Productions and Operations Management Notes

8/13/2019 Productions and Operations Management Notes

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1Productions and Operations Management Prof.Rupesh Patel

Productions and Operations Managem

Unit-1:

1) Importance of Operations Manage

2) Operations Strategy and

Competitiveness

3) Product design and Process Selec

4) Facility layout and location

Unit-2:

1) Forecasting

2) Inventory Management

3) ggregate Planning

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RupeshPatel


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!ue"1# $%at are responsi&ilities of Production'Operations Manager(

$%at are P*s of Production and Operations Management(

The following are the major responsibilities of production managers:

Planning:Capacity, location, products and services, make or buy, layouts, projects andscheduling

Organi$ing:Degree of centralization, subcontracting

%taffing:Hiringlaying off of employees

&irecting:!ncentive plans, issue of work orders, job assignments

'ontrolling:!nventory control, "uality control, Cost control

#roduction managers are responsible for the amalgamation of five #s namely #roduct, #lant,#rocesses, #rograms and #eople$

Product#The product is the most obvious interface between production and marketing$ !t includescharacteristics such as performance, aesthetics, %uality, reliability, selling price, deliverdates and or lead times$

Plant#The plant should have the capacities to meet the present needs as well as that of the future$The considerations are: &i' design and layout of buildings, &ii' performance and reliability ofmachines and e%uipment, &iii' maintenance of machines and e%uipment, &iv' safety ofinstallation and operation of machinery and e%uipment and &v' environment protection$

Process#The processes include the transformation or conversion processes which convert the inputsinto outputs$ The factors to be e(amined in deciding upon a process are: &i' availablecapacity, &ii' available labour skills, &iv' layout of plant e%uipment, &v' safety re%uirements inoperations and &vi' costs to be achieved$

Programs#The programs consist of schedules and timetables which set times for delivery of products orservices to customers$ These delivery schedules in turn decide the time schedules forvarious activities such as design, purchase, manufacture, assembly, packing and dispatchetc$

People#

The people aspect of production management includes the skills, knowledge, intelligence,etc$, of labour and managerial personnel which is crucial for the efficient and effectiveutilization of resources for the production of outputs$

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(Productions and Operations Management Prof.Rupesh Patel

!ue"2# $%at is Production and Operations Management( $%at is

t%e difference &et+een goods and services(

*ny process which involves the conversion of raw materials and bought)out components intofinished products for sale is known as Production$ +uch conversion of inputs adds to thevalue or utility of the products produced by the conversion or transformation process$ Theutility or added value is the difference between the value of outputs and the value of inputs$

The value addition to inputs is brought about by alteration, transportation, storage orpreservation and %uality assurance$

The term operationrefers to a function or system that transforms inputs into outputs ofgreater value$ perations are often demand as a transformation or conversion processwherein inputs such as materials, machines, labour and capital are transformed into outputs&goods and services'$

,ifference &et+een goods and services#

-' +ervices are usually intangible whereas goods are tangible.' +ervices are often produced and consumed simultaneously, services cannot be stored

whereas goods can be produced and inventoried before consumption or use$/' +ervices are often uni%ue, for e(ample insurance policies, medical treatment procedures,

haircut styles etc$0' +ervices have high customer interaction, services are often difficult to standardize and

automate because customer interaction demands uni%ueness$ The service product mayhave to be customized in most of the service offerings$

1' +ervices are often knowledge based, for e(ample educational, health)care, legal andconsultancy services and, therefore, difficult to standardize and automate$

2' +ervices are fre%uently dispersed because services may have to delivered to theclientcustomer at hisher place or office, a retail outlet or even at the residence of thecustomerclient$

3' 4oods can be inventoried and can be resold whereas reselling of services is unusual and

services cannot be inventoried$5' +ome aspects of %uality of goods are measurable whereas many aspects of %uantity of

services are difficult to measure$6' +elling and production are distinct in case of goods whereas in case of services selling is

often a part of the service$-7'4oods can be transported whereas service cannot be transported but the service

provider can be transported$--'8ocation of facility to manufacture goods, affects costs whereas location of service

facility affects customer contact$-.'9anufacturing of goods can be easily automated whereas service is often difficult to

automate$

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!ue"3# $%at are t%e recent trends in Production'Operations

Management(

9any recent trends in productionoperations management relate to global competition andthe impact it has on manufacturing firms$ +ome of the recent trends are:


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)Productions and Operations Management Prof.Rupesh Patel

