Intro Week1

7/25/2019 Intro Week1

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The Production System

Defnition:The set of resources and procedures

involved in converting raw material intoproducts and delivering them tocustomers

Production and delivery of products are

central to the rm Functions have value only if they enhance

the ability to do this protably

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Value-AddedValue-Added-Process-Process

The difference between the cost of inputsand the value or price of outputs.

Inputs Land Labor Capital

Transformation/Conversion

process

Outputs Goods Services

Control

Feedbac

FeedbacFeedbac

!alue added


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"roduction and Inventor# Control$Introduction(4)

%i&h"rofitabilit#

Low

Costs

Low 'nit

Costs

%i&h

Throu&hput

Less

!ariabilit#

%i&h

'tili(ation

Low

Inventor#

)ualit#

"roduct

%i&h

Sales

*an#

products

Fast

+esponse

*ore

!ariabilit#

%i&h

Inventor#

Low

'tili(ation

Short

C#cle Times

%i&h Customer

Service

"roduction Ob,ectives


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Production Activityand Information Flows

-

Fabrication

Plant

Assembly

Plant

Distribution

Center

Retailer

Forecasting

Strategic Planning

Aggregate Production

Planning

Disaggregation

Production Scheduling

Shop Floor Control

Administrative Functions

(Purchasing, Payroll,

Finance, Accounting

!ar"eting

Product Design

Process Planning

!anu#acturing Support

(Facilities Planning,

$ool !anagement,

%uality Control,

!aintenance

a Product Flow b Decision Hierarchy c Support Functions

Ra& !aterial

Customer

Finished

Products


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haracteristics of services

Intangibility

Inseparability

Perishability Variability


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erence e weenphysical goods and

servicesPhysical goods ServicesTan&ible intan&ible

%omo&eneous hetero&eneous

"roduction and distribution areseparated from consumption

"roduction distribution andconsumption are simultaneousprocesses

thin& n activit# or process

processed in factor# produced in the bu#er$seller interaction

Customers do not participate in theproduction process

Customers participate in production

Can be ept in stoc Cannot be ept in stoc

Transfer of ownership 0o transfer of ownership


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METHODS OF PRODUCTION

The methods of production can be ofthe following types#

$% Intermittent or interruptedproduction

a% &ob Production

b% 'atch Production

(% )ass and process production


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JOB PRODUCTION

In this type of production* every +ob

is di"erent from the other in terms oftype* cost* e"orts* consumption ofmaterials or specications%


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This is used when one item at a time

is produced% ,amples include#

'ridge building

./ce bloc0s


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ADVANTAGES

1eaching the target customer2sre3uirements

Special training to labor

'est suitable for pull system of demand

DISADVANTAGES

Time ta0ing

4arge scale economies cannot bereali5ed

ostliest

!ivision of labor is not possible


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BATCH PRODUCTION

All the products manufactured under a

batch are similar in terms of type* cost*e"orts* consumption of materials orspecications%


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This is when the same product is made fora while* then production is switched toanother product% They will return to theproduction of the rst product again lateron%

Examples include:

'a0ers

lothing manufacturers

Pharmaceuticals


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ADVANTAGES

cost of product design per unit is low,conomies of production

Flow of materials can be continuous

Automation and mechani5ation

DISADVANTAGES

Varying customer demands


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MASS PRODUCTION

This is also called 6ow production% The

production can be underta0en on largeand speciali5ed machines and processes%


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This is when goods are mass made

continuously on a production line%

,amples include#

ars

7ardware

,lectric 4amp


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ADVANTAGES

)echani5ation and division of labour4arge 8 scale economies

)inimum material handling costs

DISADVANTAGES

Special care

Idle machinery may result in wastageof resources

'ottle nec0s


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Process Type

.ne principal raw materialtransformed in to several products atdi"erent stages of operations

,ample-Petroleum rening*heavychemicals

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Product !evelopment

)ar0et 1esearch

!esign a prototype

Production of Prototype !esign wor0 for product

!evelopment 9or0

Production ,valuation

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P d ti S t


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Production System!ecision 7ierarchy

