You are on page 1of 328

Topic 3

 By the end of this topic, you should be able to:


 Define inventory;
 State the functions and types of inventory;
 List the requirements for effective inventory
management;
 Identify inventory models for independent demand;
 Explain dependent inventory model requirement;
 Describe the MRP structure; and
 Determine lot-sizes in a MRP system.

2
Inventory

 Whydo you think that Inventory is


important for an organization?

 Stored resource that is used to


satisfy current or future need is
called inventory.
Functions of Inventory

 To provide a stock of goods


 To avoid shortages or stock-outs due to
bad weather, quality problems or
improper delivery.
 To reduce the cost of goods by
minimizing purchasing and inventory
cost
 To allow operations to continue smoothly
with the use of ‘work-in-process’
inventory.
Inventory
types

Maintenance/
Work-in- Repair/
Finished
Raw material progress Operating
good
(WIP) (MRO)
supply

5
Inventory Management

 ABC Analysis
 classifies items according to its
importance
 Record Accuracy
 able to make precise decision about
ordering, scheduling and shipping
Class C
100 — Class B
90 —
Class A
Percentage of dollar value

80 —

70 —

60 —

50 —

40 —

30 —

20 —

10 —

0—
10 20 30 40 50 60 70 80 90 100
Percentage of items
ABC analysis - steps
1. Classify the items of inventories, determining the
expected use in units and the price per unit for each
item.

2. Determine the total value of each item by multiplying


the expected units by its units price

3. Rank the items in accordance with the total value,


giving first rank to the item with highest total value
and so on.

4. Compute the ratios (percentage) of number of units of


each item to total units of all items and the ratio of
total value of each item to total value of all items.

5. Combine items on the basis of their relative value to


form three categories: -A, B and C.
ABC analysis - example
 A firm has 7 different items in its inventory. The firm wishes to
introduce an ABC inventory system. Suggest a breakdown of the
items into A, B & C classifications
ABC analysis - example
Activity 8
Item RM Value Annual
 Rank the items Usage
and assign
them to the 1 0.01 1200
A,B or C class
2 0.03 120000
3 0.45 100
4 1.00 44000
5 4.50 900
6 0.90 350
7 0.30 70000
8 1.50 200
Inventory models

Independent demands Dependant demands


demands of various items need of any one item is
unrelated to each other the need for some other item

12
 Holding Cost
 cost associated with maintaining the inventory warehouse and
protecting
 Setup Cost
 arranging specific equipment setups, filling out the required papers
and moving out the previous stock of material
 Ordering Cost
 clerical cost to prepare the purchase and production order such as
counting items and calculating order quantities
 Shortage Cost
 Associated with demand when stocks have been depleted. When
sales are lost because of stock-outs, the firm loses both profit margin
on unmade sales and its customers’ good will. Some will even suffer
with lateness penalties.
Inventory models

Fixed-time Period/
Fix-order Quantity/
Fixed Order Quantity Discount
EOQ model
Interval System

14
Notations
 The following are the notation that will be
used in developing the inventory models.

D = Annual demand
Q = Quantity ordered (in units)
S = Annual Setup/Ordering cost per order
H = Annual Holding Cost per unit
C = Total annual Cost
How
Much?
When!
Bird feeder container.
 Sales are 18 units/week.
 Supplier charges = $60/unit
 Order cost = $45
 Annual holding cost = 25% of unit value
 Museum operates = 52weeks/year
 Management decision 390 unit lot size
 What is the annual cost?
 Would lot size 468 be better?
Assumptions
1. Demand rate is constant
2. No constraints on lot size
3. Only relevant costs are holding and
ordering/setup
4. Decisions for items are independent
from other items
5. No uncertainty in lead time or supply
Receive Inventory depletion
order (demand rate)
On-hand inventory (units)

Q Average
— cycle
2
inventory

1 cycle
Time
Total cost = HC + OC
Annual cost (dollars)

Holding cost (HC)

Ordering cost (OC)

Lot Size (Q)


Example 15.2

3000 —
Q D
Annual cost (dollars)

Total cost = (H) + (S)


2 Q
2000 —
Q
Holding cost = (H)
2
1000 —

D
Ordering cost = (S)
0— Q

| | | | | | | |
50 100 150 200 250 300 350 400
Lot Size (Q)
Example 15.2

3000 —
Q D
Annual cost (dollars)

Total cost = (H) + (S)


2 Q
2000 — Bird feeder costs
Q
Holding cost = (H)
D = (18 /week)(52 weeks) = 936 units 2
H = 1000
0.25—($60/unit) = $15
S = $45 Q = 390 units

Q D D
Ordering cost = (S)
0—C = (H) + (S) Q
2 Q
| | | | | | | |
C = $2925 + $108 = $3033
50 100 150 200 250 300 350 400
Lot Size (Q)
Current
cost Example 15.2

3000 —
Q D
Annual cost (dollars)

Total cost = (H) + (S)


2 Q
2000 — Bird feeder costs
Q
Holding cost = (H)
D = (18 /week)(52 weeks) = 936 units 2
H = 1000
0.25—($60/unit) = $15
S = $45 Q = 390 units

Q D D
Ordering cost = (S)
0—C = (H) + (S) Q
2 Q
| | | | | | | |
C = $2925 + $108 = $3033
50 100 150 200 250 300 350 400
Current
Lot Size (Q)
Q
Current
cost Example 15.2

3000 —
Q D
Annual cost (dollars)

Total cost = (H) + (S)


2 Q
2000 — Bird feeder costs
Q
Holding cost = (H)
D = (18 /week)(52 weeks) = 936 units 2
H = 1000
0.25—($60/unit) = $15
S = $45 Q = 390 units

Q D D
Ordering cost = (S)
0—C = (H) + (S) Q
2 Q
| | | | | | | |
C = $2925 + $108 = $3033
50 100 150 200 250 300 350 400
Current
Lot Size (Q)
Q
Current
cost Example 15.2

3000 —
Q D
Annual cost (dollars)

Total cost = (H) + (S)


2 Q
2000 — Bird feeder costs
Q
Holding cost = (H)
D = (18 /week)(52 weeks) = 936 units 2
H = 1000
0.25—($60/unit) = $15
S = $45 Q = 468 units

Q D D
Ordering cost = (S)
0—C = (H) + (S) Q
2 Q
| | | | | | | |
C = $3510 + $90 = $3600
50 100 150 200 250 300 350 400
Current
Lot Size (Q)
Q
D Q
S= H
S 2
2 DS = Q 2 H
2 DS
Q2 =
H
2 DS
Q* =
H

EOQ
D Q
formula: S= H
S 2
2 DS = Q 2 H
2 DS
Q =
2

H
2 DS
Q* =
H
Current
cost Example 15.2

3000 —
Bird feeder costs
Q D
Annual cost (dollars)

Total cost = D(=


H)(18
+ /week)(52
(S) weeks) = 936 units
2 Q
H = 0.25 ($60/unit) = $15
2000 — S = $45 Q = EOQ
Q
2DS Holding cost
Q = D(H)
EOQ = C= (H) +2 (S)
1000 — H 2 Q

D
Ordering cost = (S)
0— Q

| | | | | | | |
50 100 150 200 250 300 350 400
Current
Lot Size (Q)
Q
Current
cost Example 15.2

3000 —
Bird feeder costs
Q D
Annual cost (dollars)

Total cost = D(=


H)(18
+ /week)(52
(S) weeks) = 936 units
2 Q
H = 0.25 ($60/unit) = $15
2000 — S = $45 Q = 75
Q
2DS Holding cost
Q = D(H)
EOQ = C= (H) +2 (S)
1000 — H 2 Q

D
Ordering cost = (S)
0— Q

| | | | | | | |
50 100 150 200 250 300 350 400
Current
Lot Size (Q)
Q
Current
cost Example 15.2

3000 —
Bird feeder costs
Q D
Annual cost (dollars)

Total cost = D(=


H)(18
+ /week)(52
(S) weeks) = 936 units
2 Q
H = 0.25 ($60/unit) = $15
2000 — S = $45 Q = 75
Q
2DS Holding cost
Q = D(H)
EOQ = C= (H) +2 (S)
1000 — H 2 Q

C = $562 + $562 = $1124


D
Ordering cost = (S)
0— Q

| | | | | | | |
50 100 150 200 250 300 350 400
Current
Lot Size (Q)
Q
Current
cost Example 15.2

3000 —
Bird feeder costs
Q D
Annual cost (dollars)

Total cost = D(=


H)(18
+ /week)(52
(S) weeks) = 936 units
2 Q
H = 0.25 ($60/unit) = $15
2000 — S = $45 Q = 75
Q
2DS Holding cost
Q = D(H)
EOQ = C= (H) +2 (S)
1000 — H 2 Q

C = $562 + $562 = $1124


D
Lowest Ordering cost = (S)
0— Q
cost
| | | | | | | |
50 100 150 200 250 300 350 400
Best Q Current
Lot Size (Q)
(EOQ) Q
Current
cost Example 15.2

3000 —
Bird feeder costs
Q D
Annual cost (dollars)

Total cost = D(=


H)(18
+ /week)(52
(S) weeks) = 936 units
2 Q
H = 0.25 ($60/unit) = $15
2000 — S = $45 Q = 75
Q
2DS Holding cost
Q = D(H)
EOQ = C= (H) +2 (S)
1000 — H 2 Q

C = $562 + $562 = $1124


D
Lowest Ordering cost = (S)
0— Q
cost
| | | | | | | |
50 100 150 200 250 300 350 400
Best Q Current
Lot Size (Q)
(EOQ) Q
Current
cost Example 15.2

3000 —
Bird feeder costs
Q D
Annual cost (dollars)

Total cost = D(=


H)(18
+ /week)(52
(S) weeks) = 936 units
2 Q
H = 0.25 ($60/unit) = $15
2000 — S = $45 Q = 75
Q
2DS Holding cost
Q = D(H)
EOQ = C= (H) +2 (S)
1000 — H 2 Q

C = $562 + $562 = $1124


D
Lowest Ordering cost = (S)
0— Q
cost
| | | | | | | |
50 100 150 200 250 300 350 400
Best Q Current
Lot Size (Q)
(EOQ) Q
Current
cost Example 15.2

3000 —
Bird feeder costs
Time between orders
Q D
Annual cost (dollars)

Total cost = D(=


H)(18
+ /week)(52
(S) weeks) = 936 units
2 Q
H TBO EOQ = $15
= 0.25 ($60/unit)
= = 75/936 = 0.080 year
2000 — EOQ
S = $45 D Q = 75
Q
2DS Holding cost = D(H)
Q= 0.96 2months
TBO=EOQ
EOQ = (75/936)(12)
C= (H) + (S)
1000 — H 2 Q
TBOEOQ = (75/936)(52) = 4.17 weeks
C = $562 + $562 = $1124
TBOEOQ = (75/936)(365) = 29.25D
Lowest Ordering cost = days
(S)
0— Q
cost
| | | | | | | |
50 100 150 200 250 300 350 400
Best Q Current
Lot Size (Q)
(EOQ) Q
Activity 9
 A company that markets a product Z would like
to reduce its inventory cost by determining the
optimal number of Z to obtain per order. The
annual demand is 1960 units, the
setup/ordering cost is RM5 per order, and the
holding cost per unit per year is RM1.

(a) Calculate the optimal number of units per


order.
(b) If a 260-day working per year, find the
number of orders, N.
(c) Calculate the total inventory costs.
How
Much?
When!
Inventory
models

Master
Bill of Accurate Purchase Lead Time
Production
Material Inventory Order for each
Schedule
(BOM) Records Standing component
(MPS)

38
Authorized Other
master production sources
schedule of demand

Engineering
Inventory Inventory MRP Bills of
and process
transactions records explosion materials
designs

Material
requirements
plan
Back slats Seat cushion

Leg supports Seat-frame


boards

Back Front
legs legs A
Ladder-back
chair
A
Ladder-back
chair

B (1) C (1) D (2) E (4)


Ladder-back Seat Front Leg
subassembly subassembly legs supports

F (2) G (4) H (1) I (1)


Back Back Seat Seat
legs slats frame cushion

J (4)
Seat-frame
boards
April May

1 2 3 4 5 6 7 8

Ladder-back chair 150 150

Kitchen chair 120 120

Desk chair 200 200 200 200

Aggregate
production plan 670 670
for chair family
Item: C Lot Size: 230 units
Description: Seat subassembly Lead Time: 2 weeks

Week

1 2 3 4 5 6 7 8

Gross
requirements 150 0 0 120 0 150 120 0

Scheduled
receipts 230 0 0 0 0 0 0 0

Projected
on-hand 37
inventory

Planned
receipts

Planned order
releases
Item: C Lot Size: 230 units
Description: Seat subassembly Lead Time: 2 weeks

Week

1 2 3 4 5 6 7 8

Gross
requirements 150 0 0 120 0 150 120 0

Scheduled
receipts 230 0 0 0 0 0 0 0

Projected
on-hand 37
inventory

Planned
receipts Explanation:
Gross requirements are the total demand for
Planned order
the two chairs. Projected on-hand inventory
releases
in week 1 is 37 + 230 – 150
Item: C Lot Size: 230 units
Description: Seat subassembly Lead Time: 2 weeks

Week

1 2 3 4 5 6 7 8

Gross
requirements 150 0 0 120 0 150 120 0

Scheduled
receipts 230 0 0 0 0 0 0 0

Projected
on-hand 37 117
inventory

Planned
receipts Explanation:
Gross requirements are the total demand for
Planned order
the two chairs. Projected on-hand inventory
releases
in week 1 is 37 + 230 – 150 = 117 units.
Item: C Lot Size: 230 units
Description: Seat subassembly Lead Time: 2 weeks

