operations

What are the 3 planning levels?

• Long range plans (more than a year)

• Intermediate plans (2-12 month)

• Short range plane (1-8 weeks)

What is aggregate planning?

Intermediate range capacity planning that typically covers a time horizon of 2 to 12 months

What are the 3 aspects in the planning sequence?

1. Business plan

2. Aggregate plan

3. Master schedule

What are the 3 strategies for counter variation?

• Maintain excess capacity to handle increases in demand

• Maintain a degree of flexibility in deciding what changes

• Wait as long as possible before commuting to a certain level of supply capacity

What are the 3 steps in aggregate planning?

1. Forecast or aggregate demand for the intermediate range

2. Develop a general plan to meet demand requirements

3. Update the aggregate plan periodically

What are aggregate plans concerned with?

• Demand quality

• Timing of demand

What are the inputs for aggregate planning?

• Resources

• Demand forecast

• Policies

• Costs

What are the outputs of aggregate plans?

• Total cost of a plan

• Projected levels of inventory, output, employment, subcontracting, back ordering

What are the 3 strategies for aggregate planning?

• Proactive: alter demand to March capacity

• Reactive: alter capacity to March demand

• Mixed: some of each

What are the 2 pure aggregate planning strategies?

• Level capacity strategy

• Chase demand strategy

What are the advantages and disadvantages of the level approach?

Advantages

• Stable output rate and workforce

Disadvantages

• Greater inventory cost

• Increased overtime and idle time

• Resource utilization vary over time

What are the advantages and disadvantages of the chase approach?

Advantages

• investment in inventory is low

• Labor utilization is high

Disadvantages

• The cost of adjusting output rates and/or workforce levels

What is the technique in aggregate planning?

1. Determine demand for each period

2. Determine capacity for each period

3. Identify company or departmental policies and pertinent

4. Determine unit costs

5. Develop alternative plans and costs

6. Select the plan that best satisfies objectives

What is Difference in aggregate planning from service compared to manufacturing?

1. Demand for service can be difficult to predict

2. Capacity available can be difficult to predict

3. Labor flexibility can be an advantage in services

4. Services occur when they are rendered

What does a master schedule do?

• Shows quantities and timing of specific end items for a scheduled horizon

• Determines the quantity needed to meet demand from all sources

• It interfaces with : marketing, capacity planning, production planning, distribution planning

• Helps determine whether the business plan and its strategic objectives will be achieved

• Evaluate impact of new orders

• Provides delivery dates for orders

What problems does the master schedule deal with?

• Evaluating the impact of production or delivery dates

• Revising master schedule when necessary because of insufficient supplies or capacity

• Bring instances of insufficient capacity to the attention of relevant personnel so they can participate in resolving conflicts

What are the inputs of master schedule?

• Beginning inventory

• Forecast

• Customer orders

What are the outputs of master schedule?

• Projected inventory

• Master production schedule (MPS)

• Uncommitted inventory

What is dependent demand?

Demand for items that are subassemblies or component parts to be used in the production of finished goods

What is material requirements planning (MRP)?

A computer based information system that translated master schedule requirements for end items into time phased requirements for subassemblies, components, and raw materials

What are the 3 inputs of MRP?

• Master schedule

• Bill of material

• Inventory records

What does MRP processing do?

Takes the end item requirements specified by master schedule and “explodes” them into time phased requirements for assemblies, parts, and raw material offset by lead times

What are the MRP considerations: lot sizing rules?

• Left for lot (L4L) ordering: the order or run size is set equal to demand for that period

• Economic order quantity (EOQ) : Can lead to minimum costs of usage of item is fairly uniform

• Fixed period ordering: provides coverage for some predetermined number of periods

What changes occur in an MRP?

MRP is not a static document

• Some orders get completed

• Other orders are nearing completion

• New orders will have been entered

• Existing orders will have been altered

What are the primary outputs of MRP?

• Planned orders

• Order releases

• Changes

What are the secondary outputs of MRP?

• Performance control reports

• Planning reports

• Exception reports

What are the benefits of MRP?

Enables managers to easily

• Determine quantities of each component for a give order size

• To know when to release orders for each component

• To be altered when items need attention

Additional benefits

• Low level of in process inventories

• The ability to track material requirements

• The ability to evaluate capacity requirements

• A means of allocating production time

• The ability to easily determine inventory usage

What are the 3 requirements of MRP?

• A computer and the necessary software to handle computations and maintain records

• Accurate and updatable: Master schedule, Bills of materials, inventory records

• Integrity of data files

What are the ERP implications?

• High initial cost

• High cost to maintain

• Need for future upgrades

• Intensive training required

What benefits does one get from using ERP as a strategic tool?

