SCM352 Exam 3

Operation Planning Systems

-material requirements planning -closed-loop MRP -manufacturing resource planning (MRP-II) -enterprise requirements planning (ERP) -distribution requirement planning (DRP)

quality control practices in services

-prevent sources of errors -customer satisfaction measurement

Joseph Juran

-quality control handbook 1951 -fitness for use -quality trilogy -defect elimination using statistical tools

W Edwards Deming

-reducing uncertainty and variability in goods and services -higher quality leads to higher productivity and lower costs -14 points

Hierarchical planning

process that translates annual business & marketing plans, and demand forecasts into a production plan for all products in a plant or facility. Hence, it is called Aggregate Production Plan

Checksheets

simple tools for data collection, ensure completeness.

Commonly called black belts and master black belts

six sigma

Process out of control

special causes are present in the process

Intermediate (6 to 18 months)

Master production schedule (MPS) shows the quantity & timing of end items

Short-range (days/weeks)

Materials requirement planning (MRP) shows detailed planning process for components & parts to support the MPS

Pareto Diagrams

separate the vital few from the trivial many causes; provide direction for selecting projects for improvement

5-why technique

This approach forces one to redefine a problem statement as a chain of causes and effects to identify the source of the symptoms by asking why, ideally five times.

flowcharts

process mapping to identify the sequence of activities or flow of materials/ information in a process.

5 Dimensions of Service Quality

1. tangibles 2. reliability 3. responsiveness 4. assurance 5. empathy

project

A temporary endeavor undertaken to create a unique product, service, or result.

Resource Management deals with the ____, _____, and ____ of all the resources

planning, execution, and control

Firm Segment

(AKA as a demand time fence), from current period to several weeks into future. Quantities can only be altered by senior management.

Tentative Segment

(AKA planning time fence), from end of the firmed segment to several weeks farther into the future; changes allowed during this time.

Poka-yoke

(mistake-proofing) is a method for mistake-proofing processes using automatic devices or methods to avoid simple human error.

Philip B Crosby

-brought quality to attention of us firms -quality is free -absolutes of quality mgmt

lean tools that timken utilized

-eliminate waste -increase speed and response -improve quality -reduce cost

Principles of Total Quality

-A focus on customers and stakeholders, -A process focus supported by continuous improvement and learning, and -Participation and teamwork by everyone in the organization.

Quality Control Systems have three components

-A performance standard or goal, -A means of measuring actual performance, and -Comparison of actual performance with the standard to form the basis for corrective action

Four decisions to make regarding designing an appointment system are:

1. Determine the appointment time intervals. 2. Determine the length of each workday and time off-duty. 3. Decide how to handle overbooking. 4. Develop customer appointment rules that maximize customer satisfaction

Basic Methods for Calculating the ATP quantities

1. Discrete available-to-promise 2. Cumulative available-to-promise without look ahead 3. Cumulative available-to-promise with look ahead

Two-Resource Sequencing Problem (Johnson's Rule)

1. List the jobs and their processing times on Resources #1 and #2. 2. Find the job with the shortest processing time (on either resource). 3. If this time corresponds to Resource #1, sequence the job first; if it corresponds to Resource #2, sequence the job last. 4. Repeat steps 2 and 3, using the next-shortest processing time and working inward from both ends of the sequence until all jobs have been scheduled.

3 basic app strategies

1. chase strategy 2. level strategy 3. mixed production strategy

Aggregate Planning Decisions and Strategies

1. demand management 2. production-rate changes 3. workforce changes 4. inventory changes 5. facilities, equipment, & transportation

4 Basic Lean Principles

1. elimination of waste 2. increased speed and response 3. improved quality 4. reduced cost

3 Objectives of Resource Mgmt

1. maximize profits and customer satisfaction 2. minimize costs 3. maximize benefits to stakeholders

Capacity Planning

1. resource requirement planning (RRP) 2. rough-cut capacity plan (RCCP) 3. capacity requirement planning (CRP)

2 most popular sequencing rules for prioritizing jobs

1. shortest processing time 2. earliest due date

5S Principles

1. sort 2. set in order 3. shine 4. standardize 5. sustain

Material Requirements Planning (MRP)

A computer-based system that calculates the exact quantities, need dates, & planned order releases for subassemblies & materials required to manufacture the final products on the MPS.

