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Can You Accurately Plan Orders Based on Spreadsheet Models?

April 2, 2009

What is the first thing a planner has to know when planning orders? A typical answer is expected cycle time. Where does that answer come from? How reliable is it?  Is it based on history collected from a specific set of circumstances that no longer exist? Or is it dynamically calculated, looking forward predicting results of the constant changes taking place in the factory? Many factories still employ a spreadsheet to determine predicted outs cycle time for products. Depending on spreadsheet predictions of cycle time may lead to problems of overloading the factory, poor serviceability, longer than predicted cycle times, over and underutilized equipment. Some of the causes of these static model problems are:

1.      Using average historical cycle time at each step, products can move independently of each other. This allows for process of more than one lot a time where it is not feasible.

2.      Using historical static calculations of moves, setups, queues, maintenance, reflects past product volumes, mixes and factory behavior. This can lead to over or under estimation of cycle time in a new set of circumstances

3.      Typically these models use only first in first out sequencing for lot movements. This sequence remains the same from start to finish of processing. This is unrealistic and leads to skewed results.

4.      Spreadsheets typically can’t account for all the variation in the factory, such as queuing at down equipment. This can lead to overly optimistic cycle time predictions.

One way to model a factory, taking into account variance is with discrete event simulation. These models can take all the variability of mix changes, unpredictable equipment, setups, different product priorities, WIP levels and calculate a cycle time based on dependence on all these factors. Using this as a basis for planning orders allows the factory to operate in a much more predictable manner. This results in better on time delivery, lower cycle time and meeting key measures.

A detailed white paper titled “Using Expected Cycle time Values to Manage Change” is available as a free download on this blog site. It details the difference between spreadsheet and discrete event simulations models.

We’re very interested in your comments. You can make them on this blog site.

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