Production Planning and Control Simulation
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Production Planning and Control Simulation
PRODUCTION MANAGEMENT GAME
The Manufacturing Situation
A company manufactures 4 products, Pilts, Relts, Stuns, and Super Stuns which are assemblies of
different combinations of 5 basic components A, B, C D, and E The product structure (Bill of Materials)
of each product is as follows with the number in brackets being the number of each component required
per product:
These products are manufactured by processes involving 6 machines (M1-6) and an assembly process:
Components A and B are fabricated on Line 1 which involves three sequential processes on M1, M2 and
M3. Components C and D are fabricated on Line 2 which involves process on M4 and M5. Component E
is fabricated on line 3 involving a single process M6. Each machine has an average production rate of
parts per day as indicated, although considerable process variability exists. Changeover times are
involved on individual machines when they change from one component to another. However, the
assembly line is flexible and can change between different products without any loss of production time.
The weekly demand for the products over the past 6 weeks has been as follows (wk-1 represents last
week, wk-2 the week before last etc):
Wk -6 Wk -5 Wk -4 Wk -3 Wk -2 Wk -1
Pilt 5 5 4 4 3 3
Relt 3 4 4 3 3 4
Stun 1 1 1 1 3 2
S.Stun 1 0 1 2 1 1
The Super Stun is a product that is progressively expected to replace the Relt. Thus sales of the former are
expected to rise and sales of the latter to drop.
Playing the Game
The object of the exercise is to simulate 30 working days (six 5-day weeks) of production in such a
way as to meet as much of the expected demand as possible.
o The daily variability of each process is simulated by dice throw as follows:
o M1, M3, M4: random dice throw between 1and 6.
Production Planning and Control Simulation by S. Kara 2
o M2: random dice throw between 1 and 5 (i.e. if a 6 is thrown, it is rejected and the dice is
thrown again until a number below 6 is obtained.
o M5: random dice throw between 1 and 3 (i.e. the dice is thrown until a number between 1 and
3 is obtained.
o M6: random dice throw between 1 and 4
o There is no process variability on the assembly line.
Changeover times on the relevant machines between components A and B, and between C and D are
simulated by a loss of production as follows:
o M1, M3, M4: loss of one day production whenever a component changeover takes place.
o M2: two units production less than the dice throw whenever a component changeover takes
place.
o M5: one unit of production less than the dice throw whenever a component changeover takes
place.
It is possible to invest money in reduction of machine changeover time and reduction in machine
variability according to the following rules which have been invented by the Accounting Department
to reflect the cost of making improvement:
o For an additional operating cost of $100 per week for every product produced the changeover
penalty of one machine may be reduced by one unit of production. Thus the more machines
are subject to this type of improvement, the greater will be the operating cost.
o For an additional operating cost of $100 per week for every product produced the range of
process variability of any machine may be reduced by two units of production e.g. for an
additional cost of $100 per week, you can alter the dice throw of (for example) machine M3
from 1-6 to 2-5.
Components A, B, C, D and E may be represented by different types of paper clip, which are moved
through the individual processes according to the dice throws indicated above.
Paper clips may be "assembled" into products by hooking together the appropriate clips required for
each product.
Each machine, and the assembly line, will have an input buffer stock of each of each type of
component, and the number of components in each buffer will vary from day to day according to the
variability of the individual machines, and decisions about which component to produce on any
particular day, or series of days.
For each day’s production, production should occur (i.e. dice should be thrown) in the following
sequence: M1: M4: M2: M5: M3: M6
The output of each machine's production is available for processing by the next machine on the
same day.
Components are passed each day according to dice thrown from each machine to the input buffer of
the next machine. A decision must be made as to which component to produce on a particular day
BEFORE the dice is thrown. If the dice throw is greater than the quantity in the input buffer stock of
the chosen component, only the quantity in the buffer can be passed to the next machine.
On component changeover, loss of one day’s production means the machine will lose a dice throw on
the day that the production would have taken place. Loss of a certain number of units of production
means that after the dice throw, the units of production lost by the changeover should be subtracted
from the number thrown by the dice.
