting up Ior production and the cost oI holding
each item. This brings to mind the EOQ Iormula each item. This brings to mind the EOQ Iormula
Irom Chapter 4, hich can be used in this context. Irom Chapter 4, hich can be used in this context.
Hoever, there are better methods. Hoever, there are better methods.
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Statement oI the Lot Sizing Problem Statement oI the Lot Sizing Problem
Assume there is a knon set oI requirements Assume there is a knon set oI requirements
(r (r
11
, r , r
22
, . . . r , . . . r
nn
) ) over an over an n n period planning period planning
horizon. Both the set up cost, horizon. Both the set up cost, K, K, and the and the
holding cost, holding cost, , , are given. The objective is are given. The objective is
to determine production quantities to determine production quantities (y (y
11
, y , y
22
, . . , . .
., y ., y
nn
) ) to meet the requirements at minimum to meet the requirements at minimum
cost. The Ieasibility condition to assure cost. The Ieasibility condition to assure
there are no stockouts in any period is: there are no stockouts in any period is:
1 1
Ior . 1
f f
i i
i i
y r f n

K A A

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ethods ethods
One could apply the EOQ Iormula by deIining One could apply the EOQ Iormula by deIining
but there are better methods. but there are better methods.
Property oI the optimal solution Property oI the optimal solution: every optimal solution : every optimal solution
orders exact requirements: that is, orders exact requirements: that is,
One method that utilizes this property is the One method that utilizes this property is the $i;0r M0, $i;0r M0,
H0:ri89ic H0:ri89ic. The method requires computing the average cost . The method requires computing the average cost
Ior an order horizon oI Ior an order horizon oI ff periods Ior periods Ior f 1, 2, 3, f 1, 2, 3, etc. and etc. and
stopping at the Iirst instance hen the average cost stopping at the Iirst instance hen the average cost
Iunction increases. The average cost Ior a production Iunction increases. The average cost Ior a production
quantity spanning j periods, quantity spanning j periods, C(f), C(f), is given by: is given by:
1
1
n
i
i
r
n
2

