bit 3414 exam 2
leaning the supply chain
"pulling" a smooth flow of material through a series of suppliers to support frequent replenishment orders and changes in customer demand Firms need to share information and coordinate demand forecasts, production planning, and inventory replenishment with suppliers and supplier's suppliers throughout supply chain time and cost are reduced
effective daily capacity
(number of machines or workers) * (hours per shift) * (number of shifts) * (utilization) *(efficienecy)
master production schedule
also called the master schedule a schedule of finished products that drives the MRP process specifies which end items or finished products a firm is to produce, how many are needed, and when they are needed works within the constraints of the aggregate production plan but produces a more specific schedule by individual products
time phased bill of material
an assembly chart shown against a time scale horizontal product structure diagram that graphically shows the lead time required to purchase or manufacture an item
lean production
an integrated management system that emphasizes the elimination of waste and the continuous improvement of operations doing more with less- less inventory, fewer workers, less space
stockout
an inventory shortage
ERP implementation involves
analyzing business processes choosing the modules to implement aligning the level of sophistication finalizing delivery and access linking with external partners
lot sizing
determining the quantities in which items are usually made or purchased
work package
shop paperwork that travels with a job
sales/ marketing
supports customer related activities such as order processing, product configuration and delivery quotations pricing, promotions, availability and shipping options are determined as sales orders are entered allows for profitability analyses based in different pricing strategies with discounts and rebates
cycle counting
taking physical count of inventory at various cycles during the year
shortage costs
temporary or permanent loss of sales when demand cannot be met insufficient inventory shortages occur because carrying inventory is costly
utilization
the percent available time spent working
cumulative lead time
the total length of time needed to manufacture a product
objectives in scheduling
-Meet customer due dates -minimize job lateness -minimize response time -minimize completion time -minimize time in the system -minimize overtime -maximize machine or labor utilization -minimize idle time -maximize work-in-process inventory
recognizing the potential gains from integrating lean and environmental initiatives, the EPA recommends that companies:
1) commit to eliminate environmental waste through lean implementation. add environmental waste to the seven wastes of lean 2) involve staff with environmental expertise in planning for and implementing lean events 3) find and drive out environmental wastes in specific processes by using lean process-improvement tools, such as the 5 whys, visual control, and poka yokes 4) empower and enable workers to eliminate environmental wastes in their work areas through 6s workplace evaluations 5) recognize new improvement opportunities by incorporating environmental, health and safety icons and data into value stream maps. include environmental metrics
theory of constraints scheduling procedure
1) identify the bottleneck 2) schedule the job first whose lead time to the bottleneck is less than or equal to the bottleneck processing time 3) forward schedule the bottleneck machine 4) backward schedule the other machines to sustain the bottleneck schedule 5) transfer in batch sizes smaller than the process batch size
lean production is the result of the mandate to eliminate waste. it is composed of ten elements
1. flexible resources 2. cellular layouts 3. pull system 4. kanbans 5. small lots 6. quick setups 7. uniform production levels 8. quality at the source 9. total productive maintenance 10. supplier networks
stopwatch time study
1.establish the standard job method -the job should be analyzed using methods analysis to make sure the best method is being used 2. break down the job elements -the job is broken down into short, elemental tasks with obvious break points between them. the more detailed the elements the easier it is to eliminate elemental times that are not normally included in each job cycle and might abnormally effect standard time 3. study the job -time studies have traditionally been conducted using a stopwatch attached to a clipboard, although handheld electronic time-study machines are now available that store elemental times in a memory that can be transferred to a computer for processing 4. rate the worker's performance -as the time study is being conducted, the worker's performance is also rated by the person doin the study 5. compute the average time -once a sufficient number of job cycles have been observed, an average time for each work element is calculated 6. compute the normal time -calculated by multiplying the elemental average time by the performance rating factor =(elemental average time)(rating factor) =Nt=(tbar)(RF) OR summing the elemental normal time NT=sigma Nt 7. compute the standard time -computed by adjusting the normal cycle time by an allowance factor for unavoidable work delays (such as machine breakdown). it is a percentage increase in the normal cycle time calculated as follows: standard time= (normal cycle time) (1+ allowance factor)
strategies for adjusting capacity
1.producing at a constant rate and using inventory to absorb fluctuations in demand (level production) 2.hiring and firing workers to match demand 3.maintaining resources for high demand levels 4.increasing or decreasing working hours (overtime or undertime) 5.subcontracting work to other firms 6. using part time workers 7. providing the service or product at a later time period (backordering) when one of these alternatives is selected, a company is said to have a pure strategy for meeting demand. when two or more are selected it is a mixed strategy.
