Operations-Management China

p p | Course Outline × × × × × × × × àntroduction to Operations Management x Ôorecasting ë a stem and work Design u ualit auppl Chain Management r ànventor Management and achedulingÎ ?roject Management A Manufacturing and aervice TechnologiesË u Operations Management Course ?rogramme: | hours lectures, discussions and presentations × 2 hours group presentation × 6 Operations Management Assessment Method: | ×| ×3 ×3 ×2 × Attendance Class participation atudentYs group assignment atudentYs individual assignment ritten examination § Operations Management Reference: illiam J atevenson. Operations Management (9th Edition). The McGraw-Hill Companies ànc. àa - -3 |9|-2 × ù Group and àndividual Assignment ö ö ö ö ö ou need to be a member of one of the stud groups Each stud group will conduct a case stud on an operation at its own choice The stud group should comment and recommend what measures can be made in order to improve the efficienc & effectiveness of the operation. A presentation will be made in last session followed b a written reports with not less than |, words in English or |,5 words in Chinese. ou should submit the assignment not later than a month counting from the last session The report should include: × × × × ackground of the operation ou are going to stud hat challenges the are facing ahead hat areas the perform well and what areas the perform poor hat suggestions ou would make in order to improve the efficienc & effectiveness of the operation ß Re terms to understand Order winner and order qualifier ö 5 ke attributes in good operations management ö × × × × × ualit Cost Time Ôlexibilit Agilit È p The management of s stems or processes that create goods and/or provide services Organization Ôinance Operations Marketing ó The difference between the cost of inputs and the value or price of outputs. ó à U a a | Ô ànputs ?rocessing Outputs Raw Vegetables Metal aheets ater Energ Labor uilding Equipment Cleaning Making cans Cutting Cooking ?acking Labeling Canned vegetables || ànputs Doctors, nurses Hospital Medical aupplies Equipment Laboratories ?rocessing Outputs Examination aurger Monitoring Medication Therap Health patients |u |6 ?roduction of Goods vs. Deliver of aervices ö ö ö ?roduction of goods tangible output Deliver of services an act aervice job categories × × × × × × × Government holesale/retail Ôinancial services Healthcare ?ersonal services usiness services Education |§ Re Differences |. 2. 3. . 5. . . 8. Customer contact Uniformit of input Labor content of jobs Uniformit of output Measurement of productivit ?roduction and deliver ualit assurance Amount of inventor |ù Characteristic Manufacturing aervice Output Tangible Customer contact Low High Uniformit of input High Low Labor content Low High Uniformit of output High Low Measurement of productivit Eas Difficult Opportunit to correct qualit problems High Low àntangible High |ß p ö Operations Management includes: × × × × × × × × Ôorecasting Capacit planning acheduling Managing inventories Assuring qualit Motivating emplo ees Deciding where to locate facilities And more . . . |È ö The operations function × Consists of all activities directl related to producing goods or providing services | p Operations Goods ?roducing atorage/Transportation Exchange Entertainment Communication Examples Ôarming, mining, construction, manufacturing, power generation arehousing, trucking, mail service, moving, taxis, buses, hotels, airlines Retailing, wholesaling, banking, renting, leasing, librar , loans Ôilms, radio and television, concerts, recording ewspapers, radio and television newscasts, telephone, satellites |U « | 8 2 5 5 55 5 5 8 85 9 95 u m p ?lanning Capacit Location ?roducts & services Make or bu La out ?rojects acheduling Controlling/àmproving ànventor ualit Costs ?roductivit Organizing Degree of centralization ?rocess selection ataffing Hiring/la ing off Use of Overtime Directing àncentive plans àssuance of work orders Job assignments u| Re Decisions of Operations Managers ö hat hat resources/what amounts ö hen eeded/scheduled/ordered ö here ork to be done ö How Designed ö ho To do the work ö ö How How Much uu ^ a stem Design capacit location arrangement of departments product and service planning acquisition and placement of equipment u6 ^ a stem operation personnel inventor scheduling project management qualit assurance u§ Decision Making Models ö uantitative approaches ö Anal sis of trade-offs ö a stems approach ö uù A model is an abstraction of realit . ?h sical achematic Mathematical j uß Models Are eneficial Eas to use, less expensive ö Require users to organize ö a stematic approach to problem solving ö àncrease understanding of the problem ö Enable what if questions ö apecific objectives ö Consistent tool ö ?ower of mathematics ö atandardized format ö uÈ O Linear programming O ueuing Techniques O ànventor models O ?roject models O atatistical models u e w ole is greater t an t e sum of t e parts.´ uU O A few factors account for a high percentage of the occurrence of some event(s). O 8 /2 Rule - 8 of problems are caused b 2 of the activities. ! 6 ± p p " 6| p ? ? ? 6u Historical Evolution of Operations Management àndustrial revolution (| Ys) ö acientific management (|9||) ö × × × Mass production ànterchangeable parts Division of labor Human relations movement (|92 - ) ö Decision models (|9|5, |9 - Ys) ö ànfluence of Japanese manufacturers ö 66 Trends in usiness ö Major trends × × × × × The ànternet, e-commerce, e-business Management technolog Globalization Management of suppl chains Agilit 6§ Y ? aupply C ain: A sequence of activities And organizations involved in producing And delivering a good or service 6ù ± Value Added Value of ?roduct Ôarmer produces and harvests wheat $ .|5 $ .|5 heat transported to mill $ . 8 $ .23 Mill produces flour $ .|5 $ .38 Ôlour transported to baker $ . 8 $ . aker produces bread $ .5 $|. read transported to grocer store $ . 8 $|. 8 Grocer store displa s and sells bread $ .2| $|.29 Total Value-Added Â atage of ?roduction 6ß Other àmportant Trends Ethical behavior ö Operations strateg ö orking with fewer resources ö Cost control and productivit ö ualit and process improvement ö àncreased regulation and product liabilit ö Lean production ö 6È p pp 6 Historical Milestones in OM The àndustrial Revolution ö ?ost-Civil ar ?eriod ö acientific Management ö Human Relations and ehaviorism ö Operations Research ö The aervice Revolution ö 6U The àndustrial Revolution ö ö ö ö The industrial revolution developed in England in the | s. The steam engine, invented b James att in |, largel replaced human and water power for factories. Adam amith¶s e Wealt of Nations in | touted the economic benefits of the specialization of labor. Thus the late-| s factories had not onl machine power but also wa s of planning and controlling the tasks of workers. § The àndustrial Revolution ö ö ö ö ö ö The industrial revolution spread from England to other European countries and to the United aates. àn |9 an American, Eli hitne , developed the concept of interchangeable parts. The first great industr in the Ua was the textile industr . àn the |8 s the development of the gasoline engine and electricit further advanced the revolution. the mid-|8 s, the old cottage s stem of production had been replaced b the factor s stem. . . . more §| ?ost-Civil ar ?eriod ö ö During the post-Civil ar period great expansion of production capacit occurred. post-Civil ar the following developments set the stage for the great production explosion of the 2 th centur : increased capital and production capacit × the expanded urban workforce × new estern Ua markets × an effective national transportation s stem × §u acientific Management ö Ôrederick Ta lor is known as the father of scientific management. His shop s stem emplo ed these steps: × × × × × Each worker¶s skill, strength, and learning abilit were determined. atopwatch studies were conducted to precisel set standard output per worker on each task. Material specifications, work methods, and routing sequences were used to organize the shop. aupervisors were carefull selected and trained. àncentive pa s stems were initiated. §6 acientific Management ö àn the |92 s, Ôord Motor Compan ¶s operation embodied the ke elements of scientific management: × × × × × × standardized product designs mass production low manufacturing costs mechanized assembl lines specialization of labor interchangeable parts §§ Human Relations and ehavioralism ö ö ö àn the |92-|932 period, researchers in the Hawthorne( ) atudies realized that human factors were affecting production. Researchers and managers alike were recognizing that ps chological and sociological factors affected production. Ôrom the work of behavioralists came a gradual change in the wa managers thought about and treated workers. §ù Operations Research ö ö ö ö During orld ar àà, enormous quantities of resources (personnel, supplies, equipment, «) had to be deplo ed. Militar operations research (OR) teams were formed to deal with the complexit of the deplo ment. After the war, operations researchers found their wa back to universities, industr , government, and consulting firms. OR helps operations managers make decisions when problems are complex and wrong decisions are costl . §ß The aervice Revolution ö ö ö ö ö ö The creation of services organizations accelerated sharpl after orld ar àà. Toda , more than two-thirds of the Ua workforce is emplo ed in services. About two-thirds of the Ua GD? is from services. There is a huge trade surplus in services. ànvestment per office worker now exceeds the investment per factor worker. Thus there is a growing need for service operations management. §È The Computer Revolution ö ö ö ö ö ö Explosive growth of computer and communication technologies Eas access to information and the availabilit of more information Advances in software applications such as Enterprise Resource ?lanning (ER?) software idespread use of email More and more firms becoming involved in E-usiness using the ànternet Result: faster, better decisions over greater distances § Toda s Ôactors Affecting OM ö ö ö ö ö ö Global Competition ualit , Customer aervice, and Cost Challenges Rapid Expansion of Advanced Technologies Continued Growth of the aervice aector acarcit of Operations Resources aocial-Responsibilit àssues §U Operations Management illiam J. atevenson ù Ô !"