Academic journal article Academy of Strategic Management Journal

An Integration Analysis of Material Requirements Planning, Just in Time, and the Theory of Constraints

Academic journal article Academy of Strategic Management Journal

An Integration Analysis of Material Requirements Planning, Just in Time, and the Theory of Constraints

Article excerpt

STATEMENT OF THE PROBLEM

Orlicky (1975) and Fogarty, Blackstone, and Hoffman (1990) note that variation between the master production schedule and actual production will emanate even when the schedule is not embellished. This disparity is brought on by a miscellany of unplanned events that transcend typical manufacturing operations. The development of production control systems would be simple except for the existence of these unplanned events.

These events consist of (but are not limited to) machine breakdowns, tool breakages, worker absenteeism, lack of material, scrap, rework, customers who change their minds on timing and quality, etc., and the fact that operations are interdependent. Development of random fluctuations and dependent events cannot be prevented, but they can, and should, be compensated for through strategic planning.

When dealing with manufacturing control systems, problems arise when the need to answer critical questions go un-addressed, such as:

1. Which control schemes to employ,

2. How to assign protective WIP inventory to the associated work centers,

3. How to coordinate WIP inventory required for assembly of the products, and

4. How to introduce raw material into the system.

IMPORTANCE OF THE RESEARCH

Aggarwal (1985) states: A revolution is occurring in operations management. During the last few years, three important approaches--material requirements planning (MRP), kanban (JIT), and optimized production technology (OPT) (or TOC)--have invaded operations planning and control in quick succession, one after the other. Each new system has challenged old assumptions and ways of doing things. These innovative methods are completely changing not only manufacturing processes but also operations management. Factory managers must decide which strategy to adopt to meet current and future needs. Installing any one requires several years to train company personal and millions of dollars of investment. Aggarwal goes on to state: During the remainder of this century and perhaps during the early part of the next, managers will be faced with the question of which one to choose to run their factories. Goldratt and Fox (1986) report: The Western manager is challenged to solve a very fundamental problem from this alphabet soup of solutions. To understand each of these new technologies, can by it self, be a time-consuming challenge. Deciding which is best is a formidable task. Figuring out how to put them all together seems beyond our reach. Since we don't have the time, resources or funds to do everything, everywhere, we had better be convinced that we are taking the actions that will leapfrog us back into the race. There is no longer margin for error and no time for risky experiments.

It will be of significant importance to the practitioner to discern the relative differences and the associated considerations that evolve around the strategic choice of an inventory control method and management philosophy. This review had the goal of minimizing the investment of time and capital required in making that choice.

PURPOSE OF THE RESEARCH

The purpose of this research will be two fold. The first objective will be to detail the many positive and negative aspects of MRP, JIT, and TOC as they apply to a manufacturing system. The second objective will be to bring about and develop a new concept of an integrative model of MRP, JIT, and TOC. This new model actually considers the most positive strategic aspects of each management philosophy and ties them together in a usable format. The format should assist strategic management in the areas of planning, execution, and scheduling of its own production process.

MATERIAL REQUIREMENTS PLANNING LITERATURE REVIEW

Starting in the sixties and on into the seventies, the basic elements of an integrated production planning and control system known as MRP were established. …

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