total carrying cost
=CcQ/2(1-d/p)
maximum inventory level
=Q(1-d/p)
average inventory level
=Q/2(1-dp)
analyze business processes
ERP implementation type requires major changes in a company's organizational structure and business processes companies that have had success with ERP have taken the time to think about how their processes work and how they can best be integrated before "automating" them
finalize delivery and access
ERP vendors such as Oracle and SAP now offer their products through portals. the vendor hosts the application which the customer accesses over the internet with their browser
scientific management
FW Taylor broke down a job into its simplest elements and motions, eliminating unneccessary motions and then divided the tasks among several workers so that each would require only minimal skill
employee scheduling; one heuristic
Let N= number of workers available Di= demand for workers on day i X= day working O= day off assign the first N-Di workers day 1 off. assign the next N-D2 workers day 2 off. continue until all days have been scheduled if the number of workdays for a full time employee is less than 5, assign the remaining workdays so that consecutive days off are possible or where unmet demand is highest assign any remaining work to part-time employees, subject to maximum hour restrictions if consecutive days off are desired, consider switching schedules among days with the same demand requirements
discrete demand
NOT continuous avoids excess inventory
align level of sophistication
QAD- offers industry speciic software to manufacturing companies and international clients tailors its software to individual plants and then links them with corporate financial, distribution and support functions
we can compute the reorder point to meet a specific service level as
R= dbarL + z*omegad *square rt L dbar= average daily demand L= lead time omegad= the standard deviation of daily demand z= number of standard deviations corresponding to the service level probability z*omegad*square rt L= safety stock the term omegad * square rt L in this formula for the reorder point is the square root of the sum of the daily variances during lead time variance= (daily variance) * (number of days of lead time) =omega ^2 d*L standard deviation= omegad* square rt L
guidelines for selecting a sequence rule
SPT is most useful when the shop is highly congested use SLACK for period of normal activity use DDATE when only small tardiness values can be tolerated use LPT if subcontracting is anticipated use FCFS when operating at low capacity levels do not use SPT to sequence jobs that have to be assembled with other jobs at a later date
quick setups
Shingo reduced setup time on a 1000 ton press from 6 hours 3 minutes using a system called SME (single minute exchange of dies) based on the following principles: 1) separate internal setups from external setups -internal setups: setup activities that can be performed only when a process is stopped -external setups: setup activities that can be performed in advance 2) convert internal setups to external setups 3) streamline all aspects of setup 4) perform setup activities in parallel or eliminate the entirely
total annual inventory cost
TC= C0D/Q + CcQ/2 (1-d/p) Qopt= square rt( 2C0D/(Cc(1-d/p))
total minimum cost
Tcmin= C0D/Qopt + CcQopt/2
safety stocks
a buffer added to the inventory on hand during lead time
production kanban
a card authorizing production of goods
withdrawal kanban
a card authorizing the movement of goods
lean six sigma
a combination of lean's principles for eliminating waste with six sigma's reduction of variability
material requirements planning (MRP)
a computerized inventory control and production planning system main objective is to ensure that material is available when needed wants to maintain the lowest possible level of inventory first inventory system to recognize that inventories of raw materials, components and finished goods may need to be handled differently.
continuous inventory system
a constant amount is ordered when inventory declines to a predetermined level a continual record of the inventory level for every item is maintained whenever the inventory on hand decreases to a predetermined level, referred to as the REORDER LEVEL, a new order is placed to replenish the stock of the inventory ECONOMIC ORDER QUANTITY- the order that is placed is for a fixed amount that minimizes total inventory costs inventory constantly monitored, but this can be costly often incorporate IT tools to improve speed and accuracy of data entry
item master file
a database of information on every item produced, ordered or inventoried includes such data as on hand quantitites, on order quantities, lot sizes, safety stock, lead time and past usage figures
product structure file
a file that contains a computerized bill of material for every item produced
theory of constraints
a finite scheduling approach that concentrates on scheduling the bottleneck resource
load profiles
a graphical comparison of load versus capacity underloaded conditions can be leveled by: 1. acquiring more work 2. pulling work ahead that is scheduled for later periods 3. reducing normal capacity
bill of material
a list of all the materials, parts and assemblies that make up a product, including quantitites, parent-component relationships, and order of assembly
periodic order quantity
a lot sizing technique that orders at set time intervals
kanban square
a marked area designated to hold items
linear decision rule
a mathematical technique or aggregate planning solves a set of 4 quadratic equations that describe hte major capacity costs in the factory: payroll costs, hiring and firing, overtime/ undertime
search decision rule
a pattern search technique for aggregate planning
sales and operating process
a process for coordinating supply and demand over an intermediate time horizon-6 to 1 months in the future 2 objectives: to establish a company wide game plan for allocating resources develop an economic strategy or meeting demand
material kanban
a rectangular kanban used to order material in advance of a process
management cefficients model
a regression technique for aggregate planning
5S
a set of processes for workplace organization
service oriented architecture
a software architecture that bundles together stand-alone services
advanced planning and scheduling
a software system that uses intelligent analytical tools and techniques to develop realistic schedules
kaizen
a system of continuous improvement: "change for the good of all" quality in lean systems is based on this means CONTINUOUS IMPROVEMENT
preventive maintenance
a system of periodic inspection and maintenance designed to keep a machine in operation
total productive maintenance
a system that combines the practice of preventive maintenance with the concepts of total quality
value stream mapping
a tool for analyzing process flow and eliminating waste maps of the current state and the future state are created
signal kanban
a triangular kanban used to signal production at the previous workstation
employee motivation
a willingness to work hard because that effort satisfies an employee need key factor in achieving company goals such as product quality and creating a quality work place
pull system
a workstation pulls output from the preceding station as it is needed supermarket example: americans do not keep large stocks of food at home, instead they make frequent visits to supermarkets to purchase items of food for home the supermarkets in turn, carefully control their inventory by replenishing items on their shelves only as they are removed.customers pull through the system the items they need push system- rely on a predetermined schedule pull system- rely on customer requests when their output has been taken, workers at the previous station know it is time to start producing more and they replenish the exact quantity that the subsequent station just took away
level of customer service
ability to meet effectively internal organizational demand or external customer demand in a timely efficient manner
backlog
accumulated customer orders to be completed at a later date
subcontracting
aka outsourcing a feasible alternative if a supplier can reliably meet quality and time requirements. this is a common solution for component parts when demand exceeds expectations for the final product. the outsourcing decision requires maintaining strong ties with possible subcontractors and first hand knowledge of their work
production quantity model
an inventory system in which an order is received gradually, as inventory is simultaneously being depleted variation of the basic EOQ model assumption is that orders are received all at once is relaxed. the order quantity is received gradually over time and the inventory level is depleted at the same time it is being replenished. situation is common where the inventory user is also the producer p=daily rate at which the order is received over time, also known as the production rate d= daily rate at which inventory is demanded
