Ops. Exam #2

Tracking Signal

An unbiased system will have TS around zero. The APICS dictionary permits TS of -4 to +4 or at the most -8 to +8 depending on the importance of the item.

Time Series Method

Based on the analysis of past history Cheap and easy On the average most accurate method, should always be attempted Different Time-Series Methods Naive 1 Naive 2 Simple Moving Average Weighted Moving Average Exponential Smoothing (Level, Trend, Seasonality, Composite)

supplier selection criteria

Cost and quality. If you don't have product of minimum quality or fit into price range. Suppliers ability to customize (flexibility of volume, reduce lead time)

supply chain processes

Sourcing= finding the appropriate supplier and qualifying that supplier to ensure they have the necessary skills to meet the quality, quantity, flexibility and delivery requirements of the purchasing company. Purchasing= the management of the acquisition process of materials, supplies and services. It includes sourcing, negotiating contracts and deciding between centralized and/or localized buying. Inventory Management=the decisions associated with the quantity of inventory required to meet customer demand, the production schedule and safety stock. Is critical in order to meet customer demands while minimizing the costs associated with inventory. Production Scheduling=the scheduling of the equipment and human resource assets to provide the good or service. Also includes capacity scheduling. Order Processing=the activity required to administratively process a customer's order and make it ready for shipment or production. Can be time consuming and is a potential source of errors -How can we reduce order processing errors? Have the customer place the order electronically on the web or through EDI - electronic data interchange.

Facility Layout/decision requires the following inputs:

Specification of objectives of the system in terms of output and flexibility (What does it need to do) Estimation of product or service demand on the system (How Much) Processing requirements in terms of the number of operations and amount of flow (people or materials) between departments and work centers (How) Space requirements for the elements in the layout Space availability within the facility itself Restrictions on proximity of departments (broilers cannot be near fryers)

How to Increase Productivity

Split the task so that half the work is completed in one workstation and the rest of the work is completed in the next workstation. Share the task between an adjacent workstation that has idle time - this is called buffering. Use parallel workstations. In this scenario there will be two workstations in parallel that perform the long task (and maybe other tasks as well). Work-in-process from the preceding workstation alternates the material flow between each parallel workstation. Use a more skilled worker. Issue here is you might have to pay the worker more money and there is no guarantee the worker will be able to keep up over a full work day. Work overtime in order to make up the shortage. Redesign the product to reduce the time it takes to perform the task.

Assembly Line

The focus is to minimize the time imbalance between machines or people while meeting a required output from the line Know the entire system Time requirements for each task I in the process Precedence relationships In order to produce at a specified rate, the entire system used in the value adding process must be known, as well as the time requirements for each task in the process. The precedence relationship between the tasks must also be known so that the correct sequence of tasks can be adhered to. Cycle Time: in manufacturing it is the time between completion of two discrete units of production. Production Rate: the rate of production usually expressed in units or cases per period of time (per hour, shift, day or week) Cycle Time =Total production Time Available per Day/ Demand per Day or Production Rate per Day Production Rate = Total production Time Available per Day/Required Cycle Time or Maximum Work Station Time

retail service layout

The objective is to maximize net profit per square foot of store space. Store space includes floor space and shelf/rack space. Servicescapes: refers to the physical surroundings in which the service takes place and how these surroundings affect customers and employees. The desired effect on customers is to induce them to buy more products or to funnel customers into areas of high margin products. Servicescapes are composed of three elements: the ambient conditions; the spatial layout and functionality; and the signs, symbols and artifacts. Ambient Conditions: refers to background characteristics such as noise level, music, lighting, temperature, and scent that can affect employee morale and the customer's perception of the service. Ambient conditions should be designed to keep customers in the store (instead of offending them away) and therefore spending money. Spatial Layout and Functionality: is the planning of the circulation path of the customers and the grouping of merchandise. Remove crossover aisles that allow the customer the opportunity of moving between aisles and use end-aisle locations because they have a very high exposure rate. The point of entry for a grocery store often leads directly to the produce area (perishable items) which is a wide-open, inviting area that is blocked off from the rest of the store with displays. This layout funnels customers through the produce section to the seafood and deli counters which are then linked to the meat department. High volume staple items such as milk and bread are located in the back corner of the store as far away from the entrance as possible to force customers to pass as many end-aisle locations as possible. After picking up your milk and bread, on your way to the checkout register, the quickest path is through the bakery. Signs, Symbols, and Artifacts: refer to the parts of the service that have social significance such as a receptionist's desk in the lobby or tiled floors in a department store indicating aisles for travel while carpeted areas are for shopping. Issue with these items is that they need to easily recognized and understood by customers.

