Overproduction in Microsoft Dynamics AX 2012

With the introduction of the new warehouse management capabilities in Microsoft Dynamics AX 2012 R3, it is possible to Report as finished a production or batch order from a handheld device. The only disadvantage of using this capability is that you can’t overproduce. The user will be blocked by the error: Quantity reported as finished exceed the quantity started, and have no option to override the setting.

With Hotfix KB 3034999, we leverage the quantity validation parameters, originally built for the Manufacturing execution module, so the user can now report overproduction from a handheld device.

Overproduction is the term used in Microsoft Dynamics AX 2012 for reporting a production or batch order as finished when the quantity produced is greater than originally planned. This is a common scenario in the process industry and can be caused by many factors, for example, potency and yield.

When you produce more items than planned for a production or batch order, you will get the following blocking error: Quantity reported as finished exceeds the quantity started.

In order to allow for overproduction, you have to select the parameter Accept error in the Report as finished parameters. This will bypass the quantity validation check and then allow for overproduction.

For companies that use the Manufacturing execution module in Dynamics AX2012, there is a more advanced support for overproduction. In this module, you can set up a quantity validation based on different criteria. For example, you can accept overproduction in percent based on the planned quantity, the started quantity, or the quantity reported on the previous operation.

To show an example of how overproduction is reported, I have changed the demo script for CU8 “SCM Demo Script – Batch orders and WMS integration” (Attached). I have changed the section:

DEMO: REPORT THE PRODUCTS AS FINISHED AND MOVE THEM TO LOCATION FOR FINISHED PRODUCTS

The following diagram shows the complete logic. The logic was originally only applicable for reporting overproduction from the job registration form in the Manufacturing execution module, but is now applicable for the scenario where the user needs to report overproduction from a handheld device.

SCM Demo Script – Batch orders and WMS integration – Overproduction.pdf

Working with Overlap in Microsoft Dynamics AX

Conducting Dynamics AX Manufacturing training for a class in Malaysia, it became clear that the current documentation on Overlap in Dynamics AX was not telling the full story.
Therefore, I decided to write this blog.

So, what is Transfer batch and Overlap quantity?

In Dynamics AX ‘Transfer batch’ is the field used to control an overlapped schedule. Apics define ‘Overlapped schedule’ as “A manufacturing schedule that overlaps successive operations. Overlapping occurs when the completed portion of an order at one work center is processed at one or more succeeding work centers before the pieces left behind are finished at the preceding work centers.”

Overlapped schedule is also known as lap phasing, operation overlapping, telescoping or send ahead.

‘Overlap quantity’ is a calculated field on the production order – ensuring that we avoid gaps in the schedule, when the successor operation to the operation with a Transfer batch value, has a shorter process time.
The ‘Overlap quantity’ determines the first transfer batch size for the operation; the following transfers to the next operation will use the ‘Transfer batch’ value.

Overlap quantity example

Say you have a production order for 10 pcs and it has two operations 10 and 20, each operation taking 2 minutes per pcs:

Without overlap:

Normally operation 20 will start when the entire quantity (10 pcs) has been processed on operation 10

With overlap:

When you have specified something in ‘Transfer batch’ field, let us say 2 pcs, it means the next operation (in our case 20) can already start when only 2 pcs has been processed on the operation 10. The value from ‘Transfer batch’ is by default copied to the ‘Overlap quantity’, on the production order.

Why does the Overlap quantity sometimes change when I estimate a production order?

The ‘Overlap quantity’ parameter on the production order route is calculated by the system. This is done during the estimation (or scheduling) of the production order, to prevent gaps in situations where a later operation have a shorter process time than the current operation. The fact that the successor would be waiting for the delivery from the predecessor would be causing a gap.
So, the calculation of an optimal ‘Overlap quantity’ is done based on the ‘Transfer batch’ and the operation process durations on the route.

Overlap example with gaps (two operations):

Say you have a production order for 10 pcs and it has two operations 10 and 20, this time the first operation takes more time than the second does:
Opr 10: 20 min per pcs
Opr 20: 10 min per pcs
Again, we have a Production order for 10 pcs and Transfer batch quantity set to 2 pcs

Without any change during Estimation the jobs on the route would have a gapped schedule and look like this:

However, as the first operation in total will take 200 min to complete and the second will take 100 min you will get the following information when estimating:

With the change from 2 to 6 we ensure that there are no gaps between the jobs in the second operation.