periodic inventory system
an order is placed for a variable amount after a fixed passage of time inventory on hand is counted at specific time intervals like every week or at the end of the month after the inventory is determined, an order is placed for an amount that will bring inventory back to a desired level example is a college university bookstore an order for new textbooks is made every semester according to course enrollments for the next term
loading
assigning work to limited resources assignment method minimization problem: 1) perform row reductions by subtracting the minimum value in each row from all the other row values 2) perform column reductions by subtracting the minimum value in each column from all other column values 3) the resulting table is an opportunity cost matrix. cross out all zeros in the matrix using the minimum number of horizontal or vertical lines 4) if the number of lines equals number of rows, an optimal solution has been reached
jidoka
authority to stop the production line
modular bills of material bills
bills used to plan the production of products with many optional features with this approach, the end item in the master production schedule is not a finished product, but a major option or module
XML
business language of the internet tags each chunk of data such as part number, price and delivery rate- before sending it to a trading partner the receiving XML -run system picks out the data by its tag and inserts it into the proper place in tis ERP system websites can communicate with websites, and computers with computers
andons
call lights that signal quality problems
economic order quantity
can be adapted for use with MRP if it is treated as a minimum orde quantity
calculating capacity
capacity- the maximum capability to produce can be measured as units of output, dollars of output, hours of work, or number of customers processed over a specified period of time rated capcity is the theoretical output that could be attained if a process were operating at full speed without interruptions, exceptions, or downtime
chase demand
changing workforce levels so that production matches demand
alternative workplace
combination of nontraditional work locations, settings and practices that supplements or replaces the traditional office
overtime and undertime
common strategies when demand fluctuations are not extreme. a competent staff is maintained, hiring and firing costs are avoided and demand is met temporarily without investing in permanent resources. disadvantages include the premium paid for overtime work, a tired and potentially less efficient workforce and the possibility that overtime alone may be insufficient to meet peak demand periods`
work sampling study example
company has a pool of 28 phone operators to take catalog orders during the business hours of 9 am to 5 pm. the company has recently been experiencing a larger number of lost calls because operators are busy and suspects it is because the operators are spending around 30% of their time describing products to customers. the company believes that if operators knew more about the products instead of having to pull up a description screen on the computer each time a customer asked a question, it would save more time. however first the company wants to perform a work sampling study to determine the proportion of time operators are answering product-related questions. the company wants the proportion os this activity to be accurate within +/= 2% with a 95% degree of confidence n=(z/e)^2 p(1-p) n=(1.96/0.02)^2(0.3)(0.7) =2016.84
MRP matrix
completed for each item starting with level zero items. identifying information at the top of the matrix includes the item name or number, the lowest level at which the item appears in the product structure (low level code or LLC), the time required to make or purchase an item (lead time or LT), and the quantities in which an item is usually made or purchased (lot size)
jobs
comprise a set of tasks, elements, and job motions (basic physical movements)
annual carrying cost
computed by multiplying the annual per unit carrying cost, Cc, by average inventory level
annual ordering cost equation
computed by multiplying the cost per order(C0) times the number of orders per year (D/Q) annual ordering cost= C0D/Q
SLACK
considers the work remaining to be performed on a job as well as the tie remainig until the due date to perform thate work (due date- today's date) - (processing time)
human resources
covers all personnel management tasks, including workforce planning, employee scheduling, training and development, payroll and benefits, travel expense reimbursement, applicant data, job descriptions
capacity requirements planning
created a load profile that identifies underloads and overloads three major inputs to CRP: the planned order releases from the MRP process a routing file, which specifies which machines or workers are required to complete an order from the MRP plan, in what order the operations are to be conducted, and the length of time each operation should take an open orders file, which contains information on the status of jobs that have already been released but have not yet been completed with this information, CRP can produce a load profile for each process or work center in the shop. the load profile compares released orders and planned orders with work center capacity
assemble to order
customer is allowed to choose among different options these products have many common components that are inventoried in some form before the customer order is received produces major assemblies and subassemblies in advance of the customer order and then competing the product on receipt of the order
choose modules to implement
decision should be guided by questions such as: which processes have the biggest impact on customer relations? which processes would benefit the most from cross-functional or interorganizational integration? which processes should be standardized throughout the organization and which should be allowed to vary
dependent demand
derived from another deand demand for table legs are dependent on demand for tables
total productive maintenance requires management t take a broader, strategic view of maintenance. this means:
designing products that can easily be produced on existing machines designing machines for easier operation, changeover, and maintenance training and retraining workers to operate and maintain machines properly purchasing machines that maximize productive potential designing a preventive maintenance plan that spans the entire life of each machine
task analysis
determines how to do each task and how all thet asks fit together to form a job. it includes defining the individual tasks and determining their most sequence, their duration, their relationship with other tasks, and their frequency. performance requirements of a task can be the time required to complete the task, the accuracy in performing the task to specifications, the output level or productivity field or quality performance measurement, temperature, weight, litmus test
worker machine chart
determines if worker and machine time are used efficiently illustrates the amount of time a worker and machine are working or idle in a job usually used in conjunction with a process flow chart when the job process includes equipment or machinery
worker analysis
determines the characteristics the worker must possess to meet the job requirements, the responsibilities the worker will have in the job, and how the worker will be rewarded. some jobs require manual labor and physical strength, whereas others require none
work sampling
determines the proportion of time a worker spends on activities make brief, random observations of a worker or machine over a period of time and record the activity in which they are involved steps in work sampling: 1.define the job activities 2.determine the number of observations in the work sample n=(z/e)^2 p(1-p) where n=the sample size (number of sample observations) z= the nuber of standard deviations from the mean for the desired level of confidence e= the degree of allowable error in the sample estimate p= the proportion of time spent on a work activity estimated prior to calculating the work sample 3. determine the length of the sampling period 4. conduct the work sampling study and record the observations 5. periodically recompute the number of observations
cross training
employee learns more than one job in a company provides safety measure with job coverage employees given more knowledge and variety so won't get bored opportunity to move to other jobs respect each other because more familiar with each other's jobs
telecommuting
employees work electronically from a location they choose
finance/ accouning
encompasses financial accounting, investment management, cost control, treasury management, asset management, and enterprise controlling includes cost centers, profit centers, activity based costing, capital budgeting and profitability analysis.
