MANAGEMENT INFORMATION SYSTEMS 8/E

Raymond McLeod, Jr. and George Schell

Appendix C
Manufacturing Information Systems

C-1
Copyright 2001 Prentice-Hall, Inc.
 Manufacturing Information
System
Used to support efforts to produce products
Evolution of computer use in manufacturing
Systems keyed on reorder points
MRP
JIT
Consists of three input and four output
subsystems

C-2
 The Computer as Part
of the Physical System

Focuses on computer-controlled machines

in the production area
CAD (computer-aided engineering)
Design database
CAM (computer-aided manufacturing)
Robotics

C-3
 The Computer As an
Information System
Term manufacturing information system
used to describe the CBIS subsystem that
provides information concerning the
production operations
Goes by many other names
ROP, MRP, MRP II
JIT, CIM

C-4
 Reorder Point (ROP) Systems

Key Terms
Reorder point, stockout, lead time, safety stock
ROP formula: R = LU+S
Still used by many firms
Well suited to retail inventories

C-5
 Reorder Point With No Safety Stock
and With a Safety Stock
Reorder point

Balance
on hand

A. No safety stock Lead time Time

Balance
on hand

Safety stock
B. Safety stock C-6
 Material Requirements
Planning (MRP)
Looks to the future and identifies the
materials needed
Components:
1. Production scheduling system -- produces a master
production schedule that encompasses the longest lead
time plus the longest production time.
2. MRP system -- explodes the bill of materials. Converts
the gross requirements into the net requirements.

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 Material Requirements
Planning (MRP)

Components (cont.):

3. Capacity requirements planning system works with

MRP system to keep production within plant capacity.
Produces outputs: reports and planned order schedule.
4. Order release system produces reports for shop floor
and purchasing.

C-8
 An MRP System
Purchasing
system
Bill of 3. Capacity
Customer
material requirements
order file
file planning Order release
Sales report
forecast
file
1.Production 2. Material Planned 4.Order
Finished- scheduling Master requirements order release
goods system produc- planning schedule system
inventory tion system
file schedule
Order release
Planning reports
Produc- report
Performance reports
tion Raw Exception reports
capacity materials
file Changes to Shop floor
inventory planned orders control
file system

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 Manufacturing Resource
Planning (MRP-II)

The purpose is to integrate MRP with all

systems that affect materials management
Organizational systems
Accounting information system

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An MRP II System
Other functional
Executive
information systems
information
system
Order Purchasing
entry

Material
Billing requirements Receiving
planning

Accounts Accounts
receivable General payable
ledger

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 MRP-II Benefits

More efficient use of resources

Reduced inventories
Less idle time
Fewer bottlenecks
Better priority planning
Quicker production starts
Schedule flexibility

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 MRP-II Benefits [cont.]

Improved customer service

Meet delivery dates
Improved quality
Lower price possibility
Improved employee moral
Better management information

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 Just-In-Time (JIT)
Faster material flow
Small lot size
Timing
Compare JIT to online processing and MRP
to batch
Kanban pulls material as opposed to MRP
push
Computer not emphasized

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 Manufacturing Information
System

Definition
A computer-based system that works in
conjunction with other functional information
systems to support the firm's management in
solving problems that relate to manufacturing
the firm's products

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A Model of a Manufacturing System
Output
Input subsystems Data Information

subsystems
Accounting Production
information subsystem
system
Internal D
sources A Inventory
subsystem
Industrial T
engineering Users
system
A
B Quality
Environmental subsystem
sources
A
S
Manufacturing
intelligence E Cost
subsystem subsystem

C-16
 Accounting Information
System [AIS]
Data collection terminals
Track material flow
Gather job data (job reporting)
Gather attendance data (attendance reporting)

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 Location of
Receiving area 1 Data Collection Terminals
Receiving Terminal
inspection 2

Raw-materials
storeroom 3 4 5

6
8

9 Shop floor area

7
10

Finished-goods
storeroom 11

Shipping area 12

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 Industrial Engineering
Subsystem
The industrial engineer (IE)
Studies physical and conceptual systems
Sets production standards

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 Manufacturing Intelligence
Subsystem
Can be viewed in terms of environmental
contacts
Labor unions (personnel flow)
Formal and informal systems
Personnel information
Union contract compliance
Suppliers (material and machine flow)

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 Flow of Labor Information
Strategic level
Industrial relations
management
Labor Unions department

Union contract
performance

Government

Personnel
Suppliers requests
Employment
agencies Human
Manufacturing
College & resources
management
universities department
Trade
Applicant
schools
data

Global
community

Competitors
Formal flow Employees
Informal flow
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 Input to Supplier Records

Financial strength, quality control

Supplier emphasis, past quality and delivery
input performance, and so on

Quality Units rejected upon receipt, units

Supplier
control input
rejected during production,
reasons for rejection, and so on file

Units replaced or repaired because

Customer of defective parts, supplier spare
service input parts availability, and so on

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 Production Subsystem

Used to:
1. Build production facilities
2. Operate production facilities
Production schedule determines when the
production steps are performed
Track expected and actual completion times

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 Job Flow Through the Plant
Plastic top Step 5 Install bulb
Raw
materials
inventory Plastic
cylinder Step 6 Install reflector

Attach switch
Step 7 Install red lens
Step 2 Step 1 Attach spring

Step 8 Install clear lens

Step 3 Step 4
Step 9
Put top on
Attach strap Add batteries cylinder
Flashlight

PRODUCTION AREA Finished

goods
inventory C-24
 Inventory Subsystem

Importance of determining the inventory

level
Maintenance cost (carrying costs)
Purchasing costs
Economic Order Quantity (EOQ)
Economic manufacturing quantity (EMQ)

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The Effect of Order Quantity on Average Inventory Level

25
Balance on

15 Average inventory level

---------------------------------------------------
hand

5
Safety stock
0
Time
A. Order quantity of 20; average level is 15.
Balance on hand

21

13 Average inventory level

------------------------------------------------------
5
0 Safety stock
Time
B. Order quantity of 16; average level is 13.
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 Quality Subsystem
Demings fourteen points; maintained that it
is not workers but management that
determines quality
Total quality management (TQM)
Elements of TQM
Zero defects
Quality at the source

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 Total
Quality
Management

TQM Philosophy Graphical Tools Statistical

Tools
*Customer-driven *Process flowcharts
quality standards *Check sheets
*Customer-supplier *Pareto analysis *Sampling plans
links and histograms *Process
*Prevention *Cause and effect capability
orientation (fishbone) diagrams *Taguchi
*Quality at the *Run charts methods
source *Scatter diagrams
*Continuous *Control charts
improvement

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 Cost Subsystem

Periodic reports
Required ingredients
1. Standards
2. Information

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 How Managers Use the
Manufacturing Information System
Subsystem

User Inventory Quality Production Cost

Vice president of manufacturing X X X X

Other executives X X X
Plant Superintendent X X X X
Manager of planning and control X X
Manager of Engineering X X X

Manager of quality control X

Director of purchasing X X
Manager of inventory control X X
Other managers X X X

C-30
 Summary
Manufacturing managers have applied
computers
Physical
Conceptual
Inventory
MRP II
JIT
CIM is management philosophy aimed at
integrating all CBIS plus factory automation
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