Overlap example with gaps (three operations):

Now let us spice it up a bit and add another operation – Opr. 30 with a run time of 5 min per pcs. We will also set a ‘Transfer batch’ = 4 on operation 20

In this case, you get the following information during estimation:

Now the schedule will look like this:

Therefore, by updating the ‘Overlap quantity’ on the production order during the Estimation Dynamics AX ensures that production on the following operation can happen without any gaps – avoiding a gapped schedule.

Christian Rytt, Senior Program Manager at Microsoft Development Center Copenhagen

Use of ingredient types for batch balancing in production

In an earlier blog post, http://blogs.msdn.com/b/axmfg/archive/2012/12/05/what-s-new-in-microsoft-dynamics-ax-2012-r2-potency-management.aspx#10421522, we introduced the new capabilities in Microsoft Dynamics AX 2012 R2 that support potency management business processes for process industries. This blog provides more information about the four ingredient types that were introduced, None, Active, Compensating, and Filler, and the impact that they have on how quantities are calculated for batch orders.

There are many examples of the use of potency; in chemical industry the percentage of caustic can be characterized as an active ingredient in Pottassium Hydroxide, alcohol can be an active ingredient is liqueurs or fat can be an active ingredient in foods. The amout of active ingredient will often vary around a target value for these products, and the purchase price and the amount to consume in further production will often be affected by this variation. The batch balancing process, which is described in more details here, is focusing on how to take this variation into account

The key to setup formulas, where items with active ingredients must be taken into account, is by the use of the Ingredient types on the formula lines. For the example we will be looking at product A, B, C and D which each represent a seperate Ingredient type.

Ingredient type: Active

You can specify the potency of a product by defining the percentage of its active ingredient. When a product with an active ingredient is included in a formula, the ingredient type on the formula line gets the value Active and cannot be changed. Products must have a potency specified for them before they can be used as an active ingredients in formulas.

The potency of a product is defined by the use of a base attribute of the product. The base attribute is specified from the Manage inventory tab on the Action Pane in the Released products form. Before the base attribute can be associated with a product, the product must have the following setup:

The batch dimension must be active for the product. This is done by assigning to the product a tracking dimension group with an active batch dimension.
The attribute that will act as the base attribute for the product must be defined as a product specific batch attribute for the product. (Manage inventory > Batch attributes > Product specific). The associated attribute must have minimum, maximum, and target values.

The balanced quantity of an active ingredient is calculated according to the target value specified for the base attribute. Batch orders for products that have active ingredients in their formulas must go through a batch
balancing process. The batch balancing process is carried out from the Batch balancing form, which is available from the Batch orders list page and Batch order details form when the batch order status is Started. The batch balancing process estimates the amount of each ingredient in the formula that is required to produce the product. The estimation is based on the potency of the on-hand batches that are selected for the production.

Example

Ingredient B has a base attribute X and a target value of 30, and it’s included in a formula that requires 30 liters of Ingredient B for every 100 liters of the product. A batch order is created with a batch size of 100 liters. The batch order is started, and during the batch balancing process the user points to a batch of Ingredient B that has a potency level of 35. Because the potency level of 35 is higher than the target value of 30, the balanced quantity of ingredient B is reduced with the ratio of the potency value and the target value of the batch compared to the estimated quantity. The calculation of the balanced quantity looks like this:

(30/35) * 30 Liters = 25,71 Liters.

Ingredient type: None

When using this type there will be no difference between the estimated quantity and the balanced quantity when performing the batch balancing operation.

Example

Ingredient A is assigned to an ingredient type None, and is added to a formula for a finished product. The formula calls for 10 liters of Ingredient A for every 100 liters of the finished product. When a batch order requires 200 liters both the estimated and the balanced quantity of Ingredient A is calculated as 20 liters.

Ingredient type: Compensating

A compensating ingredient can either offset or compliment the effect of the active ingredient in a product. Therefore, the quantity of a compensating ingredient that will be consumed depends on the potency of the product.