Inputs Process Outputs Length ofPlanning

Horizon

'ong Range conomic Forecasts Financial Choices

StrategicPlanning

)perating Facilities Product 'ine (Families $echnologies

*ears

Processing $echnologies+##iciency !achine Schedules

AggregateProduction

Planning

Production 'evel or"#orce 'evel

Family -nventories

!onths

Production 'evels or"#orce 'evels Current -nventory Status Changeover $imes and Costs -tem Forecasts

Disaggregation !aster Production Schedule(!PS . Final Assembly by item

-tem -nventories

ee"s

/ill o# !aterials Process Plans

ProductionScheduling

0ob Priorities )rder Releases !achine Schedules

Days.Shi#t

'abor Status !achine Status 0ob Priorities )rder Releases !achine Schedules

Shop FloorControl

!achine Priorities 0ob Status 'abor Reporting !aterial 1andling $as"s 'oad+Prices+2nload Authori3ation

Real $ime !inutes

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Products* Processes* and4ayouts

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!a"e.to.stoc"

standardi3ed

commodities

Continuous

process industries

repetitive m#g

Product 'ayout

Assemble.to.order

modular

1ybrid, F!S,

CA!, C-!Cellular 'ayout

0ob.Shop(-ntermittent Process 'ayout

ngineer.to.order

one.o#."ind

Special Pro4ect Fi5ed Position

PRODUCSPRODUCS PROC!SS!SPROC!SS!S L"#OUSL"#OUS

!a"e.to.order custom

lo& volume,lo& volume,

lo& varietylo& variety


high varietyhigh variety


medium varietymedium variety

high volume,high volume,

lo& varietylo& variety


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4ayout :oals

;se space e/ciently ,/cient personnel movement

)aimum e3uipment utili5ation

onvenient < safe wor0 environment

Simplify repair < maintenance

Smooth 6ow of wor0

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T pes of Production


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Types of ProductionSystems

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$here are #our basic types o# productionsystems6

78 Process

98 Product

:8 Cellular

;8 Fi5ed positions


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Fied Position 4ayout

3-

$he product or pro4ect remainsstationary, and &or"ers, materials, and

e


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Process 4ayout

37

Similar processes (or processes &ith similar needsare located together

/y grouping similar processes utili3ation o# resources

is improved

Customers, products, patients move through theprocesses according to their needs

Di##erent products = di##erent needs = di##erent routes

Comple5 #lo& pattern in the operation

!$a%ples&

Supermar"ets, hospitals


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Process 4ayouts

Process Layout products travel

to dedicated process centers

Milling

Assembly

& Test rinding

!rilling Plating

7$38


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Product 4ayout

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Sometimes called line layout, #lo& line or assemblyline

Parts #ollo& a speci#ied route the se


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Product 4ayout

7$32

"a#

materials

or customer

$inished

itemStation

%

Station

%Station

Station

Station

4

Station

4

Material

and'or

labor

Station

Material

and'or

labor

Material

and'or

labor

Material

and'or

labor

Used for Repetitive or Continuous Processing


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ellular 4ayouts

machines are grouped into a cell that can processitems that have similar processing reroup technology &hich involvesgrouping items &ith similar design or manu#acturing

characteristics into part #amiliesCould be considered as mini product layouts

Can improve and simpli#y a #unctional+processlayout

Fle5ibleDuplicates some resources

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Part families

"art families with similarit#in shape

"art families with similarit#

in manufacturin& process


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.riginal Process 4ayout

C" ' Raw %aterials

"sse%(ly

)

*

+

,

-

. /

0

1

)2

))

)*


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ellular 4ayout

+

.

1

"sse%(ly

)*

,

0 )2

-

/

))

)*

" ' C

Raw %aterials

Cell ) Cell * Cell +


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9or0ers Inventory

Storage space )aterial

handling Aisles Scheduling

4ayout decision :oal

Advantage

Limited sills Low in$process hi&h

finished &oods Small Fi:ed path ;conve#or< 0arrow Line balancin& ;=asier< In$line '$t#pe

=>uali(e wor at eachstation =fficienc#

Process

omparison o* Productomparison o* Product

and Process Layoutsand Process Layouts

%i&h sills %i&h in$process low

finished &oods Lar&e !ariable path ;forlift< ?ide @#namic ;*ore difficult< Functional

*inimi(e materialhandlin& cost Fle:ibilit#

Product


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Product Volume and Variety

5-

ProductProduct

'ayouts'ayouts

Fi5edFi5ed

PositionPosition'ayouts'ayouts !i5ed 'ayouts!i5ed 'ayouts Process 'ayoutsProcess 'ayouts