4lobal 9arket #lace: 4lobalization of business has compelled many manufacturing firms tohave operations in many countries where they have certain economic advantage$ This hasresulted in a steep increase in the level of competition among manufacturing firmsthroughout the world

Production'Operations strategy#9ore and more firms are recognizing the importance of productionoperations strategy forthe overall success of their business and the necessity for relating it to their overall businessstrategy

-otal !uality Management .-!M)#T"9 approach has been adopted by many firms to achieve customer satisfaction by anever)ending %uest for improving the %uality of goods and services$

Fle/i&ility#The ability to adapt %uickly to changes in volume of demand, in the product mi( demanded,and in product design or in delivery schedules, has become a major competitive strategyand a competitive advantage to the firms$

-ime 0eduction#eduction of manufacturing cycle time and speed to market for a new product providescompetitive edge to a firm over other firms$ ;hen companies can provide products at thesame price and %uality, %uicker delivery &short lead times' provides one firm withcompetitive edge over the other$

-ec%nology#*dvances in technology have led to a vast array of new products, new processes and newmaterials and components$ *utomation, computerization, information and communicationtechnologies have revolutionized the way companies operate$ Technological changes inproducts and processes can have great impact on competitiveness and %uality, if theadvanced technology is carefully integrated into the e(isting system$

$orer Involvement#The recent trend is to assign responsibility for decision making and problems solving to thelower levels in the organization$

0eengineering#This involves drastic measures or break)through improvements to improve the performanceof a firm$ !t involves the concept of clean)slate approach or starting from scratch inredesigning the business processes$

nvironmental Issues#Today


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*Productions and Operations Management Prof.Rupesh Patel

9anagement of supply)chain, from suppliers to final customers reduces the cost oftransportation, warehousing and distribution throughout the supply chain$

ean Production##roduction systems have become lean production systems which use minimal amounts ofresources to product a high volume of high %uality goods with some variety$ These systems

use fle(ible manufacturing systems and multi)skilled workforce to have advantages of bothmass production and job production$

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+Productions and Operations Management Prof.Rupesh Patel

!ue"4# $%at is Operation Strategy( 5o+ Production'Operations

Management is %elpful in gaining competitive advantage( $%at are

t%e various competitive dimensions(

The role of operations strategy is to provide a plan for the operations function so that it canmake the best use of its resources$ perations strategy specifies the policies and plans forusing the organization


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,Productions and Operations Management Prof.Rupesh Patel

able to have a competitive advantage over other firms$ The ability to be fle(ible depends agreat deal on the design of the productive system and the process technology employed bythe firm$

-ime#

Time to perform certain activities refers to several aspects of an organization


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Productions and Operations Management Prof.Rupesh Patel

e(plained only through the angle of human psychology the very fact that somebody cared,mattered much to the workers who gave increased output$

dvent of Operations 0esearc% -ec%ni7ues#The advent of perations esearch during the ;orld ;ar !! period saw a big boost in theapplication of scientific techni%ues in management$ arious techni%ues, such as liner

programming, mathematical programming, game theory, %uening theory and the likedeveloped by people such as 4eorge Dantzig, * chanes, *nd ;; Cooper have becomeindispensable tools for management decisions making today$

-%e Computer ge#*round -611, !>9 developed digital computers$ This made possible the comple( repeatedcomputations involved in various and other management science techni%ues$ !n effect, ithelped to spread the use of management science concepts and techni%ues in all fields ofdecision making$

Service and 0elations%ips ra#*dvances in computing technology, associated software, electronics and communicationfacilitated the manufacture of a variety of goods and its reach to the consumer$ !n parallel,the demand for services such as transport, telecommunication and leisure activities alsogrew at a rapid pace$ The service economy came to be treated at par as that of physicalgoods$ !n fact, manufacturing started emulating some of the practices and principles of theservices industry$ #roduction and perations 9anagement is now getting to be increasingly@relationship oriented


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Productions and Operations Management Prof.Rupesh Patel

.' ;hen the ratio is between more than one input, it is called multifactor productivity$/' ;hen the ratio is between all inputs and all outputs, it is called total productivity$

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!ue":# /plain Product ,evelopment Process in conte/t +it%

Production and Operations Management6

* systematic new product development process has si( major steps which are illustrated infollowing chart$


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1/Productions and Operations Management Prof.Rupesh Patel

The si( phases of the generic development process are:

P%ase ;


