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Lecture 5 Planning and Control
10 The nature of Planning and Control
11 Capacity Planning and Control
12 Inventory Planning and Control
Hessel Visser
Slack
Operations Management
Oktober 2010
Operations Management, 5E: Chapter 10,11 en12
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10 The nature of Planning and Control
11 Capacity Planning and Control
12 Inventory Planning and Control
Planning and control
Supply
Demand
Delivery of products
and services
The operation
Operations resources
Capacity
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The market
Required time,
quantity and quality
of products and
services
Customer requirements
Load
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CONTROL
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PLANNING
Days/weeks/months
Hours/days
Time horizon
Months/years
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Difference between Production Lead Time (P)
and Delivery Lead Time (D)
Operation
ASSEMBLE TO ORDER
Order
Purchase
Make
Assemble
Deliver
D
P
Compare CODP = KOOP
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Difference between Production Lead Time (P)
and Delivery Lead Time (D)
P:D ratios
Customer
orders
Obtain resources
Produce product / service
Make to stock
Deliver to customer
Produce to stock
D
P
Part produce to order
D
P
Make to order
Produce to order
D
P
Resource to order
D
P
Resource
to order
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Finite and infinite loading of jobs
on three work centres A, B and C
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Finite loading limits the loading on each centre to their capacities, even if it means
that jobs will be late. Infinite loading allows the loading on each centre to exceed their
capacities to ensure that jobs will not be late
Infinite loading
Finite loading
0
4
3
2
1
5
A
B
Work centre
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C
A
B
Work centre
C
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Capacity and load
are not always in
balance
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The hospital triage system
In Accident and Emergency
departments, patients arrive at
random. Medical staff must
rapidly devise a schedule:
1.
Patients with serious illness
need urgent attention.
2. Less urgent cases will have to
wait.
3. Routine non-urgent cases will
have the lowest priority of all.
See article about van Houdenhoven
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Gantt chart showing the schedule for
jobs at each process stage
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Week
12
Process
stage
Week
13
Initial spec. Job A
Job B
Pre-coding Job W
Job X
Coding
Compact. check
Job A
Job Z
Job C
Week
18
Job D
Job B
Job E
Job D
Job C
Job B
Job A
Job C
Job B
Job A
Job X
Job Y
Job A
Job B
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Shift allocation for the technical ‘hotline’:
(a) on a daily basis; (b) on a weekly basis
10
Mon
Number of staff
required
Peter
Walter
Marie
04:00
Week
17
Week
16
Week
15
Job X
Job Y
Final test
Week
14
08:00
Jo
Claire
12:00
16:00
Shift pattern (24-hour clock)
(a)
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Jo
Jo
Tue
3
5
Wed
5
Thu
5
Fri
Sat
3
Sun
2
2
Peter
X
X
X
X
O
O
X
Marie
X
X
X
X
X
O
O
Claire
X
X
X
X
O
O
X
Walter
O
X
X
X
X
X
O
Jo
O
X
X
O
X
X
X
20:00
X
Full day
O
Day off
(b)
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Pull and push philosophies of planning and control
PUSH CONTROL
FORECAST
CENTRAL OPS. PLANNING AND CONTROL SYSTEM
OR
Instruction on
what to make
and where to
send it
Work
centre
Work
centre
Work
centre
DEMAND
Work
centre
See also chapter 14
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Pull and push philosophies of planning and control
PULL CONTROL
Work
centre
Work
centre
Delivery
Page 290
Work
centre
Delivery
Request
Request
Request
Request
Work
centre
Delivery
DEMAND
Delivery
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Push versus Pull explained
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The drum, buffer, rope, concept
Buffer of
inventory
Stage or
process A
Stage or
process B
Stage or
process C
Communication rope controls
prior activities
Bottleneck
drum sets
the beat
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Stage or
process D
Stage or
process E
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Bottleneck/niet-bottleneck concept
Een bottleneck is die capaciteitsbron waarvan de
capaciteit kleiner is dan of gelijk is aan de
capaciteitsbehoefte ten gevolge van de marktvraag.
Een niet-bottleneck heeft een zekere overcapaciteit.
Maak de niet-bottlenecks ondergeschikt aan de
bottlenecks.
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Bottleneck-management
1. Ontdek de bottleneck
2. Maximaliseer de output van de bottleneck
3. Maak alles afhankelijk van de bottleneck
4. Hef de bottleneck op
5. Ga terug naar 1
Voorkom dat traagheid (inertie) de bottleneck wordt.