#: ö ö A statement about the future value of a variable of interest such as demand. Ôorecasts affect decisions and activities throughout an organization × × × × × × Accounting, finance Human resources Marketing Màa Operations ?roduct / service design ù| Uses of Ôorecasts Accounting Cost/profit estimates Ôinance Cash flow and funding Human Resources Hiring/recruiting/training Marketing ?ricing, promotion, strateg Màa àT/àa s stems, services Operations achedules, MR?, workloads ?roduct/service design ew products and services ùu ö Assumes causal s stem past ==> future ö Ôorecasts rarel perfect because of randomness ö Ôorecasts more accurate for groups vs. individuals ö Ôorecast accurac decreases as time horizon increases à see that ou will get an A this semester. ù6 Elements of a Good Ôorecast # " $ % ù§ ateps in the Ôorecasting ?rocess ,#' - ' ' * ' +(+ ' ) $ ' ' ( & ùù T pes of Ôorecasts ö udgmental - uses subjective inputs ö ime series - uses historical data assuming the future will be like the past ö ssociative models - uses explanator variables to predict the future ùß Judgmental Ôorecasts ö Executive opinions ö aales force opinions ö Consumer surve s ö Outside opinion ö Delphi method × Opinions of managers and staff × Achieves a consensus forecast ùÈ Time aeries Ôorecasts rend - long-term movement in data ö aeasonality - short-term regular variations in data ö C cle ± wavelike variations of more than one ear¶s duration ö àrregular variations - caused b unusual circumstances ö mandom variations - caused b chance ö ù Ôorecast Variations . # + ! ùU aive Ôorecasts « #### j $%& ####' ( #### ! ) * # ß aïve Ôorecasts aimple to use ö Virtuall no cost ö uick and eas to prepare ö Data anal sis is nonexistent ö Easil understandable ö Cannot provide high accurac ö Can be a standard for accurac ö ß| Uses for aïve Ôorecasts ö atable time series data × ö aeasonal variations × ö Ô(t) = A(t-|) Ô(t) = A(t-n) Data with trends × Ô(t) = A(t-|) + (A(t-|) ± A(t-2)) ßu Techniques for Averaging ö Moving average ö eighted moving average ö Exponential smoothing ß6 Moving Averages ö Ôoving average ± A technique that averages a number of recent actual values, updated as new values become available. MAn } ö A Ö } n Weig ted moving average ± More recent values in a series are given more weight in computing the forecast. ß§ Moving Averages ö Ôoving average ± MAn } ?eriod | 2 3 5 A Ö } n aales Average Ôorecast for next period | 2 |23/3 | ßù Moving Averages ö Ôoving average ± MAn } ?eriod | 2 3 5 A Ö } n aales Average Ôorecast for next period | |23/3 | 2 2 Actual | 2 2 ßß Moving Averages ö Ôoving average ± MAn } ?eriod | 2 3 5 A Ö } n aales Average Ôorecast for next period | 2 |23/3 | |25/3 |. 2 Actual | 2 2 ßÈ Moving Averages ö Ôoving average ± MAn } ?eriod | 2 3 5 A Ö } aales Average Ôorecast for next period | |23/3 | 2 2 |25/3 |. |28/3 2. n Actual | 2 2 3 ß Moving Averages ö Ôoving average ± MAn } ?eriod | 2 3 5 A Ö } n aales Average Ôorecast for next period | |23/3 | 2 2 |25/3 |. |28/3 2. 3 |29/3 § Actual | 2 2 3 § ßU aimple Moving Average " " 5 3 | 39 3 35 " | 2 3 5 MAn } 8 9 | || |2 A Ö } n È eighted Moving Averages ö Weig ted Ôoving average ± MAn} ?eriod | 2 3 5 aales | 2 eight 2 3 5 Result A*w Ö } Ôorecast Actual È| eighted Moving Averages ö Weig ted Ôoving average ± MAn} ?eriod | 2 3 5 aales | 2 eight 2 3 5 A*w Ö } Result Ôorecast Actual 8 |2.3 2| |.3 2 Èu eighted Moving Averages ö Weig ted Ôoving average ± MAn} ?eriod | 2 3 5 aales | 2 2 eight 2 3 5 A*w Ö } Result Ôorecast Actual 8.2 |2. 2| |.8 È6 eighted Moving Averages ö Weig ted Ôoving average ± MAn} ?eriod | 2 3 5 aales | 2 2 eight 2 3 5 A*w Ö } Result Ôorecast Actual 8. |2. 22 3 È§ eighted Moving Averages ö Weig ted Ôoving average ± MAn} ?eriod | 2 3 5 aales | 2 2 3 eight 2 3 5 A*w Ö } Result Ôorecast Actual 8. |3.2 2|.5 3.| Èù Exponential amoothing Ôt = Ôt-| VAt-| - Ôt-|l O ?remise--The most recent observations might have the highest predictive value. × Therefore, we should give more weight to the more recent time periods when forecasting. Èß Exponential amoothing Ôt = Ôt-| VAt-| - Ôt-|l eighted averaging method based on previous forecast plus a percentage of the forecast error ö A-Ô is the error term, V is the feedback ö ÈÈ Exponential amoothing Ôt = Ôt-| VAt-| - Ôt-|l = ext ?eriod öÔt-|= ?revious ?eriod öV amoothing Constant öAt-| = Actual Result ?revious ?eriod öÔt È Exponential amoothing - ?roblem Ôt = Ôt-| VAt-| - Ôt-|l öÔt = Result of formula öÔt-|= 2 öV amoothing = .| öAt-| = ÈU Exponential amoothing - ?roblem Ôt = Ôt-| VAt-| - Ôt-|l öÔt = 2 + .| (-2) öÔt = 2 + .| (2) öÔt = 2 + .2 öÔt = 2.2 Exponential amoothing - ?roblem Ôt = Ôt-| VAt-| - Ôt-|l öÔt = 3 + .| (2.2 -3) öÔt = 3 + .| (-.8 ) öÔt = 3 + -. 8 öÔt = 2.92 | V V Actual ?eriod | 2 3 5 8 9 | || |2 Alpha = .| Error 2 3 | 39 5 38 2 |.8 |.92 |.3 |. |.39 |.85 2. 2.3 |.92 |.3 Alpha = . Error -2. |.2 -|.92 - .3 -2. .| 2.|5 2.93 -.3 -|.92 2 |.2 |.92 |.|5 |. 9 .25 2.55 3.|3 3.88 |.53 .92 -2 |.8 -|.92 - .|5 -2. 9 5.5 |.5 |.8 -5.88 -|.53 u ?icking a amoothing Constant " 5 & + V V 5 35 | 2 3 5 8 9 | || |2 + 6 Common onlinear Trends $ / * 0 ' § Linear Trend Equation Ôt Ôt = a + bt ö ö ö ö Ôt = Ôorecast for period t t = apecified number of time periods a = Value of Ôt at t = b = alope of the line ù Calculating a and b n Ö (t ) Ö t Ö b } nÖ t Ö t) a } bÖ t Ö n ß Linear Trend Equation Example t eek | 2 3 5 È t = |5 È t) 2 = 2 2 5 2 t | 9 | 25 È t 2 = 55 a a le s |5 |5 |2 | | t |5 3| 8 885 È = 8|2 È t = 2 9 9 È Linear Trend Calculation 234 23 4 $ 1 1 1 234 4 8|2 - .3(|5) a = = 5 = |3.5 + .3t Associative Ôorecasting ö ?redictor variables - used to predict values of variable interest ö megression - technique for fitting a line to a set of points ö !east squares line - minimizes sum of squared deviations around the line U Linear Model aeems Reasonable X 2 | |5 | |2 | 2 |5 |5 | |3 |5 25 2 2 2 2 3 | Computed relationship 5 3 2 | 5 | |5 2 25 A straight line is fitted to a set of sample points. U Ôorecast Accurac ö Error - difference between actual value and predicted value ö Mean Absolute Deviation (MAD) × ö Mean aquared Error (MaE) × ö Average absolute error Average of squared error Mean Absolute ?ercent Error (MA?E) × Average absolute percent error U| MAD, MaE, and MA?E MAD } Ö Actual 2 forecast n MaE } Ö Actual 2 forecastl n | MA?E } Ö Actual 2 forecas t n / Actual*| ) Uu Example | + | 2 3 5 8 "&1 1 "1 " 2| 2|3 2| 2| 2|3 2|9 2| 2|2 Ô 2|5 2| 2|5 2| 2|| 2| 2| 2| 2"4Ô3 2 -3 | - 2 5 -| - -2 5"4Ô5 2 3 | 2 5 | 22 2"4Ô36 9 | | 25 | | 25"4Ô57" 38 .92 |.| . |.9 .9 2.28 . |.89 | .2 2.5 | .8 |.28 U6 Controlling the Ôorecast ö Control chart × × ö A visual tool for monitoring forecast errors Used to detect non-randomness in errors Ôorecasting errors are in control if × × All errors are within the control limits o patterns, such as trends or c cles, are present U§ aources of Ôorecast errors Model ma be inadequate ö àrregular variations ö àncorrect use of forecasting technique ö Uù Tracking aignal OTracking signal ±Ratio of cumulative error to MAD Actual forecastl Ö Tracking signal } MAD ± + $ * ' Uß Choosing a Ôorecasting Technique o single technique works in ever situation ö Two most important factors ö × × ö Cost Accurac Other factors include the availabilit of: × × × × Historical data Computers Time needed to gather and anal ze the data Ôorecast horizon UÈ V U ! V UU ! m | ^ p p Ô p | | !"# $ % Job Design ö ob design involves specif ing the content and methods of job × × × × × hat will be done ho will do the job How the job will bob will be done here the job will be done Ergonomics | u Design of ork a stems ö apecialization ö ehavioral Approaches to Job Design ö Teams ö Methods Anal sis ö Motions atud ö orking conditions | 6 Job Design auccess auccessful ob Design must be: ö ö ö ö Carried out b experienced personnel with the necessar training and background Consistent with the goals of the organization àn written form Understood and agreed to b both management and emplo ees | § apecialization in usiness: Advantages Ô Ô Ô :0+ + ; ) 9 ' + :00 $ : ++ | ù Disadvantages Ô Ô Ô & ) 0 ; : + + % ; + < $ : 0 ; $ <' ' : <+ 4 < ) | ß ehavioral Approaches to Job Design ö Job Enlargement × ö Job Rotation × ö Giving a worker a larger portion of the total task b horizontal loading orkers periodicall exchange jobs Job Enrichment × àncreasing responsibilit for planning and coordination tasks, b vertical loading | È Motivation and Trust ö Motivation × × ö ànfluences qualit and productivit Contributes to work environment Trust × ànfluences productivit and emplo eemanagement relations | Teams ö enefits of teams × × × ö Higher qualit Higher productivit Greater worker satisfaction aelf-directed teams × Groups of empowered to make certain changes in their work process | U Methods Anal sis ö Methods anal sis × × × Anal zing how a job gets done egins with overall anal sis Moves to specific details || Methods Anal sis e need for met ods analysis can come from a number of different sources: öChanges in tools and equipment öChanges in product design or new products öChanges in materials or procedures öOther factors (e.g. accidents, qualit problems) ||| Methods Anal sis ?rocedure the operation to be studied 2. Get emplo ee input 3. atud and document current method . Anal ze the job 5. ?ropose new methods . ànstall new methods . Ôollow-up to ensure improvements have been achieved |. àdentif ||u Anal zing the Job ö Ôlow process chart × ö Chart used to examine the overall sequence of an operation b focusing on movements of the operator or flow of materials orker-machine chart × Chart used to determine portions of a work c cle during which an operator and equipment are bus or idle ||6 Ôaa "=": # "* $) ' & >$ & '+ ) +$+ '+ , ;4-$; # + " + + " +$ " +$' " ++$$;; '+ ' + + '';+ ) + ' + $/ ||§ Motion atud Ôotion study is the s stematic stud of the human motions used to perform an operation. ||ù Motion atud Techniques ö Ôotion study principles - guidelines for designing motion-efficient work procedures ö nalysis of t erbligs - basic elemental motions into which a job can be broken down ö Ôicromotion study - use of motion pictures and slow motion to stud motions that otherwise would be too rapid to anal ze ö C arts ||ß Developing ork Methods |. 2. 3. . 5. Eliminate unnecessar motions Combine activities Reduce fatigue àmprove the arrangement of the workplace àmprove the design of tools and equipment ||È orking Conditions T e m p e ra tu re & H u m id i t à l lu m in a t i o n V e n t il a t io n C o lo r || orking Conditions (cont¶d) oise & Vibration aafet ork reaks Causes of Accidents ||U ork Measurement ö atandard time ö atopwatch time stud ö Historical times ö ?redetermined data ö ork aampling |u Compensation ö Time-based s stem × ö Compensation based on time an emplo ee has worked during a pa period Output-based (incentive) s stem × Compensation based on the amount of output an emplo ee produces during a pa period |u| Ôorm of àncentive ?lan ö Accurate ö Eas to appl ö Consistent ö Eas to understand ö Ôair |uu Compensation ö àndividual àncentive ?lans ö Group àncentive ?lans ö Rnowledge-ased ?a a stem ö Management Compensation |u6 p^ ^ ^ Ô p |u§ !"