Week

1 2 3 4 5 6 7 8

Gross
requirements 150 0 0 120 0 150 120 0

Scheduled
receipts 230 0 0 0 0 0 0 0

Projected
on-hand 37 117
inventory

Planned
receipts

Planned order
releases
Item: C Lot Size: 230 units
Description: Seat subassembly Lead Time: 2 weeks

Week

1 2 3 4 5 6 7 8

Gross
requirements 150 0 0 120 0 150 120 0

Scheduled
receipts 230 0 0 0 0 0 0 0

Projected
on-hand 37 117
inventory

Planned
receipts Scheduled
Projected on-hand Inventory on Gross
or planned
inventory balance
Planned order = hand at end + receipts in – requirements
releases at end of week t of week t - 1
week t
in week t
Item: C Lot Size: 230 units
Description: Seat subassembly Lead Time: 2 weeks

Week

1 2 3 4 5 6 7 8

Gross
requirements 150 0 0 120 0 150 120 0

Scheduled
receipts 230 0 0 0 0 0 0 0

Projected
on-hand 37 117 117 117 –3 –3 –153 –273 –273
inventory

Planned
receipts Scheduled
Projected on-hand Inventory on Gross
or planned
inventory balance
Planned order = hand at end + receipts in – requirements
releases at end of week t of week t - 1
week t
in week t
Explanation:
Item: C
Without a new order in week 4, Lot Size: 230 units
Description: Seat subassembly Lead Time: 2 weeks
there will be a shortage of three
units: 117 + 0 + 0 – 120 = – 3 Week
units.
1 2 3 4 5 6 7 8

Gross
requirements 150 0 0 120 0 150 120 0

Scheduled
receipts 230 0 0 0 0 0 0 0

Projected
on-hand 37 117 117 117 –3 –3 –153 – 273 – 273
inventory

Planned
receipts

Planned order
releases
Item: C Lot Size: 230 units
Description: Seat subassembly Lead Time: 2 weeks

Week

1 2 3 4 5 6 7 8

Gross
requirements 150 0 0 120 0 150 120 0

Scheduled
receipts 230 0 0 0 0 0 0 0

Projected
on-hand 37 117 117 117
inventory

Planned
receipts

Planned order
releases
Explanation:
Item: C Lot Size: 230 units
Adding the planned
Description: receipt
Seat subassembly Lead Time: 2 weeks
brings the balance to
Week
117 + 0 + 230 – 120 = 227 units.
1 2 3 4 5 6 7 8

Gross
requirements 150 0 0 120 0 150 120 0

Scheduled
receipts 230 0 0 0 0 0 0 0

Projected
on-hand 37 117 117 117 227
inventory

Planned
230
receipts

Planned order
releases
Explanation:
Item: C Lot Size: 230 units
Adding the planned
Description: receipt
Seat subassembly Lead Time: 2 weeks
brings the balance to
Week
117 + 0 + 230 – 120 = 227 units.
1 2 3 4 5 6 7 8

Gross
requirements 150 0 0 120 0 150 120 0

Scheduled
receipts 230 0 0 0 0 0 0 0

Projected
on-hand 37 117 117 117 227
inventory

Planned
230
receipts

Planned order
releases
Explanation:
Item: C Lot Size: 230 units
Offsetting for Seat
Description: a two-week lead time
subassembly Lead Time: 2 weeks
puts the corresponding planned
Week
order release back to week 2.
1 2 3 4 5 6 7 8

Gross
requirements 150 0 0 120 0 150 120 0

Scheduled
receipts 230 0 0 0 0 0 0 0

Projected
on-hand 37 117 117 117 227
inventory

Planned
230
receipts

Planned order
230
releases
Explanation:
Item: C Lot Size: 230 units
Offsetting for Seat
Description: a two-week lead time
subassembly Lead Time: 2 weeks
puts the corresponding planned
Week
order release back to week 2.
1 2 3 4 5 6 7 8

Gross
requirements 150 0 0 120 0 150 120 0

Scheduled
receipts 230 0 0 0 0 0 0 0

Projected
on-hand 37 117 117 117 227
inventory

Planned
230
receipts

Planned order
230
releases
Explanation:
Item: C Lot Size: 230 units
TheDescription:
first planned
Seat order lasts
subassembly Lead Time: 2 weeks
until week 7, when projected
Week
inventory would drop to – 43.
1 2 3 4 5 6 7 8

Gross
requirements 150 0 0 120 0 150 120 0

Scheduled
receipts 230 0 0 0 0 0 0 0

Projected
on-hand 37 117 117 117 227 227 77 –43
inventory

Planned
230
receipts

Planned order
230
releases
Explanation:
Item: C Lot Size: 230 units
Adding the second
Description: planned
Seat subassembly Lead Time: 2 weeks
receipt brings the balance to
Week
77 + 0 + 230 – 120 = 187.
1 2 3 4 5 6 7 8

Gross
requirements 150 0 0 120 0 150 120 0

Scheduled
receipts 230 0 0 0 0 0 0 0

Projected
on-hand 37 117 117 117 227 227 77
inventory

Planned
230 230
receipts

Planned order
230
releases
Explanation:
Item: C Lot Size: 230 units
Adding the second
Description: planned
Seat subassembly Lead Time: 2 weeks
receipt brings the balance to
Week
77 + 0 + 230 – 120 = 187.
1 2 3 4 5 6 7 8

Gross
requirements 150 0 0 120 0 150 120 0

Scheduled
receipts 230 0 0 0 0 0 0 0

Projected
on-hand 37 117 117 117 227 227 77 187
inventory

Planned
230 230
receipts

Planned order
230
releases
Explanation:
Item: C Lot Size: 230 units
TheDescription:
corresponding planned
Seat subassembly Lead Time: 2 weeks
order release is for week 5.
Week

1 2 3 4 5 6 7 8

Gross
requirements 150 0 0 120 0 150 120 0

Scheduled
receipts 230 0 0 0 0 0 0 0

Projected
on-hand 37 117 117 117 227 227 77 187
inventory

Planned
230 230
receipts

Planned order
230 230
releases
Item: C Lot Size: 230 units
Description: Seat subassembly Lead Time: 2 weeks

Week

1 2 3 4 5 6 7 8

Gross
requirements 150 0 0 120 0 150 120 0

Scheduled
receipts 230 0 0 0 0 0 0 0

Projected
on-hand 37 117 117 117 227 227 77 187 187
inventory

Planned
230 230
receipts

Planned order
230 230
releases
Item: C Lot Size: P = 3
Description: Seat subassembly Lead Time: 2 weeks

Week

1 2 3 4 5 6 7 8

Gross
requirements 150 120 150 120

Scheduled
receipts 230

Projected
on-hand 37 117 117 117
inventory

Planned
receipts

Planned order
releases
Item: C Lot Size: P = 3
POQ Gross
Description: Seat requirements
subassembly Lead Time: 2 weeks
Inventory at
lot = for weeks – end of week 3
size 4, 5, and 6 Week

1 2 3 4 5 6 7 8

Gross
requirements 150 120 150 120

Scheduled
receipts 230

Projected
on-hand 37 117 117 117
inventory

Planned
receipts

Planned order
releases
Item: C Lot Size: P = 3
Description: Seat subassembly Lead Time: 2 weeks

Week

1 2 3 4 5 6 7 8

Gross
requirements 150 120 150 120

Scheduled
receipts 230

Projected
on-hand 37 117 117 117
inventory

Planned
receipts

Planned order
releases
Item: C Lot Size: P = 3
Description: Seat subassembly Lead Time: 2 weeks
(120 + 0 + 150)
Week

1 2 3 4 5 6 7 8

Gross
requirements 150 120 150 120

Scheduled
receipts 230

Projected
on-hand 37 117 117 117
inventory

Planned
receipts

Planned order
releases
Item: C Lot Size: P = 3
Description: Seat subassembly Lead Time: 2 weeks
(120 + 0 + 150) – 117
Week

1 2 3 4 5 6 7 8

Gross
requirements 150 120 150 120

Scheduled
receipts 230

Projected
on-hand 37 117 117 117
inventory

Planned
receipts

Planned order
releases
Item: C Lot Size: P = 3
Description: Seat subassembly Lead Time: 2 weeks
(120 + 0 + 150) – 117 = 153 units
Week

1 2 3 4 5 6 7 8

Gross
requirements 150 120 150 120

Scheduled
receipts 230

Projected
on-hand 37 117 117 117
inventory

Planned
153
receipts

Planned order
releases
Item: C Lot Size: P = 3
Description: Seat subassembly Lead Time: 2 weeks
(120 + 0 + 150) – 117 = 153 units
Week

1 2 3 4 5 6 7 8

Gross
requirements 150 120 150 120

Scheduled
receipts 230

Projected
on-hand 37 117 117 117
inventory

Planned
153
receipts

Planned order
releases
Item: C Lot Size: P = 3
Description: Seat subassembly Lead Time: 2 weeks
(120 + 0 + 150) – 117 = 153 units
Week

1 2 3 4 5 6 7 8

Gross
requirements 150 120 150 120

Scheduled
receipts 230

Projected
on-hand 37 117 117 117 150
inventory

Planned
153
receipts

Planned order
releases
Item: C Lot Size: P = 3
Description: Seat subassembly Lead Time: 2 weeks
(120 + 0 + 150) – 117 = 153 units
Week

1 2 3 4 5 6 7 8

Gross
requirements 150 120 150 120

Scheduled
receipts 230

Projected
on-hand 37 117
inventory 117 117 150

Planned
receipts 153

Planned order
releases 153
Item: C Lot Size: P = 3
Description: Seat subassembly Lead Time: 2 weeks
(120 + 0) – 0 = 120 units
Week

1 2 3 4 5 6 7 8

Gross
requirements 150 120 150 120

Scheduled
receipts 230

Projected
on-hand 37 117 117 117 150 150 0 0 0
inventory

Planned
153 120
receipts

Planned order
153 120
releases
Item: C Lot Size: P = 3
Description: Seat subassembly Lead Time: 2 weeks

Week

1 2 3 4 5 6 7 8

Gross
requirements 150 120 150 120

Scheduled
receipts 230

Projected
on-hand 37 117 117 117 150 150 0 0 0
inventory

Planned
153 120
receipts

Planned order
153 120
releases
Item: C Lot Size: L4L
Description: Seat subassembly Lead Time: 2 weeks

Week

1 2 3 4 5 6 7 8

Gross
requirements 150 120 150 120

Scheduled
receipts 230

Projected
on-hand 37 117 117 117
inventory

Planned
receipts

Planned order
releases
Item: C Lot Size: L4L
L4L
Description:Gross
Seat subassembly Lead Time: 2 weeks
requirements Inventory balance
lot = in week 4 – at end of week 3
size Week

1 2 3 4 5 6 7 8

Gross
requirements 150 120 150 120

Scheduled
receipts 230

Projected
on-hand 37 117 117 117
inventory

Planned
receipts

Planned order
releases
Item: C Lot Size: L4L
L4L
Description: Seat subassembly Lead Time: 2 weeks
lot = 120 – 117 = 3
size Week

1 2 3 4 5 6 7 8

Gross
requirements 150 120 150 120

Scheduled
receipts 230

Projected
on-hand 37 117 117 117
inventory

Planned
receipts

Planned order
releases
Item: C Lot Size: L4L
L4L
Description: Seat subassembly Lead Time: 2 weeks
lot = 120 – 117 = 3
size Week

1 2 3 4 5 6 7 8

Gross
requirements 150 120 150 120

Scheduled
receipts 230

Projected
on-hand 37 117 117 117
inventory

Planned
3
receipts

Planned order
releases
Item: C Lot Size: L4L
L4L
Description: Seat subassembly Lead Time: 2 weeks
lot = 120 – 117 = 3
size Week

1 2 3 4 5 6 7 8

Gross
requirements 150 120 150 120

Scheduled
receipts 230

Projected
on-hand 37 117 117 117 0
inventory

Planned
3
receipts

Planned order
3
releases
Item: C Lot Size: L4L
Description: Seat subassembly Lead Time: 2 weeks

Week

1 2 3 4 5 6 7 8

Gross
requirements 150 120 150 120

Scheduled
receipts 230

Projected
on-hand 37 117 117 117 0 0 0
inventory

Planned
3
receipts

Planned order
3
releases
Item: C Lot Size: L4L
Description: Seat subassembly Lead Time: 2 weeks

Week

1 2 3 4 5 6 7 8

Gross
requirements 150 120 150 120

Scheduled
receipts 230

Projected
on-hand 37 117 117 117 0 0 0
inventory

Planned
3 150
receipts

Planned order
3 150
releases
Item: C Lot Size: L4L
Description: Seat subassembly Lead Time: 2 weeks

Week

1 2 3 4 5 6 7 8

Gross
requirements 150 120 150 120

Scheduled
receipts 230

Projected
on-hand 37 117 117 117 0 0 0 0
inventory

Planned
3 150 120
receipts

Planned order
3 150 120
releases
Item: C Lot Size: L4L
Description: Seat subassembly Lead Time: 2 weeks

Week

1 2 3 4 5 6 7 8

Gross
requirements 150 120 150 120

Scheduled
receipts 230

Projected
on-hand 37 117 117 117 0 0 0 0 0
inventory

Planned
3 150 120
receipts

Planned order
3 150 120
releases
• The FOQ rule generates high average
inventory because it creates remnants.