monthly sales and operations process planning process
end of month reports demand planning supply planning Pre-S&OP meeting Executive S&OP meeting
the MRP process consists of 4 basic steps
exploding the bill of material netting out inventory lot sizing time phasing requirements
undercapacity scheduling
extra time built into a schedule for planning, problem solving, and maintenance
part time workers
feasible for unskilled jobs in areas with large temporary labor pools (like homemakers, homemakers, or retirees) part time workers are less costly than full time workers- they receive no healthcare or retirement benefits been the mainstay of retail, fastfood and other services
quality at the source
for lean systems, quality has to be extremely high there is no extra inventory to buffer against defective units producing poor quality items and then having to rework or reject them is a waste that should be eliminated
assembly line
ford motor company created and maintained a mass market for the Model-T automobile combined standardized parts and product design, continuous flow production and Taylor's scientific management workers remained at a single workplace
lost sales
forfeited sales for out of stock items
basic EOQ model
formula for determining the optimal order size the minimizes the sum of carrying costs and ordering costs derived under a set of simplifying and restrictive assumptions: demand is known with certainty and is constant over time no shortages are allowed lead time for the receipt of orders is constant the order quantity is received all at once
quantity discounts
given for specific higher order quantities total inventory cost= C0D/Q + CcQ/2 + PD where P= per unit price of the item and D= annual demand
johnson's rule
gives an optimal sequence for jobs processed serially through two processes
empowerment
giving employees responsibility and authority to make decisions
employee compensation
good human resource management practices or motivation factors cannot compensate for insufficient monetary rewards two traditional forms: hourly wage and individual incentive
job design
good job design: appropriate degree of repetitiveness appropriate degree of attention and mental absorption some eployee responsibility for decisions and discretion employee control over their own job goals and achievement feedback perceived contribution to a useful product or service opportunities for personal relationships and friendships use of skills some nifluence over the way work is carried out in groups
process flowchart
graph of the steps of a job used to analyze how the steps of a job or how a set of jobs fit together into the overall flow of the production process
k bills
group small, loose parts such as fasteners together under one pseudo-item number in this way, requirements for the items are processed only once for the group rather than for each individual items
temporary and part time employees
have accounted for 40% of job growth in the retail industry in last 2 decades do not always have the commitment to goals for quality and service that a company might want
efficiency
how well a machine or worker performs compared to a standard output level
frederick herzberg's hygiene/ motivation theories
hygiene: company policies, supervision, working conditions, interpersonal relations, salary, status, security motivation: achievement, recognition, job interest, responsibility, growth, advancement
learning curve
illustrates the improvement rate of workers as a job is repeated aka improvement curve the convention is to describe a learning curve in terms of 1 or 100% minus the percentage rate improvement ie: an 80% learning curve describes an improvement rate of 20% each time production doubles, a 90% learning curve indicates a 10% improvement rate formula: tn = t1n^b tn= time required for the nth unit produced t1= time required for the first unit produced n= cumulative number of units produced b=ln r/ln 2, where r is the learning curve percentage (decimal coefficient) useful for measuring work improvement for nonrepetitive, complex jobs requiring a long time to complete such as building airplanes or medical surgical procedures help managers project labor and budgeting requirements in order to develop scheduling plans
teams
in order to be effective they must know what their purpose and roles are relative to the company's goals self-directed teams usually empowered to make decisions and chanes relative to the processes in their own work area
gainsharing
incentive plan joins employees in a common effort to achieve company goals who share in gain
managing diverstiy
includes education, awareness, communication, fairness and commitment
tasks
individual, defined job activities that consist of one or more elements
lean healthcare
interest of corporations in keeping the cost of healthcare down flowcharts, mistake-proofing, flow management, quick setups and kaizen are some tools
ergonomics
is fitting the task to the person deals with the interaction of work, technology and humans. applies human sciences like anatomy, physiology, and psychology to the design of the work environment make the best use of employees' capabilities while maintaining their health and well-being good ergonomics shortens learning times, makes the job easier with less fatigue, improves equipment maintenance, reduces absenteeism, labor turnover
independent demand
items are final products demanded by external customers not a function of or dependent on internal production activity
dependent demand
items are used internally to produce a final product demand for wheels is dependent on demand for cars
kanban
japanese word for card in the pull system, each kanban corresponds to a standard quantity of production or size of container kanban contains basic information such as part number, brief description, type of container, unit load, preceding and subsequent station closely associated with the fixed quantity inventory
production control
job shop scheduling/ shop floor control/ production activity control the scheduling and monitoring of day to day production in a job shop consists of three objectives: loading- checking the availability of material, machines and labor -load leveling: the process of smoothing out the work assigned -dispatch list: a list of orders released to the shop that specifies the sequence in which jobs should be processed sequencing- releasing work orders to the shop and issuing dispatch lists for individual machines monitoring- maintaining progress reports on each job until it is completed
number of kanbans example
julie works in a cosmetic factory filling, capping and labeling bottles. she is asked to process an average of 150 bottles per hour through her work cell. if one kanban is attached to every container, a container holds 25 bottles, it takes 30 minutes to receive new bottles from the previous workstation, and the factory uses a safety stock factor of 10%, how many kanbans are needed for the bottling process? dbar= 150 bottles per hour L= 30 mins= 0.5 hour S= 0.10 (150*0.5)=7.5 C= 25 bottles N= dL+S/C = (150*0.5) + 7.5/ 25 = 3.3 kanbans or containers
big data
large volumes of both structured and unstructured data unstructured data- video, images, texts, emails, logs; not represented in a form that can be stored or processed in a relational database other approaches for big data processing; in memory computing business analytics of various types are applied, decisions are made, and the results sent back to enterprise systems for use in the next cycle enterprise systems continue to evolve in functionality, connectivity and integration with new technologies.