# $ % ^ ö Major factors in design strateg × × × × × Cost ualit Time-to-market Customer satisfaction Competitive advantage ?roduct and service design ± or redesign ± should be closel tied to an organization¶s strateg |uù ?roduct or aervice Design Activities Translate customer wants and needs into product and service requirements ö Refine existing products and services ö Develop new products and services ö Ôormulate qualit goals ö Ôormulate cost targets ö Construct and test protot pes ö Document specifications ö |uß Reasons for ?roduct or aervice Design ö Economic ö aocial and demographic ö ?olitical, liabilit , or legal ö Competitive ö Technological |uÈ Objectives of ?roduct and aervice Design ö Main focus × ö Customer satisfaction aecondar focus × × × × × × Ôunction of product/service Cost/profit ualit Appearance Ease of production/assembl Ease of maintenance/service |u Designing Ôor Operations ö Taking into account the capabilities of the organization in designing goods and services |uU Legal, Ethical, and Environmental àssues ö Legal × × × ö Ethical × ö ÔDA, OaHA, àRa ?roduct liabilit Uniform commercial code Releasing products with defects Environmental × E?A |6 Regulations & Legal Considerations !iability - A manufacturer is liable for an injuries or damages caused b a fault product. ö?roduct Commercial Code - ?roducts carr an implication of merchantabilit and fitness. ö«niform |6| Designers Adhere to Guidelines ?roduce designs that are consistant with the goals of the compan ö Give customers the value the expect ö Make health and safet a primar concern ö Consider potential harm to the environment ö |6u Other àssues in ?roduct and aervice Design ?roduct/service life c cles ö How much standardization ö ?roduct/service reliabilit ö Range of operating conditions ö |66 Life C cles of ?roducts or aervices & + & * 0 ' . + # |6§ atandardization ö atandardization × ö Extent to which there is an absence of variet in a product, service or process atandardized products are immediatel available to customers |6ù Advantages of atandardization ö Ôewer parts to deal with in inventor & manufacturing ö Design costs are generall lower ö Reduced training costs and time ö More routine purchasing, handling, and inspection procedures |6ß Advantages of atandardization (Cont¶d) ö Orders fillable from inventor ö Opportunities for long production runs and automation ö eed for fewer parts justifies increased expenditures on perfecting designs and improving qualit control procedures. |6È Disadvantages of atandardization ö Designs ma be frozen with too man imperfections remaining. ö High cost of design changes increases resistance to improvements. ö Decreased variet results in less consumer appeal. |6 Mass Customization O Mass customization: × × × A strateg of producing standardized goods or services, but incorporating some degree degree of customization Dela ed differentiation Modular design |6U Dela ed Differentiation O Dela ed differentiation is a postponement tactic × ?roducing but not quite completing a product or service until customer preferences or specifications are known |§ Modular Design Ôodular design is a form of standardization in which component parts are subdivided into modules that are easil replaced or interchanged. àt allows: × easier diagnosis and remed of failures × easier repair and replacement × simplification of manufacturing and assembl |§| Reliabilit ö meliability: The abilit of a product, part, or s stem to perform its intended function under a prescribed set of conditions ö ailure: aituation in which a product, part, or s stem does not perform as intended ö Normal operating conditions: The set of conditions under which an item¶s reliabilit is specified |§u m O Component design O ?roduction/assembl techniques O Testing O Redundanc /backup O ?reventive maintenance procedures O User education O a stem design |§6 ?roduct Design ö ?roduct Life C cles ö Robust Design ö Concurrent Engineering ö Computer-Aided Design ö Modular Design |§§ m ^ Robust Design: Design that results in products or services that can function over a broad range of conditions |§ù Taguchi Approach Robust Design ö Design a robust product × ànsensitive to environmental factors either in manufacturing or in use. Central feature is ?arameter Design. ö Determines: ö × × factors that are controllable and those not controllable their optimal levels relative to major product advances |§ß Degree of ewness |. Modification of an existing product/service 2. Expansion of an existing product/service 3. Clone of a competitor¶s product/service . ew product/service |§È Degree of Design Change T pe of Design Change Modification ewness of the organization Low ewness to the market Low Expansion Low Low Clone High Low ew High High |§ ?hases in ?roduct Development ?rocess |. 2. 3. . 5. . . 8. 9. àdea generation Ôeasibilit anal sis ?roduct specifications ?rocess specifications ?rotot pe development Design review Market test ?roduct introduction Ôollow-up evaluation |§U àdea Generation auppl chain based àdeas Competitor based Research based |ù Reverse Engineering meverse engineering ' + + ? + + + |ù| Research & Development (R&D) ö Organized efforts to increase scientific knowledge or product innovation & ma involve: × × × ±asic mesearc advances knowledge about a subject without near-term expectations of commercial applications. pplied mesearc achieves commercial applications. Development converts results of applied research into commercial applications. |ùu Manufacturabilit ö Manufacturabilit ' $ +7 $0' ' @ × Cost × ?roductivit × ualit |ù6 Designing for Manufacturing e ond the overall objective to achieve customer satisfaction while making a reasonable profit is: Design for Manufacturing(DÔM) The designers¶ consideration of the organization¶s manufacturing capabilities when designing a product. The more general term design for operations encompasses services as well as manufacturing |ù§ Concurrent Engineering Concurrent engineering '$ ' + + '+ ' |ùù Computer-Aided Design ö Computer-ided Design (CD) is product design using computer graphics. × increases productivit of designers, 3 to | times × creates a database for manufacturing information on product specifications × provides possibilit of engineering and cost anal sis on proposed designs |ùß ?roduct design Design for manufacturing (DÔM) ö Design for assembl (DÔA) ö Design for rec cling (DÔR) ö Remanufacturing ö Design for disassembl (DÔD) ö Robust design ö |ùÈ m Rec cling: recovering materials for future use ö Rec cling reasons ö × × × Cost savings Environment concerns Environment regulations |ù aervice Design aervice is an act ö aervice deliver s stem ö × × × ö Ôacilities ?rocesses akills Man services are bundled with products |ùU aervice Design ö aervice design involves × × × × The ph sical resources needed The goods that are purchased or consumed b the customer Explicit services àmplicit services |ß aervice Design ö aervice × ö aervice deliver s stem × ö The facilities, processes, and skills needed to provide a service ?roduct bundle × ö aomething that is done to or for a customer The combination of goods and services provided to a customer aervice package × The ph sical resources needed to perform the service |ß| ^ ± ^ Tangible ± intangible ö aervices created and delivered at the same time ö aervices cannot be inventoried ö aervices highl visible to customers ö aervices have low barrier to entr ö Location important to service ö |ßu ?hases in aervice Design |. Conceptualize service package components 3. Determine performance specifications . Translate performance specifications into design specifications 5. Translate design specifications into deliver specifications 2. àdentif |ß6 aervice lueprinting ö aervice blueprinting × ö A method used in service design to describe and anal ze a proposed service A useful tool for conceptualizing a service deliver s stem |ß§ Major ateps in aervice lueprinting |. 2. 3. . 5. . Establish boundaries àdentif steps involved ?repare a flowchart àdentif potential failure points Establish a time frame Anal ze profitabilit |ßù Characteristics of ell Designed aervice a stems |. 2. 3. . 5. . . 8. 9. Consistent with the organization mission User friendl Robust Eas to sustain Cost effective Value to customers Effective linkages between back operations aingle unif ing theme Ensure reliabilit and high qualit |ßß Challenges of aervice Design Variable requirements ö Difficult to describe ö High customer contact ö aervice ± customer encounter ö |ßÈ ualit Ôunction Deplo ment ö ualit Ôunction Deplo ment × × Ô Voice of the customer House of qualit ! " |ß The House of ualit Correlation matrix Design requirements Customer requirements Relationship matrix Competitive assessment apecifications or target values |ßU V * & ,/ , & # !$ % - " # ' / % . - ( ( - ) % Y ! - - % ,$ 0, / % l }+ } , -} , l . $ ), %% % % ,$ 0 % ? % " % % - - * }) } } |È ! >+ Excitement Expected Must Have ! =+ |È| p |. àncrease emphasis on component commonalit 2. ?ackage products and services 3. Use multiple-use platforms . Consider tactics for mass customization 5. Look for continual improvement . ahorten time to market |Èu ahorten Time to Market |. Use standardized components 2. Use technolog 3. Use concurrent engineering |È6 p | ö ö ö ö à à | ö ö ö à ! " " # " | ö ö ö " ! $ " ö ö ö ö ö % & ' ( | * + ö % ö ö . ö ö ' ö ö & ö ö , - ( ö . . / $ $ | ) . ö " ö ö %$ $ $ 1 ö ! $ $ $ # $ | 0 % ö ö 1 3 ö ö ö ö ( / ö ö à |)2 % * % ö , ö |2 |)| * 5# & |)4 7 |)6 ( ö ö ö ö & " 1 à # 8 ö % ö % ö # ö 9 " ö ( ö ( ö " |) ( : ö & % ö ö ö % à ö ö ö à $ . . % $ . . ;1$ <! # ö # 3 |) (* % = ö / ö ö ö 9 ö ö ö * ) |2 #! 1 $ $ $ > ? @ (:: :/ |) + à ö (:: :/ % =(/ ö ö ö % ö ö / + %$ & ö 9 |) (/ ö ( ö ö ö ö ö ö à * ö ö % $ $ $ % / ö ö % à $ # |)) (/ ö = % ö / $ |)0 % ö ö ö ö ö ö ö %: : &# %! % % ( / A |02 %: : ö ö % Ô & " |0| &# ö ö 9 ( 8: |04 %! ö a |06 % % ö ö à a * % 9% % # # |0 ö ö |0 ( / ö ö ö ö " 5 |0 à )2:42 8 ( " # . . )2B 42B |0 A ö ö / # " ! ! : # # # = !# |0 ( : & ö ö ö % 9 " & =& & ö ö ö ö ö ö % " % ( 8 : |0) & =& ö ( ' ' %: ! |00 & : A ö / :$ > : <! 422 8 * " ö ö ö 8 $ # 5 |22B 8 : 42| 8 * " 8 8 C =8| =84 =86 . . . =8 8 C 8| C ö ö à 424 8 * " ö ö à ( # 8 C 8| D =84E ( 4 426 ( ö ö ö ö " " " F 42 /# ö ! ö ö "a#$$$ ö "a%&$$$a 42 <5/: + à àö ö ö ö /# % * 8 / à # " 7 # 3 $ $ ( #3 %.$ G$ & $ 6$ à<$ 81:% 42 (1 ö G ' ( a ) %#*% ö +,) ( ++"" ö %#-& ö Ô ./ 'a 42 à ö ö ö ö ö ö ö ö ö 0222 H à % à 1 1 1 " % > à 0222H4222 * & à 022|H4222 * 8" à 022H4222 : 7 ( 2$222 |222H à ö & F 42) + & ö ö ö ! " ! : : (% 420 + ö ö # 1 ö ö ö ö ö ö ö ! * ! & * / * * " ( * " A 8 * # ! à * 4|2 A ö ö ö " $ " $ " & " $ $ + /. #$ +. # $ I . I$ / '. & $ ( <. % $ ; à!#$ 7 4|| A : % ö ö ö ö 3 $ $ #$ " $ $ $ " & " 8 # < /# 1 " . 4|4 u|6 ?hases of ualit Assurance . $ 7 + " #' . + + + A $ ' ! #' u|§ ànspection How Much/How Often ö here/hen ö Centralized vs. On-site ö . " # " u|ù ! ànspection Costs # ! ! ! + " . u|ß here to ànspect in the ?rocess ö Raw materials and purchased parts ö Ôinished products ö efore a costl operation ö efore an irreversible process ö efore a covering process u|È Examples of ànspection ?oints # $ Ôast Ôood . Cashier Counter area Eating area uilding Ritchen Hotel/motel ?arking lot Accounting uilding Main desk aupermarket Cashiers Deliveries !' Accurac Appearance, productivit Cleanliness Appearance Health regulations aafe, well lighted Accurac , timeliness Appearance, safet aiting times Accurac , courtes ualit , quantit u| öatatistical ?rocess Control: atatistical evaluation of the output of a process during production öuality of Conformance: A product or service conforms to specifications u|U Control Chart ö Control Chart × ?urpose: to monitor process output to see if it is random × A time ordered plot representative sample statistics obtained from an on going process (e.g. sample means) × Upper and lower control limits define the range of acceptable variation uu Control Chart "$ + $ «!: = + ' :!: "$ + $ $ uu| atatistical ?rocess Control ö The essence of statistical process control is to assure that the output of a process is random so that future output will be random. uuu atatistical ?rocess Control ö The Control ?rocess × × × × × × Define Measure Compare Evaluate Correct Monitor results uu6 atatistical ?rocess Control ö Variations and Control × × mandom variation: atural variations in the output of a process, created b countless minor factors ssignable variation: A variation whose source can be identified uu§ aampling Distribution + $ + $ uuù ormal Distribution + ++ 2 2 B B uuß Control Limits + $ + $ :0 « uuÈ a?C Errors ö T pe à error × ö Concluding a process is not in control when it actuall is. T pe àà error × Concluding a process is in control when it is not. uu T pe à Error V7 V7 V $$ #. :!: «!: uuU Observations from aample Distribution «!: :!: $ u6 Control Charts for Variables ó $ + ' ö ö Mean control charts × Used to monitor the central tendenc of a process. × X bar charts Range control charts × Used to monitor the process dispersion × R charts u6| Mean and Range Charts > # a «!: & ' /4!' :!: «!: 4' :!: & + ' u6u Mean and Range Charts a > $ # «!: /4!' :!: & «!: 4' :!: u66 Control Chart for Attributes ö p-Chart - Control chart used to monitor the proportion of defectives in a process ö c-Chart - Control chart used to monitor the number of defects per unit " $ + ' u6§ Use of p-Charts ö ö hen observations can be placed into two categories. × Good or bad × ?ass or fail × Operate or don¶t operate hen the data consists of multiple samples of several observations each u6ù Use of c-Charts ö Use onl when the number of occurrences per unit of measure can be counted; non-occurrences cannot be counted. × × × × × acratches, chips, dents, or errors per item Cracks or faults per unit of distance reaks or Tears per unit of area acteria or pollutants per unit of volume Calls, complaints, failures per unit of time u6ß Use of Control Charts ö At what point in the process to use control charts ö hat size samples to take ö hat t pe of control chart to use × Variables × Attributes u6È Run Tests ö mun test ± a test for randomness ö An sort of pattern in the data would suggest a non-random process ö All points are within the control limits the process ma not be random u6 onrandom ?atterns in Control charts Trend ö C cles ö ias ö Mean shift ö Too much dispersion ö u6U m Ôigure | .