• The POQ rule reduces


average on-hand inventory
because it does a better
job of matching order
quantity to requirements.
• The L4L rule minimizes
inventory investment
but maximizes the number of orders placed.
MRP
explosion

Material requirements plan


Action notices Priority reports Capacity reports
• Releasing new orders • Dispatch lists • Capacity requirements planning
• Adjusting due dates • Supplier schedules • Finite capacity scheduling
• Input-output control
Routings
and time
standards

Manufacturing resources plan


Cost and
Performance reports
price data
C (1)
Seat
subassembly

H (1) I (1)
Seat Seat
frame cushion

J (4)
Seat-frame
boards
Item: Seat subassembly
Lot size: 230 units

Week
Lead
time: 2 weeks 1 2 3 4 5 6 7 8

Gross
requirements 150 0 0 120 0 150 120 0

Scheduled
receipts 230 0 0 0 0 0 0 0

Projected
on-hand 37 117 117 117 227 227 77 187 187
inventory

Planned
230 230
receipts

Planned order
230 230
releases
Item: Seat subassembly
Lot size: 230 units

Week
Lead
time: 2 weeks 1 2 3 4 5 6 7 8

Gross
150 0 0 120 0 150 120 0
requirements

Planned
230 230
receipts

Planned
order 230 230
releases
Item: Seat subassembly
Lot size: 230 units

Week
Lead
time: 2 weeks 1 2 3 4 5 6 7 8

Gross
150 0 0 120 0 150 120 0
requirements

Planned
230 230
receipts

Planned
order 230 230
releases

Item: Seat frames Item: Seat cushion


Lot size: 300 units Lot size: L4L

Week Week
Lead Lead
time: 1 week 1 2 3 4 5 6 7 8 time: 1 week 1 2 3 4 5 6 7 8

Gross Gross
requirements requirements

Scheduled Scheduled
0 300 0 0 0 0 0 0 0 0 0 0 0 0 0 0
receipts receipts

Projected Projected
on-hand 40 on-hand 0
inventory inventory

Planned Planned
receipts receipts

Planned Planned
order order
releases releases
Item: Seat subassembly
Lot size: 230 units

Week
Lead
time: 2 weeks 1 2 3 4 5 6 7 8

Gross
150 0 0 120 0 150 120 0
requirements

Planned
230 230
receipts

Planned
order 230 230
releases

Usage quantity: 1 Usage quantity: 1


Item: Seat frames Item: Seat cushion
Lot size: 300 units Lot size: L4L

Week Week
Lead Lead
time: 1 week 1 2 3 4 5 6 7 8 time: 1 week 1 2 3 4 5 6 7 8

Gross Gross
0 230 0 230
requirements requirements

Scheduled Scheduled
0 300 0 0 0 0 0 0 0 0 0 0 0 0 0 0
receipts receipts

Projected Projected
on-hand 40 on-hand 0
inventory inventory

Planned Planned
receipts receipts

Planned Planned
order order
releases releases
Item: Seat subassembly
Lot size: 230 units

Week
Lead
time: 2 weeks 1 2 3 4 5 6 7 8

Gross
150 0 0 120 0 150 120 0
requirements

Planned
230 230
receipts

Planned
order 230 230
releases

Usage quantity: 1 Usage quantity: 1


Item: Seat frames Item: Seat cushion
Lot size: 300 units Lot size: L4L

Week Week
Lead Lead
time: 1 week 1 2 3 4 5 6 7 8 time: 1 week 1 2 3 4 5 6 7 8

Gross Gross
0 230 0 0 230 0 230 0 0 230
requirements requirements

Scheduled Scheduled
0 300 0 0 0 0 0 0 0 0 0 0 0 0 0 0
receipts receipts

Projected Projected
on-hand 40 on-hand 0
inventory inventory

Planned Planned
receipts receipts

Planned Planned
order order
releases releases
Item: Seat subassembly
Lot size: 230 units

Week
Lead
time: 2 weeks 1 2 3 4 5 6 7 8

Gross
150 0 0 120 0 150 120 0
requirements

Planned
230 230
receipts

Planned
order 230 230
releases

Item: Seat frames Item: Seat cushion


Lot size: 300 units Lot size: L4L

Week Week
Lead Lead
time: 1 week 1 2 3 4 5 6 7 8 time: 1 week 1 2 3 4 5 6 7 8

Gross Gross
0 230 0 0 230 0 0 0 0 230 0 0 230 0 0 0
requirements requirements

Scheduled Scheduled
0 300 0 0 0 0 0 0 0 0 0 0 0 0 0 0
receipts receipts

Projected Projected
on-hand 40 40 110 110 110 180 180 180 180 on-hand 0 0 0 0 0 0 0 0 0
inventory inventory

Planned Planned
300 230 230
receipts receipts

Planned Planned
order 300 order 230 230
releases releases
Item: Seat frames Item: Seat cushion
Lot size: 300 units Lot size: L4L

Week Week
Lead Lead
time: 1 week 1 2 3 4 5 6 7 8 time: 1 week 1 2 3 4 5 6 7 8

Gross Gross
0 230 0 0 230 0 0 0 0 230 0 0 230 0 0 0
requirements requirements

Planned Planned
300 230 230
receipts receipts

Planned Planned
order 300 order 230 230
releases releases
Item: Seat frames Item: Seat cushion
Lot size: 300 units Lot size: L4L

Week Week
Lead Lead
time: 1 week 1 2 3 4 5 6 7 8 time: 1 week 1 2 3 4 5 6 7 8

Gross Gross
0 230 0 0 230 0 0 0 0 230 0 0 230 0 0 0
requirements requirements

Planned Planned
300 230 230
receipts receipts

Planned Planned
order 300 order 230 230
releases releases

Item: Seat-frame boards


Lot size: 1500 units

Week
Lead
time: 1 week 1 2 3 4 5 6 7 8

Gross
requirements

Scheduled
0 0 0 0 0 0 0 0
receipts

Projected
on-hand 200
inventory

Planned
receipts

Planned
order
releases
Item: Seat frames Item: Seat cushion
Lot size: 300 units Lot size: L4L

Week Week
Lead Lead
time: 1 week 1 2 3 4 5 6 7 8 time: 1 week 1 2 3 4 5 6 7 8

Gross Gross
0 230 0 0 230 0 0 0 0 230 0 0 230 0 0 0
requirements requirements

Planned Planned
300 230 230
receipts receipts

Planned Planned
order 300 order 230 230
releases releases

Usage quantity: 4
Item: Seat-frame boards
Lot size: 1500 units

Week
Lead
time: 1 week 1 2 3 4 5 6 7 8

Gross
0 0 0 1200 0 0 0 0
requirements

Scheduled
0 0 0 0 0 0 0 0
receipts

Projected
on-hand 200
inventory

Planned
receipts

Planned
order
releases
Item: Seat frames Item: Seat cushion
Lot size: 300 units Lot size: L4L

Week Week
Lead Lead
time: 1 week 1 2 3 4 5 6 7 8 time: 1 week 1 2 3 4 5 6 7 8

Gross Gross
0 230 0 0 230 0 0 0 0 230 0 0 230 0 0 0
requirements requirements

Planned Planned
300 230 230
receipts receipts

Planned Planned
order 300 order 230 230
releases releases

Item: Seat-frame boards


Lot size: 1500 units

Week
Lead
time: 1 week 1 2 3 4 5 6 7 8

Gross
0 0 0 1200 0 0 0 0
requirements

Scheduled
0 0 0 0 0 0 0 0
receipts

Projected
on-hand 200 200 200 200 500 500 500 500 500
inventory

Planned
1500
receipts

Planned
order 1500
releases
Authorized
production
plan
Authorized Prospective master
production production
plan schedule
Authorized Prospective master
production production Are resources
plan schedule available?
Authorized Prospective master No
production production Are resources
plan schedule available?
Authorized Prospective master No
production production Are resources
plan schedule available?

Yes

Authorized master
production schedule
Authorized Prospective master No
production production Are resources
plan schedule available?

Yes

Material
Authorized master
requirements
production schedule
planning
55 chairs 38 chairs already
MPS quantity 17
Inventory = currently in + – promised for =
(0 for week 1) chairs
stock delivery in week 1
Item: Ladder-back chair
55 chairs 38 chairs already
MPS quantity
April 17
Inventory = currently in + – promised for =
Quantity (0 for week 1) chairs
stock
55 1 2 delivery in week 1
On Hand:

Forecast 30 30

Customer orders
(booked)
38 27

Projected on-hand
Inventory

MPS quantity

MPS start
Item: Ladder-back chair
55 chairs 38 chairs already
MPS quantity
April 17
Inventory = currently in + – promised for =
Quantity (0 for week 1) chairs
stock
55 1 2 delivery in week 1
On Hand:

Forecast 30 30
Explanation:
Forecast is less than booked
Customer orders orders in week 1; projected
(booked)
38 27 on-hand inventory
balance = 55 + 0 – 38 = 17.
Projected on-hand
Inventory
17

MPS quantity 0

MPS start
Item: Ladder-back chair
55 chairs 38 chairs already
MPS quantity
April 17
Inventory = currently in + – promised for =
Quantity (0 for week 1) chairs
stock
55 1 2 delivery in week 1
On Hand:

Forecast 30 30
Explanation:
Forecast is less than booked
Customer orders orders in week 1; projected
(booked)
38 27 on-hand inventory
balance = 55 + 0 – 38 = 17.
Projected on-hand
Inventory
17 -13

Explanation:
MPS quantity 0 0 Forecast exceeds booked orders in
week 2; projected on-hand inventory
balance = 17 + 0 – 30 = –13. The
MPS start shortage signals a need to schedule an
MPS quantity for completion in week 2.
Order Policy: 150 units
Item: Ladder-back chair Lead Time: 1 week

April May
Quantity
55
on Hand: 1 2 3 4 5 6 7 8

Forecast 30 30 30 30 35 35 35 35

Customer
orders 38 27 24 8 0 0 0 0
(booked)
Projected
on-hand 17
inventory

MPS quantity 0

MPS start
Order Policy: 150 units
Item: Ladder-back chair Lead Time: 1 week

April May
Quantity
55
on Hand: 1 2 3 4 5 6 7 8

Forecast 30 30 30 30 35 35 35 35

Customer
orders 38 27 24 8 0 0 0 0
(booked)
Projected
on-hand 17 137
inventory

MPS quantity 0 150

MPS start
Order Policy: 150 units
Item: Ladder-back chair Lead Time: 1 week

April May
Quantity
55
on Hand: 1 2 3 4 5 6 7 8

Forecast 30 30 30 30 35 35 35 35

Customer
orders 38 27 24 8 0 0 0 0
(booked)
Projected
on-hand 17 137 Explanation:
inventory
On-hand inventory balance
= 17 + 150 – 30 = 137.
137 The
MPS quantity 0 150
MPS quantity is needed to
avoid a shortage of 30 – 17 = 13
MPS start chairs in week 2.
Order Policy: 150 units
Item: Ladder-back chair Lead Time: 1 week

April May
Quantity
55
on Hand: 1 2 3 4 5 6 7 8

Forecast 30 30 30 30 35 35 35 35

Customer
orders 38 27 24 8 0 0 0 0
(booked)
Projected
on-hand 17 137
inventory
Explanation:
MPS quantity 0 150 The time needed to assemble
150 chairs is one week. The
assembly department must
MPS start 150 start assembling chairs in week
1 to have them ready by week 2.
Order Policy: 150 units
Item: Ladder-back chair Lead Time: 1 week

April May
Quantity
55
on Hand: 1 2 3 4 5 6 7 8

Forecast 30 30 30 30 35 35 35 35

Customer
orders 38 27 24 8 0 0 0 0
(booked)
Projected
on-hand 17 137 107
inventory

MPS quantity 0 150 0

MPS start 150 0


Order Policy: 150 units
Item: Ladder-back chair Lead Time: 1 week

April May
Quantity
55
on Hand: 1 2 3 4 5 6 7 8

Forecast 30 30 30 30 35 35 35 35

Customer
orders 38 27 24 8 0 0 0 0
(booked)
Projected
on-hand 17 137 107 77
inventory

MPS quantity 0 150 0 0

MPS start 150 0 0


Order Policy: 150 units
Item: Ladder-back chair Lead Time: 1 week

April May
Quantity
55
on Hand: 1 2 3 4 5 6 7 8

Forecast 30 30 30 30 35 35 35 35

Customer
orders 38 27 24 8 0 0 0 0
(booked)
Projected
on-hand 17 137 107 77 42
inventory

MPS quantity 0 150 0 0 0

MPS start 150 0 0 0


Order Policy: 150 units
Item: Ladder-back chair Lead Time: 1 week

April May
Quantity
55
on Hand: 1 2 3 4 5 6 7 8

Forecast 30 30 30 30 35 35 35 35

Customer
orders 38 27 24 8 0 0 0 0
(booked)
Projected
on-hand 17 137 107 77 42 7
inventory

MPS quantity 0 150 0 0 0 0

MPS start 150 0 0 0 0


Order Policy: 150 units
Item: Ladder-back chair Lead Time: 1 week

April May
Quantity
55
on Hand: 1 2 3 4 5 6 7 8

Forecast 30 30 30 30 35 35 35 35

Customer
orders 38 27 24 8 0 0 0 0
(booked)
Projected
on-hand 17 137 107 77 42 7 122
inventory

MPS quantity 0 150 0 0 0 0 150

MPS start 150 0 0 0 0 150


Order Policy: 150 units
Item: Ladder-back chair Lead Time: 1 week

April May
Quantity
55
on Hand: 1 2 3 4 5 6 7 8

Forecast 30 30 30 30 35 35 35 35

Customer
orders 38 27 24 8 0 0 0 0
(booked)
Projected
on-hand 17 137 107 77 42 7 122 87
inventory

MPS quantity 0 150 0 0 0 0 150 0

MPS start 150 0 0 0 0 150 0 0


Order Policy: 150 units
Item: Ladder-back chair Lead Time: 1 week

April May
Quantity
55
on Hand: 1 2 3 4 5 6 7 8

Forecast 30 30 30 30 35 35 35 35

Customer
orders 38 27 24 8 0 0 0 0
(booked)
Projected
on-hand 17 137 107 77 42 7 122 87
inventory

