SCM #3

Capacity options (5)

1. Changing inventory levels 2. Varying workforce size by hiring or layoffs 3. Varying production rates through overtime or idle time 4. Subcontracting 5. Part-time workers

Maintenance tactics

1. Implementing or improving preventive maintenance 2. Increasing repair capability.

Demand options (3)

1. Influencing demand (through promotion, price, advertising and selling). 2. Back ordering during high periods 3. Counter-seasonal product and service mix

Reliability tactics

1. improving individual components 2. providing redundancy

Four things needed for aggregate planning

1. logical unit for measuring sales and output 2. forecast demand for a reasonable intermediate planning period. 3. method to determine the relevant cost 4. model that combines forecasts and costs.

Compare the assumptions of the production order quantity model to those of the basic EOQ model.

All are the same, except the assumption that receipt of inventory is instantaneous, which holds for EOQ, but not POQ.

MRP

Material requirements planning is a dependent demand technique. benefits: 1. better response to customer orders 2.faster response to market changes 3.improved utilization of facilities and labor 4. Reduced inventory levels.

Time fences

Puts limits on replanting. Used to reduce system nervousness in MRP environments.

How sensitive is the EOQ to variations in demand or costs?

The EOQ is relatively insensitive to small changes in demand or setup or carrying costs because the cost curve is relatively flat around the EOQ.

Assumptions of the EOQ model

The more important assumptions of the basic EOQ model are demand is known and constant over time, the lead time, is known and constant, the receipt of the inventory is instantaneous.

Maintenance

all activites involved in keeping a system's equipment in working order.

Net requirements plan

starts with the top level requirements from the bill of material, then subtracts inventory of that item on hand.

Reliability

the probability that a machine will function properly for a specified time.

Disaggregation

the process of breaking down the plan into greater detail.

Capacity options

does not change demand but attempt to absorb the demand fluctuations

Reorder point

inventory level (point) at which action is taken (an order placed) to replenish the stocked item.

Level strategy

maintains a constant output rate, production rate. Stable production leads to better quality and production.

Gross requirements plan

multiplies each part quantity in the bill of material by the number of top level parents needed. This ignores any inventory on hand.

aggregate planning

objective is to meet forecast demand while minimizing cost over the planning period.

chase strategy

sets production equal to forecast demand. Main advantage: low inventory levels. Favored by many service organizations.

demand options

try to smooth the demand pattern, bit do not impact supply or capacity.