|2 + " , -. / ++++++ Ôigure | .|3 «0 , -1 / ««0«0«0««0 u§ ?rocess Capabilit ö Tolerances or specifications × ö ?rocess variabilit × ö Range of acceptable values established b engineering design or customer requirements atural variabilit in a process ?rocess capabilit × ?rocess variabilit relative to specification u§| ?rocess Capabilit :0 « " $ ' :0 « C $ :0 « 00 ' ! $ /+ u§u ?rocess Capabilit Ratio ? 1} } $ # # + $ # $ ( u§6 « 23%& 23%& 2#. 2#. ? 4 3 4 5 u§§ àmproving ?rocess Capabilit aimplif ö atandardize ö Mistake-proof ö Upgrade equipment ö Automate ö u§ù Limitations of Capabilit àndexes |. ?rocess ma not be stable 2. ?rocess output ma not be normall distributed 3. ?rocess not centered but Cp is used u§ß atatistical ?rocess Control (a?C) ànvented b alter ahewhart at estern Electric ö Distinguishes between ö × × ö common cause variabilit (random) special cause variabilit (assignable) ased on repeated samples from a process u§È Empirical Rule ¢ ¢ ¢ ¢ ¢ ¢ ¢ (23 )3 )),3 u§ Control Charts in General ö ö ö Are named according to the statistics being plotted, i.e., X bar, R, p, and c Have a center line that is the overall average Have limits above and below the center line at 3 standard deviations (usuall ) + +l # l u§U Variables Data Charts ö ?rocess Centering × × ö X bar chart X bar is a sample mean Ö ?rocess Dispersion (consistenc ) × × R chart R is a sample range 4 l 2 l uù X bar charts Center line is the grand mean (X double bar) Ö ö ?oints are X bars 0 â ö â 2 â 2 uù| R Charts Center line is the grand mean (R bar) ö ?oints are R ö D3 and D values are tabled according to n (sample size) ö . uùu Use of X bar & R charts Charts are alwa s used in tandem ö Data are collected (2 -25 samples) ö aample statistics are computed ö All data are plotted on the 2 charts ö Charts are examined for randomness ö àf random, then limits are used forever´ ö uù6 Attribute Charts ö c charts ± used to count defects in a constant sample size Ö 2 uù§ Attribute Charts ö p charts ± used to track a proportion (fraction) defective Öâ Ö Öâ 2 l 2 2 l uùù ?rocess Capabilit The ratio of process variabilit to design specifications " 5 5 5 6 5 5 5 # + / $ (5 uùß p ^ uùÈ auppl Chains & aCM ö ö "' ' 0 ; ' + + '+ + 7 ' × aourcing of: raw materials, assembl , warehousing, order entr , distribution, deliver !' ' $ ' + ' 0 ; ; × Coordinates movement of goods through suppl chain from suppliers to manufacturers to distributors × ?romotes information sharing along chain like forecasts, sales data, & promotions uù Components of a auppl Chain ö External auppliers± source of raw material × × × ö ànternal Ôunctions include ± processing functions × ö Tier one supplier supplies directl to the processor Tier two supplier supplies directl to tier one Tier three supplier supplies directl to tier two ?rocessing, purchasing, planning, qualit , shipping External Distributors transport finished products to appropriate locations × Logistics managers are responsible for traffic management and distribution management uùU Components of a auppl Chain ö External Distributors transport finished products to appropriate locations × Logistics managers are responsible for managing the movement of products between locations. àncludes; traffic management ± arranging the method of shipment for both incoming and outgoing products or material ö distribution management ± movement of material from manufacturer to the customer ö uß A asic auppl Chain uß| The ullwhip Effect ö ö ® ullwhip effect - the inaccurate or distorted demand information created in the suppl chain ! +$: × demand forecasting updating, × order batching, × price fluctuations, × rationing and × gaming ußu The ullwhip Effect ö ! ' @ × × × × × Change the wa suppliers forecast product demand b making this information available at all levels of the suppl chain ahare real demand information (?Oa terminals) Eliminate order batching atabilize pricing Eliminate gaming uß6 àssues Affecting auppl Chain Management ànformation technolog ± enablers include the ànternet, eb, EDà, intranets and extranets, bar code scanners, and pointof-sales demand information ö E-commerce and e-business ± uses internet and web to transact business ö uß§ T pes of E-Commerce 4 + + ' ' . + '%$ $ ö #0 4 ö × × usiness-to-business (2) and usiness-to-consumer (2C) ußù T pes of E-Commerce ö C 4 4C 2CC3 @ × × × × ö Automated order entr s stems started in |9 ¶s Electronic Data ànterchange (EDà) started in the |9 ¶s Electronic atorefronts emerged in the |99 ¶s et Marketplaces emerged in the late |99 ¶s C CC4! × × × × Lower procurement administrative costs, Low-cost access to global suppliers Lower inventor investment due to price transparenc /reduced response time etter product qualit because of increased cooperation between bu ers and sellers, especiall during the product design and development ußß T pes of E-Commerce ö C 4 4! 2C!3@ × ö On-line businesses tr to reach individual consumers C! + × × × × × Advertising ± eb site offers providers and opportunit to advertise aubscription ±eb site charges a subscription fee for access to the site Transaction ± compan receives a fee for executing a transaction aales ± a means of selling goods, information, or service directl to customers Affiliate ± companies receive a referral fee for directing business to an affiliate ußÈ aCM Ôactors ö ! must consider the following trends, improved capabilities, & realities: ! / +! ± power has shifted to the consumer × *$ ( ± capitalize on emerging markets × * +4! issues of ànternet government regulations × . 4! ± rec cling, sustainable eco-efficienc , and waste minimization × uß Global aCM Ôactors ö / $' + × × × × × * ' + +$ 4 increase replenishment transit times and inventor investment Ô complicated b longer lead times and different operating practices /' fluctuate, inflation can be high . ® like transportation, communication, lack of skilled labor, & scarce local material supplies + ®Ð created b the need to customize products for each market ußU aourcing àssues ö ö hich products to produce in-house and which are provided b other suppl chain members Vertical integration ± a measure of how much of the suppl chain is owned b the manufacturer × × ö ackward integration ± owning or controlling of sources of raw material and component parts Ôorward integration ± owning or control the channels of distribution Vertical integration related to levels of insourcing or outsourcing products or services uÈ ànsourcing vs. Outsourcing ö %' ) + $;+ $ + +D × × × às product/service technolog critical to firm¶s success às product/service a core competenc às it something our compan must do to survive uÈ| Make or u Anal sis ö Anal sis will look at the expected sales levels and cost of internal operations vs. cost of purchasing the product or service Total Cost of Outsourcin g : Total Cost of ànsourcing : àndifferen ce ?oint : uÈu /@;4 4C 4 Mar and aue, have decided to open a bagel shop. Their first decision is whether the should make the bagels on-site or b the bagels from a local baker . àf the bu from the local baker the will need airtight containers at a fixed cost of $| annuall . The can bu the bagels for $ . each. àf the make the bagels in-house the will need a small kitchen at a fixed cost of $|5, annuall . àt will cost them $ .|5 per bagel to make. The believe the will sell , bagels. ö ö ö ö ö +0 ;0 ''+; $ '$ ÔCu + (VCu x ) = ÔCMake + (VCMake x ) $|, + ($ . x ) = $|5, + ($ .|5 x ) = 5, bagels ' ) <$ + +/ <$ < ' '+; '$ 4' uÈ6 The Role of ?urchasing ö ' ' + + 4B ++ Ethics considerations is a constant concern × Developing supplier relationships is essential × Determining how man suppliers to use × Developing partnerships × uÈ§ Critical Ôactors in auccessful ?artnership Relations ö Critical factors in successful partnering include; àmpact ± attaining levels of productivit and competitiveness that are not possible through normal supplier relationships × àntimac ± working relationship between two partners × Vision ± the mission or objectives of the partnership × uÈù Critical Ôactors in auccessful ?artnership Relations Have a long-term orientation ahare a common vision Are strategic in nature ahare short/long term plans ahare information Driven b end-customer needs ahare risks and opportunities ö C Earl supplier involvement (Eaà) in the design process × Using supplier expertise to develop and share cost improvements and eliminate costl processes × ahorten time to market × uÈß auppl Chain Distribution ö arehouses involved in suppl chain distributions and include ?lant warehouses × Regional warehouses × Local warehouses × ö arehouses can either be General ± used for long-term storage × Distribution ± used for short-term storage, consolidation, and product mixing × uÈÈ auppl Chain Distribution continued Transportation consolidation ± warehouses consolidate less-thantruckload (LTL) quantities into truckload (TL) quantities ö ?roduct mixing ± warehouse value added customer service of grouping a variet of products into a direct shipment to the customer ö uÈ auppl Chain Distribution continued aervices are offered can improve customer service b moving goods closer to the customer and thus reducing replenishment time ö Crossdocking or movement of material without storage and order-picking material while still performing the receiving and shipping functions. ö uÈU auppl Chain Distribution continued ö ö Radio Ôrequenc àdentification Technolog (RÔàD) ± automated data collection technolog which relies on radio waves to transfer data between reader and RÔàD tag Third-part aervice ?roviders ± ease of developing an electronic storefront has allowed the discover of suppliers from around the world u àntegrated aCM ö . +! ) @ × × × ö "( '0'' $ . / ' ' ' ?* × × × × × × × + ++ . ) ++ . + . + ; ö ?