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gradual$ *t some point in the transition, the product is launched and becomes available for

widespread distribution$

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!ue"=# /plain various Production Processes6

There are mainly five basic process types:

1. Job shop production

2. Batch production

3. Repetitive or assembly line production

4. Continuous production

5. Project production

1) >o& S%op Process#

!t is use din job shops when a low volume of high)variety goods are needed$ #rocessing is

intermittent each job re%uires somewhat different processing re%uirements$ * job shop is

characterized by high customization &made to order', high fle(ibility of e%uipment andskilled labour and low volume$ * tool and die shop is an e(ample of job shop where job

process is carried out to produce one)of)a)kind of tolls$ =irms having job shops often carryout

job works for other firms$ * job shop uses a fle(ible flow strategy, with resources organized

around the process$

2) ?atc% process#

>atch processing is used when a moderate volume of goods or services is re%uired and also

a moderate variety in products or services$ * batch process differs from the job process with

respect to volume and variety$ !n batch processing, volumes are higher because same or

similar products or services are repeatedly provided$ ?(amples of products produced in

batches include paint, ice cream, soft drinks, books and magazines$

/' 0epetitive Process'ssem&ly line process#

This is used when higher volumes of more standardized goods or services are needed$ This

type of process is characterized by slight fle(ibility of e%uipment &as products are

standardized' and generally low labour skills$ #roducts produced include automobiles, home

appliances, television sets, computers, toys, etc$ epetition process is also referred to as

line process a sit include production lines and assembly lines in mass production$ esources

are organized around a product or service and materials move in a line flow from one

operation to the ne(t according to a fi(ed se%uence with little work)in)progress inventory$

This kind of process is suitable to Amanufacture)to)stockB strategy with standard products

held in finished goods inventory$ However, Aassemble)to)orderB strategy and Amass

customizationB are also possible in repetitive process$

4) Continuous Process#

This is used when a very highly standardized product is desired in high volumes$ These

systems have almost no variety in output and hence, there is no need for e%uipment

fle(ibility$ * continuous process is the e(treme end of high volume, standardized production

with rigid line flows$ The process often is capital intensive and operate round the clock to

ma(imize e%uipment utilization and to avoid e(pensive shutdowns and start)ups$ ?(ample of


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products made in continuous process systems include petroleum products, steel, sugar,

flour, paper, cement, fertilizers, etc$

) Pro@ect Process#

!t is characterized by high degree of job customization, the large scope for each project and

need for substantial resources to complete the project$ ?(amples of projects are, building a

shopping centre, a dam, a bridge, construction of a factor, hospital, developing a new

product, publishing a new book, etc$ #rojects tend to be comple(, take a long time and

consist of a large number of comple( activities$ ?%uipment fle(ibility and labour skills can

range from low to high depending on the type of projects$

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!ue"A# -+o types of cars .,elu/e and imited) +ere produced &y a

car manufacturer in 2


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1(Productions and Operations Management Prof.Rupesh Patel

+o, the case presented here is a normal scenario$

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!ue"1


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Case ; "

#arent Company:

-' 9ultifactor productivity E utput &8abour G Capital'

E -77777 &.7777G27777'

E -77777 57777

E -$.1

+ubsidiary Company:

-' 9ultifactor productivity E utput &8abour G Capital'

E .7777 &-1777G1777'

E .7777 .7777

E -

9es3 the multifactor producti8ity of la#our and capital of parent company and

its su#sidiary is 8ery much similar to each other.

Case ; c#"

ate of e(change is - e E -7 =C

Therefore, F - E -7 =C &=oreign Currency'

F.777 E .7777 =C

#arent Company:

-' aw materials productivity E utput !nput

E -77777 .777E 1

+ubsidiary Company:

-' aw materials productivity E utput !nput

E .7777 .777

E -7

7he ra6-materials producti8ity is #etter n su#sidiary than that of parent

company. 7he reasons might #e as follo6ing:

7he capital equipment producti8ity of su#sidiary is greater than that ofparent company. hich clearly suggests that the machineries and

equipments are used in optimum manner in su#sidiary as compared to

parent company.

o 9ore output from the available capital e%uipment hours

o 8ess damaged products

o 8ess wastage of raw)materials

%o the #etter capital equipment usage leads the su#sidiary to #etter ra6-

materials producti8ity


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!ue"11# Darious financial data for 2