3uantity

4u%(er of Different Products

CellularCellular


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Product Flow ontrol

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'atch Processing 5Process Layout6 From a couple to several thousands identical parts

A batch #or each di##erent part type

!ove together through the production system

!ay split #or material handling or to reduce processingtime

!$a%ples are clothing, #urniture production

Repetiti7e or Flow processing 5Product Layout6

Continuous chemicals, #oods, pharmaceuticals

Discrete car, re#rigerator production

Setup osts A"ect The


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Setup osts A"ect The'atch Si5e

ost and time to set up productionfacilities to manufacture a specicproduct a"ect the batch si5e%

9hen changeover time =setup time>and cost are large* the si5e of batchis 0ept large%

4arge batch si5es result in highinventory cost%

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Production hoices

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8a9e:to:stoc9 ?umber o# units o# each product are "ept on hand at all times %uic" delivery to customers upon receipt o# an order

hen delivery response time is a "ey competitive #actor

'imited number o# products manu#actured repeatedly

An idea &hat customers &ill &ant Allo&s to schedule production in advance

8a9e:to:order

)nly produce items a#ter they have been ordered

Production system must respond


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Planning

Static Vs% !ynamic

,nvironments )odels used for production planning areeither static or dynamic

Static onstant through time

Assume same plan acceptable in each periodfor the foreseeable future

Dynamic ,plicitly consider changes in demand and

resource availability to determine what shouldbe done through time over a planning hori5on 1e3uire stochastic data 1e3uire great e"ort to build and solve

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The 1ole of Inventory

Inventory consists of physical items movingthrough the production system

.riginates with shipment of raw material andparts from the supplier

,nds with delivery of the nished products tothe customer

osts of storing inventory accounts for asubstantial proportion of manufacturing cost

.ften (?@ or more .ptimal level of inventory

Allows production operations to continue smoothly

A common control measure is Inento!y

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Inventory Turnover

$he ratio o# annual cost o# goods sold toaverage inventory investment8

-t indicates ho& many times a year theinventory is sold8

1igher the ratio, the better, because it impliesmore e##icient use o# resources8

1igher the pro#it margin and longer themanu#acturing lead time, the lo&er theinventory turns8

5ample6 Supermar"ets (lo& pro#it marginshave a #airly high turnover rate

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I ! i i d


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Inventory !enitions and!ecisions

Batc# o! o!$e! %i&e' ( 'atch si5e is the number of units released to the

shop 6oor to be produced

Reo!$e! )oint' !

Species the timing for placing a new order Inento!y Po%ition

Inventory Position = Inventory On Hand + On Order Backorders

Unit% on o!$e! 7ave been ordered but not yet arrived

Bac*o!$e!% Items promised to customers but not yet shipped

ew units are shipped out to cancel bac0orders63


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Types of Inventory Ra+ Mate!ia,%

,ssential to the production process .ften 0ept in large 3uantities on site

Fini%#e$ Goo$% ompleted products awaiting shipment to customers

-o!*.in.P!oce%% /-IP0 'atches of semi nished products currently in

production 'atches of parts from time of release until nished

goods status

Pi)e,ine :oods in transit between facilities 1aw materials being delivered to the plant Finished goods being shipped to warehouse or

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Types of Inventory

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&ustication of Inventory

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-nventory &ill al&ays e5ist Competitive pressure to supply common products


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.rdering osts

68

A #i5ed ordering cost can be associated &ith eachreplenishment &hen parts are ordered #rom suppliers

-denti#ying the need to order

5ecute the order

Prepare the paper&or" Place the order

Delivery cost #i5ed component

Receiving inspection

$ransportation to place o# use

Storage


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Setup osts

69

For parts produced in.house, &e must6

Chec" status o# ra& material

Possibly place an order

Create route sheets &ith instructions #or each stage o#

the production process

Store routing data in a database

Chec" routing data #or compatibility &ith shop status

and engineering changes

!a"e routing instructions &ith ra& material Deliver to production &or"ers

!achine set up

Inventory arrying osts


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Inventory arrying osts

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Carrying inventory incurs a variety o# costs Space heated and cooled