* × × × × × . . + . +++ . $ u| auppl Chain Measurements ö ' × Traditional measures include; Return on investment ö ?rofitabilit ö Market share ö Revenue growth ö × Additional measures Customer service levels ö ànventor turns ö eeks of suppl ö ànventor obsolescence ö uu auppl Chain ?erformance Measurement ! ++ $ 4) ) ? + 0 ö + ö × × × × × arrant costs ?roducts returned Cost reductions allowed because of product defects Compan response times Transaction costs u6 Current Trends in aCM ö àncreased use of electronic marketplace such as × × E-distributors ± independentl owned net marketplaces having catalogs representing thousands of suppliers and designed for spot purchases E-purchasing ± companies that connect on-line MRO suppliers to business who pa fees to join the market, usuall for long-term contractual purchasing u§ Current Trends in aCM continued ö àncreased use of electronic marketplace such as Value chain management ± automation of a firm¶s purchasing or selling processes × Exchanges ± marketplace that focuses on spot requirements of large firms in a single industr × àndustr consortia ± industr -owned markets that enable bu ers to purchase direct inputs from a limited set of invited suppliers × ö Decreased suppl chain velocit due to greater distances with greater uncertaint and generall less efficient. uù aCM Across the Organization ö ö ö ö ö ö aCM changes the wa companies do business. Accounting shares aCM benefits due to inventor level decreases Marketing benefits b improved customer service levels ànformation s stems are critical for information sharing through ?aO data, EDà, RÔàD, the ànternet, intranet, and extranets ?urchasing is responsible for sourcing materials Operations use timel demand information to more effectivel plan production schedules uß aCM Highlights ö ö Ever organization is part of a suppl chain, either as a customer or as a supplier. auppl chains include all the processes needed to make a finished product, from the extraction of raw materials through the sale to the end user. aCM is the integration and coordination of these efforts. The bullwhip effect distorts product demand information passed between levels of the suppl chain. The more levels that exist, the more distortion that is possible. Variabilit results from updating demand estimates at each level, order batching, price fluctuations, and rationing uÈ aCM Highlights (continued) ö ö Man issues affect suppl chain management. The ànternet, the E, EDà, intranets, extranets, bar-code scanners, and ?Oa data are aCM enablers. 2 and 2C electronic commerce enable suppl chain management. et marketplaces bring together thousands or suppliers and customers. Allowing for efficient sourcing and lower transaction costs. u aCM Highlights (continued) ö Global suppl chains increase geographic distances between members, causing greater uncertaint in deliver times. ö ?urchasing has a major role in aCM. ?urchasing is involved in sourcing decisions and developing strategic long-term partnerships. uU aCM Highlights (continued) ö ö Ethics in suppl management is an ongoing concern. aince bu ers are in a position to influence or award business, it is imperative that bu ers avoid an appearance of unethical behavior or conflict of interest. Companies make insourcing and outsourcing decisions. These make-or-bu decisions are based on financial and strategic criteria. uU aCM Highlights (continued) ö ö ?artnerships require sharing information, risks, technologies, and opportunities. àmpact, intimac , and vision are critical to successful partnering. auppl chain distribution requires effective warehousing operations. The warehouses provide transportation, consolidation, product mixing, and service. uU| aCM Highlights (continued) aCM usuall begins with the manufacturer integrating internal processes first. The, the compan tries to integrate the external suppliers. The last step is integrating the external distributors. ö àntegrated uUu aCM Highlights (continued) ö ö A compan needs to evaluate the performance of its suppl chain. Regular performance metrics (ROà, profitabilit , market share, customer service levels, etc.) and other measures that reflect the objectives of the aC are used. The emergence of net marketplaces has significantl affected aCM. As suppl chains become longer, it is likel that suppl chain velocit will decrease. àt is possible that a more strategic and integrated approach is needed to advance aCM to the next level. uU6 p p ^ Ô p uU§ !"# $ % eed for Location Decisions ö Marketing atrateg ö Cost of Doing usiness ö Growth ö Depletion®q of Resources uUù ature of Location Decisions ö atrategic àmportance × × × ö Objectives × × × ö Long term commitment/costs àmpact on investments, revenues, and operations auppl chains ?rofit potential o single location ma be better than others àdentif several locations from which to choose Options × × × Expand existing facilities Add new facilities Move uUß Making Location Decisions Decide on the criteria ö àdentif the important factors ö Develop location alternatives ö Evaluate the alternatives ö Make selection ö uUÈ Location Decision Ôactors Ô ! ! + 4 + Ô uU Regional Ôactors Location of raw materials ö Location of markets ö Labor factors ö Climate and taxes ö uUU Communit Considerations ualit of life ö aervices ö Attitudes ö Taxes ö Environmental regulations ö Utilities ö Developer support ö 6 aite Related Ôactors Land ö Transportation ö Environmental ö Legal ö 6 | Multiple ?lant atrategies ?roduct plant strateg ö Market area plant strateg ö ?rocess plant strateg ö 6 u Comparison of aervice and Manufacturing Considerations 7& $ 7 ! Ô Transportation modes/costs Demographics: age,income,etc Energ availabilit , costs ?opulation/drawing area Labor cost/availabilit /skills Competition uilding/leasing costs Traffic volume/patterns Customer access/parking 6 6 Trends in Locations ö Ôoreign producers locating in U.a. × × ö ö ö Made in UaA´ Currenc fluctuations Just-in-time manufacturing techniques Microfactories ànformation Technolog 6 § Ô * ! & a. ?olicies on foreign ownership of production facilities Local Content àmport restrictions Currenc restrictions Environmental regulations Local product standards b. atabilit issues Living circumstances for foreign workers / dependents Religious holida s/traditions ! ?ossible bu locall sentiment :$ Level of training and education of workers ork practices ?ossible regulations limiting number of foreign emplo ees Language differences Availabilit and qualit of raw materials, energ , transportation / 6 ù Evaluating Locations ö Cost-?rofit-Volume Anal sis × Determine fixed and variable costs × ?lot total costs × Determine lowest total costs 6 ß Location Cost-Volume Anal sis ö Assumptions × × × × Ôixed costs are constant Variable costs are linear Output can be closel estimated Onl one product involved 6 È Example |: Cost-Volume Anal sis Ôixed and variable costs for : potential Ô / + four locations A C D ! $ 2 5 , | , | 5 , 2 , ó $ ! $ | | 3 2 3 5 6 Example |: aolution Ô ix e d C o s ts A C D $25 | |5 2 , , , , V a r ia b le C o s ts $ | | (| 3 (| 2 (| 3 5 (| , , , , T o ta l C o s ts ) ) ) ) $3 35 55 , , , , 6 U Example |: aolution Â23 & C ! " " ! C " 23 6| Evaluating Locations ö Transportation Model × ö Ôactor Rating × ö Decision based on movement costs of raw materials or finished goods Decision based on quantitative and qualitative inputs Center of Gravit Method × Decision based on minimum distribution costs 6|| p p ^ p Ô p 6|u !"# $ % àntroduction ö ?rocess selection × ö Deciding on the wa production of goods or services will be organized Major implications × × × × Capacit planning La out of facilities Equipment Design of work s stems 6|6 ?rocess aelection and a stem Design Ô $ a Ô % $ a & 6|§ ?rocess atrateg O Re aspects of process strateg ± Capital intensive ± equipment/labor ± ?rocess flexibilit ± Adjust to changes ± Design ± Volume ± technolog 6|ù ?rocess aelection Batch ö Variet × ö Ôlexibilit × ö How much Repetitive hat degree Volume × Job Shop Continuous Expected output 6|ß ?rocess T pes ö Job shop × ö atch × ö Moderate volume Repetitive/assembl line × ö amall scale High volumes of standardized goods or services Continuous × Ver high volumes of non-discrete goods 6|È ?roduct ± ?rocess Matrix # $' :0 :0 9 ' « )2 ; +3 + + + (+ + Appliance repair Emergenc room ó ' ' !+ + ot feasible Commercial baker C ' Classroom Lecture Automotive assembl Automatic carwash ! 203 ot feasible Oil refiner ater purification 6| ?roduct ± ?rocess Matrix & :0 « )2 ; +3 $ Ver High Moderate Low Ver low / $ Ver High Moderate Low Ver low « Ver High Moderate Low Ver low ó Ver High Low High Ver low :0 + 9 ' + + (+ + ó ' ' !+ + 6|U Automation ö utomation: Machiner that has sensing and control devices that enables it to operate × × Ôixed automation ?rogrammable automation 6u Automation O Computer-aided design and manufacturing s stems (CAD/CAM) O umericall controlled (C) machines O Robot O Manufacturing cell O Ôlexible manufacturing s stems(ÔMa) O Computer-integrated manufacturing (CàM) 6u| Ôacilities La out ö !ayout: the configuration of departments, work centers, and equipment, with particular emphasis on movement of work (customers or materials) through the s stem 6uu àmportance of La out Decisions Requires substantial investments of mone and effort ö ànvolves long-term commitments ö Has significant impact on cost and efficienc of short-term operations ö 6u6 The eed for La out Decisions ànefficient operations Ôor Example: High Cost ottlenecks Changes in the design of products or services Accidents The introduction of new products or services aafet hazards 6u§ The eed for La out Design (Cont¶d) Changes in environmental or other legal requirements Changes in volume of output or mix of products Morale problems Changes in methods and equipment 6uù asic La out T pes ö ?roduct la outs ö ?rocess la outs ö Ôixed-?osition la out ö Combination la outs 6uß asic La out T pes ö ?roduct la out × ö ?rocess la out × ö La out that uses standardized processing operations to achieve smooth, rapid, highvolume flow La out that can handle varied processing requirements Ôixed ?osition la out × La out in which the product or project remains stationar , and workers, materials, and equipment are moved as needed 6uÈ ?roduct La out , 2 " " « $ " 3 6 " 6u Advantages of ?roduct La out High rate of output ö Low unit cost ö Labor specialization ö Low material handling cost ö High utilization of labor and equipment ö Established routing and scheduling ö Routing accounting and purchasing ö 6uU Disadvantages of ?roduct La out Creates dull, repetitive jobs ö ?oorl skilled workers ma not maintain equipment or qualit of output ö Ôairl inflexible to changes in volume ö Highl susceptible to shutdowns ö eeds preventive maintenance ö àndividual incentive plans are impractical ö 66 A U-ahaped ?roduction Line . 2 $ 3 6 % % ; 5 2& 7 1 . 66| ?rocess La out ? ocess Layout (functional) " " " "' " "Ô «( )a' 66u ?roduct La out ? oduct Layout (sequential) & a * & a + & a , « 666 Advantages of ?rocess La outs Can handle a variet of processing requirements ö ot particularl vulnerable to equipment failures ö Equipment used is less costl ö ?ossible to use individual incentive plans ö 66§ Disadvantages of ?rocess La outs ö ö ö ö ö ö ö àn-process inventor costs can be high Challenging routing and scheduling Equipment utilization rates are low Material handling slow and inefficient Complexities often reduce span of supervision apecial attention for each product or customer Accounting and purchasing are more involved 66ù Cellular La outs ö Cellular ?roduction × ö La out in which machines are grouped into a cell that can process items that have similar processing requirements Group Technolog × The grouping into part families of items with similar design or manufacturing characteristics 66ß Ôunctional vs. Cellular La outs & Ô ! umber of moves between departments man few Travel distances longer shorter Travel paths variable fixed Job waiting times greater shorter Throughput time higher lower Amount of work in process higher lower aupervision difficult higher lower acheduling complexit higher lower Equipment utilization lower higher 66È Other aervice La outs arehouse and storage la outs ö Retail la outs ö Office la outs ö 66 Design ?roduct La outs: Line alancing Line alancing is the process of assigning tasks to workstations in such a wa that the workstations have approximatel equal time requirements. 