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!ue"12# n electronics company maes communication devices for

military contracts6 -%e company @ust completed t+o contracts6 -%e

navy contract +as for 23


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= +.+* >

7he producti8ity of May is increased #y +.+* > than that of pril

parcel delivery company delivered 1B


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+ome industries such as *luminum e(traction plants consume heavy amount of electricity

and hence, re%uire ade%uate supply of electricity at a cheap rate$

-ransport Facilities#

Transport facilities are essential for transportation of raw materials and supplies and

employees to the plant as well as for carrying finished goods from the plant to the market

place$

The location of the plant must be well connected by rail, road and sea$ =or e(ample,petroleum refineries and fertilizer plants are located near the ports because they need

shipping facility either to bring raw materials &such as crude oil' to the plant or ship the

finished products &fertilisers' to other destinations &ports'$

Suita&ility of Climate#

Certain industries re%uire particular climatic conditions because of the nature of their

production$ =or e(ample, humid climate is re%uired for cotton te(tile and jute industries$

*lso, dust free climatic conditions are favorable for electronic industries$ ?ven though the

desired climatic conditions can be provided artificially, it would be %uite costly to do so and

hence, natural climatic conditions are preferred$

overnment Policy#+ome states in backward regions of our country, have encouraged industrialists to locate

their industries in the backward regions &economically backward states'$ The central

government may influence plant location in backward states by their licensing policy, freight

rate policy, institutional finance and subsidies, etc$

Competition &et+een states#

9any states compete among themselves to attract new industries by offering investment

subsidies, cheap power and land, sales ta( e(emption, longer loan repayment period and

low interest rates, etc$, small and medium sized plants are attracted by these incentives$

3) Selection of Community#

The selection of a locality or a community in a region is influenced by the following factors:

vaila&ility of a&our#

8abour having the appropriate levels of skills needed for the industry is an important

consideration$ The skilled labour influences the plant location &their availability and cost'$

This factor may not be very important if the skilled labour are mobile &i$e$, willing to move'$

The attitude of labour &workers', union activities and industrial disputes play a major role in

attracting an industry to be located in a community$

Civic menities for mployees#

?mployees need facilities such as housing, medical facilities, sports and recreational

facilities, educational facilities$ +uch facilities will attract skilled labour and other employees

to the plants which are located in places where all employee amenities are available$

/istence of ComplementaryB ncillary and Competing Industries#

Complementary and ancillary industries can accept job orders which are subcontracted by

major industries$ *lso, the big industries can get raw materials, tools and supplies from the

small scale industries located in the vicinity of in the same community$ Competing industries

which encourage healthy competition are advantageous to the new plants because they can

jointly tackle certain problems regarding raw materials, labour, power, wastage, disposal,


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pollution control, etc$, and also collectively negotiate with labour unions or government

agencies$

Finance and 0esearc% Facilities#

*vailability of banks, financial institutions, and research and development laboratories is

also a factor which attracts new industries to a location$

vaila&ility of $ater#+ome industries such as chemical and paper industries re%uire plenty of water for industrial

use and hence must be located where water is available in abundance$ egularity of supply,

cost and purity are considered regarding water supply to the plant$

vaila&ility of Fire Fig%ting Facilities#

+ince industrial units are prone to fire hazards, ade%uate fire fighting facilities must be

available

ocal ta/es and restrictions#

The municipality or local administration has its own ta( structure for industries and

regulations waste disposal, effluents and smoke emanated from the industries$

4) Selection of /act Site#

The selection of e(act site for a plant is influenced by the following considerations:

rea of land availa&leB soilB topograp%y and cost of land#

=or certain industries such as *gro industries, fertile soil is necessary$ =or industries

re%uiring large area of land, availability of land and cost of land are important

considerations$ Topography is also considered because a hilly, rocky and rough terrain is

unsuitable and involves e(penditure to level the site$

,isposal of +aste#+ome industries such as chemical plants, leather industries, breweries, steel plants etc$ have

the problem of disposal of effluents and the site selected should have provision for this$

Community ttitude#

The people living in the nearby areas surrounding the proposed site for the industry should

not oppose the location of the plant$ The reasons for negative attitude could be pollution,

health hazards &such as radiation' dangerous fumes emanating from the industries etc$

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!ue ; 1# $%at is facility layout( $%at are t%e needs for facilitylayout planning(

#lant layout, also know as A=acility 8ayoutB refers to the configuration of departments, work)

centers and e%uipment and machinery with focus on the flow of materials or work through

the production system$

#lant layout or facility layout means planning for location of all machines, e%uipment

utilities, work stations, customer service areas, material storage areas, tool servicing areas,

tool cribs, aisles, rest rooms, lunch rooms, coffeetea bays, offices, and computer rooms and