infinite scheduling
loads without regard to capacity, then levels the load and sequences the jobs
lean supply involves:
long term supplier contracts synchronized production supplier certification mixed loads and frequent deliveries precise delivery schedules standardized, sequence delivery locating in close proximity to the customer
cellular layouts
manufacturing cells- dissimilar machines brought together to manufacture a family of parts use labor more efficiently, the flexibility of new layout process to be fundamental to the effectiveness of the system a a whole cells produce similar items, setup time requirements are low and lot sizes can be reduced movement of output from the cells to subassembly or assembly lines occur in small lots
erratic orders
manufacturing environments in which customer orders are erratic, each job takes a different path through the system, lead time is uncertain and due dates vary need an information system such as MRP to keep track of the different jobs and coordinate their schedules.
three major inputs to MRP process
master production schedule product structure file item master file
today's ERP technology allows us to relax some of the more restrictive assumptions of MRP
material is not always the most constraining resource lead times can vary not every transaction needs to be recorded the shop floor may require a more sophisticated scheduling system scheduling in advance may not be appropriate for on demand production
revenue management
maximizes the yield of time-sensitive products and services
complex products
may have hundreds of component parts, dozens of assmemblies, and several levels of assembly. MRP ties to ensure that multiple components of an assembly are ready at the same time so that they can be assembled together.
ABC system
method for classifying inventory according to several criteria, including its dollar value to the firm typically thousand of independent demand items are held in inventory by a company especially in manufacturing but a small percentage is such a higher dollar value to warrant close inventory control Class A items-5% to 15% account for 70-80% of all inventory items Class B items- represent 30% of total inventory units but only about 15% total inventory dollar value Class C items- account for 50-60% of all inventory units but only represent 5-10% dollar value 1.classify all inventory items as A B or C 2. determine level of inventory control for each classification
input/ output control
monitors the input and output from each work center provide the necessary information to regulate the flow of work to and from a network of work centers
flexible resources
multifunctional workers- perform more than one job general purpose machines- perform several basic functions **taiichi ohno- toyota this is recognized as the key element of lean production the operation of different, multiple machines required additional training for workers and specific rotation schedules closely related to the concept of cycle time is takt time(the pace at which production should take place to match customer demand)
drawbacks of lean production
not appropriate for every type of organization starts to have deficiencies when applied to companies that have high variability in demand or large variety of low volume products or custom engineered products difficult for high volume repetitive items where mass production is more common
job rotation
not exactly same as cross training job rotation requires cross training but also includes horizontal movement between two or more jobs according to a plan or schedule. creates a flexible employee and reduces boredom
number of kanbans equation
number of kanbans= average demand during lead time+safety stock/ container size N=dbarL+ S/ C where N= number of kanbans or containers dbar= average number of units demanded over some time period L= lead time; the time it takes to replenish an order (expressed in the same terms as demand) S= safety stock; usually given as a percentage of demand during lead time but can be based on service level, lead time and the standard deviation or demand during lead time C= container size
job training
numerous courses typically available for training in different jobs and functions. considered part of a structured career development system that includes cross training and job rotation
job enrichment
objective is to create more opportunities for individual achievement and recognition by adding variety, responsibility and accountability: allow employees control over their own work and some supervisory responsibilites (vertical job enlargement) assign each worker a complete unit of work that includes all the tasks necessary to complete a process or product with clearly defined start and end points (horizontal job enlargement) provide additional authority and freedom for employees make periodic reports available to workers instead of just supervisors introduce new and more difficult tasks into the job encourage development of expertise by assigning individuals to specialized tasks
Cloud computing
on demand IT services housed on the internet salesforce was the first to use cloud computing in the CRM market followed by Netsuite
software as a service (SaaS)
on demand access of software from a provider site also maintain and run the IT infrastructure including networks, servers, operating systems and storage necessary to run the sotware
backordering
ordering an item that is temporarily out of stock
lot for lot (L4L)
ordering in the exact quantities needed
overloads
overload conditions are the primary concern of the MRP planner because an overloaded schedule left unchecked cannot possibly be completed as planned. over loads can be reduced by: 1. eliminating unneccessary requirements 2 rerouting jobs to alternative machines, workers or work centers 3. splitting lots between 2 or more machines 4. increasing normal capacity 5. subcontracting 6. increasing the efficiency of the operations 7. pushing work back to later time periods 8. revising the master schedule
flextime
part of a daily work schedule in which employees can choose time of arrival and departure
example learning curve problem
paulette and maureen assembled the first unit as trial and found that it took them 18 hours of direct labor. to determine if they can fill the order in the time alotted, they want to apply the learning curve effect to determine how much time the 9th, 18th and 36th units will require to assemble. based on prior experience they believe their learning curve is 80%. the time required for the 9th unit is computed using the learning cure formula: tn= t1n^b t9= (18)(9)^(ln(0.8)/ln2) = 8.874 t18= (18)(18)^(ln(0.8)/ln2) = 7.092 t36= (18)(36)^(ln(0.8)/ln2)= 5.67
maslow hierarchy of needs
physiological, safety/ security, social, esteem, self-actualization