66U C cle Time Cycle time is the maximum time allowed at each workstation to complete its set of tasks on a unit. 6§ Determine Maximum Output Output capacit OT OT = CT operating time per da D = Desired output rate OT CT = c cle time = D 6§| Determine the Minimum umber of orkstations Required = Öt (D)( Ö t) OT = sum of task times 6§u ?recedence Diagram ?recedence diagram: Tool used in line balancing to displa elemental tasks and sequence requirements $ + " + & 6§6 Example |: Assembl Line alancing ö Arrange tasks shown in Ôigure .| into three workstations. × × Use a c cle time of |. minute Assign tasks in order of the most number of followers 6§§ Example | aolution % ; # $ " #; + # |. .9 .2 a, c c none a c - .9 .2 2 |. b b . 3 |. .5 .3 d e - d e - .5 .3 | .+# .2 . .3 .5 6§ù Calculate ?ercent àdle Time àdle time per c cle ?ercent idle time = ()(CT) Efficienc = | ± ?ercent idle time 6§ß Line alancing Rules aome Heuristic (intuitive) Rules: öAssign tasks in order of most following tasks. × Count the number of tasks that follow öAssign tasks in order of greatest positional weight. × ?ositional weight is the sum of each task¶s time and the times of all following tasks. 6§È Example 2 -"+ -"+ -", -". -"/ *"- -"0 -", 6§ aolution to Example 2 $ ' + 6§U ?arallel orkstations | min. 30/h . | min. 30/h . 2 min. 30/h . | min. 30/h . ' & 30/h . | min. 60/h . | min. 30/h . | min. | min. 60/h . 30/h . | min. 30/h . & 6ù Designing ?rocess La outs ànformation Requirements: |. List of departments 2. ?rojection of work flows 3. Distance between locations . Amount of mone to be invested 5. List of special considerations . Location of ke utilities 6ù| Example 3: ànterdepartmental ork Ôlows for Assigned Departments " C ! 6ùu ?rocess La out "$ E# * + & : 4 0 ; ++ + 6ù6 Ôunctional La out +++ 000 +++ *** 000 +++ ,,,, **** ++++ $ *** ,,, *** ,,, *** *** 000 6ù§ Cellular Manufacturing La out & & : ' 9 * 9 * + 4 9 * + 4 & * 4 "$ 4 : ' 4 6ùù p p^ ^ Ô p 6ùß !"# $ % Capacit ?lanning Capacit is the upper limit or ceiling on the load that an operating unit can handle. ö The basic questions in capacit handling are: ö × × × hat kind of capacit is needed How much is needed hen is it needed 6ùÈ àmportance of Capacit Decisions |. 2. 3. . 5. . . 8. àmpacts abilit to meet future demands Affects operating costs Major determinant of initial costs ànvolves long-term commitment Affects competitiveness Affects ease of management Globalization adds complexit àmpacts long range planning 6ù Capacit ö Design capacit × ö Effective capacit × ö maximum output rate or service capacit an operation, process, or facilit is designed for Design capacit minus allowances such as personal time, maintenance, and scrap Actual output × rate of output actuall achieved--cannot exceed effective capacit . 6ùU Efficienc and Utilization " 1 " « ( 1 & ± 6ß Efficienc /Utilization Example }' ! 0 $$ % }.' ! 0 }( 0 Actual output = 3 units/da Efficienc = 9 Utilization = 2 = Effective capacit Actual output Design capacit units/ da = 3 units/da 5 units/da = 6ß| Determinants of Effective Capacit Ôacilities ö ?roduct and service factors ö ?rocess factors ö Human factors ö Operational factors ö auppl chain factors ö External factors ö 6ßu atrateg Ôormulation ö ö ö ö Capacit strateg for long-term demand Demand patterns Growth rate and variabilit Ôacilities × ö Technological changes × ö ö Cost of building and operating Rate and direction of technolog changes ehavior of competitors Availabilit of capital and other inputs 6ß6 Re Decisions of Capacit ?lanning |. 2. 3. . Amount of capacit needed Timing of changes eed to maintain balance Extent of flexibilit of facilities Capacity cushion ± ext a demand intended to offset unce tainty 6ß§ ateps for Capacit ?lanning |. 2. 3. . 5. . . 8. Estimate future capacit requirements Evaluate existing capacit àdentif alternatives Conduct financial anal sis Assess ke qualitative issues aelect one alternative àmplement alternative chosen Monitor results 6ßù Make or u |. Available capacit 2. Expertise considerations . ature of demand 5. Cost . Risk 3. ualit 6ßß Developing Capacit Alternatives |. 2. 3. . 5. . Design flexibilit into s stems Take stage of life c cle into account Take a big picture´ approach to capacit changes ?repare to deal with capacit chunks´ Attempt to smooth out capacit requirements àdentif the optimal operating level 6ßÈ Economies of acale ö Economies of scale × ö àf the output rate is less than the optimal level, increasing output rate results in decreasing average unit costs Diseconomies of scale × àf the output rate is more than the optimal level, increasing the output rate results in increasing average unit costs 6ß Evaluating Alternatives " ?roduction units have an optimal rate of output for minimal cost. Minimum average cost per unit 6ßU Evaluating Alternatives " E ( + + : 6È ?lanning aervice Capacit ö eed to be near customers × ö ànabilit to store services × ö Capacit and location are closel tied Capacit must be matched with timing of demand Degree of volatilit of demand × ?eak demand periods 6È| " 2Â3 Cost-Volume Relationships Ô /+ 2Ô!3 A2 3 6Èu " 2Â3 Cost-Volume Relationships A2 3 6È6 " 2Â3 Cost-Volume Relationships C A2 3 6È§ reak-Even ?roblem with atep Ôixed Costs ' ' ' A /+ + $ 6Èù reak-Even ?roblem with atep Ôixed Costs Â C C #! #! #! A $ ;4 6Èß Assumptions of Cost-Volume Anal sis |. 2. 3. . 5. . One product is involved Ever thing produced can be sold Variable cost per unit is the same regardless of volume Ôixed costs do not change with volume Revenue per unit constant with volume Revenue per unit exceeds variable cost per unit 6ÈÈ Ôinancial Anal sis ö Cash Ôlow - the difference between cash received from sales and other sources, and cash outflow for labor, material, overhead, and taxes. ö ?resent Value - the sum, in current value, of all future cash flows of an investment proposal. 6È Calculating ?rocessing Requirements ? ro d u c t Annual D em and a ta n d a rd p r o c e s s in g tim e p e r u n it ( h r .) ? r o c e s s in g tim e n e e d e d (h r.) #| 5. 2, #2 3 8. 2 , #3 2. | , 5 ,8 6ÈU p Ô p 6 !"# $ % à @ ; + &+ &+ -$/ +-6/ 0-$/ .++ &+ 8-2/ 0-3/ -$/ .++ ++ &+ ++ 6| T pes of ànventories ö Raw materials & purchased parts ö ?artiall completed goods called work in progress ö Ôinished-goods inventories × (manufacturing firms) or merchandise (retail stores) 6u T pes of ànventories (Cont¶d) ö Replacement parts, tools, & supplies ö Goods-in-transit to warehouses or customers 66 Ôunctions of ànventor ö To meet anticipated demand ö To smooth production requirements ö To decouple operations ö To protect against stock-outs 6§ Ôunctions of ànventor (Cont¶d) ö To take advantage of order c cles ö To help hedge against price increases ö To permit operations ö To take advantage of quantit discounts 6ù Objective of ànventor Control ö To achieve satisfactor levels of customer service while keeping inventor costs within reasonable bounds × Level of customer service × Costs of ordering and carr ing inventor 6ß Effective ànventor Management ö A s stem to keep track of inventor ö A reliable forecast of demand ö Rnowledge of lead times ö Reasonable estimates of ö × Holding costs × Ordering costs × ahortage costs A classification s stem 6È ànventor Counting a stems ö ?eriodic aystem ?h sical count of items made at periodic intervals ö ?erpetual ànventory aystem a stem that keeps track of removals from inventor continuousl , thus monitoring current levels of each item 6 ànventor Counting a stems (Cont¶d) wo-±in aystem - Two containers of inventor ; reorder when the first is empt ö «niversal ±ar Code - ar code printed on a label that has & information about the item to which it is attached ö $261&&$3$&1..51 6U Re ànventor Terms !ead time: time interval between ordering and receiving the order ö olding (carrying) costs: cost to carr an item in inventor for a length of time, usuall a ear ö prdering costs: costs of ordering and receiving inventor ö a ortage costs: costs when demand exceeds suppl ö 6U AC Classification a stem Classif ing inventor according to some measure of importance and allocating control efforts accordingl . " 4 ver important C 4 mod. important ! 4 least important 9 ' " " Â C ! :0 Ô0 =$ . 6U| C cle Counting ö A ph sical count of items in inventor ö C cle counting management × How much accurac is needed × hen should c cle counting be performed × ho should do it 6Uu Economic Order uantit Models ö Economic order quantit model ö Economic production model ö uantit discount model 6U6 Assumptions of EO Model ö Onl one product is involved ö Annual demand requirements known ö Demand is even throughout the ear ö Lead time does not var ö Each order is received in a single deliver ö There are no quantit discounts 6U§ The ànventor C cle . : A A '+ # « + + + + + + # :+ 6Uù Total Cost " # 1 #!1 " F + F 6Uß Cost Minimization Goal "! #'# 4! ! «4'+ + ! A 2 + ) 3 + A 2A3 6UÈ Deriving the EO Using calculus, we take the derivative of the total cost function and set the derivative (slope) equal to zero and solve for . O?T = 2Da = H 2(Annual Demand)(Order or aetup Cost) Annual Holding Cost 6U Minimum Total Cost The total cost curve reaches its minimum where the carr ing and ordering costs are equal. O?T = 2Da = H 2(Annual Demand)(Order or aetup Cost) Annual Holding Cost 6UU Economic ?roduction uantit (E?) ?roduction done in batches or lots ö Capacit to produce a part exceeds the part¶s usage or demand rate ö Assumptions of E? are similar to EO except orders are received incrementall during production ö § Economic ?roduction uantit Assumptions Onl one item is involved ö Annual demand is known ö Usage rate is constant ö Usage occurs continuall ö ?roduction rate is constant ö Lead time does not var ö o quantit discounts ö § | Economic Run aize ' 2 § u Total Costs with ?urchasing Cost (?D) " " ' F #!1 F + #!1 F F § 6 ! Total Costs with ?urchase Cost (?D) "++ ' +? ' A #!0 '& #!0 ' & & & A A § § Total Cost (TC) with Constant Carr ing Costs (CC) # ! #! #!$ & #! !!<$< ! A A § ù hen to Reorder with EO Ordering ö meorder ?oint - hen the quantit on hand of an item drops to this amount, the item is reordered ö aafety atock - atock that is held in excess of expected demand due to variable demand rate and/or lead time. ö aervice !evel - ?robabilit that demand will not exceed suppl during lead time. § ß Determinants of the Reorder ?oint The rate of demand ö The lead time ö Demand and/or lead time variabilit ö atockout risk (safet stock) ö § È A aafet atock / $$++ + + / +++ + + aafet stock reduces risk of stockout during lead time ; :# # § Reorder ?oint (RO?) The RO? based on a normal Distribution of lead time demand ; ; $$ ; / + ++ ,? A ; Ü (4 § U Ôixed-Order-ànterval Model Orders are placed at fixed time intervals ö Order quantit for next interval ö auppliers might encourage fixed intervals ö Ma require onl periodic checks of inventor levels ö Risk of stockout ö §| Ôixed-ànterval enefits Tight control of inventor items ö àtems from same supplier ma ield savings in: ö × × × ö Ordering ?acking ahipping costs Ma be practical when inventories cannot be closel monitored §|| Ôixed-ànterval Disadvantages Requires a larger safet stock ö àncreases carr ing cost ö Costs of periodic reviews ö §|u aingle ?eriod Model ö aingle period model: model for ordering of perishables and other items with limited useful lives ö a ortage cost: generall the unrealized profits per unit ö V cess cost: difference between purchase cost and salvage value of items left over at the end of a period §|6 aingle ?eriod Model ö ö Continuous stocking levels × àdentifies optimal stocking levels × Optimal stocking level balances unit shortage and excess cost Discrete stocking levels × aervice levels are discrete rather than continuous × Desired service level is equaled or e ceeded §|§ Operations atrateg ö Too much inventor × × × ö Tends to hide problems Easier to live with problems than to eliminate them Costl to maintain ise strateg × × Reduce lot sizes Reduce safet stock §|ù + ? 