It will not be necessary to run each machine at its full capacity if this is not required. Thus a 4 may be
thrown but only two units passed on if it is thought that over-production may be occurring. In fact,
any quantity of units may be passed on provided this is (a) not greater than the dice throw, and (b) not
greater than the quantity in the input buffer.
Customer orders are delivered weekly (at the end of each week). The customers have a "blanket"
ordering system i.e. customers have long term agreements in which they commit themselves to
cumulative orders of a certain aggregate quantity of products over a six month period, but reserve the
right to vary the individual quantities ordered on a week by week basis according to current market
conditions (products delivered to customers are sub-assemblies whose arrival time needs to be
coordinated with their own production schedule for delivering products of which Pilts, Relts etc. are a
Production Planning and Control Simulation by S. Kara 3
component part.). Thus, some degree of assembly flexibility is required to cater for these variations,
and stocks of unsold products may arise.
Note the one-week lead time for ordering raw materials. The amount to be available the following
week should be specified on the suppliers’ score sheet. Thus, if a decision is made at the start of week
1 to order 10 units of A, this should be entered in the appropriate column for week 1. However, the
materials cannot be physically transferred to be input buffer until the start of the following week. Also
note that the first input of raw materials can only be made at the start of week 2 based on orders
placed at the start of week 1.
At the start of each week’s production, the actual demand on each product required to be delivered at
the end of the week will be given in the classroom during the execution of the game.
Initially, ONE of each product type is in stock. In addition, a total of not more than 15 units of work
in progress for A, B, C and D may be distributed amongst the input buffers of each machine. These
may be distributed over buffers in any quantity or combination provided the TOTAL number of all
types of components in all input buffers does not exceed 15.
Delivery of raw components from suppliers is made in weekly batches (which arrive in stock at the
start of each week). Requirements to the suppliers for each type of component must be specified one
week in advance. Thus, at the start of each week, it will be required to specify to the supplier the
quantity of each raw component required at the start of the following week. After one week (five days
production has elapsed) the corresponding quantity may be moved into the input buffers of the first
processes (M1 and M4). These quantities may NOT be changed during the week.
ALSO, if a sale in a particular week is lost because inadequate products were available, this sale is
lost irretrievably (i.e. NO BACKORDERS ARE ALLOWED. IF THE CUSTOMER IS NOT
SATISFIED IN THE WEEK THE PRODUCT IS REQUIRED, THEY WILL GO ELSEWHERE)
Objective of the game
The objective is to maximise profit over a 6 week (30 day) simulated period of production. However,
at the end of the 10 week period, for every unit of unsold product you have in stock either greater than
or less than of your starting stock position, $2000 will be deducted from the final profit, and for every
component of Work-in-Progress in either greater or less than the initial Work in Progress of 15 units
at the start of the game, $1000 will be deducted. Your profit will therefore be reduced if you finish the
game with excessive amounts of inventory or if your stocks run so low that the future trading position
of the company is threatened. Your average inventory costs must also be assessed each week for a
final deduction from your total profit. The average inventory carrying cost for each week is estimated
as an approximation, by multiplying the total number of components in stock at the end of each week
by $100, and the total number of finished products in stock at the end of each week by $200. You may
find that changeover times are such that it will be necessary to produce individual components for
several consecutive days so as not to lose too much production time in changeovers.
The exercise will be to plan the weekly assembly schedule, and the daily production of each machine
and the raw material quantities to be ordered weekly from suppliers to support the assembly schedule,
and then to simulate this activity using dice and paper clips, using one of the Production Planning and
Control Techniques (e.g. MRP, JIT).
When you adopt the JIT approach, you will have the option of investing in new equipment and
processes that will reduce changeover times as follows:
o M1, M3: changeovers may be reduced from one day of production to three units of
production less than the dice throw on that day, at an additional cost of $50 per week
o M2, M4: one unit of production less than the dice throw for $50 per week.
o M5 set-up time can be eliminated at a cost of $100 per week.