Master Production Schedule

A detailed disaggregation of the APP, listing the exact end items to be produced by a specific period. More detailed than APP & easier to plan under stable demand. Planning horizon is shorter than APP, but longer than the lead time to produce the item.

Statistical process control (SPC)

A technique that involves testing a random sample of output from a process in order to detect if nonrandom changes in the process are occurring

Chase Strategy

Adjusts capacity to match demand. Firm hires & lays off workers to match demand. Finished goods inventory remains constant. Works well for make-to-order firms.

Long-range (more than 1 year)

Aggregate Production Plan (APP) involves the construction of facilities & major equipment purchase

Level 1 - Aggregate planning

Aggregate planning is the development of a long-term output and resource plan in aggregate units of measure. These typically define output levels over a planning horizon of 1 to 2 years, focusing on product families or total capacity requirements.

Bill of Materials

An engineering document that shows an inclusive listing of all component parts & assemblies making up the final product. Shows the parent-component relationships & the specific units of components known as the planning factor. Enables the firm to compute (not forecast) the time-phased, net requirements of the components (planned order releases)

Dependent Demand

Describes the internal demand for parts based on the demand of the final product in which the parts are used. Subassemblies, components, & raw materials are examples of dependent demand items. Dependent demand is usually calculated.

Level 2 - Disaggregation

Disaggregation, is the process of translating aggregate plans into short-term operational plans that provide the basis for weekly and daily schedules and detailed resource requirements.

Earliest Due Date (EDD)

Earliest Due Date (EDD), minimizes the maximum job tardiness and lateness.

Level 3 - Execution

Execution involves moving work from one workstation to another, assigning people to tasks, setting priorities for jobs, scheduling equipment, and controlling processes.

Poka-Yoke Examples

Fast food restaurants use automated french-frying machines that can only be operated one way; the french fries are prepackaged and the equipment automated to reduce the chance of human error.

System Nervousness

Frequent changes to the MPS may create system nervousness Situation where a small change in the quantities required, causes a major change in the lower-level components required

Manufactured Good Recovery

In an effort to reduce costs, many firms are actively recovering and recycling parts. Options include repairing, refurbishing, remanufacturing, cannibalizing, and recycling. This can occur in various points of the supply chain.

JIT systems are sometimes called a

Kanban system

Mixed Production Strategy

Maintains stable core workforce while using other short-term means, such as overtime, subcontracting & part time helpers to manage short-term fluctuation in demand pattern.

Three PERT estimates are obtained for each activity:

Optimistic time (a): activity time under ideal conditions, Most probable time (m): most likely activity time, Pessimistic time (b): activity time if breakdowns or serious delays occur.

Deming Cycle aka

Plan Do Check Act PDCA

Push System

Produces finished goods inventory in advance of customer demand using a forecast of sales. Parts and subassemblies are "pushed" through the processes based on a predefined schedule that is independent of actual customer demand

ISO 9000

Quality standards were created in 1987 and revised in 1994 and 2000 to improve product quality, improve the quality of operation's processes, and provide confidence to organizations and customers that quality system requirements are fulfilled.

Level Strategy

Relies on a constant output rate while varying inventory & backlog according to fluctuating demand. Firm relies on fluctuating finished goods & backlogs to meet demand. Works well for make-to-stock firms.

Control Chart Design

Sample size: small sample size keeps costs lower; however, large samples provide greater degrees of statistical accuracy in estimating the true state of control. Sampling frequency: samples should be close enough to provide an opportunity to detect changes in process characteristics as soon as possible and reduce the chances of producing a large amount of nonconforming output.

Example of a lean airline

Southwest Airlines

Independent Demand

The demand for final products & service parts. It has a demand pattern affected by trends, seasonal patterns, & general market conditions. Independent demand is usually forecasted.

MRP Requires

The demand information of the end item (MPS). Parent-component relationships from the bill of materials. Inventory status of the final product & all of the components. Lead times for all purchased and manufactured component/parts.

Material Requirements Planning

Uses the MPS, Bill of Material and inventory status to compute planned order releases

Available-to-Promise (ATP) Quantities

Uses to decides whether additional orders can be accepted, based on the difference between confirmed customer orders & the quantity the firm planned to produce (i.e., the MPS)

Time Fence System

Using a time fence to separates the planning horizon into two segments is an effective way to deal with system nervousness

The difference between value stream mapping (VSM) and traditional flowcharting analysis and service blueprinting is that

VSM tries to highlight value-added and non-value-added work activities.