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also planning for the patterns of flow of materials and people around, into and within the

buildings$

-%e need for layout decisions#

The need for layout planning arises both in the process of designing new plants and the

redesigning of e(isting plants or facilities$

0easons for design of ne+ layouts#

-' 8ayout is one of the key decisions that determine the long)run efficiency in operations$

.' 8ayout has many strategic implications because it establishes an organization


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/$ +hort processing time$

0$ educes material handling$

1$ 8ow cost labour procurement and lesser training re%uirements

2$ 8esser !nspection$

3$ =loor area is more production

5$ ?asy production control$

6$ 9inimum need for buffer stock$

&isad8antages of line of production layout:

-$ #roduct layout is infle(ible in nature$

.$ Chances of production line to shut down$

/$ +upervision is more difficult$

0$ e%uires heavy capital investment

2) Functional or process layout

5ere mac%ines performing same type of operations are installed at one

place 6i6e6 plant is grouped according to functions e6g6 all drilling mac%inesare located at one place no+n as drilling section6 -%is type of layout is

most appropriate for intermittent .>O? and ?-C5 ) type of mfg systems

+%ere small 7ty*s of a large range of products are to &e manufactured e6g6

mac%ine tools etc6

d8antages of process layout:

-$ ?ach production unit of the system works independently and is not affected by the

happenings in another section of the plant$

.$ +cope for more skilled labour leads to better %uality in production$

/$ ;ide fle(ibility in production facilities$

0$ ?ffective supervision$1$ 9achine breakdown doesn


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d8antages of Fied ayout:

-$ This layout is fle(ible with regard to change in design, operation se%uence, labour

availability etc$

.$ !t is essential in large project jobs, such as construction and shipbuilding etc$, where

large capacity mobile e%uipment is re%uired

/$ ery cost effective when similar type products are being processed, each at a

different stage of progress$&isad8antages of Fied layout:

-$ Capital investment may be for a one)off product, which can make it e(pensive$

.$ Due to long duration to complete a product, average utilization of capital e%uipment

is limited$

/$ +pace re%uirements for storage of material and e%uipment are generally large

4) Cellular ayout

Cellular ayout is a layout &ased on roup tec%nology principles6 In t%is

layoutB components t%at are similar in design or manufacturing operationsB

are groped into one familyB called part"family6 It is a com&ination of &ot%

process and product layout and incorporates t%e strong points of &ot%6

d8antages of 'ellular ayout:

-$ 8ower work)in)progress inventories

.$ * reduction in materials handling costs

/$ +horter flow times in production

0$ +implified scheduling of materials and labour

1$ "uicker set)ups and fewer tooling changes

2$ !mproved functional and visual control

&isad8antages of 'ellular ayout:

-$ educed manufacturing fle(ibility.$ Jnless the forecasting system in place is e(tremely accurate, it also has the potential

to increase machine downtime

/$ There is also the risk that the cells that may become out)of)date as products and

processes change, and the disruption and cost of changing to cells can be significant

0$ There is increased operator responsibility, and therefore behavioral aspects of

management become crucial

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!ue ; 1:# $%at is forecasting( /plain various forecasting met%ods6

=orecasting is the first step in planning$ =orecasting is defined as estimating the future

demand for products and services and the resources necessary to produce these outputs$

?stimating of future demand for products or services are commonly referred to as sales

forecasts$ The sales forecasts or demand forecasts are the starting point for the entire

planning in production and operations management$ =or e(ample, material planning,

capacity planning, manpower planning, financial planning and production scheduling, all

depend on sales forecasting$

Forecasting met%ods#


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The two general methods to forecasting are: &i' "ualitative, and &ii' "uantitative$ "ualitative

methods consist mainly of subjective inputs, often of non)numerical description$

"uantitative methods involve either projection of historical data or the development of

association models which attempt to use causal variables to arrive at the forecasts$

!ualitative Met%ods

16 >ury of /ecutive Opinion#!t is a forecasting techni%ue in which the opinions of a small group of high)level e(ecutives

&managers' are taken, based on which a group estimate of demand is obtained as the

forecast$

d8antage:

Jses e(perience and knowledge of two or more managers to arrive at a single forecast$