disintermediation

The trend to reduce many of the steps in the supply chain by reducing the number of intermediaries in the chain. cross-docking direct-to-store shipments Benefits of cross-docking reduce inventory holding costs reduce handling reduce required warehouse space

Simple Exponential Smoothing Approach

Using a lower alpha (α) value will result in more stability in the forecasts. Using a higher alpha (α) value will result in more responsiveness in the forecasts.

Weighted Moving Average Approach

Using more periods = more stability in the forecasts. Using fewer periods results in more responsiveness in the forecasts. Lower weights on the more recent demand will result in more stability. Placing higher weights on the more recent demand will result in more responsiveness in the forecasts.

Process Layout

also called a job shop or functional layout. Used for an intermittent process such as a job shop or a batch shop (low volume, high variety). A layout in which similar equipment or functions are grouped together, such as lathes in one area, welding stations in another area. A process layout is good for small batches where a batch can consist of one unit or one person. A benefit of this layout is its flexibility in equipment and people. The objective in designing a process layout is to minimize material handling (volume and travel distance), even if the material is a patient. In addition, it is difficult to schedule jobs and employees. Since operators generally perform different tasks in their work area depending on the job, they are often highly to moderately skilled.

Product Layout

also called flow-shop layout. Used for a line flow process such as an assembly lines or a continuous processes (high volume, low variety). A layout in which equipment or work processes are arranged according to the progressive steps by which the product is made. The path for each part is, in effect a straight line The objective in designing a product layout is to balance the work at each step in order to ensure a smooth flow through the facility and thereby avoid a buildup of work-in-process at one or more operations (called bottlenecks). Other objectives of balancing the work flow include the minimization of idle time and production costs, and the maximization of efficiency and equipment utilization.

Fixed Position Layout

also called project layout. In a fixed position layout, the product (by virtue of its size or weight) remains at one location, and the equipment, materials and workers are brought to the location. It is difficult to have high efficiency in production and material handling flows due to limited space, material mix and material volume. In addition, the worker mix also changes as different skills are required. In order to increase efficiency and shorten the project completion time you try to move certain tasks off-site where they can be better controlled in a production type environment - can be either a process or product layout. In this section we will focus primarily on Process Layouts and Product Layouts, as well as cover Flexible Layouts and Retail Service Layouts. The below table summarizes the differences between Process Layouts and Product Layouts.

Moving Average

average of actuals in previous 3 months or 6 months or whatever

Group technology Layout

dissimilar machines into work centers (or cells) to work on products that have similar processing (routing) requirements. A GT layout is similar to a process layout in that cells are designed to perform a specific set of processes for each job, and it is similar to a product layout in that cells are dedicated to a limited range of products. A GT layout has the variety and flexibility benefits of Process Layouts and the high production of Product Layouts. In addition, a GT layout has low work-in-process inventory and reduced material handling. Often the products produced in a work cell are called a product family. A product family uses common raw materials, equipment, labor skills, cycle times and process routings. A key requirement of a GT layout is reduced setup time for the machines in order to produce multiple small batches of a variety of product models.

The Bullwhip Effect

distortion of information through a supply chain. Causes: Demand Forecast Updating Lead Time Order Batching Price Fluctuations Rationing within the supply chain How to Minimize: Reduce uncertainty by sharing point of sale demand data (sales to the final customer) with all members of the supply chain. Will still have some distortions if each stage uses a Reduce Uncertainty - share point of sale demand data with all members of the supply chain. Reduce Variability - in customer demand through every day low pricing instead of price promotions. Reduce Lead Time - reduces the length of time we need to forecast, which then improves forecast accuracy. We do this by reducing 1) order placement processing time; 2) manufacturing time; 3) shipping time to customer Use Vendor Managed Inventory - materials inventory is located at the customer site, and the supplier is responsible for maintaining the inventory level required by the customer. The customer needs to share production data with the supplier.