• Improves supply chain management

• Stronger links between their customers and their suppliers

• Makes the organization more capable of satisfying changing customer requirements

• Offers opportunities for continuous improvement

Chapter

Chapter 14

What are lean operations?

A flexible system of operations that uses considerably less resources than a traditional system

What does lean operations allow for?

• Greater productivity

• Lower costs

• Shorter cycle time

• Higher quality

What is the ultimate goal of lean operations?

Achieve a system that matches supply to customer demand; supply in synchronized to meet customer demand in a smooth uninterrupted flow

What are supporting goals?

The degree to which the ultimate goal is achieved depends upon how well it’s supporting goals are achieved

What do supporting goals do?

1. Eliminate disruption

2. Make the system flexible

3. Eliminate waste, especially excess inventory

Where can waste occur?

1. Inventory

2. Overproduction

3. Waiting time

4. Unnecessary transporting

5. Processing waste

6. Inefficient work methods

7. Product defects

What are the building block of lean operations?

• Product design

• Process design

• Personnel/ organizational elements

• Manufacturing planning and control

What are the building block of product design?

1. Standard parts

2. Modular design

3. Highly capable systems with quality built in

4. Concurrent Engineering

What are the building blocks of process design?

1. Small lot sizes

2. Setup time reduction

3. Manufacturing cells

4. Quality improvement

5. Production flexibility

6. A balanced system

7. Little inventory storage

8. Fail- safe methods

What are the 6 guidelines of increasing flexibility?

1. Reduce downtime due to changeovers by reducing changeover time

2. Use preventive maintenance on key equipment to reduce breakdowns and downtime

3. Cross train workers so they can help when bottlenecks occur or when other workers are absent

4. Use many small units of capacity

5. Use off line buffers

6. Reserve capacity for important customers

What are the the 3 steps in calculating the takt time ?

1. Determine the net time available for shift

2. If there is more than one shift per day multiply the net time by the number of shifts

3. Compute the takt time by dividing the net available time by demand

What are the building blocks of personnel and organizational?

• Workers as assets

• Cross trained workers

• Continuous improvement

• Cost accounting

• Leadership / Project management

What are the 7 elements of manufacturing planning and control (MPC)?

1. Level losing

2. Pull systems

3. Visual systems

4. Limited work in progress

5. Close vendor relationship

6. Reduced transaction processing

7. Preventive maintenance and housekeeping

What is kanban?

Card or other devices that communicate demand for work or materials from the preceding station

What are the 2 types of kanbans?

• Production kanban : signals the need to produce parts

• Convergence kanban: signals the need to deliver parts to next work center

What are the benefits of limited WIP in Manufacturing planning and control?

• Lower carrying costs

What is JITII?

A supplier works right in the company’s plant, making sure there is an appropriate supply on hand

Chapter

Chapter 15

What is the supply chain?

The sequence of organizations their facilities, functions and activities that are involved in producing a delivery of a product or service

What are some functions and activities in a supply chain?

• Forecasting

• Purchasing

• Inventory management

• Information management

• Quality assurance

• Scheduling

• Production and delivery

• Customer service

What is supply chain management (SCM) ?

The strategic coordination of business functions within a business organization and throughout its supply chain for the purpose of integrating supply and demand management

What are SCM managers involved in?

• Planning and coordination for activities

• Sourcing and procurements of materials and services

• Transformation activities

• Logistics

What are the 6 key SCM issues?

• Determining appropriate levels of outsourcing

• Managing procurement

• Managing suppliers

• Managing customer relationships

• Identifying problems and responding

• Managing risks

What are the 6 trends in SCM?

• Measuring supply chain ROI

• “Greening” the supply chain

• Re-evaluating outsourcing

• Integrating IT

• Managing risks

• Adopting lean principles

What are the 5 complexities of global supply chains?

• Language and cultural differences

• Currency fluctuations

• Political instability

• Increasing transportation costs and lead times

• Increase the need for trust amongst supply chain partners

What are the 3 aspects of management responsibility?

• Legal: Being knowledgeable about laws and regulations of the country where supply chains exists and obeying laws and operating to conform to regulations

• Economic: supplying products and services to meet demand as efficiently as possible

• Ethical: Conducting business in ways that are consistent with the moral standards of society

What are the 3 management responsibilities?

• Strategic

• Tactical

• Operational

What are the 8 strategic responsibilities?

• Supply chain strategy alignment

• Network configurations

• Information technology

• Products and services

• Capacity planning

• Strategic partnerships

• Distribution strategy

• Uncertainty and risk reduction

What are the 6 tactical responsibilities?