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Operations Management, 5E: Chapter 10,11 en12
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10 The nature of Planning and Control
11 Capacity Planning and Control
12 Inventory Planning and Control
Capacity planning and control
Supply
The operation
Demand
Availability of capacity
to deliver products and
services
Operations resources
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Required availability
of products and
services
The market
Customer requirements
Operations Management, 5E: Chapter 10,11 en12
Objectives of capacity planning and control
Measure aggregate
capacity and demand
Aggregated output
Identify the alternative
capacity plans
Choose the most
appropriate capacity
plan
Forecast demand
Estimate of current capacity
Time
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Capacity versus Load
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Outsourcing?
Turnover in man hours
Capacity
Load
1/1
Spring
Winter
Summer
Autumn
31/12
Time in quarterlies
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Causes of seasonality
Climatic
Festive
Behavioural
Political
Financial
Social
Source: Alamy/Medical-on-line
Construction materials
Travel services
Beverages (beer, cola)
Holidays
Foods (ice-cream, Christmas cake)
Tax processing
Clothing (swimwear, shoes)
Doctors (influenza epidemic)
Gardening items (seeds, fertilizer)
Sports services
Fireworks
Education services
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How capacity and demand are measured
Efficiency =
Planned loss
of 59 hours
Design
capacity
Avoidable loss –
58 hours per
week
Effective
capacity
109 hours
per week
168 hours
per week
Utilization=
Actual output –
51 hours per
week
Actual output
Design capacity
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Actual output
Effective capacity
Ways of reconciling capacity and demand
Demand
Capacity
Level capacity
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Demand
Demand
Capacity
Chase demand
Capacity
Demand
management
Operations Management, 5E: Chapter 10,11 en12
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Cumulative representations
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Capacity and
demand
Cumulative demand
Cumulative capacity
Unable to
meet orders
Building
stock
Time
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Z-graphic
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Lead time
Time
Cumu
lative
Lead time
In
Stock level
Out
Time
Stock level
Time
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Simple queuing system
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Server 1
Distribution of
processing times
Distribution of
arrival times
Rejecting
Balking Reneging
Server 2
Source of
customers
Boundary
of system
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Served
customers
Queue or
‘waiting line’
Server m
Operations Management, 5E: Chapter 10,11 en12
Simple queuing system
Low variability –
narrow distribution
of process times
Time
High variability –
wide distribution of
process times
Time
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10 The nature of Planning and Control
11 Capacity Planning and Control
12 Inventory Planning and Control
Inventory planning and control
Supply
Demand
The operation
Operations resources
Delivery of products
and services when
required
Need for products
and services at a
particular time
Customer requirements
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The market
Inventory is created to compensate for the
differences in timing between supply and demand
Rate of supply from
input process
Source: Alamy/Van Hilversum
Rate of demand from
output process
Inventory
Input
process
Output
process
Inventory
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Two alternative inventory plans with
different order quantities (Q)
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Inventory level
Demand (D) = 1000 items per year
400
Plan A
Q = 400
Average inventory
for plan A = 200
Plan B
100 Q = 100
Average inventory
for plan B = 50
Time
0.1 yr
0.4 yr
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Traditional view of inventory-related costs
400
350
300
Total costs
Costs
250
200
150
Holding costs
100
Order costs
50
Economic order
quantity (EOQ)
50
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100
150
200
250
Order quantity
300
350
400
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If the true costs of stock holding are taken, the
economic order quantity, the real EOQ, is much smaller
400
Revised total
costs
350
Revised
holding costs
300
Costs
250
Original total
costs
200
150
Original
holding costs
100
Order costs
50
Revised
EOQ
100
50
Original
EOQ
200
250
150
Order quantity
350
400
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300
The ‘two-bin’ and ‘three-bin’ re-ordering systems
Two-bin system
Bin 1
Bin 2
Items being Re-order level
+ safety
used
inventory
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Three-bin system
Bin 1
Items being
used
Bin 2
Bin 3
Re-order level
inventory
Safety
inventory
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Pak het kleurrijk aan
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Iedereen snapt dit
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Pareto curve for stocked items
Percentage of value of items
100
90
80
70
60
50
40
30
Class A
items
Class B
items
Class C
items
20
10
10
20
30
40
50
60
70
80
90
100
Percentage of types of items
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Inventory classifications and measures
Class A items – the
20% or so of high-value
items which account for
around 80% of the total
stock value
Class B items – the
next 30% or so of
medium-value items
which account for
around 10% of the total
stock value
Class C items – the
remaining 50% or so of
low-value items which
account for around the
last 10% of the total
stock value
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