certain basic elements in job design and management have been shown to improve motivation
positive reinforcement and feedback, effective organization and discipline, fair treatment of people, satisfaction of employee needs, setting of work related, design of jobs to fit the employee, work responsibility, empowerment, restructuring of jobs when necessary, rewards based on company as well as individual performance, achievement of company goals
lean banking
practiced by all big banks banking and insurance industries are particularly well suited to lean techniques because of their repetitive processes significant savings in time and money
elemental standard time files
predetermined job element times
predetermined motion times
predetermined times for basic micromotions this system provides normal times for basic, generic micromotions such as reach, grasp, move, position, and release that are common to many jobs methods time measurement basic motion time study
sequencing
prioritizes jobs that have been assigned to a resource first come first serve/ last come first serve sequence/earliest due date/highest customer priority
disaggregation
process of breaking an aggregate plan into more detailed plans
level production
producing at a constant rate and using inventory as needed to meet demand set production at a fixed rate uses inventory to absorb variations in demand during overproduction of low demand, overproduction is stored as inventory, to be depleted in periods of high demand. the cost of this strategy is the cost of holding inventory, including the cost of obsolete or perishable items that may have to be discarded
inventory management
purpose is to determine the amount of inventory to keep in stock- how much to order and when to replenish or order
visual control
quality improves when problems are made visible and workers have clear expectations of performance. production systems designed with quality in mind include visible instructions for worker or machine action, and direct feedback on the results of this action. known as visual control: procedures or mechanisms that make problems visible visual control often leads to a "poka yoke": a foolproof device that prevents defects from occurring. like a dial on which desired ranges are marked in different colors is an example of visual control; a dial that shuts off a machine whenever the instrument needle falls above or below the desired range is a poka yoke
inventories can take on different forms such as
raw materials purchased parts and supplies partially complete work in process items being transported tools and equipment
the benefits of lean production
reduced inventory improved quality lower costs reduced space requirements shorter lead time increased productivity greater flexibility better relations with suppliers simplified scheduling and control activities increased capacity better use of human resources more product variety
environmental analysis
refers to the physical location of the job in the production or service facitility includes things like proper temperature, lighting, ventilation and noise microchips requires extremely clean, climatically controlled, enclosed environment
best of breed
refers to the selection of ERP modules from different vendors
breakdown maintenance
repairs needed to make a failed machine operational
5 why's
repeatedly asking "why" until a root cause is identified
small lots
requires less space and capital investment than systems that incur large inventories by producing small amounts at a time, processes can be physically moved closer together and transportation between stations can be simplified quality problems are easy to detect lead time is typically made up of four components: processing time move time waiting time setup time
lean retailing
retail stores provide customers with more choices faster than ever before involves smaller, more frequent orders and rapid replenishment of stock
supplier kanbans
rotate between the factory and suppliers to handle this volume of transactions, a kind of kanban "post office" can be set up, with the kanbans sorted by supplier
aggregate planning example
sales forecasts- spring: 80,000 summer: 50,000 fall: 120,000 winter: 150,000 hiring cost= $100 per worker firing cost= $500 per worker inventory carrying cost= $0.50 per pound per quarter regular production cost per pound= $2.00 production per employee: 1000 pounds per quarter beginning workforce= 100 workers solution: a. average quarterly demand (80000+50000+120000+150000)/4= 100000 pounds *each worker can produce 1000 pounds so 100 workers will be needed each quarter for level production strategy: spring=80000-100000=inventory=20000 summer=20000+100000-50000=70000 fall=70000+100000-120000=50000 winter=50000++100000-150000=0 total sales forecast = 400000 total inventory= 140000 cost of LEVEL PRODUCTION strategy= (400000*2.00)+(140000*0.50)=$870000 for chase demand strategy: workers needed= spring- 80000/1000=80 summer-50 fall -120 winter-150 workers hired: spring=100-80=20 summer=80-50=30 workers fired: fall- 120-50=70 winter-150-120=30 cost of CHASE DEMAND strategy= (400000*0.2)+(100*$100)+(50*$500)=$835000
backward scheduling
schedules backwards from the due date
forward scheduling
schedules forward from today's date
scheduling
scheduling specifies when labor, equipment and facilities are needed to produce a product or provide a service. it is the last stage of planning before production takes place. scheduling function differs considerably based on the type of operation: process industries- determining the mix of ingredients that goes into a vat or when the system should stop producing one type of mixture mass production- the schedule of production is pretty much determined when the assembly line is laid out. products flow down tje assembly line from one station to the next projects- scheduling decisions are so numerous and interrelated that specialized project- scheduling techniques such as PERT and CPM have been devised batch or job shop production- determines to which machine a part will be routed for processing
finite scheduling
sequences jobs as part of the loading decision. resources are never loaded beyond capacity
production/ materials management
set up to handle all types of manufacturing processes- make to order, assemble to order, repetitive and continuous interfaces with CAD programs: process planning, bill of material processing, product costing, plans material requirements
profit sharing
sets aside a portion of profits for employees at year's end
collaborative planning
sharing information and synchronizing production across the supply chain
aggregate planning can also involve proactive demand management. strategies for managing demand include:
shifting demand into other time periods with incentives, sales promotions, and advertising campaigns offering products or services with counter cyclical demand patterns partnering with suppliers to reduce information distortion along the supply chain
Gantt charts
show both planned and completed activites against a time scale
just in time
smoothing the flow of material to arrive just as it is needed emphasizes minimizing inventory and smoothing the flow of materials so that material arrives just as it was needed
produt lifecycle management
software that manages the product development process, product lifecycles and design collaboration with suppliers and customers PLM, CRM, ERP and SCM make a powerful combination
enterprise resource planning
software that organizes and manages a company's business processes by sharing information across functional areas transforms transactional data like sales into useful information that supports business decisions in other parts of the company, such as manufacturing, inventory, procurement, invoicing, distribution and accounting serves as the backbone for an organization's information needs as well as its e-business initiatives with ERP companies can integrate their accounting sales, distribution, manufacturing, planning purchasing, human resources and other transactions into one application software
customer relationship management (CRM)
software that plans and executes business processes involving customer interaction such as sales, marketing, fulfillment and customer service changes the focus from managing products to managing customers marketing can be personalized to individual preferences and behaviors provides decision support for forecasting demand
supply chain management
software that plans and executes business processes related to supply chains includes supply chain planning, supply chain execution, and supplier relationship management. planning- designing the supply chain network, demand planning and collaborative supply planning execution- fulfillment, manufacturing and delivery relationship management- handles all the interactions with suppliers from supplier certification to quality assurance, contracts and agreements
automated scheduling systems
staff scheduling- assigns qualified workers to standardized shift patterns, taking into account leave requests and scheduling conflicts schedule bidding- puts certain shift positions or schedule assignments up for bid and allows workers to post and trade schedules schedule optimization- creates demand-driven forecasts of labor requirements and assigns workers to variable schedules that change dynamically with demand
peak demand
staffing for high levels of customer service can be very costly in terms of the investment in extra workers an machines that remain idle during low demand periods
inventory
stock of items kept to meet demand. virtually every type of organization maintains some form of inventory
job analysis
study the methods used in the work included in the job to see how it should be done referred to as methods analysis or work methods used to redesign or improve existing jobs. analyst will study a job to see if it is being done in the most efficient manner possible also used to develop new jobs
time phasing
subtracting an item's lead time from its due date to determine when to order an item
total inventory cost
sum of the ordering and carrying costs TC= C0D/Q + CcQ/2 the optimal order quantity occurs at the point where the total cost curve is at a minimum, which coincides exactly with the point where the carrying cost curve intersects the ordering cost curve- lets us determine Q C0D/Q = CcQ/2 Q^2= 2C0D/Q Qopt= square rt (2C0D/Q)
carrying costs
the costs of holding an item in inventory can include: facility storage material handling labor record keeping borrowing to purchase inventory product deterioration, spoilage, breakage
ordering costs
the costs of replenishing inventory annual costs vary with the orders made
tardiness
the difference between the late job's due date and its completion time
drum buffer rope
the drum sets the pace for the production, a buffer is placed before the bottleneck, and a rope communicates changes
reorder point
the level of inventory at which a new order should be placed the reorder point for our basic EOQ model with constant demand and a constant lead time to receive an order is equal to the amount demanded during the lead time R=dL where d= demand rate per period (daily) L= lead time example: the ePaint internet store is open 311 days per year. if annual demand is 10,000 gallons of Ironcoat paint and the lead time to receive an order is 10 days, determine the reorder point for paint R=dL =(10000/311)(10) =321.54 gallons
economic order quality
the optimal order quantity that will minimize total inventory costs also referred to as economic lot sized model determines the optimal order size that minimizes total inventory costs
the EOQ cost model with constant carrying costs for a pricing schedule with two discounts, d1 and d2
the optimal order size, Qopt, is feasible only for the middle level of the total cost curve, TC(d1)- it does not coincide with the top level of the cost curve, TC or the lowest level TC(d2) EXAMPLE: pricing schedule 1-49: $1400 50-89: $1100 90+ : $900 annual carrying cost for the stores for a tv is $190, ordering cost is $2500, annual demand is 200 units. should they take advantage of the discount order ot the basic EOQ order size Qopt= square rt(SCcD/Cc) Qopt= square rt(2(2500)(200)/190 =72.5 tvs ...this order size is eligible for the first discount of $1100 Tcmin= C0D/Qopt + CcQopt/2 + PD TCmin= (2500)(200)/72.5 + (190)(72.5)/2 + (1100)(200) =$233,784 since there is a discount for a larger order size than 50 units, this total cost of $233784 must be compared with total cost with an order size of 90 and a discounted price of $900 TC= C0D/Q + CcQ/2 + PD =(2500)(200)/90 + (190)(90)/2 + (900)(200) $194105 since this total cost is lower (194105 < 233784), the maximum discount price should be taken and 90 units should be ordered
order quantity with variable demand
the order size for a fixed period model given variable daily demand that is normally distributed is determined by: Q= [dbar(tb + L) + zomegad* squarert tb+L] -1 dbar= average demand rate tb= the fixed time between orders L= lead time omegad= standard deviation of demand zomega d* square rt tb+L= safety stock I= inventory in stock example: KVS pharmacy stocks a popular brand of over the counter flu and cold medicine. the average demand for the medicine is 6 packages per day with a standard deviation of 1.2 packages. a vendor for the pharmaceutical company checks KVS's stock every 60 days. During one visit the store had 8 packages in stock. The lead time to receive an order is 5 days. determine the order size for this order period that will enable KVS to maintain a 95% service level dbar= 6 packages per day omega d= 1.2 packages tb= 60 days L= 5 days I= 8 packages z= 1.65(for a 95 service level) Q= dbar(tb + L) + zomega d* square rt tb + L -1 =(6)(60 + 5) + (1.65)(1.2)[square rt 60+5] -8 =397.96 packages