MPS quantity 0 150 0 0 0 0 150 0

MPS start 150 0 0 0 0 150 0 0

Available-to-
promise (ATP)
inventory
Order Policy: 150 units
Item: Ladder-back chair Lead Time: 1 week

April May
Quantity
55
on Hand: 1 2 3 4 5 6 7 8

Forecast 30 30 30 30 35 35 35 35

Customer
orders 38 27 24 8 0 0 0 0
(booked)
Projected
on-hand 17 137 107 77 42 7 122 87
inventory
Explanation:
MPS quantity 0 150 The
0 total
0 of customer
0 orders
0 150 0
booked until the next MPS
receipt is 38 units. The ATP =
MPS start 150 0 55
0 (on-hand)
0 + 00 (MPS150 0 0
quantity) – 38 = 17.
17
Available-to-
promise (ATP) 17
inventory
Order Policy: 150 units
Item: Ladder-back chair Lead Time: 1 week

April May
Quantity
55
on Hand: 1 2 3 4 5 6 7 8

Forecast 30 30 30 30 35 35 35 35

Customer
orders 38 27 24 8 0 0 0 0
(booked)
Projected
on-hand 17 137 107 77 42 7 122 87
inventory

MPS quantity 0 150 0 0Explanation:


0 0 150 0
The total of customer orders
booked until the next MPS
MPS start 150 0 0 0receipt 0is 27 +150
24 + 8 =0 59 0
units. The ATP = 150 (MPS
Available-to- quantity) – 59 = 91 units.
promise (ATP) 17 91
inventory
Order Policy: 150 units
Item: Ladder-back chair Lead Time: 1 week

April May
Quantity
55
on Hand: 1 2 3 4 5 6 7 8

Forecast 30 30 30 30 35 35 35 35

Customer
orders 38 27 24 8 0 0 0 0
(booked)
Projected
on-hand 17 137 107 77 42 7 122 87
inventory

MPS quantity 0 150 0 0 0 0 150 0

MPS start 150 0 0 0 0 150 0 0

Available-to-
promise (ATP) 17 91 150
inventory
Week

1 2 3 4 5 6 7 8 9 10

MPS
0 150 0 0 0 0 150 0 0 0
quantity
Week

1 2 3 4 5 6 7 8 9 10

MPS
0 150 0 0 0 0 150 0 0 0
quantity

Demand
time
fence
Week

1 2 3 4 5 6 7 8 9 10

MPS
0 150 0 0 0 0 150 0 0 0
quantity

Demand Planning time fence


time
fence
Order Policy: 50 units
Item: A Lead Time: 1 week

Week
Quantity
5
on Hand: 1 2 3 4 5 6 7 8 7 8

Forecast 20 10 40 10 0 0 40 20 30 10

Customer
orders 30 20 5 8 0 2 0 0 0 0
(booked)
Projected
on-hand 25
inventory

MPS quantity 50

MPS start

Available-to-
promise (ATP)
inventory
Customer orders Forecasts

Master production schedule

Bills of materials
MRP Inventory records
Routings
explosion Inventory transactions
Time standards

Material requirements plan

Cost and
Manufacturing resource plan
financial data

Financial/ Sales and Human


Purchasing Manufacturing
accounting marketing resource
reports reports
reports reports reports
Production
Plan 1500 —
Tru-Rainbow
1250 —
Company
Paint (thousands of gallons)
Requirements
1000 —

750 —

500 —

250 —

0—

| | | |
1 2 3 4
Quarter
Production
Plan 1500 —
Tru-Rainbow
1250 —
Company
Paint (thousands of gallons)
Requirements
1000 —
Production plan
750 —

500 —

250 —

0—

| | | |
1 2 3 4
Quarter
Production Inventory

Plan 1500 —
accumulation

Tru-Rainbow
1250 —
Company
Paint (thousands of gallons)
Requirements
1000 —
Production plan
750 —

500 —

250 — 300

0 — 510

| | | |
1 2 3 4
Quarter
Production Inventory

Plan 1500 —
accumulation

Inventory
Tru-Rainbow consumption
1250 — 400
Company
Paint (thousands of gallons)
Requirements
1000 —
Production plan
750 —
110
500 —

250 — 300

0 — 510

| | | |
1 2 3 4
Quarter
Production Inventory

Plan 1500 —
accumulation

Inventory
Tru-Rainbow consumption
1250 — 400
Company
Paint (thousands of gallons)
Requirements
1000 —
Production plan
750 —
110
500 —

250 — 300

0 — 510

| | | |
1 2 3 4
Quarter
Production
Planning
Tableau
Tru-Rainbow
Company
Production
Planning
Tableau
Tru-Rainbow Total Cost
Company Quarter Cost
Production
Planning
Tableau
Tru-Rainbow Total Cost
Company Quarter Cost
1 250($0) + 30($1.00) + 20($1.90) = $68
Production
Planning
Tableau
Tru-Rainbow Total Cost
Company Quarter Cost
1 250($0) + 30($1.00) + 20($1.90) = $68
2 420($1.30) + 90($1.80) + 340($1.00) = 1,048
Production
Planning
Tableau
Tru-Rainbow Total Cost
Company Quarter Cost
1 250($0) + 30($1.00) + 20($1.90) = $68
2 420($1.30) + 90($1.80) + 340($1.00) = 1,048
3 110($1.30) + 90($1.80) + 200($2.20)
+ 750($1.00) + 150($1.50) = 2,100
Production
Planning
Tableau
Tru-Rainbow Total Cost
Company Quarter Cost
1 250($0) + 30($1.00) + 20($1.90) = $68
2 420($1.30) + 90($1.80) + 340($1.00) = 1,048
3 110($1.30) + 90($1.80) + 200($2.20)
+ 750($1.00) + 150($1.50) = 2,100
4 450($1.00) + 90($1.50) + 110($1.90) = 794
Total $4,010
Regular-Time Overtime Subcon-
Quarter Production Production tracting Total
1 450 90 20 560
2 450 90 200 740
3 750 150 200 1,100
4 450 90 110 650
Totals 2,100 420 530 3,050

Anticipation Inventory
Quarter Quantity
Regular-Time Overtime Subcon-
Quarter Production Production tracting Total
1 450 90 20 560
2 450 90 200 740
3 750 150 200 1,100
4 450 90 110 650
Totals 2,100 420 530 3,050

Anticipation Inventory
Quarter Quantity
1 250 + 560 – 300 = 510
2 510 + 740 – 850 = 400
3 400 + 1,100 – 1,500 = 0
4 0 + 650 – 350 = 300
er

Al
art

ter
Qu

B
n a
invegin tiv
Re entonin e 1s Qu
1 O timgeula ry g 2 ar t
ve r
Su rti
m 3 er
bc e
Re ont 4 Un
r
2 O timgeula act us To
ve r e t
Su rti d al
b me
Re cont Ca Ca
3 O timgeula act
r ac p ac p
ve r it it
y y

Topic 4
Su rti
b me
Re cont
g r
4 O timeula act
ve r
Su rti
bc me
Re
qu ontra
ire ct
me
nts
 Bythe end of this topic, you should be
able to:
 Discuss the aggregate planning
strategies;
 Describe some of the methods used in
aggregate planning;
 Identify assignment method, sequencing
rules and Johnson’s rule; and
 Explain shop loading, sequencing
monitoring.
147
Planning Relationships

Business
or annual
plan
Planning Relationships

Business
or annual
plan
Production
or staffing
plan
Planning Relationships

Business
or annual
plan
Production
or staffing
plan
MPS or
workforce
schedule
Planning Relationships

Business
or annual
plan
Production
or staffing
plan
MPS or
workforce
schedule
Planning Relationships

Business
or annual
plan
Production
or staffing
plan
MPS or
workforce
schedule
Managerial Inputs

Aggregate
plan
Managerial Inputs
Distribution and marketing
Customer needs
Demand forecasts
Competition behavior

Aggregate
plan
Managerial Inputs
Distribution and marketing
Customer needs
Demand forecasts
Competition behavior

Accounting and finance


Aggregate Cost data
plan Financial condition
of firm
Managerial Inputs
Distribution and marketing
Customer needs
Demand forecasts
Competition behavior

Accounting and finance


Aggregate Cost data
plan Financial condition
of firm

Human resources
Labor-market conditions
Training capacity
Managerial Inputs
Distribution and marketing
Customer needs
Demand forecasts
Competition behavior

Accounting and finance


Aggregate Cost data
plan Financial condition
of firm

Engineering Human resources


New products Labor-market conditions
Product design changes Training capacity
Machine standards
Managerial Inputs
Distribution and marketing
Customer needs
Demand forecasts
Competition behavior

Materials Accounting and finance


Supplier capabilities Aggregate Cost data
Storage capacity plan Financial condition
Materials availability of firm

Engineering Human resources


New products Labor-market conditions
Product design changes Training capacity
Machine standards
Managerial Inputs
Operations Distribution and marketing
Current machine capacities Customer needs
Plans for future capacities Demand forecasts
Workforce capacities Competition behavior
Current staffing level

Materials Accounting and finance


Supplier capabilities Aggregate Cost data
Storage capacity plan Financial condition
Materials availability of firm

Engineering Human resources


New products Labor-market conditions
Product design changes Training capacity
Machine standards
• Minimize Costs/Maximize Profits
• Maximize Customer Service
• Minimize Inventory Investment
• Minimize Changes in Production
Rates
• Minimize Changes in Workforce
Levels
• Maximize Utilization of Plant and
Equipment 160
TABLE 14.1 PLANNING STRATEGIES FOR AGGREGATE PLANS

Possible Alternatives Possible Alternatives


Strategy during Slack Season during Peak Season

1. Chase #1: vary workforce Layoffs Hiring


level to match demand
2. Chase #2: vary output Layoffs, undertime, Hiring, overtime,
rate to match demand vacations subcontracting
3. Level #1: constant No layoffs, building No hiring, depleting
workforce level anticipation inventory, anticipation inventory,
undertime, vacations overtime, subcontracting,
backorders, stockouts
4. Level #2: constant Layoffs, building antici- Hiring, depleting antici-
output rate pation inventory, pation inventory, over-
undertime, vacations time, subcontracting,
backorders, stockouts
Aggregate Planning Process
Determine
requirements for
planning horizon
Aggregate Planning Process
Determine
Identify alternatives,
requirements for
constraints, and costs
planning horizon
Aggregate Planning Process
Determine Prepare prospective
Identify alternatives,
requirements for plan for
constraints, and costs
planning horizon planning horizon
Aggregate Planning Process
Determine Prepare prospective
Identify alternatives,
requirements for plan for
constraints, and costs
planning horizon planning horizon

Is the plan
acceptable?
Aggregate Planning Process
Determine Prepare prospective
Identify alternatives,
requirements for plan for
constraints, and costs
planning horizon planning horizon

No
Is the plan
acceptable?
Aggregate Planning Process
Determine Prepare prospective
Identify alternatives,
requirements for plan for
constraints, and costs
planning horizon planning horizon

No
Is the plan
acceptable?

Yes
Implement and
update the plan
Aggregate Planning Process
Determine Prepare prospective
Identify alternatives,
requirements for plan for
constraints, and costs
planning horizon planning horizon

No
Is the plan
acceptable?

Yes
Move ahead
Implement and
to next
update the plan
planning session
• Regular-Time Costs
• Overtime Costs
• Hiring and
Layoff Costs
• Inventory
Holding Costs
• Backorder and Stockout Costs
169
Dock Aisle

170
Dock Aisle

TIME PERIOD
1 2 3 4 5 6 Total
Requirement* 6 12 18 15 13 14 78
Current employment = 10 part-time clerks * Number of part-time employees

171
Dock Aisle

TIME PERIOD
1 2 3 4 5 6 Total
Requirement* 6 12 18 15 13 14 78
Current employment = 10 part-time clerks * Number of part-time employees

1. No more than 10 new hires in any period


2. No backorders are permitted
3. Overtime can not exceed 20% of regular-time capacity
4. The following costs can be assigned:
Regular-time wage $2,000/period at 20 hours/week
Overtime wages 150% of regular-time
Hiring $1,000/person
Layoffs $500/person

172
Dock Aisle

TIME PERIOD
1 2 3 4 5 6 Total
Requirement* 6 12 18 15 13 14 78
Current employment = 10 part-time clerks
Peak Requirement
1. No more than 10 new hires in any period
2. No backorders are permitted
3. Overtime can not exceed 20% of regular-time capacity
4. The following costs can be assigned:
Regular-time wage $2,000/period at 20 hours/week
Overtime wages 150% of regular-time
Hiring $1,000/person
Layoffs $500/person

173
Dock Aisle

TIME PERIOD
1 2 3 4 5 6 Total
Requirement* 6 12 18 15 13 14 78
Current employment = 10 part-time clerks
Peak Requirement
1. No more than 10 new hires in any period
2. No backorders are permitted
1.20w = 18 employees in peak period
3. Overtime can not exceed 20% of regular-time capacity
4. The following costs can be assigned:
Regular-time wage $2,000/period at 20 hours/week
Overtime wages 150% of regular-time
Hiring $1,000/person
Layoffs $500/person

174
Dock Aisle

TIME PERIOD
1 2 3 4 5 6 Total
Requirement* 6 12 18 15 13 14 78
Current employment = 10 part-time clerks
Peak Requirement
1. No more than 10 new hires in any period
2. No backorders are permitted
1.20w = 18 employees in peak period
3. Overtime can not exceed 20% of regular-time capacity
4. 18
The following costs can be assigned:
Regular-time wage w = = 15atemployees
$2,000/period 20 hours/week
1.20
Overtime wages 150% of regular-time
Hiring $1,000/person
Layoffs $500/person