• Forecasting

• Sourcing

• Operations planning

• Managing inventory

• Transportation planning

What are the 8 operational responsibilities?

• Scheduling

• Receiving

• Transforming

• Order fulfilling

• Managing inventory

• Shipping

• Information sharing

• Controlling

What are the 5 duties of purchasing?

• Identifying sources of supply

• Negotiating contracts

• Maintaining a database of suppliers

• Obtaining goods and services

• Managing suppliers

What are the 5 steps in the purchasing cycle?

1. Receive the requisition

2. Select a supplier

3. Place the order with a vendor

4. Monitor orders

5. Receive orders

What is E-Business?

The use of electronic technology to facilitate business transactions

What are the 5 applications of E-business?

• Internet buying and selling

• E-mail

• Order and shipment tracking

• Electronic data interchange (EDI)

• Product or service promotion

• Provide information about products and services

What are the advantages of E-Business?

Allows a company to

• Have a global presence

• Improve competitiveness and quality of service

• Analyze customer interests

• Collect details information about clients preferences

• Shorten the supply chain response times

• Reduce it eliminate the role of ‘traditional’ retailers and/or intermediaries

• Realize substantial cost saving

Also allows for

• Creation of virtual companies

• Leveling of the playing field for small companies

What are the 3 E-Business fulfillment problems?

• Customer expectations

• Demand variability creates order fulfillment problems

• Sometimes internet demand excess an organizations ability to fulfill orders

What are the steps in supplier management?

1. Choosing suppliers

2. Supplier audits

3. Supplier certifications

4. Supplier relationship management

What are the 3 types of supplier relationships?

• Short term

• Medium term

• Long term

What are the 3 inventory issues in SCM?

• Inventory location: Centralized/ Decentralized inventories

• Inventory velocity : The speed at which goods move through a supply chain

• The bullwhip effect : inventory social lotions that become increasingly larger look backward through the supply chain

What are the 6 causes of the bull whip effect?

• Periodic ordering

• Reactions to shortages

• Forecast inaccuracies

• Order batching

• Sales incentives and promotions

• Liberal product return policies

What are the 2 results of the bullwhip effect?

• Higher costs

• Lower customer satisfaction

What are 2 ways to mitigate the bullwhip effect?

A function of the degree of customization requirements

• Strategic buffering: Holding inventory at a distribution center rather than at retail outlets

• Replenishment based on need: vendors monitor and replenish retail inventories when supplies are low

What are the 4 common approaches of order fulfillment?

• Make to stock (MTS)

• Assemble to order (ATO)

• Make to order (MTO)

• Engineering to order (ETO)

What are logistics?

The part of the supply chain involved with the forward and reverse flow of goods, services, cash and information

What is RFID?

A technology that uses radio waves to identify objects such as good in supply chains

What are the benefits of RFID?

• Able to convey much more information

• Do not require like of sight for reading

• Do not need to be read one at a time

• Increased supply chain visibility

• Improve inventory management

• Improve quality ratio

• Enhances relationship with suppliers and customers

What are the benefits of third party logistics (3-PL) ?

• The specialists knowledge

• Their well developed information system

• Their ability to obtain favorable shipping rates

How to create an effective supply chain?

Strategic sourcing: analyzing the procurement process to lower costs by reducing water and non value added activities, increase profits, reduce risks, improve supplier performance

What are the 6 necessary things to create and effective supply chain?

• Trust

• Effective communication

• Information velocity

• Supply chain visibility

• Event management capabilities

• Performance metrics

What are the 7 types of retuned items?

• Defective products

• Recalled products

• Obsolete products

• Unsold products returns form retailers

• Parts replaced in the field

• Items for recycling

• Waste

What are the 3 elements of return management?

• Gate keeping: screening returned goods to prevent incorrect acceptance of goods

• Avoidance: finding ways to minimize the number of items that are retuned

• Closed loop supply chains: A manufacturer controls both forward and reverse shipment of products

What are the 6 challenges facing SCM?

• Barriers to integrating of organization

• Getting top management “onboard”

• Small businesses

• Variability and uncertainty

• Response time

• Dealing with trade-offs

What are the 5 types of trade offs?

• Lot sizes Vs inventory trade offs

• Inventory Vs transportation cost trade offs

• Lead time Vs transportation costs trade off

• Product variety vs inventory trade offs

• Cost Vs customer service trade off

What is Inventory Vs transportation cost trade offs?

Suppliers prefer to ship full Truck loads instead of partial loads to spread shipping costs over as many units as possible. This leads to greater holding costs for customer

What is Product variety vs inventory trade offs?

Greater product variety usually means smaller lot sizes and higher setup costs, as well as higher transport and inventory management costs