Can be used for technological forecasting$

Can be used for forecasting the demand for new products

Can be used to modify an e(isting forecast to account for unusual circumstances

&isad8antages

?(ecutive opinion can be costly because it takes valuable e(ecutive time$

!t sometimes gets out of control or gets delayed$

Difficult to obtain consensus opinion of several e(perts$

26 Sales Composite Met%od#

This is also known as A#ooled +ales force ?stimateB method$

?ach sales person estimates what sales will be in his or her territory$ These estimates are

then reviewed to ensure that they are realistic$ Then they are combined at the district and

national level to arrive at the overall forecast$

d8antages:

The sales force is the group closest to the customers$ The sales persons are most likely

to know which products or services, customers will be buying in the near future and in

what %uantities$

+ales territories often are divided into districts or regions and forecasts for districts or

regions will be useful in inventory management, distribution and sales force staffing$

&isad8antages

!ndividual biases of sales people may affect the sales forecast &some are optimistic and

some are pessimistic'$

+ales people may be unable to distinguish between what customers would like to do and

what they actually will do$

+ometimes, sales people may be overly influenced by their recent e(periences$

!f the firm uses individual salesperson


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Consumerudgmental Met%od',elp%i Met%od#

!n this method opinions are solicited from a number of other managers and staff personal$

The decision makers consist of a group of 1 to -7 e(perts who will be making the actual

forecast$

?ach new %uestionnaire is developed using the information e(tracted from the previous one,

thus enlarging the scope of information on which participants can base their judgments$d8antages

This method can be used to develop long)range forecasts of product demand and sales

projections for new products$

* panel of e(perts may be used as participants &respondents'

&isad8antages:

The process can take a long time

esponses may be less meaningful because respondents are not accountable due to

anonymity$

High accuracy may not be possible

#oorly designed %uestionnaire will result in ambiguous or false conclusions$

!uantitative Met%ods

There are five %uantitative forecasting methods, all of which use historical data$ They

fall into two categories$

ime series models

-$ aKve approach

.$ 9oving averages method

/$ ?(ponential smoothing method

Causal models

-$ Trend projection

.$ 8inear regression analysis

-ime Series Models

16 EaGve pproac%


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The simplest way to forecast is to assume that forecast of demand in the ne(t period

is e%ual to the actual demand in the most recent period &i$e$ the current period'$

For eample:

!f the actual sales for a product in Lanuary .7-- is -77 units, the forecast demand for

=ebruary .7-- will also be -77 units$

26 Moving verages Met%od

1. %imple Mo8ing 8erage Method

* moving average forecast uses a number of most recent historical actual data

values to generate a forecast$

The moving average for @n< number of periods in the moving average is calculated as:

Mo8ing a8erage E C demand in pre8ious n periods

n

nmay be /, 0, 1 or 2 periods for /, 0, 1 or 2 period moving average

2. eighted Mo8ing 8erage Method

?ach historical demand in the moving average can have its own weight and the sum

of the weight e%uals one$

=or e(ample, in a / period weighted moving average model, the most recent period

might be assigned a weight of 7$17, the second most recent period might be

assigned a weight of 7$/7 and the third most recent period with a weight of 7$.7

Then forecast,

F tD1 E &7$07=tG 7$/7=t-1G 7$.7=t-2G 7$-7=t-(' &7$0G7$/G7$.G7$-'

(.


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= %pecified num#er of time periods from = /

y = Forecast for period

a = alue of ytat = /

# = %lope of the straight line

26 inear 0egression Model

!n a simple linear regression model, the dependent variable &N' is a function of only

one independent variable &(' and the theoretical relationship is linear or a straightline$

9 = a D #

9 = &ependent 8aria#le

G = ;ndependent 8aria#le

= constant 8alue 4a constant 8alue5

H = %lope of the line 4a constant 8alue5

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!ue " 1=6 -%e num&er of cans of soft drins sold in a mac%ine eac%+ee is recorded &elo+6 ,evelop forecasts using a t%ree periodmoving average633=B 21AB 2:=B 28B 314B 323B 2AAB 2AB 2=:B 3


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!ue ; 1A# se a four period moving average to forecast attendanceat &ase&all games6 5istorical records s%o+348B :=12B 813B :=3B A=2B 81AB 82=3B ::B 8:12B and :34

!et "t denote the number o# vie%ers o# baseball 'ame o# the tth

period. &o% the

4 period mov) in' avera'e o# the t(1thperiod is 'iven by

"t( "t)1 ( "t)2 ( "t)3Ft9

4 *t+ 4* 5* ,

&o% the #our periods movin' avera'e #orecast is 'iven in the #ollo%in' table

0our period movin'

Period "

0orecast

1 534

2 12

3 513

4 53

5 52 33.