1 1 1 1 2 1 1 2
or ,. . ., or ...
n
y r y r r y r r r
2 3
) 2 ... 1) ) /
f
C f K r r f r f
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ethods continued) ethods continued)
Another method that is popular in practice is Another method that is popular in practice is 5,r9 5,r9
50rio/ b,,ncing. 50rio/ b,,ncing. Here one chooses the order Here one chooses the order
horizon to most closely balance the total holding horizon to most closely balance the total holding
cost ith the set cost ith the set- -up cost. up cost.
Finally, a third heuristic is knon as the Finally, a third heuristic is knon as the 0,89 :ni9 0,89 :ni9
co89 0:ri89ic. co89 0:ri89ic. Here one minimizes the average Here one minimizes the average
cost per unit oI demand as opposed to the average cost per unit oI demand as opposed to the average
cost per period as is done in the Silver eal cost per period as is done in the Silver eal
heuristic.) The average cost per unit oI demand heuristic.) The average cost per unit oI demand
over j periods is given by: over j periods is given by:
2 3 1 2
) 2 ... 1) ) / ... ).
f f
C f K r r f r r r r
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ethods concluded) ethods concluded)
Experimental evidence seems to Iavor the Experimental evidence seems to Iavor the
Silver eal Heuristic among the Iour Silver eal Heuristic among the Iour
discussed as the most cost eIIicient. discussed as the most cost eIIicient.
Optimal lot sizes can be Iound by using Optimal lot sizes can be Iound by using
backards dynamic programming. backards dynamic programming.
A heuristic method Ior lot sizing subject to A heuristic method Ior lot sizing subject to
capacity constraints is discussed in this capacity constraints is discussed in this
section. section.
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Shortcomings oI RP Shortcomings oI RP
&nc0r9,in9y &nc0r9,in9y. RP ignores demand uncertainty, supply uncertainty, . RP ignores demand uncertainty, supply uncertainty,
and internal uncertainties that arise in the manuIacturing process. and internal uncertainties that arise in the manuIacturing process.
C,5,ci9y P,nning C,5,ci9y P,nning. Basic RP does not take capacity constraints . Basic RP does not take capacity constraints
into account. into account.
#oing Hori:on8 #oing Hori:on8. RP is treated as a static system ith a Iixed . RP is treated as a static system ith a Iixed
horizon oI n periods. The choice oI n is arbitrary and can aIIect the horizon oI n periods. The choice oI n is arbitrary and can aIIect the
results. results.
0,/ Tim08 D050n/0n9 on o9 $i:08 0,/ Tim08 D050n/0n9 on o9 $i:08. n RP lead times are . n RP lead times are
assumed Iixed, but they clearly depend on the size oI the lot required. assumed Iixed, but they clearly depend on the size oI the lot required.
":,i9y Prob0m8 ":,i9y Prob0m8. DeIective items can destroy the linking oI the levels . DeIective items can destroy the linking oI the levels
in an RP system. in an RP system.
D,9, In90gri9y D,9, In90gri9y. Real RP systems are big perhaps more than 20 . Real RP systems are big perhaps more than 20
levels deep) and the integrity oI the data can be a serious problem. levels deep) and the integrity oI the data can be a serious problem.
r/0r P0gging r/0r P0gging. A single component may be used in multiple end . A single component may be used in multiple end
items, and each lot must then be pegged to the appropriate item. items, and each lot must then be pegged to the appropriate item.
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ntroduction to T ntroduction to T
T ust n Time) is an outgroth oI the Kanban system T ust n Time) is an outgroth oI the Kanban system
developed by Toyota. developed by Toyota.
Kanban reIers to the posting board here the evolution oI Kanban reIers to the posting board here the evolution oI
the manuIacturing process ould be recorded. the manuIacturing process ould be recorded.
The Kanban system is a manual inIormation system that The Kanban system is a manual inIormation system that
relies on various types oI cards. relies on various types oI cards.
t`s development is closely tied to the development oI t`s development is closely tied to the development oI
SED: Single inute Exchange oI Dies, that alloed SED: Single inute Exchange oI Dies, that alloed
model changeovers to take place in minutes rather than model changeovers to take place in minutes rather than
hours. hours.
The mechanics oI a typical Kanban system are pictured in The mechanics oI a typical Kanban system are pictured in
Figure 7 Figure 7- -8.) 8.)
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Product Structure Diagram Ior Product Structure Diagram Ior
CU2 Computer Ior Problem 4) CU2 Computer Ior Problem 4)
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Features oI T Systems Features oI T Systems
$m, Work $m, Work- -in in- -Proc088 In;0n9ori08. Proc088 In;0n9ori08.
Advantages: Advantages:
1. Decreases nventory Costs 1. Decreases nventory Costs
2. mproves EIIiciency 2. mproves EIIiciency
3. Reveals quality problems see Figure 7 3. Reveals quality problems see Figure 7- -10) 10)
Disadvantages: Disadvantages:
1. ay result in increased orker idle time 1. ay result in increased orker idle time
2. ay result in decreased throughput rate 2. ay result in decreased throughput rate
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River/nventory Analogy River/nventory Analogy
llustrating the Advantages oI ust llustrating the Advantages oI ust- -in in- -Time Time
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Features oI T Systems continued) Features oI T Systems continued)
K,nb,n Inform,9ion Fow $y890m K,nb,n Inform,9ion Fow $y890m
Advantages: Advantages:
1. EIIicient tracking oI lots 1. EIIicient tracking oI lots
2. nexpensive implementation oI T 2. nexpensive implementation oI T
3. Achieves desired level oI WP 3. Achieves desired level oI WP
Disadvantages Disadvantages
1. Slo to react to changes in demand 1. Slo to react to changes in demand
2. gnores predicted demand patterns 2. gnores predicted demand patterns
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Features oI T Systems continued) Features oI T Systems continued)
IT P:rc,8ing $y890m IT P:rc,8ing $y890m
Advantages: Advantages:
1. nventory reduction 1. nventory reduction
2. mproved coordination 2. mproved coordination
3. Better relationships ith vendors 3. Better relationships ith vendors
Disadvantages: Disadvantages:
1. Decreased opportunity Ior multiple sourcing 1. Decreased opportunity Ior multiple sourcing
2. Suppliers must react quickly 2. Suppliers must react quickly
3. Potential Ior congestion 3. Potential Ior congestion
4. Suppliers must be reliable. 4. Suppliers must be reliable.
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Comparison oI RP and T Comparison oI RP and T
ajor study comparing RP and T in ajor study comparing RP and T in
practice reveals: practice reveals:
T orks best in 'Iavorable manuIacturing T orks best in 'Iavorable manuIacturing
environments: little demand variability, reliable environments: little demand variability, reliable
vendors, and small set up times vendors, and small set up times
RP and ROP based on Chapter 5 methods) RP and ROP based on Chapter 5 methods)
orked ell in Iavorable environments orked ell in Iavorable environments
comparable to T) and better in unIavorable comparable to T) and better in unIavorable
environments. environments.