175
Dock Aisle

TIME PERIOD
1 2 3 4 5 6 Total
Requirement* 6 12 18 15 13 14 78
Current employment = 10 part-time clerks
Peak Requirement
1. No more than 10 new hires in any period
2. No backorders are permitted
1.20w = 18 employees in peak period
3. Overtime can not exceed 20% of regular-time capacity
4. 18
The following costs can be assigned:
Regular-time wage w = = 15atemployees
$2,000/period 20 hours/week
1.20
Overtime wages 150% of regular-time
Hiring $1,000/person
Layoffs $500/person

176
Scheduling Services
Required employees
Day M T W Th F S Su
Number of employees 6 4 8 9 10* 3 2

178
Scheduling Services
Required employees
Day M T W Th F S Su
Number of employees 6 4 8 9 10* 3 2
Employee 1

179
Scheduling Services
Required employees
Day M T W Th F S Su
Number of employees 6 4 8 9 10* 3 2
Employee 1 X X X X X

180
Scheduling Services
Required employees
Day M T W Th F S Su
Number of employees 6 4 8 9 10* 3 2
Employee 1 X X X X X
Requirement 5 3 7 8 9* 3 2

181
Scheduling Services
Required employees
Day M T W Th F S Su
Number of employees 6 4 8 9 10* 3 2
Employee 1 X X X X X
Requirement 5 3 7 8 9* 3 2
Employee 2 X X X X X

182
Scheduling Services
Required employees
Day M T W Th F S Su
Number of employees 6 4 8 9 10* 3 2
Employee 1 X X X X X
Requirement 5 3 7 8 9* 3 2
Employee 2 X X X X X
Requirement 4 2 6 7 8* 3 2

183
Scheduling Services
Required employees
Day M T W Th F S Su
Number of employees 6 4 8 9 10* 3 2
Employee 1 X X X X X
Requirement 5 3 7 8 9* 3 2
Employee 2 X X X X X
Requirement 4 2 6 7 8* 3 2
Employee 3 X X X X X

184
Scheduling Services
Required employees
Day M T W Th F S Su
Number of employees 6 4 8 9 10* 3 2
Employee 1 X X X X X
Requirement 5 3 7 8 9* 3 2
Employee 2 X X X X X
Requirement 4 2 6 7 8* 3 2
Employee 3 X X X X X
Requirement 3 1 5 6 7* 3 2

185
Scheduling Services
Required employees
Day M T W Th F S Su
Number of employees 6 4 8 9 10* 3 2
Employee 1 X X X X X
Requirement 5 3 7 8 9* 3 2
Employee 2 X X X X X
Requirement 4 2 6 7 8* 3 2
Employee 3 X X X X X
Requirement 3 1 5 6 7* 3 2
Employee 4 X X X X X

186
Scheduling Services
Required employees
Day M T W Th F S Su
Number of employees 6 4 8 9 10* 3 2
Employee 1 X X X X X
Requirement 5 3 7 8 9* 3 2
Employee 2 X X X X X
Requirement 4 2 6 7 8* 3 2
Employee 3 X X X X X
Requirement 3 1 5 6 7* 3 2
Employee 4 X X X X X
Requirement 3 1 4 5 6* 2 1

187
Scheduling Services
Required employees
Day M T W Th F S Su
Number of employees 6 4 8 9 10* 3 2
Employee 1 X X X X X
Requirement 5 3 7 8 9* 3 2
Employee 2 X X X X X
Requirement 4 2 6 7 8* 3 2
Employee 3 X X X X X
Requirement 3 1 5 6 7* 3 2
Employee 4 X X X X X
Requirement 3 1 4 5 6* 2 1
Employee 5 X X X X X
188
Scheduling Services
Required employees
Day M T W Th F S Su
Requirement 2 0 3 4 5* 2 1

189
Scheduling Services
Required employees
Day M T W Th F S Su
Requirement 2 0 3 4 5* 2 1
Employee 6 X X X X X

190
Scheduling Services
Required employees
Day M T W Th F S Su
Requirement 2 0 3 4 5* 2 1
Employee 6 X X X X X
Requirement 2 0 2 3 4* 1 0
Employee 7 X X X X X

191
Scheduling Services
Required employees
Day M T W Th F S Su
Requirement 2 0 3 4 5* 2 1
Employee 6 X X X X X
Requirement 2 0 2 3 4* 1 0
Employee 7 X X X X X
Requirement 1 0 1 2 3* 1 0
Employee 8 X X X X X

192
Scheduling Services
Required employees
Day M T W Th F S Su
Requirement 2 0 3 4 5* 2 1
Employee 6 X X X X X
Requirement 2 0 2 3 4* 1 0
Employee 7 X X X X X
Requirement 1 0 1 2 3* 1 0
Employee 8 X X X X X
Requirement 0 0 0 1 2* 1 0
Employee 9 X X X X X

193
Scheduling Services
Required employees
Day M T W Th F S Su
Requirement 2 0 3 4 5* 2 1
Employee 6 X X X X X
Requirement 2 0 2 3 4* 1 0
Employee 7 X X X X X
Requirement 1 0 1 2 3* 1 0
Employee 8 X X X X X
Requirement 0 0 0 1 2* 1 0
Employee 9 X X X X X
Requirement 0 0 0 0 1* 0 0
Employee 10 X X X X X
194
Scheduling Services
Final Schedule
Day M T W Th F S Su
Employee 1 X X X X X off off
Employee 2 X X X X X off off
Employee 3 X X X X X off off
Employee 4 off off X X X X X
Employee 5 X X X X X off off
Employee 6 off off X X X X X
Employee 7 X X X X X off off
Employee 8 X X X X X off off
Employee 9 off X X X X X off
Employee 10 X X X X X off off

195
Scheduling Services
Final Schedule
Day M T W Th F S Su
Employee 1 X X X X X off off
Employee 2 X X X X X off off
Day Employee M3 T XW XTh X F XS XSuoff TOTAL
off
Employee 4 off off X X X X X
Employee 5 X X X X X off off
Employee 6 off off X X X X X
Employee 7 X X X X X off off
Employee 8 X X X X X off off
Employee 9 off X X X X X off
Employee 10 X X X X X off off

196
Scheduling Services
Final Schedule
Day M T W Th F S Su
Employee 1 X X X X X off off
Employee 2 X X X X X off off
Day Employee M3 T XW XTh X F X S XSuoff TOTAL
off
Employee
Capacity, C 74 8 off10off10 X10 X 3 X2 X X
50
Employee 5 X X X X X off off
Employee 6 off off X X X X X
Employee 7 X X X X X off off
Employee 8 X X X X X off off
Employee 9 off X X X X X off
Employee 10 X X X X X off off

197
Scheduling Services
Final Schedule
Day M T W Th F S Su
Employee 1 X X X X X off off
Employee 2 X X X X X off off
Day Employee M3 T XW XTh X F X S XSuoff TOTAL
off
Employee
Capacity, C 74 8 off10off10 X10 X 3 X2 X X
50
Employee
Requirements, R 65 4 X 8 X 9 X10 X 3 X 2 off 42
off
Employee 6 off off X X X X X
Employee 7 X X X X X off off
Employee 8 X X X X X off off
Employee 9 off X X X X X off
Employee 10 X X X X X off off

198
Scheduling Services
Final Schedule
Day M T W Th F S Su
Employee 1 X X X X X off off
Employee 2 X X X X X off off
Day Employee M3 T XW XTh X F X S XSuoff TOTAL
off
Employee
Capacity, C 74 8 off10off10 X10 X 3 X2 X X
50
Employee
Requirements, R 65 4 X 8 X 9 X10 X 3 X 2 off 42
off
Slack, CEmployee
–R 16 4 off 2 off 1 X 0 X 0 X0 X X8
Employee 7 X X X X X off off
Employee 8 X X X X X off off
Employee 9 off X X X X X off
Employee 10 X X X X X off off

199
Manufacturing Process

Shipping Department
Raw Materials

Legend:
Batch of parts
Workstation
200
Dispatching Procedures
• Critical ratio (CR)
= (Due date – Today’s date)/Total shop time remaining
• Earliest due date (EDD)
• First come, first served (FCFS)
• Shortest processing time (SPT)
• Slack per remaining operations (S/RO)
= ((Due date - Today’s date) – Total shop time remaining)/
Number of operations remaining

201
Sequencing
Single-Dimension Rules – EDD
Job Scheduled Actual
Engine Processing Flow Customer Customer Hours
Block Begin Time Time Pickup Pickup Hours Past
Sequence Work (hr) (hr) Time Time Early Due
Ranger 0 + 8 = 8 10 10 2
Explorer 8 + 6 = 14 12 14 2
Econoline 150 14 + 3 = 17 18 18 1
Bronco 17 + 15 = 32 20 32 12
Thunderbird 32 + 12 = 44 22 44 22

202
Sequencing
Single-Dimension Rules – EDD
Job Scheduled Actual
Engine Processing Flow Customer Customer Hours
Block Begin Time Time Pickup Pickup Hours Past
Sequence Work (hr) (hr) Time Time Early Due
Ranger 0 + 8 = 8 10 10 2
Explorer 8 + 6 = 14 12 14 2
Econoline 150 14 + 3 = 17 18 18 1
Bronco 17 + 15 = 32 20 32 12
Thunderbird 32 + 12 = 44 22 44 22
8 + 14 + 17 + 32 + 44
Average job flow time =
5

203
Sequencing
Single-Dimension Rules – EDD
Job Scheduled Actual
Engine Processing Flow Customer Customer Hours
Block Begin Time Time Pickup Pickup Hours Past
Sequence Work (hr) (hr) Time Time Early Due
Ranger 0 + 8 = 8 10 10 2
Explorer 8 + 6 = 14 12 14 2
Econoline 150 14 + 3 = 17 18 18 1
Bronco 17 + 15 = 32 20 32 12
Thunderbird 32 + 12 = 44 22 44 22

Average job flow time = 32 hours

204
Sequencing
Single-Dimension Rules – EDD
Job Scheduled Actual
Engine Processing Flow Customer Customer Hours
Block Begin Time Time Pickup Pickup Hours Past
Sequence Work (hr) (hr) Time Time Early Due
Ranger 0 + 8 = 8 10 10 2
Explorer 8 + 6 = 14 12 14 2
Econoline 150 14 + 3 = 17 18 18 1
Bronco 17 + 15 = 32 20 32 12
Thunderbird 32 + 12 = 44 22 44 22

Average job flow time = 32 hours Average hours early =


2+0+1+0+0
5

205
Sequencing
Single-Dimension Rules – EDD
Job Scheduled Actual
Engine Processing Flow Customer Customer Hours
Block Begin Time Time Pickup Pickup Hours Past
Sequence Work (hr) (hr) Time Time Early Due
Ranger 0 + 8 = 8 10 10 2
Explorer 8 + 6 = 14 12 14 2
Econoline 150 14 + 3 = 17 18 18 1
Bronco 17 + 15 = 32 20 32 12
Thunderbird 32 + 12 = 44 22 44 22

Average job flow time = 32 hours Average hours early = 0.6 hour

206
Sequencing
Single-Dimension Rules – EDD
Job Scheduled Actual
Engine Processing Flow Customer Customer Hours
Block Begin Time Time Pickup Pickup Hours Past
Sequence Work (hr) (hr) Time Time Early Due
Ranger 0 + 8 = 8 10 10 2
Explorer 8 + 6 = 14 12 14 2
Econoline 150 14 + 3 = 17 18 18 1
Bronco 17 + 15 = 32 20 32 12
Thunderbird 32 + 12 = 44 22 44 22

Average job flow time = 32 hours Average hours early = 0.6 hour
0 + 2 + 0 + 12 + 22
Average hours past due =
5

207
Sequencing
Single-Dimension Rules – EDD
Job Scheduled Actual
Engine Processing Flow Customer Customer Hours
Block Begin Time Time Pickup Pickup Hours Past
Sequence Work (hr) (hr) Time Time Early Due
Ranger 0 + 8 = 8 10 10 2
Explorer 8 + 6 = 14 12 14 2
Econoline 150 14 + 3 = 17 18 18 1
Bronco 17 + 15 = 32 20 32 12
Thunderbird 32 + 12 = 44 22 44 22

Average job flow time = 32 hours Average hours early = 0.6 hour

Average hours past due = 7.2 hours

208
Sequencing
Single-Dimension Rules – EDD
Job Scheduled Actual
Engine Processing Flow Customer Customer Hours
Block Begin Time Time Pickup Pickup Hours Past
Sequence Work (hr) (hr) Time Time Early Due
Ranger 0 + 8 = 8 10 10 2
Explorer 8 + 6 = 14 12 14 2
Econoline 150 14 + 3 = 17 18 18 1
Bronco 17 + 15 = 32 20 32 12
Thunderbird 32 + 12 = 44 22 44 22

Average job flow time = 32 hours Average hours early = 0.6 hour

Average hours past due = 7.2 hours Average WIP =


Sum of flow times
Makespan
209
Sequencing
Single-Dimension Rules – EDD
Job Scheduled Actual
Engine Processing Flow Customer Customer Hours
Block Begin Time Time Pickup Pickup Hours Past
Sequence Work (hr) (hr) Time Time Early Due
Ranger 0 + 8 = 8 10 10 2
Explorer 8 + 6 = 14 12 14 2
Econoline 150 14 + 3 = 17 18 18 1
Bronco 17 + 15 = 32 20 32 12
Thunderbird 32 + 12 = 44 22 44 22

Average job flow time = 32 hours Average hours early = 0.6 hour

Average hours past due = 7.2 hours Average WIP =


8 + 14 + 17 + 32 + 44
44
210
Sequencing
Single-Dimension Rules – EDD
Job Scheduled Actual
Engine Processing Flow Customer Customer Hours
Block Begin Time Time Pickup Pickup Hours Past
Sequence Work (hr) (hr) Time Time Early Due
Ranger 0 + 8 = 8 10 10 2
Explorer 8 + 6 = 14 12 14 2
Econoline 150 14 + 3 = 17 18 18 1
Bronco 17 + 15 = 32 20 32 12
Thunderbird 32 + 12 = 44 22 44 22