51 522.

21 1.

23 125.

55 25.

1 12 14.

1 345 1.


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!ue ; 2


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!ue ; 21# -%e num&er of girls +%o attend a summer &aset&allcamp %as &een recorded for t%e seven years t%e camp %as &eenoffered6 se e/ponential smoot%ing +it% a smoot%ing constant of 6=to forecast attendance for t%e eig%t% year6

4:B 8=B 8B A2B A=B 121B 148

6

0t+0t)1(7 6t)1)0t)1/8ere9 7+ .1

Kear ttendan Ft &y e/ponential

- 03

. 25 03

/ 21 2/$5

0 6. 20$3

1 65 52$11

2 -.- 61$3-7

3 -02 --1$60.7

5 -/6$6550-2


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!ue ; 22# -%e num&er of pias ordered on Friday evenings&et+een #3< and 8#3< at a pia delivery location for t%e last 1PE Demand during lead)time E / Q -1 E 01 units

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!ue " 4

ssume t%at our firm produces -ype C fire e/tinguis%ers6 $e mae3


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!ue " 48

$e use 1B


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is calculated as N and t%e stocout cost is estimated at N8 .N3 lostprofit per s+itc% and anot%er N3 loss of good+ill or future sales)6$%at level of safety stoc s%ould itely use for t%is product(.Consider safety stoc of


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!ue " 4=

Presume t%at itely carries a modern +%ite itc%en ceiling lampt%at is 7uite popular6 -%e anticipated demand during lead"time can&e appro/imated &y a normal curve %aving a mean of 1=< units anda standard deviation of 4< units6 $%at safety stoc s%ould itelycarry to ac%ieve a A service level(

Solution#

To find the safety stock for a 61P service level it is necessary to calculate the 61thpercentile on the normal curve$ Jsing the standard ormal table from the te(t, we find the Rvalue for 7$61 is -$21 standard units$ The safety stock is then given by:

( +16- 40 180 66 180 246. * Ceiling :amps

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!ue ; 4A# $%at is Operation Sc%edule( /plain its significance also

e/plain sc%eduling6

+cheduling is the ne(t techni%ue of production control after routing$ ;ork scheduling is

defined as the assignment of starting and completion time for the various operations to be

performed$ !t involves developing and assigning specific dates for the start or completion of

the necessary work tasks$ +cheduling is performed in two stages:

a' 8oading

b' Dispatching

8oading is assigning to a particular work centre the task to be performed during some grossscheduling period, say a week$

O&@ective of sc%eduling#

-' To meet the pre)determined demand

.' To keep the inventory of raw materials at the optimum level$

/' To minimize the production cost

0' Co)ordination with other departments

1' To arrange for product development and design

2' To arrange the activities of the %uality control and inspection department

3' To determine economical batch size and ascertain se%uence of operations so that the

set up cost is reduced$

5' To eliminate delays in production$

6' To arrange for proper guidance and control

-7'To work out a schedule

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!ue ;


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+cheduling pertains to establishing both the timing and use of resources within an

organization$ Jnder the operations function &both manufacturing and services', scheduling

relates to use of e%uipment and facilities, the scheduling of human activities and receipt of

materials$

;hile issues relating to facility location and plant and e%uipment ac%uisition are considered

long term and aggregate planning is considered intermediate term, operations scheduling is

considered to be a short)term issue$ *s such, in the decision)making hierarchy, scheduling isusually the final step in the transformation process before the actual output &e$g$, finished

goods' is produced$ 4enerally, scheduling objectives deals with tradeoffs among conflicting

goals for efficient utilization of labor and e%uipment, lead time, inventory levels, and

processing times$

There are two general approaches to scheduling:forward scheduling and backward scheduling$

*s long as the concepts are applied properly, the choice of methods is notsignificant$ !n fact, if process lead times &move, %ueue and setup times' add to the

job lead time and process time is assumed to occur at the end of process time, then

forward scheduling and backward scheduling yield the same result$ ;ith forwardscheduling, the scheduler selects a planned order release date and schedules allactivities from this point forward in time$