Opposing effect – If the amount of the active ingredient is higher than anticipated, less of the compensating ingredient is required. The earlier blog gave an example of ice-cream, where cream compensates for a higher concentration of fat in milk.
Complementary effect – If the amount of the active ingredient is lower than anticipated, you need to add more compensating ingredient. The earlier blog used potato chips as an example, where more oil was added to the boiling process when the degree of moisture in the potatoes is higher than anticipated.

The relation between an active ingredient and a complementary ingredient is set up in the “Compensating principle” form, which is available from the Action Pane in the Formula lines form. You need to select the line that represents a compensating principle, and then point to the active ingredient you want to compensate. In the compensating principle, you also specify a positive or negative compensating factor to determines how much to compensate for and whether the principle should be opposing or complementary. A positive factor is used for complementary, and a negative factor is indicates opposing.

Example

Ingredient B is an active ingredient that has a base attribute X and a target value of 30. It’s included in a formula that requires 30 liters of Ingredient B for every 100 liters of the product. Ingredient C is a compensating ingredient, and is included in the same formula with a quantity of 10. The compensating principle is set up with a factor of 1.10. With a factor of 1.10, the balanced quantity of the compensating ingredient will be reduced by the difference between the active ingredient’s balanced quantity and the estimated required quantity multiplied by 1.10

In a previous example, the balanced quantity of the active ingredient needed was calculated to 25.71, and the estimated required quantity was calculated to 30. In this case, the balanced quantity of the compensating ingredient would be calculated as follows:

Difference between estimated and balanced quantity:

25.71 – 30 = – 4.29

Multiplied with compensating factor:

4.29 * 1.10 = – 4,72

Compensating estimated quantity will be reduced with -4.72 in order to calculate balanced compensating quantity:

10 – (- 4.72) = 14.72

Because 1.10 is a positive factor, this is a compensating principle with a complementary effect. And because the active ingredient is more potent than anticipated, more of the compensating ingredient is required.

Ingredient type: Filler

The filler ingredient is a neutral ingredient used to reach the desired output quantity of the finished product. Adjustment to the filler quantities are calculated based on variations in the active and compensating ingredient compared to the standard quantity.

Example:

We have formulated a product with ingredient A, B, C and D for a formula size of 100 liters. We have calculated the balanced quantity of all the ingredient types except for the line with ingredient type Filler. The balanced quantity of the filler ingredient calculates as the difference between the batch size of 100 liters and the sum of the ingredients:

100 – 20 – 25.71 – 14.72 = 39.57

What's new in Microsoft Dynamics AX 2012 R2 – Attribute based pricing and batch balancing

In Microsoft Dynamics AX 2012 R2 we introduce the batch balancing and attribute based pricing features that are used with potency management. Batch balancing feature enables you to modify a production formula by selecting the inventory batches of the active ingredients based on their current potency. Attribute based pricing is applied to the pricing of a potency item.

As the potency of an active ingredient can differ per batch, the quantities of active, compensating, and filler ingredients for a batch order need to be balanced to accommodate the amount of material that is required for production. This also means that after a batch order is created for a formula that includes an active ingredient, the picking list journal cannot be automatically created and posted. The batches of inventory that are selected for the required active ingredient must be picked before the batch order can proceed. This is performed by using the batch balancing function of the batch order. After inventory is reserved for the active ingredients, the balanced quantity for the compensating ingredients can be calculated. To determine the balanced quantity of the compensating ingredient, the following formula is used:

These calculations are part of the batch balancing function in Microsoft Dynamics AX 2012 R2 .

Attribute based pricing is applied to the pricing of a potency item which is an item that has a concentration of an active ingredient. This potency, or concentration, of active ingredient can be used to affect the amount of material that is required in production or the amount that is paid to a vendor based on the concentration level.

To calculate batch attribute pricing, take the purchase price and divide it by the batch attribute target to get a price per unit at 100% concentration. Then multiply by the batch attribute actual value. For example, a potency item has a price of $55.00 per lb. at a standard/target potency of 40%. If a batch of inventory of this item is received, and it is determined to have an actual potency of 46%, the price per lb. is (($55.00/40) * 46) $63.25. This is a higher price than the standard price that is paid for this material, because the active ingredient concentration of the material is higher and therefore, you use less than the normal quantity in production.