Shortest Processing Time (SPT)

With different processing times, SPT sequencing maximizes resource utilization and minimizes average flow time and WIP inventory.

work breakdown structure

a hierarchical tree of end items that will be accomplished by the project team during the project.

Timken Company

a leading manufacturer of highly engineered bearings and alloy steels and related products.

Statistical process control (SPC)

a methodology for monitoring quality of manufacturing and service delivery processes to help identify and eliminate

Critical Path Method (CPM)

a project-management tool that illustrates the relationships among all the activities involved in completing a project and identifies the sequence of activities likely to take the longest to complete

Run Charts and Control Charts

a run chart is a line graph with data plotted over time; control charts include control limits.

Project

a temporary and often customized initiative that consists of many smaller tasks and activities that must be coordinated and completed to finish the entire initiative on time and within budget

Aggregate planning is most challenging in the face of

fluctuating demand

nodes (circles)

activities

Project Management

all activities associated with planning, scheduling, and controlling projects

Project MGMT involves

all activities associated with planning, scheduling, and controlling projects.

For the service industry, the MPS may just be the ____

appointment log or book

Special (assignable) cause variation

arises from external sources that are not inherent in the process, usually is large, and can be traced to the source and corrected. accounts for 15-20% of the observed variation in a process. front-line employees and supervisors have the power to identify and solve special causes of variation. Examples: poorly trained workers, machines out of adjustment, etc.

Planning horizon of APP

at least one year & is usually rolled forward by three months every quarter

A missed due date or stock-out may cascade downstream, magnifying the ___

bullwhip effect

Long lead times and large order sizes magnify the _____

bullwhip effect

Six SIgma

business improvement approach that seeks to find and eliminate causes of defects and errors in manufacturing and service processes by focusing on outputs that are critical to customers and results. It is used by companies including Motorola, Allied Signal, Texas Instruments, and General Electric.

Operations managers need to balance ____ and ____

capacity and demand

To utilize single-piece flow, a company must be able to _____

change between products quickly and inexpensively by reducing setup times.

Scope of Project MGMT

define, plan, organize, control, close

project success

depends on well-defined goals and objectives, clear reporting relationships and channels of communication, good procedures for estimating time, cooperation and commitment, realistic expectations, conflict resolution, and top management support.

Distribution requirement planning (DRP)

describes the time-phased net requirements from warehouses & distribution centers customer demand minus any on hand in-transit inventories

Level 3 decisions require

detailed resource scheduling (trucks, labor, equipment, computers, and jobs), sequencing, and day-to-day execution

PERT (project evaluation and review technique)

developed to handle uncertainties in activity completion times.

Lean Six Sigma

draws upon the best practices of both lean manufacturing and 6 sigma .

Lean is focused on

efficiency by reducing waste and improving process flow while 6- is focused on effectiveness by reducing errors and defects

examples of visual controls

electronic scoreboards in production processes, painted areas on the floor where certain boxes and pallets should be placed, employee pull cords to stop production, signal lights on machines, Kanban cards, etc.

Supplier Certification and Management

ensures conformance to requirements before value-adding operations begin

In-process control

ensures that defective outputs do not leave the process and prevents defects in the first place.

Lean enterprise

focus on the elimination of waste in all forms, and smooth, efficient flow of materials and information throughout the value chain to obtain faster customer response, higher quality, and lower costs

Total Productive Maintenance (TPM)

focused on ensuring that operating systems will perform their intended function reliably. works to prevent equipment failures and downtime, maximizing equipment effectiveness and uptime

Kaizen

focuses on small, gradual, and frequent improvements over the long term with minimum financial investment and with participation by everyone in the organization.

Scatter Diagrams

graphical component of regression analysis.

Histograms

graphically represent frequency of values within a specified group.

Operations planning is usually _____

hierarchical

resource planning

includes developing time estimates for each activity and allocating resources that will be required.

Closed-loop MRP

incorporates the APP, MPS, MRP, & capacity requirements plan

Manufacturing resource planning (MRP-II)

incorporates the business plan, sales plan, closed-loop MRP, & simulation capabilities to answer "what-if" analysis

Variation of stocks/orders _______ up the supply chain

increases

visual controls

indicators for operating activities that are placed in plain sight of all employees so that everyone can quickly and easily understand the status and performance of the work system.