;ith backward scheduling, the scheduler begins with a planned receipt date or duedate and moves backward in time, according to the re%uired processing times, untilhe or she reaches the point where the order will be released$

f course there are other variables to consider other than due dates or shippingdates$ ther factors which directly impact the scheduling process include: the typesof jobs to be processed and the different resources that can process each, processroutings, processing times, setup times, changeover times, resource availability,

number of shifts, downtime, and planned maintenance$

O&;BL8oading involves assigning jobs to work centers and to various machines in the workcenters$ !f a job can be processed on only one machine, no difficulty is presented$However, if a job can be loaded on multiple work centers or machines, and thereare multiple jobs to process, the assignment process becomes more complicated$

The scheduler needs some way to assign jobs to the centers in such a way thatprocessing and setups are minimized along with idle time and throughput time$

Two approaches are used for loading work centers: infinite loading and finiteloading$ ;ith infinite loading jobs are assigned to work centers without regard forcapacity of the work center$ #riority rules are appropriate for use under the infinite

loading approach$ Lobs are loaded at work centers according to the chosen priorityrule$ This is known as vertical loading$

=inite loading projects the actual start and stop times of each job at each workcenter$ =inite loading considers the capacity of each work center and compares theprocessing time so that process time does not e(ceed capacity$ ;ith finite loadingthe scheduler loads the job that has the highest priority on all work centers it willre%uire$ Then the job with the ne(t highest priority is loaded on all re%uired workcenters, and so on$ This process is referred to as horizontal loading$ The schedulerusing finite loading can then project the number of hours each work center will


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operate$ * drawback of horizontal loading is that jobs may be kept waiting at a workcenter, even though the work center is idle$ This happens when a higher priority jobis e(pected to arrive shortly$ The work center is kept idle so that it will be ready toprocess the higher priority job as soon as it arrives$ ;ith vertical loading the workcenter would be fully loaded$ f course, this would mean that a higher priority jobwould then have to wait to be processed since the work center was already busy$

The scheduler will have to weigh the relative costs of keeping higher priority jobswaiting, the cost of idle work centers, the number of jobs and work centers, and thepotential for disruptions, new jobs and cancellations$

!f the firm has limited capacity &e$g$, already running three shifts', finite loadingwould be appropriate since it reflects an upper limit on capacity$ !f infinite loading isused, capacity may have to be increased through overtime, subcontracting, ore(pansion, or work may have to be shifted to other periods or machines$

%


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e(t %ueue &"'$ " is based on machine utilization$ The idea is to consider%ueues &waiting lines' at each of the succeeding work centers at which the

jobs will go$ ne then selects the job for processing that is going to thesmallest %ueue, measured either in hours or jobs$

8east setup &8+J'$ This rule ma(imizes utilization$ The process calls forscheduling first the job that minimizes changeover time on a given machine$

These rules assume that setup time and setup cost are independent of theprocessing se%uence$ However, this is not always the case$ Lobs that re%uire similarsetups can reduce setup times if se%uenced back to back$ !n addition to thisassumption, the priority rules also assume that setup time and processing times aredeterministic and not variable, there will be no interruptions in processing, the setof jobs is known, no new jobs arrive after processing begins, and no jobs arecanceled$ ;hile little of this is true in practice, it does make the scheduling problemmanageable$

LB77 'IR7%4antt charts are named for Henry 4antt, a management pioneer of the early -677s$He proposed the use of a visual aid for loading and scheduling$ *ppropriately, this

visual aid is known as a 4antt chart$ This 4antt chart is used to organize and clarifyactual or intended use of resources within a time framework$ 4enerally, time isrepresented horizontally with scheduled resources listed vertically$ 9anagers areable to use the 4antt chart to make trial)and)error schedules to get some sense ofthe impact of different arrangements$

There are a number of different types of 4antt charts, but the most common ones,and the ones most appropriate to our discussion, are the load chart and schedulechart$ * load chart displays the loading and idle times for machines or departmentsthis shows when certain jobs are scheduled to start and finish and where idle timecan be e(pected$ This can help the scheduler redo loading assignments for betterutilization of the work centers$ * schedule chart is used to monitor job progress$ nthis type of 4antt chart, the vertical a(is shows the orders or jobs in progress while

the horizontal a(is represents time$ * %uick glance at the chart reveals which jobsare on schedule and which jobs are on time$4antt charts are the most widely used scheduling tools$ However, they do havesome limitations$ The chart must be repeatedly updated to keep it current$ *lso, thechart does not directly reveal costs of alternate loadings nor does it consider thatprocessing times may vary among work centers$


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