MRP outputs
the outputs of the MRP process are planned orders from the planned order release row of the MRP matrix these orders can represent work orders to be released to the shop floor for in house production or purchase orders to be sent to outside suppliers
service level
the probability that the inventory available during led time will meet demand
aggregate planning for services
the process is different for planning in several ways: most services cannot be inventoried demand for services is difficult to predict capacity is also different to predict service capacity must be provided at the appropriate place and time labor is usually the most constraining resource for services
load leveling
the process of balancing underloads and overloads
explosion
the process of determining requirements for lower level items
aggregate planning
the process of determining the quantity and timing of productino over an intermediate time frame
heijunka
the process of smoothing demand across the planning horizon demand is divided into small increments of time and spread out as evenly as possible so that the same amount of each item is produced each day and item production is mixed throughout the day in very small quantities the mix is controlled by the sequence of models on the final assembly line
nettling
the process of subtracting on-hand quantities and scheduled receipts from gross requirements to produce net requirements
several components should be made concerning the quantities contained in the MPS:
the quantities represent production, not demand the quantities may consist of a combination of customer orders and demand forecasts the quantities represent what needs to be produced, not what can e produced the quantities represent end items that may or may not be finished products
capable to promise
the quantity of items that can be produced and made available at a later date
available to promise (ATP)
the quantity of items that can be promised to the customer; the difference between planned production and customer orders already received difference between customer orders and planned production ATP in period 1= (on hand quantity + MPS in period 1)-(CO until the next period of planned production) ATP in period n= (MPS in period n)-(CO until the next period of planned production)
load percent
the ratio of load to capacity load percent= load/ capacity * 100% centers loaded above 100% will not be able to complete the scheduled work without some adjustment in capacity or reduction in load
uniform production levels
the result from smoothing production requirements on the final assembly line lean production systems attempt to maintain this
load
the standard hours of work assigned to a facility total * time
order cycle
the time between receipt of orders in an inventory cycle order quantity, Q, is received and is used up over time at a constant rate when the inventory level decreases to the reorder point,R,a new order is placed a period of time called LEAD TIME is required for delivery as order size increases, fewer orders are required so the ordering cost will decline, whereas the average amount of inventory on hand will increase, resulting in an increase in carrying costs
flow time
the time it takes a job to flow through the system
makespan
the time it takes for a group of jobs to be completed
douglas mcgregor's theory x and theory y
theory x: dislikes work, must be coerced, shirks responsibility, little ambition, security top motivator theory y: work is natural, self-directed, controlled, accepts responsibility, makes good decisions
lean services
think about: mcdonald's, dominos, and fedex who compete on speed and still provide their products and services at low cost and with increasing variety construction firms that coordinate the arrival of materials "just as needed" instead of stock piling them at the site level selling with everyday low prices at walmart and food lion
standard time
time required by an average worker to perform a job once work measurement and time were introduced by Frederick W Taylor in late 1880s and 1890s
reorder point with variable demand
to compute the reorder point with a safety stock that will meet a specific service level, we will assume the demand during each day of lead time is uncertain, independent and can be described by normal distribution
expedite
to speed up an order so it is completed in less than its normal lead time
phantom bills
used for transient subassemblies that never see a stockroom because they are immediately consumed in the next stage of manufacture
motion study
used to ensure efficiency of motion in a job originated with FRANK GILBRETH complemented scientific management efficient use of the human body arrangement of the workplace and efficient use of equipment
when to use MRP
useful for dependent and discrete demand items, complex products, job shop products, and assemble to order environments. managing component demand inventory is different from managing finished goods inventory
critical ratio
uses same info as slack but recalculates the sequence as processing continues and arranges the information in ratio form CR= time remaining/ work remaining= (due date- today's date) / (remaining processing time) if the work remaining is greater than the time remaining, the critical ratio will be less than 1 if the time remaining is greater than the work remaining the critical ratio will be greater than 1 CR >1, job is ahead CR < 1, job is behind CR=1, exactly on schedule
link with external partners
value of e-business relies on a comapny's ability to integrate its internal processes with external suppliers, customers, and companies software vendors have developed powerful new analytic tools and applications that capitalize on ERP's infrastructure
mixed strategies
varying two or more capacity factors to determine a feasible production plan
periodic order quantity
was created as a variation of the EOQ more suited to variable demand represents the number of demand periods covered by each order
muda
waste, anything other than that which adds value to the product or service
number of cycles
we can use this formula to determine the sample size for a time study n=(zs/eTbar)^2 z= number of standard deviations from the mean s= SQUARE ROOT OF (sigma(x1-xbar)^2)/n-1) Tbar= the average job cycle time from the sample time study e= the degree of error from the true mean of the distributions
limitations of scientific management
workers frequently became bored and dissatisfied with the numbing repetition o simple job tasks that required little thought, ingenuinity or responsibility low skill level so they do not get to prove their worth unnatural physical and mental fatigue