Average job flow time = 32 hours Average hours early = 0.6 hour

Average hours past due = 7.2 hours Average WIP = 2.61 blocks

211
Sequencing
Single-Dimension Rules – EDD
Job Scheduled Actual
Engine Processing Flow Customer Customer Hours
Block Begin Time Time Pickup Pickup Hours Past
Sequence Work (hr) (hr) Time Time Early Due
Ranger 0 + 8 = 8 10 10 2
Explorer 8 + 6 = 14 12 14 2
Econoline 150 14 + 3 = 17 18 18 1
Bronco 17 + 15 = 32 20 32 12
Thunderbird 32 + 12 = 44 22 44 22

Average job flow time = 32 hours Average hours early = 0.6 hour

Average hours past due = 7.2 hours Average WIP = 2.61 blocks
Sum of time in system
Average total inventory =
Makespan
212
Sequencing
Single-Dimension Rules – EDD
Job Scheduled Actual
Engine Processing Flow Customer Customer Hours
Block Begin Time Time Pickup Pickup Hours Past
Sequence Work (hr) (hr) Time Time Early Due
Ranger 0 + 8 = 8 10 10 2
Explorer 8 + 6 = 14 12 14 2
Econoline 150 14 + 3 = 17 18 18 1
Bronco 17 + 15 = 32 20 32 12
Thunderbird 32 + 12 = 44 22 44 22

Average job flow time = 32 hours Average hours early = 0.6 hour

Average hours past due = 7.2 hours Average WIP = 2.61 blocks
10 + 14 + 18 + 32 + 44
Average total inventory =
44
213
Sequencing
Single-Dimension Rules – EDD
Job Scheduled Actual
Engine Processing Flow Customer Customer Hours
Block Begin Time Time Pickup Pickup Hours Past
Sequence Work (hr) (hr) Time Time Early Due
Ranger 0 + 8 = 8 10 10 2
Explorer 8 + 6 = 14 12 14 2
Econoline 150 14 + 3 = 17 18 18 1
Bronco 17 + 15 = 32 20 32 12
Thunderbird 32 + 12 = 44 22 44 22

Average job flow time = 32 hours Average hours early = 0.6 hour

Average hours past due = 7.2 hours Average WIP = 2.61 blocks

Average total inventory = 2.68 engine blocks


214
Sequencing
Single-Dimension Rules – SPT
Job Scheduled Actual
Engine Processing Flow Customer Customer Hours
Block Begin Time Time Pickup Pickup Hours Past
Sequence Work (hr) (hr) Time Time Early Due
Econoline 150 0 + 3 = 3 18 18 15
Explorer 3 + 6 = 9 12 12 3
Ranger 6 + 8 = 17 10 17 7
Thunderbird 17 + 12 = 29 22 29 7
Bronco 29 + 15 = 44 20 44 24

Average job flow time = 20.4 hours Average hours early = 3.6 hour

Average hours past due = 7.6 hours Average WIP = 2.32 blocks

Average total inventory = 2.73 engine blocks


215
Sequencing
Single-Dimension Rules – SPT
Job Scheduled Actual
Engine Processing Flow Customer Customer Hours
Block Begin Time Time Pickup Pickup Hours Past
Sequence Work (hr) Rule
(hr) Comparison
Time Time Early Due
Econoline 150 0 + 3 = 3 18 18 15
EDD SPT
Explorer 3 + 6 = 9 12 12 3
Ranger Average
6 + 8 job
= flow
17 time
1023.00
17 20.40 7
Thunderbird Average
17 + 12 hours
= 29early 22 0.60
29 3.60 7
Bronco 29 + 15
Average = 44past due
hours 20 44
7.20 7.60 24
Average WIP 2.61 2.32
Average job flow time = 20.4 hours Average hours early = 3.6 hour
Average total inventory 2.68 2.73
Average hours past due = 7.6 hours Average WIP = 2.32 blocks

Average total inventory = 2.73 engine blocks


216
Sequencing
Multiple-Dimension Rules
Operation Time
Time at Remaining Number of
Engine to Due Date Operations Shop Time
Job Lathe (hr) (Days) Remaining Remaining CR S/RO
1 2.3 15 10 6.1
2 10.5 10 2 7.8
3 6.2 20 12 14.5
4 15.6 8 5 10.2

Time remaining to due date


CR =
Shop time remaining

217
Sequencing
Multiple-Dimension Rules
Operation Time
Time at Remaining Number of
Engine to Due Date Operations Shop Time
Job Lathe (hr) (Days) Remaining Remaining CR S/RO
1 2.3 15 10 6.1
2 10.5 10 2 7.8
3 6.2 20 12 14.5
4 15.6 8 5 10.2

15
CR =
6.1

218
Sequencing
Multiple-Dimension Rules
Operation Time
Time at Remaining Number of
Engine to Due Date Operations Shop Time
Job Lathe (hr) (Days) Remaining Remaining CR S/RO
1 2.3 15 10 6.1
2 10.5 10 2 7.8
3 6.2 20 12 14.5
4 15.6 8 5 10.2

15
CR = = 2.46
6.1

219
Sequencing
Multiple-Dimension Rules
Operation Time
Time at Remaining Number of
Engine to Due Date Operations Shop Time
Job Lathe (hr) (Days) Remaining Remaining CR S/RO
1 2.3 15 10 6.1 2.46
2 10.5 10 2 7.8
3 6.2 20 12 14.5
4 15.6 8 5 10.2

15
CR = = 2.46
6.1

220
Sequencing
Multiple-Dimension Rules
Operation Time
Time at Remaining Number of
Engine to Due Date Operations Shop Time
Job Lathe (hr) (Days) Remaining Remaining CR S/RO
1 2.3 15 10 6.1 2.46
2 10.5 10 2 7.8 1.28
3 6.2 20 12 14.5 1.38
4 15.6 8 5 10.2 .78

221
Sequencing
Multiple-Dimension Rules
Operation Time
Time at Remaining Number of
Engine to Due Date Operations Shop Time
Job Lathe (hr) (Days) Remaining Remaining CR S/RO
1 2.3 15 10 6.1 2.46
2 10.5 10 2 7.8 1.28
3 6.2 20 12 14.5 1.38
4 15.6 8 5 10.2 .78

Time remaining to due date – Shop time remaining


S/RO =
Number of operations remaining

222
Sequencing
Multiple-Dimension Rules
Operation Time
Time at Remaining Number of
Engine to Due Date Operations Shop Time
Job Lathe (hr) (Days) Remaining Remaining CR S/RO
1 2.3 15 10 6.1 2.46
2 10.5 10 2 7.8 1.28
3 6.2 20 12 14.5 1.38
4 15.6 8 5 10.2 .78

15 – 6.1
S/RO =
10

223
Sequencing
Multiple-Dimension Rules
Operation Time
Time at Remaining Number of
Engine to Due Date Operations Shop Time
Job Lathe (hr) (Days) Remaining Remaining CR S/RO
1 2.3 15 10 6.1 2.46
2 10.5 10 2 7.8 1.28
3 6.2 20 12 14.5 1.38
4 15.6 8 5 10.2 .78

15 – 6.1
S/RO = = 0.89
10

224
Sequencing
Multiple-Dimension Rules
Operation Time
Time at Remaining Number of
Engine to Due Date Operations Shop Time
Job Lathe (hr) (Days) Remaining Remaining CR S/RO
1 2.3 15 10 6.1 2.46 0.89
2 10.5 10 2 7.8 1.28
3 6.2 20 12 14.5 1.38
4 15.6 8 5 10.2 .78

15 – 6.1
S/RO = = 0.89
10

225
Sequencing
Multiple-Dimension Rules
Operation Time
Time at Remaining Number of
Engine to Due Date Operations Shop Time
Job Lathe (hr) (Days) Remaining Remaining CR S/RO
1 2.3 15 10 6.1 2.46 0.89
2 10.5 10 2 7.8 1.28 1.10
3 6.2 20 12 14.5 1.38 0.46
4 15.6 8 5 10.2 .78 – 0.44

226
Sequencing
Multiple-Dimension Rules
Operation Time
Time at Remaining Number of
Engine to Due Date Operations Shop Time
Job Lathe (hr) (Days) Remaining Remaining CR S/RO
1 2.3 15 10 6.1 2.46 0.89
2 10.5 10 2 7.8 1.28 1.10
3 6.2 20 12 14.5 1.38 0.46
4 15.6 8 5 10.2 .78 – 0.44

CR Sequence =

227
Sequencing
Multiple-Dimension Rules
Operation Time
Time at Remaining Number of
Engine to Due Date Operations Shop Time
Job Lathe (hr) (Days) Remaining Remaining CR S/RO
1 2.3 15 10 6.1 2.46 0.89
2 10.5 10 2 7.8 1.28 1.10
3 6.2 20 12 14.5 1.38 0.46
4 15.6 8 5 10.2 .78 – 0.44

CR Sequence = 4

228
Sequencing
Multiple-Dimension Rules
Operation Time
Time at Remaining Number of
Engine to Due Date Operations Shop Time
Job Lathe (hr) (Days) Remaining Remaining CR S/RO
1 2.3 15 10 6.1 2.46 0.89
2 10.5 10 2 7.8 1.28 1.10
3 6.2 20 12 14.5 1.38 0.46
4 15.6 8 5 10.2 .78 – 0.44

CR Sequence = 4–2

229
Sequencing
Multiple-Dimension Rules
Operation Time
Time at Remaining Number of
Engine to Due Date Operations Shop Time
Job Lathe (hr) (Days) Remaining Remaining CR S/RO
1 2.3 15 10 6.1 2.46 0.89
2 10.5 10 2 7.8 1.28 1.10
3 6.2 20 12 14.5 1.38 0.46
4 15.6 8 5 10.2 .78 – 0.44

CR Sequence = 4–2–3

230
Sequencing
Multiple-Dimension Rules
Operation Time
Time at Remaining Number of
Engine to Due Date Operations Shop Time
Job Lathe (hr) (Days) Remaining Remaining CR S/RO
1 2.3 15 10 6.1 2.46 0.89
2 10.5 10 2 7.8 1.28 1.10
3 6.2 20 12 14.5 1.38 0.46
4 15.6 8 5 10.2 .78 – 0.44

CR Sequence = 4–2–3–1

231
Sequencing
Multiple-Dimension Rules
Operation Time
Time at Remaining Number of
Engine to Due Date Operations Shop Time
Job Lathe (hr) (Days) Remaining Remaining CR S/RO
1 2.3 15 10 6.1 2.46 0.89
2 10.5 10 2 7.8 1.28 1.10
3 6.2 20 12 14.5 1.38 0.46
4 15.6 8 5 10.2 .78 – 0.44

CR Sequence = 4–2–3–1
S/RO Sequence =

232
Sequencing
Multiple-Dimension Rules
Operation Time
Time at Remaining Number of
Engine to Due Date Operations Shop Time
Job Lathe (hr) (Days) Remaining Remaining CR S/RO
1 2.3 15 10 6.1 2.46 0.89
2 10.5 10 2 7.8 1.28 1.10
3 6.2 20 12 14.5 1.38 0.46
4 15.6 8 5 10.2 .78 – 0.44

CR Sequence = 4–2–3–1
S/RO Sequence = 4

233
Sequencing
Multiple-Dimension Rules
Operation Time
Time at Remaining Number of
Engine to Due Date Operations Shop Time
Job Lathe (hr) (Days) Remaining Remaining CR S/RO
1 2.3 15 10 6.1 2.46 0.89
2 10.5 10 2 7.8 1.28 1.10
3 6.2 20 12 14.5 1.38 0.46
4 15.6 8 5 10.2 .78 – 0.44

CR Sequence = 4–2–3–1
S/RO Sequence = 4 – 3

234
Sequencing
Multiple-Dimension Rules
Operation Time
Time at Remaining Number of
Engine to Due Date Operations Shop Time
Job Lathe (hr) (Days) Remaining Remaining CR S/RO
1 2.3 15 10 6.1 2.46 0.89
2 10.5 10 2 7.8 1.28 1.10
3 6.2 20 12 14.5 1.38 0.46
4 15.6 8 5 10.2 .78 – 0.44

CR Sequence = 4–2–3–1
S/RO Sequence = 4 – 3 – 1

235
Sequencing
Multiple-Dimension Rules
Operation Time
Time at Remaining Number of
Engine to Due Date Operations Shop Time
Job Lathe (hr) (Days) Remaining Remaining CR S/RO
1 2.3 15 10 6.1 2.46 0.89
2 10.5 10 2 7.8 1.28 1.10
3 6.2 20 12 14.5 1.38 0.46
4 15.6 8 5 10.2 .78 – 0.44

CR Sequence = 4–2–3–1
S/RO Sequence = 4 – 3 – 1 – 2

236
Sequencing
Multiple-Dimension Rules
Operation Time
Time at Remaining Number of
Engine to Due Date Operations Shop Time
Job Lathe (hr) (Days) Sequence
Remaining Summary
Remaining CR S/RO
1 2.3 15 10 6.1 2.46 0.89
2 10.5 10 2 7.8 1.28 1.10
3 6.2 20 12 14.5 1.38 0.46
4 15.6 8 5 10.2 .78 – 0.44

CR Sequence = 4–2–3–1
S/RO Sequence = 4 – 3 – 1 – 2

237
Sequencing
Multiple-Dimension Rules
Operation Time
Time at Remaining Number of
Engine to Due Date Operations Shop Time
Job Lathe (hr) (Days) Sequence
Remaining Summary
Remaining CR S/RO
1 2.3 15 10 6.1 2.46 0.89
2 10.5 10 FCFS
2 = 17.8
– 2 – 1.28
3 – 4 1.10
3 6.2 20 12 14.5 1.38 0.46
4 15.6 8 5 10.2 .78 – 0.44