Local Purchasing

each site makes their own purchasing decisions. This can be advantageous for foreign operations that require local expertise in business customs and relationships. At the plant or site Local expertise Higher prices

Centralized Purchasing

purchasing occurs at a single site. A key advantage is increased purchasing clout which can reduce purchasing costs, ensure better service, guarantee long-term supply availability, and help in the development of supplier capability. A disadvantage is that some purchases need to be made locally due to the specific product knowledge at the local level. A second disadvantage it that lead times might increase. At headquarters Lower prices Slow reaction What is a hybrid solution? Purchase products & services common to all facilities through headquarters and have the local facilities purchase items that require site specific criteria.

inventory requirements

should be a trade off between cost of holding set inventory against willingness to tell customer you need to back order item

supply chain

the global network used to deliver products and services from raw materials to end customers through an engineered flow of information, physical distribution and cash

facility layout

the process by which the placement of departments, workgroups within departments, workstations, machines, and stock-holding points within a facility are determined. Similar to the location decision, the layout decision is a long-term decision. The costs of the initial layout can be considered sunk, since a new floor plan will disrupt the work or customer/patient flow and can be expensive to execute. In addition, the design of the layout will have a major impact on how the firm operates. An efficient layout should match the process type or service environment the firm operates under and be aligned with the competitive priorities the firm is competing on.

Naive 1

whatever previous month's actual consumption was becomes forecast for next month

Naive 2

-Forecast is Some predetermined constant, C -Usually C is an average over a number of past periods product focus, known demand situation a lot of data

Responsive Supply Chains

-Process Focused!! -Responsive - Innovative Products have unpredictable demand, high forecast error competitive priorities are development speed, fast delivery times, customization, volume flexibility, high-performance design quality new product introduction is frequent contribution margins are high (does not mean they are always profitable) product variety is high operations strategy is assemble-to-order, make-to-order, or customized services capacity cushion is high inventory investment is as needed to enable fast delivery time lead time is aggressively shortened supplier selection emphasizes fast delivery time, customization, volume flexibility, high-performance design quality High-performance Responsive firms use information technology to integrate business functions and track Work-in-Process and Finished Goods. They look for partners who can help reduce prices to the end user, enhance after sales service and gain access to new markets.

Efficient Supply Chain

-Product Focused!!! -Functional Products have predictable demand, low forecast errors competitive priorities are low cost, consistent quality and on-time delivery new product introduction is infrequent contribution margins are low product variety is low operations strategy is make-to-stock or standardized services capacity cushion is low inventory investment is low, enables high inventory turns supplier selection emphasizes low prices, consistent quality and on-time delivery High performance efficient supply chains reduce costs by having a high level of material visibility and tight communication linkages between customers and suppliers. Partners look for long-term relationships with firms they can work with. Improvement efforts focus on reducing inventories, reducing lead time (without increasing costs) and maximizing efficiencies.

flexible layouts/work cells

a temporary product-oriented arrangement of machines and personnel in what is ordinarily a process-oriented facility.

stable (forecasting)

Forecasting methods that do not react quickly to demand changes are said to be weight is at older data . If demand has been showing a steady pattern of increase (or decrease), then more responsiveness is desirable, for we would like to react quickly to those demand increases (or decreases) when we make our next forecast. On the other hand, if demand has been fluctuating upward and downward, then more stability is desirable, for we do not want to "over react" to those up and down fluctuations in demand.

Responsive (forecasting)

Forecasting methods that react very strongly (or quickly) to demand changes are said to be -weight is at more recent data

Objectives of the layout decision

Higher utilization of space, equipment and people Improved flow of information, materials and people Improved employee morale and safer working conditions Improved customer/client interaction Flexibility for change Revenue enhancement Patient comfort

assembly line efficiency

One way to balance the assembly line is to group individual tasks into work stations such that the total time in a work station is as close to the cycle time as possible, but does not exceed the cycle time. You must also maintain the precedence relationships. Combining tasks into work stations the new efficiency will be:

Simple Exponential Smoothing

Demand is assumed to have relatively constant mean, with random fluctuations around the mean. (i.e., no trend or seasonal fluctuations: see the graph corresponding to Level