Setting parameters in MRP for the effective management of bought-out inventory in a JIT assembly environment

In recent years, UK industry has seen an explosive growth in the number of `Computer Aided Production Management' (CAPM) system installations. Of the many CAPM systems, materials requirement planning/manufacturing resource planning (MRP/MRPII) is the most widely implemented. Despite the huge investments in MRP systems, over 80 percent are said to have failed within 3 to 5 years of installation. Many people now assume that Just-In-Time (JIT) is the best manufacturing technique. However, those who have implemented JIT have found that it also has many problems. The author argues that the success of a manufacturing company will not be due to a system which complies with a single technique; but due to the integration of many techniques and the ability to make them complement each other in a specific manufacturing environment. This dissertation examines the potential for integrating MRP with JIT and Two-Bin systems to reduce operational costs involved in managing bought-out inventory. Within this framework it shows that controlling MRP is essential to facilitate the integrating process. The behaviour of MRP systems is dependent on the complex interactions between the numerous control parameters used. Methodologies/models are developed to set these parameters. The models are based on the Pareto principle. The idea is to use business targets to set a coherent set of parameters, which not only enables those business targets to be realised, but also facilitates JIT implementation. It illustrates this approach in the context of an actual manufacturing plant - IBM Havant. (IBM Havant is a high volume electronics assembly plant with the majority of the materials bought-out). The parameter setting models are applicable to control bought-out items in a wide range of industries and are not dependent on specific MRP software. The models have produced successful results in several companies and are now being developed as commercial products.

Aircraft rotable inventory optimisation: development of a new solution

Analysis of the use of ICT in the aerospace industry has prompted the detailed investigation of an inventory-planning problem. There is a special class of inventory, consisting of expensive repairable spares for use in support of aircraft operations. These items, called rotables, are not well served by conventional theory and systems for inventory management. The context of the problem, the aircraft maintenance industry sector, is described in order to convey some of its special characteristics in the context of operations management. A literature review is carried out to seek existing theory that can be applied to rotable inventory and to identify a potential gap into which newly developed theory could contribute. Current techniques for rotable planning are identified in industry and the literature: these methods are modelled and tested using inventory and operational data obtained in the field. In the expectation that current practice leaves much scope for improvement, several new models are proposed. These are developed and tested on the field data for comparison with current practice. The new models are revised following testing to give improved versions. The best model developed and tested here comprises a linear programming optimisation, which finds an optimal level of inventory for multiple test cases, reflecting changing operating conditions. The new model offers an inventory plan that is up to 40% less expensive than that determined by current practice, while maintaining required performance.

A new inventory model for aircraft spares

A special inventory problem is presented: aircraft spares that are repaired and returned to spares, called rotable inventory. Rotable inventory is not consumed so does not change in the medium term, but is rotated through operational, maintenance and stock phases. The objective for inventory performance is fleet Service Level (SL), which effects aircraft dispatch performance. A model is proposed where the fleet SL drives combined stock levels such that cost is optimized. By holding greater numbers of lower-cost items and holding lower levels of more expensive items, it is possible to achieve substantial cost savings while maintaining performance. This approach is shown to be an advance over the current literature and is tested with case data, with conclusive results.