CR Sequence = 4–2–3–1
S/RO Sequence = 4 – 3 – 1 – 2

238
Sequencing
Multiple-Dimension Rules
Operation Time
Time at Remaining Number of
Engine to Due Date Operations Shop Time
Job Lathe (hr) (Days) Sequence
Remaining Summary
Remaining CR S/RO
1 2.3 15 10 6.1 2.46 0.89
2 10.5 10 FCFS
2 = 17.8
– 2 – 1.28
3 – 4 1.10
3 6.2 20 SPT = 14.5
12 1 – 3 – 1.38
2 – 4 0.46
4 15.6 8 5 10.2 .78 – 0.44

CR Sequence = 4–2–3–1
S/RO Sequence = 4 – 3 – 1 – 2

239
Sequencing
Multiple-Dimension Rules
Operation Time
Time at Remaining Number of
Engine to Due Date Operations Shop Time
Job Lathe (hr) (Days) Sequence
Remaining Summary
Remaining CR S/RO
1 2.3 15 10 6.1 2.46 0.89
2 10.5 10 FCFS
2 = 17.8
– 2 – 1.28
3 – 4 1.10
3 6.2 20 SPT = 14.5
12 1 – 3 – 1.38
2 – 4 0.46
4 15.6 8 EDD
5 = 10.2
4 – 2 – 1.78
– 3 – 0.44

CR Sequence = 4–2–3–1
S/RO Sequence = 4 – 3 – 1 – 2

240
Sequencing
Multiple-Dimension Rules
Operation Time
Priority Rule Summary
Time at Remaining Number of
Engine to Due Date Shortest
Operations Shop Time Slack per
Job Lathe (hr) Sequence
(Days) Processing Earliest
Remaining Summary
Critical CR
Remaining Remaining
S/RO
FCFS Time Due Date Ratio Operation
1 2.3 15 10 6.1 2.46 0.89
Avg Flow Time 17.175 16.100 26.175 27.150 24.025
2Avg Early
10.5Time 10
3.425
FCFS =0 17.8
6.0502
– 2 –01.28
3 – 4 1.10
0
3Avg Past6.2
Due 20
7.350 SPT12.925
12
8.900 = 14.5
1 –13.900
3 – 1.38
2 –10.775
4 0.46
4Avg WIP
15.6 8
1.986 1.861EDD = 10.2
5 3.026 4 – 3.129
2 – 1.78
– 32.777
– 0.44
Avg Total Inv 2.382 2.561 3.026 3.129 2.777

CR Sequence = 4–2–3–1
S/RO Sequence = 4 – 3 – 1 – 2

241
Sequencing
Simulation

PRECISION AUTOBODY PROCESS TIMES


TIME TO PERFORM
OPERATION Average (hr) Standard Deviation

1. Frame straightening * 8 2
2a. Body repair, major damage * 16 4
2b. Body repair, minor damage * 8 2
3. Paint preparation 11/4 1
/3
4. Paint application (two coats) 11/2 1
/2
6. Clean up 3 1
/2
* Not necessary for all vehicles

242
Sequencing
Simulation

243
Sequencing
Simulation

244
Sequencing
Simulation

Figure 17.6
245
Sequencing
Johnson’s Rule

Time (hr)
Motor Workstation 1 Workstation 2
M1 12 22
M2 4 5
M3 5 3
M4 15 16
M5 10 8

246
Sequencing
Johnson’s Rule

Time (hr)
Motor Workstation 1 Workstation 2
M1 12 22
M2 4 5
M3 5 3
M4 15 16
M5 10 8

Sequence =

247
Sequencing
Johnson’s Rule

Time (hr)
Motor Workstation 1 Workstation 2
M1 12 22
M2 4 5
M3 5 3
M4 15 16
M5 10 8

Sequence =

248
Sequencing
Johnson’s Rule

Time (hr)
Motor Workstation 1 Workstation 2
M1 12 22
M2 4 5
M3 5 3
M4 15 16
M5 10 8

Sequence = M3

249
Sequencing
Johnson’s Rule

Time (hr)
Motor Workstation 1 Workstation 2
M1 12 22
M2 4 5
M3 5 3
M4 15 16
M5 10 8

Sequence = M3

250
Sequencing
Johnson’s Rule

Time (hr)
Motor Workstation 1 Workstation 2
M1 12 22
M2 4 5
M3 5 3
M4 15 16
M5 10 8

Sequence = M3

251
Sequencing
Johnson’s Rule

Time (hr)
Motor Workstation 1 Workstation 2
M1 12 22
M2 4 5
M3 5 3
M4 15 16
M5 10 8

Sequence = M3

252
Sequencing
Johnson’s Rule

Time (hr)
Motor Workstation 1 Workstation 2
M1 12 22
M2 4 5
M3 5 3
M4 15 16
M5 10 8

Sequence = M2 M3

253
Sequencing
Johnson’s Rule

Time (hr)
Motor Workstation 1 Workstation 2
M1 12 22
M2 4 5
M3 5 3
M4 15 16
M5 10 8

Sequence = M2 M3

254
Sequencing
Johnson’s Rule

Time (hr)
Motor Workstation 1 Workstation 2
M1 12 22
M2 4 5
M3 5 3
M4 15 16
M5 10 8

Sequence = M2 M3

255
Sequencing
Johnson’s Rule

Time (hr)
Motor Workstation 1 Workstation 2
M1 12 22
M2 4 5
M3 5 3
M4 15 16
M5 10 8

Sequence = M2 M5 - M3

256
Sequencing
Johnson’s Rule

Time (hr)
Motor Workstation 1 Workstation 2
M1 12 22
M2 4 5
M3 5 3
M4 15 16
M5 10 8

Sequence = M2 M5 - M3

257
Sequencing
Johnson’s Rule

Time (hr)
Motor Workstation 1 Workstation 2
M1 12 22
M2 4 5
M3 5 3
M4 15 16
M5 10 8

Sequence = M2 - M1 M5 - M3

258
Sequencing
Johnson’s Rule

Time (hr)
Motor Workstation 1 Workstation 2
M1 12 22
M2 4 5
M3 5 3
M4 15 16
M5 10 8

Sequence = M2 - M1 M5 - M3

259
Sequencing
Johnson’s Rule

Time (hr)
Motor Workstation 1 Workstation 2
M1 12 22
M2 4 5
M3 5 3
M4 15 16
M5 10 8

Sequence = M2 - M1 - M4 - M5 - M3

260
Sequencing
Johnson’s Rule

Time (hr)
Motor Workstation 1 Workstation 2
M1 12 22
M2 4 5
M3 5 3
M4 15 16
M5 10 8

Sequence = M2 - M1 - M4 - M5 - M3

261
Sequencing
Johnson’s Rule

Time (hr)
Workstation Motor Workstation 1 Workstation 2
1 M1 12 22
M2 4 5
2 M3 5 3
M4 15 16
0 5 10 15 20 25 30 35 40 45 50 55 60 65
M5 10 Day 8

Sequence = M2 - M1 - M4 - M5 - M3

262
Sequencing
Johnson’s Rule

Time (hr)
Workstation Motor Workstation 1 Workstation 2
M2 M1 M4 M5 M3 Idle—available
1 (4) M1
(12) 12
(15) (10) (5) 22 for further work
M2 4 5
2 M3 5 3
M4 15 16
0 5 10 15 20 25 30 35 40 45 50 55 60 65
M5 10 Day 8

Sequence = M2 - M1 - M4 - M5 - M3

263
Sequencing
Johnson’s Rule

Time (hr)
Workstation Motor Workstation 1 Workstation 2
M2 M1 M4 M5 M3 Idle—available
1 (4) M1
(12) 12
(15) (10) (5) 22 for further work
M2 4 5
2 M3 5 3
M4 15 16
0 5 10 15 20 25 30 35 40 45 50 55 60 65
M5 10 Day 8

Sequence = M2 - M1 - M4 - M5 - M3

264
Sequencing
Johnson’s Rule

Time (hr)
Workstation Motor Workstation 1 Workstation 2
M2 M1 M4 M5 M3 Idle—available
1 (4) M1
(12) 12
(15) (10) (5) 22 for further work
M2 4 5
2 Idle M3 5 3
M4 15 16
0 5 10 15 20 25 30 35 40 45 50 55 60 65
M5 10 Day 8

Sequence = M2 - M1 - M4 - M5 - M3

265
Sequencing
Johnson’s Rule

Time (hr)
Workstation Motor Workstation 1 Workstation 2
M2 M1 M4 M5 M3 Idle—available
1 (4) M1
(12) 12
(15) (10) (5) 22 for further work
M2 4 5
2 Idle M2M3 5 3
(5)
M4 15 16
0 5 10 15 20 25 30 35 40 45 50 55 60 65
M5 10 Day 8

Sequence = M2 - M1 - M4 - M5 - M3

266
Sequencing
Johnson’s Rule

Time (hr)
Workstation Motor Workstation 1 Workstation 2
M2 M1 M4 M5 M3 Idle—available
1 (4) M1
(12) 12
(15) (10) (5) 22 for further work
M2 4 5
2 Idle M2M3 5 3
(5)
M4 15 16
0 5 10 15 20 25 30 35 40 45 50 55 60 65
M5 10 Day 8

Sequence = M2 - M1 - M4 - M5 - M3

267
Sequencing
Johnson’s Rule

Time (hr)
Workstation Motor Workstation 1 Workstation 2
M2 M1 M4 M5 M3 Idle—available
1 (4) M1
(12) 12
(15) (10) (5) 22 for further work
M2 4 5
2 Idle M2M3Idle 5 3
(5)
M4 15 16
0 5 10 15 20 25 30 35 40 45 50 55 60 65
M5 10 Day 8

Sequence = M2 - M1 - M4 - M5 - M3

268
Sequencing
Johnson’s Rule

Time (hr)
Workstation Motor Workstation 1 Workstation 2
M2 M1 M4 M5 M3 Idle—available
1 (4) M1
(12) 12
(15) (10) (5) 22 for further work
M2 4 5
2 Idle M2M3Idle 5(22)
M1 3
(5)
M4 15 16
0 5 10 15 20 25 30 35 40 45 50 55 60 65
M5 10 Day 8

Sequence = M2 - M1 - M4 - M5 - M3

269
Sequencing
Johnson’s Rule

Time (hr)
Workstation Motor Workstation 1 Workstation 2
M2 M1 M4 M5 M3 Idle—available
1 (4) M1
(12) 12
(15) (10) (5) 22 for further work
M2 4 5
2 Idle M2M3Idle 5(22)
M1 M43
(5) (16)
M4 15 16
0 5 10 15 20 25 30 35 40 45 50 55 60 65
M5 10 Day 8

Sequence = M2 - M1 - M4 - M5 - M3

270
Sequencing
Johnson’s Rule

Time (hr)
Workstation Motor Workstation 1 Workstation 2
M2 M1 M4 M5 M3 Idle—available
1 (4) M1
(12) 12
(15) (10) (5) 22 for further work
M2 4 5
2 Idle M2M3Idle 5(22)
M1 M43 M5
(5) (16) (8)
M4 15 16
0 5 10 15 20 25 30 35 40 45 50 55 60 65
M5 10 Day 8

Sequence = M2 - M1 - M4 - M5 - M3

271
Sequencing
Johnson’s Rule

Time (hr)
Workstation Motor Workstation 1 Workstation 2
M2 M1 M4 M5 M3 Idle—available
1 (4) M1
(12) 12
(15) (10) (5) 22 for further work
M2 4 5
2 Idle M2M3Idle 5(22)
M1 M43 M5 M3
(5) (16) (8) (3)
M4 15 16
0 5 10 15 20 25 30 35 40 45 50 55 60 65
M5 10 Day 8

Sequence = M2 - M1 - M4 - M5 - M3

272
Sequencing
Johnson’s Rule

Time (hr)
Workstation Motor Workstation 1 Workstation 2
M2 M1 M4 M5 M3 Idle—available
1 (4) M1
(12) 12
(15) (10) (5) 22 for further work
M2 4 5
2 Idle M2M3Idle 5(22)
M1 M43 M5 M3
(5) (16) (8) (3)
M4 15 16
0 5 10 15 20 25 30 35 40 45 50 55 60 65
M5 10 Day 8

Sequence = M2 - M1 - M4 - M5 - M3

273
Gantt Charts
Progress Chart

Key
Job 4/17 4/18 4/19 4/20 4/21 4/22
Start4/23 4/24 4/25 4/26
activity

Ford Finish activity

Scheduled activity time


Plymouth
Actual progress

Pontiac Nonproductive time

274
Gantt Charts
Progress Chart
Current
date

Job 4/17 4/18 4/19 4/20 4/21 4/22 4/23 4/24 4/25 4/26

Ford

Plymouth

Pontiac

275
Gantt Charts
Operating Rooms Chart
Time
12
Workstation 7am 8am 9am 10am 11am noon 1pm 2pm 3pm 4pm 5pm 6pm

Dr. Jon
Operating Adams Dr. Aubrey Brothers
Room A

Dr. Jeff
Operating Dr. Gary Case Dow Dr. Madeline Easton
Room B

Operating Dr. Jordanne Flowers Dr. Dan Gillespie


Room C

276
Date: Week: 32
Plant 01 Dept. 03: Lathe Station
Capacity: 320 hours per week

Week

32 33 34 35 36 37

Planned hours 90 156 349 210 360 280

Actual hours

Total hours
Date: Week: 32
Plant 01 Dept. 03: Lathe Station
Capacity: 320 hours per week

Week

32 33 34 35 36 37

Planned hours 90 156 349 210 360 280

Actual hours 210 104 41 0 0 0

Total hours
Date: Week: 32
Plant 01 Dept. 03: Lathe Station
Capacity: 320 hours per week

Week

32 33 34 35 36 37

Planned hours 90 156 349 210 360 280

Actual hours 210 104 41 0 0 0

Total hours 300 260 390 210 360 280


Date: Week: 32
Plant 01 Dept. 03: Lathe Station
Capacity: 320 hours per week

Week

32 33 34 35 36 37

Planned hours 90 156 349 210 360 280

Actual hours 210 104 41 0 0 0

Total hours 300 260 390 210 360 280


Explanation:
Projected capacity
requirements exceed
weekly hours of
capacity.
Workstation: Rough Mill Week: 32
Tolerance: ± 25 hours

Week Ending

28 29 30 31 32

Inputs
Planned
Actual
Cumulative deviation

Outputs
Planned
Actual
Cumulative deviation
Workstation: Rough Mill Week: 32
Tolerance: ± 25 hours

Week Ending

28 29 30 31 32

Inputs
Planned 160 155 170 160 165
Actual 145 160 168 177
Cumulative deviation – 15 – 10 – 12 +5

Outputs
Planned 170 170 160 160 160
Actual 165 165 150 148
Cumulative deviation – 5 –- 10 – 20 – 32
Explanation:
Cumulative deviations
Workstation: Rough Mill Week: 32 between – 25 hours
Tolerance: ± 25 hours and + 25 hours are
allowed.

