ISEN 315
Spring 2011
Dr. Gary Gaukler
Exam 2 Review
Exam 2 Review
Exam 2 Review
Exam 2 Review
Push and Pull Production Control
“Push” system: Determines when and how much to
produce based on forecasts of future demands
“Pull” system: Initiates production of an item only
when the item is requested
Pull vs Push Systems
 By pulling material in small lots, inventory
cushions are removed, exposing problems
and emphasizing continual improvement
 Manufacturing cycle time is reduced
 Push systems dump orders on the
downstream stations regardless of the need
Supply Chain
What is a Supply Chain?
Network of entities:
• Suppliers (and their suppliers)
• Manufacturers of semi-finished and finished products
• Distributors
• Customers
Supply Chain Flows
Downstream flows:
Upstream flows:
Challenges in Supply Chains
• Complex networks
• Complex products
• Uncertainties:
–
–
• Pressure points:
–
–
Improving a Supply Chain
Initially can focus on individual nodes:
• Points to review:
– Stocking levels
– Service levels
• Improve existing operations
Control Knobs
•
•
•
•
•
•
•
Service level target
Supplier lead times: average and variability
Review periods
Process cycle times
Process variability
Forecast error
Capacity
Bullwhip Effect
Bullwhip: Increasing variability of orders up the supply
chain
The Bullwhip Effect
• Consequences of the Bullwhip:
Bullwhip
Picture borrowed from Hau Lee
Bullwhip in Electronics Industry
Peripheral Product
Consumables
45,000
350,000
40,000
300,000
35,000
250,000
30,000
25,000
200,000
20,000
150,000
15,000
100,000
10,000
50,000
5,000
0
0
1
4
7
10
13
16
19
22
25
28
week
31
34
37
40
43
46
49
52
1 4 7 101316192225283134374043464952
week
Unit orders from a major retailer to
manufacturer
Total unit sales at outlets of retailer
Slide borrowed from Hau Lee
What Causes this Effect?
Lee et al. 1997:
Reactions to demand signals
Order batching
Price fluctuations
Shortage gaming
What Causes this Effect?
Reactions to demand signals
Order batching
Price fluctuations
Shortage gaming
Mitigating the Bullwhip Effect