7+ ? 7+ Economic ?roduction uantit + §|ß ^ §|È acheduling Operations ö ö ö ö Companies differentiate based on product volume and product variet Differentiation affects how the compan organizes its operations Each kind of compan operation needs different scheduling techniques acheduling has specific definitions for routing, bottleneck, due date, slack and queue §| acheduling Definitions ö @ × ö C ;@ × ö hen the job is supposed to be finished ;@ × ö A resource whose capacit is less than the demand placed on it &+ @ × ö The operations to be performed, their sequence, the work centers, & the time standards The time that a job can be dela ed & still finish b its due date A@ × A waiting line §|U High-Volume Operations ö High-volume, also called flow operations, like automobiles, bread, gasoline can be repetitive or continuous × × × × × High-volume standard items; discrete or continuous with smaller profit margins Designed for high efficienc and high utilization High volume flow operations with fixed routings ottlenecks are easil identified Commonl use line-balancing to design the process around the required tasks §u Low-Volume Operations ö Low-volume, job shop operations, are designed for flexibilit . × × × × Use more general purpose equipment Customized products with higher margins Each product or service ma have its own routing (scheduling is much more difficult) ottlenecks move around depending upon the products being produced at an given time §u| Low-Volume Tool ± Gantt Charts ö ö Developed in the earl |9 ¶s b Henr Gantt Load charts (see below Ôigure |5-|) àllustrates the workload relative to the capacit of a resource × ahows toda ¶s job schedule b emplo ee × §uu Gantt Chart (continued) ö ' @ × × àllustrates the planned schedule compared to actual performance rackets show when activit is scheduled to be finished. ote that design and pilot run both finished late and feedback has not started et. §u6 acheduling ork - ork Loading ö . + @ × ö àgnores capacit constraints, but helps identif bottlenecks in a proposed schedule to enable proactive management Ô + @ × Allows onl as much work to be assigned as can be done with available capacit ± but doesn¶t prepare for inevitable slippage §u§ Other acheduling Techniques ö ö Ô 0 +'+ ± starts processing immediatel when a job is received C;0 +'+ ± begin scheduling the job¶s last activit so that the job is finished on due date §uù Monitoring ork Ôlow ànput/Output Control ö ö à/O control is a capacit -control technique used to monitor work flow at individual work centers Monitors how well available capacit is used and provides insight into process problems Ô 4. 7 0 ; . . 2 ' 3 +. 8 5 " . 5 8 & -5 3 ! + 4 4 2 ' 3 + " & ! + C; 2 ' 3 8 8 | 5 8 5 -5 4 8 + 8 8 -2 4 82 8| -| 4 8 8| | 4 + 8 8 -2 4 8 85 5 4 8 825 25 8 25 §uß How to aequence Jobs ö ö ö hich of several jobs should be scheduled first Techniques are available to do short-term planning of jobs based on available capacit & priorities ?riorit rules: Decision rules to allocate the relative priorit of jobs at a work center × Local priorit rules: determines priorit based onl on jobs at that workstation × Global priorit rules: also considers the remaining workstations a job must pass through × §uÈ Commonl Used ?riorities Rules ö ö ö ö ö ö Ôirst come, first served (ÔCÔa) Last come, first served (LCÔa) Earliest due date (EDD) ahortest processing time (a?T) Longest processing time (L?T) Critical ratio (CR): × ö (Time until due date)/(processing time) alack per remaining Operations (a/RO) × alack /(number of remaining operations) §u Example Using ahortest processing time (a?T), Earliest due date (EDD) /« #+&& G' '4% ;! $# & # && $=$ 2 + E# 3 && ) ) H "H> AZR||| 3 da s 3 C« H RU82 2 da s "H> &C CUÔ33 5 da s 8 &C C« DR da s 5 Ô.& !«Ô EZE| | |da !«Ô Ô.& ÔàD8 da s 9 §uU How to Use ?riorit Rules |. 2. 3. Decide which priorit rule to use List all jobs waiting to be processed with their job time Using priorit rule determine which job has highest priorit then second, third and so on §6 Measuring acheduling ?erformance ö $0 @ × ö " IJ$ @ × ö The time it takes to finish a batch of jobs; $ @ × ö Measures amount of work-in-progress; I +0 ;4 4 ;@ × ö Time a job is completed minus the time the job was first available for processing; 0 hether the job is completed ahead of, on, or behind schedule; $ + : × How long after the due date a job was completed, + + §6| acheduling ?erformance Calculations Job A finishes on da | ö Job D ends on da 2 MÔT= (sum job flow times)/ # of jobs = (| +|3+|+2 )/ = / = + ! $ J$ ' @ × ö Job C finishes on da | ! 0 @ × ö Job finishes on da |3 Average # Jobs =(sum job flow times)/ # da s to complete batch = ( )/2 = J$ ; ' ' $ ' × Makespan = Completion time for Job D minus start time for Job A = 2 ± = 2 da s §6u ?erformance Calculations (Cont.) ö ö Lateness and Tardiness are both measures related to customer service Average tardiness is a more relevant ! measurement as illustrated below /4! J$ +J$ + $ " C ! & ! & && " : 4 4 # + §66 Comparing ahortest ?rocessing time (a?T) and alack per remaining Operations (a/RO) # $ " C ! & Ô # $# % ;! 2+3 &+ 2+ 03 " $Ô0 # $Ô0# ; " I$ E done at end of da 2 A end of da 5 D at end of da 9 # ! & : 2+3 4 4 4 4 4 4 # + 2+3 Ô at end of C at end of da | da 2 '+ ) done at end of da 2 §6§ Comparing ahortest ?rocessing time (a?T) and alack per remaining Operations (a/RO) (cont.) « 7 $# % ; =$ ! $# ; ' % ; &+ # " % ; $ 2+3 ! 2+3 2+ 03 2+3 ! " C ! & Ô # 7 '+ ) " $Ô0 # $Ô0# ; " done at end of da A at end of da | I$ ! : # + & 2+3 2+3 4 4 4 4 4 4 Ô at end of E at end of D at end of da |5 da | da 2| C done at end of da 2 §6ù aequencing Jobs through Two ork Centers ±Johnson¶s Rule ö Johnson¶s Rule ± a technique for minimizing makespan in a two-stage, unidirectional process ± List the jobs and the processing time for each activit × ± Ôind the shortest activit processing time among the jobs not et scheduled × ö ö ö × àf the shortest ?rocessing time is for a |st activit , schedule that job in the earliest available position in the job sequence àf the shortest processing time is for 2nd activit , schedule that job in the last available position in the job sequence hen ou schedule a job eliminate it from further consideration ± Repeat step 2 until ou have put all activities for the job in the schedule §6ß '?/@ Vicki¶s Office Cleaners does the annual major cleaning of universit buildings. The job requires mopping (|st activit ) and waxing (2nd activit ) of each building. Vicki wants to minimize the time it takes her crews to finish cleaning (minimize makespan) the five buildings. ahe needs to finish in 2 da s. Hall "+9 C C + !' C + & ;« ! " %/ " " 2+3 %/ 2+3 'G " " ) 2+3 %/ 2+3 "+92"3 !' C + 2!3 C C + 2C3 & ;« 2&3 ! 23 " ! ! C C C & & & & & " " ! ! ! ! C C C C C & & & & §6È acheduling ottlenecks ö ö ö àn the |9 ¶s Eli Goldratt introduced optimized production technolog (O?T) O?T focused on bottlenecks for scheduling & capacit planning Definitions: #' ' @ quantit of finished goods that can be sold × # $ '@ quantit of items moved at the same time from one resource to the next × $ '@ quantit produced at a resource before switching to another product × §6 Optimized production technolog (O?T) ?rinciples alance the process rather than the flow ö on-bottleneck usage is driven b some other constraint in the s stem ö Use and activation of a resource are not the same ö A hour lost at a bottleneck is lost forever, but an hour lost at a non-bottleneck is a mirage ö §6U O?T ?rinciples - continued ottleneck determine throughput and inventor in s stem ö The transfer batch does not need to be equal to the process batch ö The process batch should be variable ö Consider all constraints simultaneousl . Lead times are the result of the schedule and are not predetermined . ö §§ Theor of Constraints ö |. 2. 3. . 5. TOC is an extension of O?T ± theor is that a s stem¶s output is determined b its constraints àdentif the bottleneck(s) in the process Exploit (full utilize) the bottleneck(s) aubordinate all other decisions to atep 2 achedule non-bottlenecks to support maximum use of bottleneck activities Elevate the ottleneck(s) Do not let inertia set in §§| acheduling for aervice Organizations ö ö &+ @ × Appointments & reservations × ?osted availabilit × Dela ed services or backlogs (queues) @ × ataff for peak demand (if cost isn¶t prohibitive) × Ôloating emplo ees or emplo ees on call × Temporar , seasonal, or part-time emplo ees §§u & % ; '+@ Tibrewala, ?hilippe, and rown developed a technique for scheduling a seven da operation giving each emplo ee two consecutive da s off. This example shows how a staff of six people can be scheduled. ö ± Ôind out the minimum number of emplo ees needed for each da of the week 23& '0; =$ ++ ö # % #' Ô ± Given the above requirements, calculate the number of emplo ees needed for each pair of consecutive da s 23 ! & # ++ +E#+ 9 emplo ees #+E%++ | emplo ees %++E#' + 8 emplo ees #' +EÔ + 8 emplo ees Ô +E + emplo ees +E+ 5 emplo ees ö - Ôind the pair of da s with the lowest total needed §§6 orkforce acheduling (cont.) ö ± Update the number of emplo ees ou still need to schedule for each da 23& '0; =$ ++ ö # % #' Ô ± Using the updated staffing needs, repeat steps 2 through until ou have satisfied all needs 23 ! & # ++ +E#+ emplo ees #+E%++ 8 emplo ees %++E#' + emplo ees #' +EÔ + emplo ees Ô +E + emplo ees +E+ 5 emplo ees §§§ acheduling (cont.) # % #' Ô 2 3& '0; # % #' Ô 23& '0; =$ ++ =$ ++ 2 3 ! & +E#+ #+E%++ %++E#' + #' +EÔ + Ô +E + +E+ # ++ 23 ! & +E#+ #+E%++ %++E#' + #' +EÔ + Ô +E + +E+ # ++ §§ù achedule (cont.) 23& '0; # % #' Ô 23& '0; # % #' Ô =$ ++ =$ ++ 23 ! & +E#+ #+E%++ %++E#' + #' +EÔ + Ô +E + +E+ # ++ 23 ! & +E#+ #+E%++ %++E#' + #' +EÔ + Ô +E + +E+ # ++ | emplo ees §§ß Ôinal achedule 23& '0; # % #' Ô =$ ++ # % / / / / / / / / / / / / / / / #' / / / / / Ô / / / / / / / / / / ö ö ö This technique gives a work schedule for each emplo ee to satisf minimum dail staffing requirements ext step is to replace numbers with emplo ee names Manager can give senior emplo ees first choice and proceed until all emplo ees have a schedule §§È acheduling Across the Organization ö acheduling executes a compan ¶s strategic business plan and affects functional areas throughout the compan × Accounting relies on schedule information and completion of customer orders to develop revenue projections §§ acheduling Across the Organization - continued × × × Marketing uses schedule effectiveness measurement to determine whether the compan is using lead times for competitive advantage ànformation s stems maintains the scheduling database Operations uses the schedule to maintain its priorities and to provide customer service b finishing jobs on time §§U acheduling Highlights ö ö ö Different kinds of environments need different scheduling techniques. acheduling in the high-volume environment is t picall done through line design and balancing. acheduling