Week Ending

28 29 30 31 32

Inputs
Planned 160 155 170 160 165
Actual 145 160 168 177
Cumulative deviation – 15 – 10 – 12 +5

Outputs
Planned 170 170 160 160 160
Actual 165 165 150 148
Cumulative deviation –5 – 10 – 20 – 32
Explanation:
Cumulative deviations
Workstation: Rough Mill Week: 32 between – 25 hours
Tolerance: ± 25 hours and + 25 hours are
allowed.

Week Ending

28 29 30 31 32

Inputs
Planned 160 155 170 160 165
Actual 145 160 168 177
Cumulative deviation – 15 – 10 – 12 +5
Explanation:
Cumulative deviation
Outputs exceeds lower tolerance
Planned 170 170 160 160 160 limit, indicating actual
Actual 165 165 150 148 hours of output have fallen
Cumulative deviation –5 – 10 – 20 – 32
too far below planned
hours of output and some
action is required.
Topic 5
A large, integrated information
system that supports many
enterprise processes and data
storage needs.

286
Purchasing
• Communication
• Transportation
Suppliers • EDI
• Materials handling
• Testing
• Storage
• Office technology
• Information
technology
Purchasing
• Communication
Suppliers • Transportation
• EDI
• Materials
handling
• Testing
• Storage
• Office
technology
• Information
technology
Service
Operations
Basic processes
Suppliers


Purchasing
Communication
Transportation
• Testing
• Materials
• EDI
• Materials
handling
• Testing


Storage
Office
technology
handling
• Information
technology • Office
technology
• Information
technology
Service
Operations
Basic processes
• Testing
• Materials
Purchasing handling
• Communication • Office
Suppliers • Transportation technology
• EDI • Information
• Materials technology
handling
• Testing
• Storage
• Office
technology
• Information
technology
Manufacturing Operations
Basic processes
• CIM (computer-
Service
Operations
integrated
Basic processes
• Testing
• Materials

Suppliers


Purchasing
Communicationmanufacturing)
Transportation
handling
• Office
technology


EDI
Materials
handling
• Materials handling
• Information
technology

• Office technology
• Testing
• Storage
• Office

• Information technology
technology
• Information
technology

• Materials technology
• Testing
• Storage
Service
Operations
Basic processes
• Testing
• Materials
Purchasing handling
• Communication • Office
Suppliers • Transportation technology
• EDI • Information
• Materials technology
handling
• Testing
• Storage Manufacturing
• Office Operations
technology Basic processes
• Information • CIM (computer-
technology integrated
manufacturing)
• Materials
handling
• Office
technology
• Information
technology
• Materials
technology
• Testing
• Storage
Distribution
• Communication
Service
Operations

• Transportation
Basic processes
• Testing
• Materials


Purchasing
EDI
handling
• Communication • Office
Suppliers • Transportation technology


• EDI

Materials handling
• Information
• Materials technology
handling
• Testing


Storage
Office
technology
• Packaging
Manufacturing
Operations
Basic processes
• Information
technology • Storage
• CIM (computer-
integrated
manufacturing)

• Office technology
• Materials
handling
• Office

• Information
technology
• Information
technology

technology
• Materials
technology
• Testing
• Storage
Service
Operations
Basic processes
• Testing
• Materials
Purchasing handling Distribution
• Communication • Office • Communication
Suppliers • Transportation technology • Transportation
• EDI • Information • EDI
• Materials technology • Materials
handling handling
• Testing • Packaging
• Storage Manufacturing • Storage
• Office Operations • Office
technology Basic processes technology
• Information • CIM (computer- • Information
technology integrated technology
manufacturing)
• Materials
handling
• Office
technology
• Information
technology
• Materials
technology
• Testing
• Storage
Marketing Service
Operations

and SalesBasic processes


• Testing
• Materials

Suppliers



Communication
Purchasing
Communication
Transportation
• OfficeCustomers
handling

technology


Distribution
Communication
Transportation

• Media technology
• EDI • Information • EDI
• Materials technology • Materials
handling handling


• Testing • Packaging

• Electronic commerce
Storage
Office
technology
Manufacturing
Operations


Storage
Office
technology


Basic processes

Testing
Information
technology
• CIM (computer-
integrated
manufacturing)
• Information
technology

• Office technology
• Materials
handling
• Office

• Information technology
technology
• Information
technology
• Materials
technology
• Testing
• Storage
Service
Operations
Basic processes
• Testing
• Materials
Purchasing handling Distribution Marketing
• Communication • Office • Communication and Sales
Suppliers • Transportation technology • Transportation • Communication Customers
• EDI • Information • EDI • Media
• Materials technology • Materials technology
handling handling • Electronic
• Testing • Packaging commerce
• Storage Manufacturing • Storage • Testing
• Office Operations • Office • Office
technology Basic processes technology technology
• Information • CIM (computer- • Information • Information
technology integrated technology technology
manufacturing)
• Materials
handling
• Office
technology
• Information
technology
• Materials
technology
• Testing
• Storage
Operations
• Planning and
budgeting
technology
Accounting • Electronic data
interchange (EDI)
• Information
technology
• Office technology
Operations • Electronic
commerce
• Planning and budgeting
technology
• Electronic data interchange
(EDI)
• Information technology
• Office technology
• Electronic commerce
Accounting

Operations
• Planning and budgeting
technology
• Electronic data interchange
(EDI)
• Information technology
• Office technology
• Electronic commerce
Accounting

Engineering

• Product technology
• Office technology
• Information technology
• Process technology
• Pilot-plant technology
• Computer-aided design (CAD)
• Planning and budgeting
technology
• Electronic data interchange
(EDI)
• Information technology
• Office technology
• Electronic commerce
Accounting
• Product
technology
• Office technology
• Information
Engineering technology
• Process
technology
• Pilot-plant
Operations technology
• Computer-aided
design (CAD)
• Planning and budgeting
technology
• Electronic data interchange
(EDI)
• Information technology
• Office technology
• Electronic commerce
Accounting
• Product
technology
• Office technology
• Information
Engineering technology
• Process
technology
• Pilot-plant
Operations technology
• Computer-aided
design (CAD)

• Planning and budgeting


technology
Finance
• Office technology
• Online databases
• Information technology
• Planning and budgeting
technology
• Electronic data interchange
(EDI)
• Information technology
• Office technology
• Electronic commerce
Accounting
• Product
technology
• Office technology
• Information
Engineering technology
• Process
technology
• Pilot-plant
Operations technology
• Computer-aided
design (CAD)

• Planning and budgeting


Finance technology
• Office technology
• Online databases
• Information technology
• Planning and budgeting
technology
• Electronic data interchange
(EDI)
• Information technology
• Office technology
• Electronic commerce
Accounting
• Product
technology
• Training technology • Office technology
• Information
• Office technology Engineering technology
• Process
• Performance evaluation technology
• Pilot-plant
• Motivational researchOperations technology
• Computer-aided
• Information technology design (CAD)

Human • Planning and budgeting


Resources Finance technology
• Office technology
• Online databases
• Information technology
• Planning and budgeting
technology
• Electronic data interchange
(EDI)
• Information technology
• Office technology
• Electronic commerce
Accounting
• Product
technology
• Office technology
• Information
Engineering technology
• Process
technology
• Pilot-plant
Operations technology
• Computer-aided
design (CAD)

Human • Planning and budgeting


Resources Finance technology
• Training technology • Office technology
• Office technology • Online databases
• Performance evaluation • Information technology
• Motivational research
• Information technology
• Planning and budgeting
technology
• Electronic data interchange
(EDI)
• Hardware • Information technology
• Office technology
• Databases • Electronic commerce
Accounting
• Software • Product

• Telecommunications technology
• Office technology
• Information
Management Engineering technology
• Process
Information technology
Systems • Pilot-plant
Operations technology
• Computer-aided
design (CAD)

Human • Planning and budgeting


Resources Finance technology
• Training technology • Office technology
• Office technology • Online databases
• Performance evaluation • Information technology
• Motivational research
• Information technology
• Planning and budgeting
technology
• Electronic data interchange
(EDI)
• Hardware • Information technology
• Databases • Office technology
• Software • Electronic commerce
• Telecommunications
Accounting
• Product
technology
• Office technology
• Information
Management Engineering technology
• Process
Information technology
Systems • Pilot-plant
Operations technology
• Computer-aided
design (CAD)

Human • Planning and budgeting


Resources Finance technology
• Training technology • Office technology
• Office technology • Online databases
• Performance evaluation • Information technology
• Motivational research
• Information technology
ERP System
Data Analysis
• Product costing
• Job costs
ERP System
Data Analysis
• Product costing
• Job costs

ERP System
Data Analysis
• Product costing
• Job costs

Sales and Marketing


• Sales orders
• Pricing system
ERP System
Data Analysis
• Product costing
• Job costs

Sales and Marketing


• Sales orders
• Pricing system

ERP System
Data Analysis
• Product costing
• Job costs

Customer Service Sales and Marketing


• Sales orders

• Field service
• Pricing system

• Quality
ERP System
Data Analysis
• Product costing
• Job costs

Sales and Marketing


• Sales orders
• Pricing system

ERP System

Customer Service
• Field service
• Quality
Supply-Chain
Data Analysis
• Product costing
• Job costs

Management Sales and Marketing


• Sales orders

• Forecasting
• Pricing system

• Purchasing
ERP System

• Distribution Customer Service


• Field service
• Quality
Data Analysis
• Product costing
• Job costs

Sales and Marketing


• Sales orders
• Pricing system

ERP System

Customer Service
• Field service
• Quality

Supply-Chain
Management
• Forecasting
• Purchasing
• Distribution
Accounting and Finance
Data Analysis
• Product costing
• Job costs

• Accounts payable and Sales and Marketing


• Sales orders
• Pricing system
receivable
• General ledgers
ERP System

• Asset management Customer Service


• Field service
• Quality

Supply-Chain
Management
• Forecasting
• Purchasing
• Distribution
Data Analysis
• Product costing
• Job costs

Sales and Marketing


• Sales orders
• Pricing system

ERP System

Customer Service
• Field service
Accounting and Finance
• Quality
• Accounts payable and
receivable
• General ledgers Supply-Chain
• Asset management Management
• Forecasting
• Purchasing
• Distribution
Data Analysis
• Product costing

Manufacturing • Job costs

Sales and Marketing

• Material requirements • Sales orders


• Pricing system

planning ERP System

• Scheduling
Customer Service
• Field service
Accounting and Finance
• Quality
• Accounts payable and
receivable
• General ledgers Supply-Chain
• Asset management Management
• Forecasting
• Purchasing
• Distribution
Data Analysis
• Product costing
• Job costs

Sales and Marketing


• Sales orders
• Pricing system

Manufacturing
• Material requirements ERP System
planning
• Scheduling

Customer Service
• Field service
Accounting and Finance
• Quality
• Accounts payable and
receivable
• General ledgers Supply-Chain
• Asset management Management
• Forecasting
• Purchasing
• Distribution
Data Analysis
• Product costing

Human • Job costs

Sales and Marketing

Resources • Sales orders


• Pricing system

Manufacturing
• Benefits
• Material requirements
planning
ERP System
• Scheduling
• Payroll
Customer Service
• Field service
Accounting and Finance
• Quality
• Accounts payable and
receivable
• General ledgers Supply-Chain
• Asset management Management
• Forecasting
• Purchasing
• Distribution
Data Analysis
Human • Product costing
Resources • Job costs
• Benefits
• Payroll Sales and Marketing
• Sales orders
• Pricing system

Manufacturing
• Material requirements ERP System
planning
• Scheduling

Customer Service
• Field service
Accounting and Finance
• Quality
• Accounts payable and
receivable
• General ledgers Supply-Chain
• Asset management Management
• Forecasting
• Purchasing
• Distribution
Back-Office Processes Front-Office Processes

Data Analysis
Human • Product costing
Resources • Job costs
• Benefits
• Payroll Sales and Marketing
• Sales orders
• Pricing system

Manufacturing
• Material requirements ERP System
planning
• Scheduling

Customer Service
• Field service
Accounting and Finance
• Quality
• Accounts payable and
receivable
• General ledgers Supply-Chain
• Asset management Management
• Forecasting
• Purchasing
• Distribution
ERP
Systems

325
326
327

You might also like