!ove inventory occasionally because it bloc"s access

to other goods

Construct and maintain in#ormation system to trac"location

Pay ta5es based on value

-nsurance costs

Some &ill be lost, damaged, or perished Cost o# capital invested in inventory


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-4

Shortage Costs

hen customer demands an out o# stoc" item !ay decide to &ait #or delivery . bac"orders

!ay cancel the order lost sales

!ay loo" else&here ne5t time lost customer

!ay pay e5pedite chargesithin the plant, i# material is unavailable to start

production

or" center may lac" &or"

Schedule may have to be modi#ied

Completion o# products may be delayed

Result in late deliveries or lost sales

I f ti Fl f V i


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Information Flow for VariousProduction Systems

-1

I I

Order !ntry

Raw

8aterialI

a; 8aterials Re"4'"46

IProcessor

-n#ormation Flo&

!aterial Flo&Finite Capacity

-nventory /u##er

-n#inite Capacity

-nventory /u##er

1ANBAN cont!o,


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1ANBAN cont!o,

1an2an cont!o, uses the levels of bu"erinventories in the system to regulate production%9hen a bu"er reaches its preset maimum level*the upstream machine is told to stop producing

that part type% This is often implemented bycirculating cards* the kanbans* between a machineand the downstream bu"er%

The machine must have a card before it can start

an operation% It can then pic0 raw materials out ofits upstream =or input> bu"er* perform theoperation* attach the card to the nished part* andput it in the downstream =or output> bu"er%

-3


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1ANBAN cont!o,

Kanban control ensures thatparts are not made ecept inresponse to a demand%

The analogy is to a supermar0et#.nly the goods that have been

sold are restoc0ed on theshelves%

-5

I f ti Fl f V i


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Information Flow for VariousProduction Systems

-6

I

Li%it on

otalIn7entory

Raw

8aterialI

c; Constant ?or9:In:Process 5CO4?IP6

Raw

8aterial

d; Hy(rid CO4?IP:>"4'"4

IProcessor

-n#ormation Flo&

!aterial Flo&Finite Capacity

-nventory /u##er

-n#inite Capacity

-nventory /u##er


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CON-IP Cont!o,

.9IP stands for Constant Work-In-Process.

a control strategy that limits the totalnumber of parts allowed into the system at

the same time% .nce the parts are released* they areprocessed as 3uic0ly as possible until they llup the last bu"er as nished goods%

.nce the consumer removes a part from thenished goods inventory* the rst machine inthe chain is authori5ed to load another part%

--


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CON-IP Cont!o,

4i0e 1ANBAN* the CONWIPsystem onlyresponds to actual demands* so it is still aCCpullDD type system%

'ut unli0e 0anban* the bu"ers for alldownstream machines are empty* eceptnished goods* which is full%

This occurs because any part released to

the system will move to nished goods%ew parts will not be released if thenished goods bu"er is full%

-7

Inventory is eeded


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Inventory is eededto Support Production

1ecent years claim a goal ofzero inventory 'ut some is necessary to meet needs ,conomically practical to maintain some 9IP to

facilitate production scheduling Variability in processing time and +ob arrival rates

Inventory should not be used to coverproblems

9asteful practice all too common Prevents the system from improving !efects not detected until later

4ean companies .perate with reliable processes* 3uic0

changeovers* low inventories* small space* lowscrap and rewor0* closer communication

-8

4arge Inventories Imply 4ong


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4arge Inventories Imply 4ongThroughput Times

T#!o"3#o"t time /man"4act"!in35ea$ Time0The span of time from when the part enters a

system until it leaves

5itt,e6% 5a+ I = X T 1elates average throughput time =T> to the

level of average inventory =I> and theproduction rate =E> for any stationary process

Stationa!y )!oce%% Probability of being in a particular state is

independent of time

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To reduce throughput time

,liminate unnecessary* non-value addedoperations#

1educe waiting time

1educe transfer time 1educe 3uality inspection time

Increase process rates

1educe batch si5e

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it ' l i


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apacity 'alancing

74

) * + , -Flow In Flow Out

Desire to have same number o# units produced ineach &or" center

Capacity is measured by number o# units that canbe made per time period

$otal production is limited by the &or"station &iththe smallest capacity (bottlenec" station