in a low-volume environment t picall involves the use of priorit rules. ahop loading techniques included infinite or finite loading. Ôinite loading loads jobs up to a predetermined capacit level. Loading can be done using forward or backward scheduling ?riorit rules are used to make scheduling decisions. a?T alwa s minimizes mean job flow times, mean job lateness, and average number of jobs in s stem. Rules related to due dates tend to minimize the maximum tardiness of the jobs. §ù acheduling Highlights ö ö ö ?erformance measures reflect the priorities of the organization. Mean flow time, mean job lateness, mean job tardiness, makespan, and the average number of jobs in the s stem measure the effectiveness of schedules. Johnson¶s Rule is a effective technique for minimizing makespan when two successive workstations are needed to complete the process. hen scheduling bottleneck s stems, the basic principles of O?T appl . TOC expands O?T into a managerial philosoph of continuous improvement. §ù| acheduling Highlights ö ö aervice organizations use different techniques such as appointments, reservations, and posted schedules for effective use of service capacit . A method developed b Tibrewala, ?hillippe, and rown constructs workforce schedules when a compan uses full-time emplo ees, operates seven da s each week, and gives its emplo ees two consecutive da s off §ùu p §ù6 J " ö %' J D An unique endeavor with specific objectives × ith multiple activities × ith defined precedent relationships × ith a specific time period for completion × ö /D A major event like a wedding × An construction project × Designing a political campaign × §ù§ ?roject Life C cle ö ! @ identif the need ö Ô $ +@ costs benefits, and risks ö @ who, how long, what to do ö / @ doing the project ö # @ ending the project §ùù etwork ?lanning Techniques ö E 0#' )2#3@ × Developed to manage the ?olaris missile project × Man tasks pushed the boundaries of science & engineering (tasks¶ duration = probabilistic) ö ! ' '+2!3@ × Developed to coordinate maintenance projects in the chemical industr × A complex undertaking, but individual tasks are routine (tasks¶ duration = deterministic) §ùß oth ?ERT and C?M ö Graphicall displa the precedence relationships & sequence of activities ö Estimate the project¶s duration ö àdentif critical activities that cannot be dela ed without dela ing the project ö Estimate the amount of slack associated with non-critical activities §ùÈ etwork Diagrams ö " × × 44=+2" =3@ «+ ' « 0 + ' §ù 4& ' J : !$C« is bringing a new product on line to be manufactured in their current facilit in some existing space. The owners have identified || activities and their precedence relationships. Develop an AO for the project. " A C D E Ô G H à J R & Develop product specifications Design manufacturing process aource & purchase materials aource & purchase tooling & equipment Receive & install tooling & equipment Receive materials ?ilot production run Evaluate product design Evaluate process performance rite documentation report Transition to manufacturing .+ + one A A D C E&Ô G G H&à J & 20;3 3 | 5 2 2 3 2 §ùU 4 & '= 0 ; !$C« §ß 234 "++& # +! + ' §ß| 232! +3@! ' '! # ö ö ' '+ ADEGHJR ADEGàJR | ACÔGHJR 22 ACÔGàJR 23 The longest path (ADEGàJR) limits the project¶s duration (project cannot finish in less time than its longest path) "C&*.> ' J ? ' §ßu aome etwork Definitions ö ö ö ö ö ö All on the ' have ( ; ; defines how long 4 can be ++ 0 ' + ' J ; = the activit ¶s ' ' (or its ) Earliest atart () = the earliest finish of the immediatel preceding activit Earliest Ôinish (Ô) = is the the Latest atart (:) and Latest Ôinish (:Ô) = the latest an activit can start (La) or finish (LÔ) without dela ing the project completion §ß6 Ea, EÔ etwork §ß§ La, LÔ etwork §ßù Calculating alack " A C D E Ô G H à J R : Ô ' | 25 | 3 3 32 35 35 39 | Ô ' | | 3 |2 32 3 35 39 | ; 20;3 |8 |8 | §ßß Revisiting Cables ±y «s Using ?robabilistic Time Estimates " A C D E Ô G H à J R & Develop product specifications Design manufacturing process aource & purchase materials aource & purchase tooling & equipment Receive & install tooling & equipment Receive materials ?ilot production run Evaluate product design Evaluate process performance rite documentation report Transition to manufacturing 2 3 2 |2 2 2 2 2 2 2 ; 3 | 5 2 3 3 2 | 5 9 2 8 2 5 2 §ßÈ Using eta ?robabilit Distribution to Calculate Expected Time Durations ö ö " $ + $ '0$0< ' ' + + #'/ + ' ' 0 ' + 8(# 6 ! 5 §ß Calculating Expected Task Times 8( " A C D E Ô G H à J R . ! ( 2 3 2 |2 2 2 2 2 2 2 ; 3 | 5 2 3 3 2 | 5 9 2 8 2 5 2 / + .83 3.| .83 | 5 2 3 3.| §ßU 2 etwork Diagram with Expected Activit Times §È Estimated ?ath Durations through the etwork " ö ' ADEGHJR ADEGàJR ACÔGHJR ACÔGàJR / ++ . .83 23.| 23.3 "C&*.> is the expected critical path & the project has an expected duration of 0; §È| Adding Ea and EÔ to etwork §Èu Gantt Chart ahowing Each Activit Ôinished at the Earliest ?ossible atart Date §È6 Adding La and LÔ to etwork §È§ Gantt Chart ahowing the Latest ?ossible atart Times if the ?roject às to e Completed in .83 eeks §Èù Estimating the ?robabilit of Completion Dates ö ö ö ö Using probabilistic time estimates offers the advantage of predicting the probabilit of project completion dates e have alread calculated the expected time for each activit b making three time estimates ow we need to calculate the variance for each activit The variance of the beta probabilit distribution is: 2 5 $ 9 $ × where p=pessimistic activit time estimate o=optimistic activit time estimate §Èß ?roject Activit Variance Activit Optimistic Most Likel ?essimistic Variance A 2 . 3 | |.3 C 2 3 5 .25 D 9 .9 E |2 | 2 |.8 Ô 2 5 8 |. G 2 2 2 . H 2 3 .|| à 2 3 5 .25 J 2 . R 2 2 2 . §ÈÈ Variances of Each ?ath through the etwork ?ath umber Activities on ?ath ?ath Variance (weeks) | A,,D,E,G,H,J,k .82 2 A,,D,E,G,à,J,R .9 3 A,C,Ô,G,H,J,R 2.2 A,C,Ô,G,à,J,R 2.38 §È Calculating the ?robabilit of Completing the ?roject in Less Than a apecified Time ö ö %';0@ × The expected completion time × àts variance ' $$ ' J ,K-0;0 ' '0 @ 2 ( 0 2 8? $ 9? here &# 1 ' + + Ô ' 1 '/ + ' ' 5? % $ §ÈU /@ Calculating the probabilit of finishing the project in 8 weeks ö ö Use the z values in Appendix to determine probabilities 61 2 66#55 e.g. probabilit for path | is 2#%$ 6#1$ ?ath umber Activities on ?ath ?ath Variance z-value (weeks) | A,,D,E,G,H,J,k .82 |.52| .935 2 A,,D,E,G,à,J,R .9 |.2|5 .9222 3 A,C,Ô,G,H,J,R 2.2 |.5898 |. A,C,Ô,G,à,J,R 2.38 |5.98 |. ?robabilit of Completion § Reducing ?roject Completion Time ö ?roject completion times ma need to be shortened because × × × × ö Different deadlines ?enalt clauses eed to put resources on a new project ?romised completion dates Reduced project completion time is crashing´ §| Reducing ?roject Completion Time - continued ö Crashing a project needs to balance × × ö ahorten a project duration Cost to shorten the project duration Crashing a project requires ou to know × × Crash time of each activit Crash cost of each activit Crash cost/duration = (crash cost-normal cost)/(normal time ± crash time) §u Reducing the Time of a ?roject (crashing) Activit ormal Time (wk) A 8, 3 ||, | 3, 3 , 5 35, | 5, C 3 , 3 , D 2, 28, 2 2, E | , |2 2, 2 , Ô 5 5, ,5 | |5 G 2 , 2 , H 2 , 2 , à 3 , 2 5, | |, J , 2 , 2 |,2 §6 R 2 5, 2 5, ormal Cost ($) Crash Time Crash Cost ($) Max. weeks of reduction Reduce cost per week ! ' /: auppose the 2 ± project manager wants to reduce the new product project from | to 3 weeks. ö ö ö ! ' ! + + $ :; ' ' ' ! ' ' / ' 2$+ 0;3 × × × × ö ' Crash . from 3 weeks to 2 weeks Â Crash from weeks to 2 weeks Â Crash & from weeks to weeks Â +! '! Â A @% ' 0; $ ' D §§ Crashed etwork Diagram §ù The Critical Chain Approach ö The ! !' " ' focuses on the project due date rather than on individual activities and the following realities: × × × × ?roject time estimates are uncertain so we add safet time Multi-levels of organization ma add additional time to be safe´ àndividual activit buffers ma be wasted on lower-priorit activities A better approach is to place the project safet buffer at the end Activit A ! ' Activit Activit C Activit D Activit E '0 ' J $ Activit A Activit Activit C Activit D Activit E ?roject uffer §ß Adding Ôeeder uffers to Critical Chains ö ö ö #' ' < '$ ' < ; $ ;$ # $ $ $ 0$ ; ' ' #'+ $ ' ' + 4 ' §È ?roject Management OM Across the Organization ö ö ö ö Accounting uses project management (?M) information to provide a time line for major expenditures Marketing use ?M information to monitor the progress to provide updates to the customer ànformation s stems develop and maintain software that supports projects Operations use ?M to information to monitor activit progress both on and off critical path to manage resource requirements § ?roject Management Highlights ö ö ö ö A project is a unique, one time event of some duration that consumes resources and is designed to achieve an objective in a given time period. Each project goes through a five-phase life c cle: concept, feasibilit stud , planning, execution, and termination. Two network planning techniques are ?ERT and C?M. ?ert uses probabilistic time estimates. C?M uses deterministic time estimates. ?ert and C?M determine the critical path of the project and the estimated completion time. On large projects, software programs are available to identif the critical path. §U ?roject Management Highlights (continued) ö ö ö ?ert uses probabilistic time estimates to determine the probabilit that a project will be done b a specific time. To reduce the length of the project (crashing), we need to know the critical path of the project and the cost of reducing individual activit times. Crashing activities that are not on the critical path t picall does not reduce project completion time. The critical chain approach removes excess safet time from individual activities and creates a project buffer at the end of the critical path. §U §U| =k 2G,3G,i-Ôi 8 2.||# «. §Uu h §U6 Û §U§ §Uù §Uß G?a ï §UÈ Õ× arcode («niversal ?roduct Code, «?C )Õ×u× . ' . ( 2 2 §U ¸ §UU ý Ô.& ö䣊᭻㳨ឍ⯾㗂മ㸌ಅ᩹㭽 ö䉓䉺❎㈫䡴㳵㧁㸌ಅ⡱ᒴⱎℜࢇ㸬ᓻⱘ䝻ᴓᲐ ö❎䡸㸌ಅㅭ㇓㗙⡱ᒴⱎℜࢬ䝀᝹⾠⅚Ῑᨡபᒘ᭻㳨 öᜡ⫑ ö䡴ᑴ䉿䁜᳟㽈ㅭ㇓ ö䡴ᑴ᳟㽈ㅭ㇓ ö⡤⏙垝ৼ᧢䖐ぎ⧗᧢⫑ㅭ㇓ ö䡴ᑴὅ〲䟋૞ㅭ㇓ ù Ô.&¦x í í Ë í í A íÈ í ()*%+ íÜ í Ü !Ü í !" í í!,%- í !,. í í x# $%&'# íÙ í -/ ù | à(¿ ) ù u ^ p p p ù 6 ^ p p p Ú ù § ^ p p p ù ù ^ p p p ,8 % ×0&123 ,8 % 0&123 × × × Ó $ l ×4 l ×5 l ,4 ×623 ù ß à(¿F ö )]t 789:;×<=¦×C8>?( @ABCDAAE7CFDGGBHDCIDJ×KL× × × × û &1MNÓO ×P×;×/×× &= ù È à(¿ ) t ö ;×<=Q9R×S×¦ÓO×TU6 &18V W×X&= ¦L ö ×YÓOu×¦×Z8[3¦ Z8\]Ü;×<^u×_`¦×*L ù | à(¿F )ªÁØ NÓO % ö K ××ÓO + # ö ù U ¿ ö ¾ × × ö × ;×a× b×a× × ×××c:×(Re ?erformance àndicators) H ×& ù| v The alanced acorecard ö é # ö é ö é ®| ®2 ®3 ® # # # ù|| ××_d Ô p Ô / Â$&&&&&& Â$2&&&&& !" Â3&&&&&& # Â36$&&&& 5: 5#61: ù|u ×e_d ! p Ô $%&'( 5: )* $%& '( +, 2#-Û $#+, 2#- . $# / 0 .: 7&: 1.: 12$ 12$ ù|6 +_d . C p Ô 34567 ( / 347 .1: .7#3: Ü 6 3& 3& 8 6 7$: 7&: 34 34 6 3 ù|§ +_d . C p Ô 34 56 56 36 Û 93 :; 56<= .1: .7#3: 34 56 5 5 : ;56< = 7&: 7&: ù|ù ¥×fg×_d : +* 0 ' p >?@ Ô ?@+, 1&:?@12 ?@ <= $ AB CD 11:?@12 $ ;E 7 ?@F G ?@FGCD 7&: 7$: H@IJ ?@ 1%: ' K LMI N 7&: 56 7&: 34O 7&: ù|ß ¿ ö X³×h¦××i ×_0× ×××_0 ö ×j=k;×<=lVmn×××op&= ö fqr×g ×õ× s × # ×t¦;×<=×N¦j=-×u×t× v× × ù|È p 2 ÛCP ª Y24 Y$4 Y34 Y64 VÛ QRSTUV QR / ! ST SX WU VÛ VÛ ù| !" ¿ wx #×! !"" +× + × a a× *&1z3 u u c&1 Î ~" ~" #$ {|z} ×y& ×y &= %~" %~" × × ù|U à(¿ ö ) ×8;×<=¦ ×E\ × ×c × ×u × ×P×¡ × ö Kqj= × × × × × × /× ÓOx× ;×××¦ &1××&× õ ×j= U6õYu× ùu &1:×R' O×xµ O×x& O××× O× ×( O$ )g OEû××+* Om×c O$ O×ûs> ²¦2 ùu| ^p ùuu

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