Costs relevant to the aggregate planning decision

inventory, setup, machine operations, hiring, firing, training, & overtime costs

Work Breakdown Structure

is a hierarchical tree of end items that will be accomplished by the project team during the project

cost control

is a vital part of project management, and resource planning aids in good budgeting

Enterprise requirements planning (ERP)

is an extension of MRP-II

capacity requirements planning (CRP)

is the process of determining the amount of labor and machine resources required to accomplish the tasks of production on a more detailed level, taking into account all components and end items in the materials plan.

Common (natural) cause variation

is the result of complex interactions of variations in materials, tools, machines, information, workers, and the environment. usually is small and insignificant. accounts for 80-95% of the observed variation in a process. only management has the power to change systems and infrastructure that cause common cause variation.

Pioneers of quality management

joseph juran and edwards deming

Cons of MRP

loss of visibility, especially acute for products with a deep BOM ignores capacity & shop floor conditions

Too little resource equals

lost sales and loss of customer goodwill

Resources include...

materials equipment facilities info tech knowledge and skills people

Quality at the source

means the people responsible for the work control the quality of their processes by identifying and correcting any defects or errors when they first are recognized or occur

Process in control

no special causes of variation are present in the process

attribute measure

one that is calculated from data that are measured on a binary scale of measurement (i.e., Yes/No).

variable measure

one that is calculated from data that are measured on a continuous scale of measurement.

Pros of MRP

provides planning information & visibility

Sequencing

refers to determining the order in which jobs or tasks are processed.

Single Minute Exchange of Dies (SMED)

refers to quick setup or changeover of tooling and fixtures in processes so that multiple products in smaller batches can be run on the same equipment. Reducing setup time frees up capacity that can be producing output, and therefore, generating revenue.

Quality Mgmt

refers to systematic policies, methods, and procedures used to ensure that goods and services are produced with appropriate levels of quality to meet the needs of customers

Scheduling

refers to the assignment of start and completion times to particular jobs, people, or equipment.

Cause-and-Effect Diagrams

represent chain of relationships; often called a fishbone diagram.

Projects fail due to

schedule overruns, use of unproven technology, poor estimates or weak definitions of objectives, and supplier problems.

bottom-up budgeting

starts with lowest-level tasks, converting labor and material estimates into dollar figures and aggregating them into higher-level activities, until a total project budget is developed

Bottom-up budgeting

starts with lowest-level tasks, converting labor and material estimates into dollar figures and aggregating them into higher-level activities, until a total project budget is developed.

Specifications

targets and tolerances determined by designers of goods and services.

Fitness for use

the ability of a good or service to meet customer needs

Flow time

the amount of time a job spent in the shop or factory

Tardiness

the amount of time by which the completion time exceeds the due date. (Tardiness is defined as zero if the job is completed before the due date, and therefore no credit is given for completing a job early).

Single-piece flow

the concept of ideally using batch sizes of one

Lateness

the difference between the completion time and the due date (either positive or negative).

Quality of conformance

the extent to which a process is able to deliver output that confirms to design specifications

arcs (arrows)

the precedence relationships between activities

Batching

the process of producing large quantities of items as a group before being transferred to the next operation

critical path

the sequence of activities in a project that is expected to take the longest to complete

Makespan

the time needed to process a given set of jobs. A short makespan aims to achieve high equipment utilization.

3 factors of project mgmt decisions

time, resources, and cost

Examples of push system

traditional automobile factory and distribution system

Enterprise Resource Planning

utilizes a centralized & shared database system to tie the entire organization together in which information is entered once at the source & made available to all users, including some suppliers and customers (in contrast to multiple legacy systems that may not be compatible)

Finished goods control

verifies that product meets customer requirements

Kanban

visual signal that contains all relevant information for an order

Too much resource equals

wasted capacity, excess inventory

Ensuring project success depends on

well-defined goals and objectives, clear reporting relationships and channels of communication, good procedures for estimating time, cooperation and commitment, realistic expectations, conflict resolution, and top management support.

Pull System (JIT)

workers at a given workstation go to the source of the required parts, such as machining/subassembly, and withdraw the units as they need them. By pulling parts from each preceding workstation, the entire manufacturing process is synchronized to the final-assembly schedule.