5cess capacity reduces cycle time

Th f t i t =T.>


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Theory of onstraints =T.>

A management philosophydeveloped by !r% ,liyahu :oldratt%

T#e 3oa, o4 a f!m i% to ma*emoney7


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!r ,liyahu :oldratt wrote


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!r% ,liyahu :oldratt wrotemany boo0s including#

The :oal# A Process of .ngoingImprovement =sold more than Bmillion copies>

ItDs ot 4uc0 =how to apply T. incon6ict resolution and mar0eting>

ritical hain =how to apply T. in

pro+ect management>

Go,$!att6% R",e% o4 P!o$"ction34$76


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Sc#e$",in3

Do not 2a,ance ca)acity 2a,ance t#e8o+

T#e ,ee, "ti,i&ation o4 a non2ott,enec*!e%o"!ce i% not $ete!mine$ 2y it% o+n)otentia, 2"t 2y %ome ot#e! con%t!aintin t#e %y%tem

An #o"! ,o%t at a 2ott,enec* i% an #o"!,o%t 4o! t#e enti!e %y%tem

An #o"! %ae$ at a non2ott,enec* i% a

mi!a3e


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ustomer-!ened Value

The technical performance or qualityof a product is no longer the primarydeterminant of customer value

ustomers evaluate other value factorsGsuch as# .n-time !elivery After Sale Service 'usiness epertise 4ow price for high 3uality

Value is what the customer wants andhow much would be paid for it

,liminate non-value-added operations t#e c"%tome! +i,, not )ay 4o! non.a,"e.

a$$e$ o)e!ation% 7-

)odels to Study Production


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)odels to Study ProductionSystems

Testing new ideas on full-scale systems isepensive* time consuming* comple* andunnecessary

Instead* we build models to visuali5e and

eamine aspects of a system )odels allow us to learn about the system and

test various system designs

For instance* P!o$"ction Sy%tem Mo$e,% allowus to test the impact of )!o$"ction ),annin3an$ inento!y cont!o, decisions so that 9rong decisions can be avoided

!istruptions of the real process can be avoided

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!enition of a )odel

A model is a simplied* articialrepresentation of reality

onstructed to facilitate o"-line

study of real ob+ect or system Flow diagrams

Philosophical =conceptual>

Small-scale prototype

)athematical

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9ays to study asystem

Systems and )odels


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A Systems Perspective

Production system represents a 0ey aspect of therm

)ust maintain global view of the entire supplychain from materials through product delivery

M"%t inte3!ate an$ coo)e!ate +it# ma!*etin3')"!c#a%in3' 9"a,ity a%%"!ance' acco"ntin3'$e%i3n en3inee!in3' an$ man"4act"!in3

Instability of the production system may occur# )isuse of mar0eting =demand> information

)isunderstanding of the relationship among safetystoc0* inventory* and production

'ad production decisions

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BA ;; Co"!%e To)ic%

!emand Forecasting

4ong-1ange apacity Planning

Aggregate Production Planning

Inventory )anagement

)aterial 1e3uirements Planning

Scheduling and Se3uencing

84

Forecastin&


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"roduction and Inventor# Control$

Introduction(+)

Forecastin&

A Ob,ectiveB predict demand *or productionplanning purposes,

A Laws of Forecastin&B

, Forecasts are always wrong!

%, Forecasts always change!

, The further into the future, the less reliable

the forecast will be!

A Forecastin& ToolsB

Qualitative- @elphi nalo&ies

Quantitative- Causal and time series models

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Introduction(+%)

&&re&ate "lannin&

A Ob,ectiveB generate a long.term production plan

that establishes a rough product mi/0 anticipates

bottlenec1s0 and is consistent #ith capacity and

#or1*orce plans,

A IssuesBAggregationBproduct families and time periods

must be set appropriatel# for the environment.

CoordinationB" is the lin between the hi&h

level functions of forecastin&/capacit# plannin&

and intermediate level functions of *+"

inventor# control and schedulin&.

Anticipating ExecutionB" is virtuall# alwa#s

Capacit#/Facilit# "lannin&


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Introduction(+)

Capacit#/Facilit# "lannin&

A 2o# much and #hat 1ind o* physical e3uipment is

needed to support production goals

A IssuesB

Basic Capacity CalculationsBstand$alone capacitiesand con&estion effects ;e.&. blocin&

Intro Week1

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