Module III

Operating Decisions
 Processing Times
➢Deterministic: If processing times of all jobs are
known and constant the scheduling problem is called
a deterministic problem.

➢Probabilistic: The scheduling problem is called

probabilistic (or stochastic) if the processing times
are not fixed; i.e., the processing times must be
represented by a probability distribution.
 Job Arrival Times
Based on this criterion, scheduling problems are classified as static
and dynamic problems.

➢Static: In the case of static problems the number of jobs is fixed and
will not change until the current set of jobs has been processed.

➢Dynamic: In the case of dynamic problems, new jobs enter the

system and become part of the current set of unprocessed jobs. The
arrival rate of jobs is given in the case of dynamic problems.
 Sequencing
• Sequencing models and methods follow the discussion of loading models
and methods.

• Sequencing establishes the order for doing the jobs at each facility.

• Sequencing reflects job priorities according to the way that jobs are
arranged in the queues.

• Say that Jobs x, y, and z have been assigned to workstation 1 (through

loading function).

• Jobs x, y, and z are in a queue (waiting line). Sequencing rules determine

which job should be first in line, which second, etc.
• A good sequence provides less waiting time, decreased delivery delays, and better due
date performance.
• There are costs associated with waiting and delays.
• There are many other costs associated with the various orderings of jobs, for example,
set up cost and in-process inventory costs.
• The objective function can be to minimize system’s costs, or to minimize total system’s
time, or (if margin data are available) to maximize total system’s profit.

• Total savings from regularly sequencing the right way, the first time, can accumulate
to substantial sums.
• Re-sequencing can be significantly more costly. When there are many jobs and facilities,
sequencing rules have considerable economic importance.
• Sequencing also involves shop floor control, which consists of communicating the status
of orders and the productivity of workstations.
 Johnson’s Rule for two serial processes
to Minimize Make-span
We use the following four step process to find the optimal
sequence.

Step 1: Find the minimum processing time considering times

on both machines.

Step 2: Identify the corresponding job and the corresponding

machine for the minimum time identified at Step 1.
Step 3: Scheduling Rule
(a) If the machine identified in Step 2 is machine M1 then
the job identified in Step 2 will be scheduled in the first
available schedule position.
(b) If the machine identified in Step 2 is machine M2 then
the job identified in Step 2 will be scheduled in the last
available schedule position.

Step 4: Remove the job from consideration whose position has

been fixed in Step 3; and go to Step 1.
Continue this process until all jobs have been scheduled.
Johnson’s rule makes the following assumptions:

➢The same optimal sequence is used on both

machines.

➢Preemption is not allowed, that is, once a job is

started it is not interrupted.
E
C
B

D
A
Job

E1
C1
B1
Operation # 1

D1
A1

E2
C2
B2
Operation # 2

D2
A2

Machine for

M1
M1
M1

M1
M1

Operation # 1
Example

Machine for
M2
M2
M2

M2
M2

Operation # 2

Time for
4
6
5

7
8

Operation # 1
(Days)

Time for
6
9
7

1
3

Operation # 2
(Days)
 Iteration 1

Time for Operation #

Time for Operation #

Step 1: The minimum time is 1.

Operation # 1

Operation # 2

Operation # 1

Operation # 2
Machine for

Machine for

1 (Days)

2 (Days)
Step 2: The job is D and the machine
is M2.

Job
Step 3: Since the machine identified
at Step 2 is machine M2, job D will
be assigned to the last available
sequence position which is position
5; and the resulting partial sequence A A1 A2 M1 M2 8 3
is given below.
Position Position Position Position
B B1 B2 M1 M2 5 7
D
1 2 3 4 C C1 C2 M1 M2 6 9
Step 4: Delete job D from
consideration. D D1 D2 M1 M2 7 1
E E1 E2 M1 M2 4 6
 Operation # 1

Operation # 2

Operation # 1

Operation # 2

Operation # 1

Operation # 2
Machine for
Machine for

Time for

Time for
Iteration 2

(Days)

(Days)
Job
Step 1: The next minimum time is
3.
Step 2: The job is A and the A A1 A2 M1 M2 8 3
machine is M2.
Step 3: The job A will be assigned
B B1 B2 M1 M2 5 7
to the last available schedule
position, which is position 4. After
assigning job A to position 4, the C C1 C2 M1 M2 6 9
partial sequence is given below.
Position Position Position Sched
A D
1 2 3 D D1 D2 M1 M2 7 1
uled
Step 4: Delete job A from
consideration. E E1 E2 M1 M2 4 6
 Iteration 3

Time for Operation # 1 (Days)

Time for Operation # 2 (Days)

Machine for Operation # 1

Machine for Operation # 2

Step 1: The minimum time is 4.

Operation # 1

Operation # 2
Step 2: The job is E and the
machine is M1.

Job
Step 3: The job E will be
assigned to the first available
schedule position, which is
position 1. The partial sequence
after assigning job E to position
1 is given below. A A1 A2 M1 M2 8 3
Schedul
ed
Position Position B B1 B2 M1 M2 5 7
E A D
2 3
C C1 C2 M1 M2 6 9
Step 4: Delete job E from Schedul
consideration D D1 D2 M1 M2 7 1 ed

E E1 E2 M1 M2 4 6
 Time for Operation # 1 (Days)

Time for Operation # 2 (Days)

Iteration 4

Machine for Operation # 1

Machine for Operation # 2

Step 1: The minimum time is 5.

Operation # 1

Operation # 2
Step 2: The job is B and the
machine is M1.

Job
Step 3: The job B will be
assigned to the first available
schedule position, which is
position 2. The partial
sequence after assigning job B A A1 A2 M1 M2 8 3
Schedu

to position 2 is given below. led

Position B B1 B2 M1 M2 5 7
E B A D
3 C C1 C2 M1 M2 6 9
Step 4: Delete job B from D D1 D2 M1 M2 7 1
Schedu

consideration led
Schedu
E E1 E2 M1 M2 4 6 led
 Iteration 5

Time for Operation # 1 (Days)

Time for Operation # 2 (Days)

Machine for Operation # 1

Machine for Operation # 2

The only unscheduled job at

Operation # 1

Operation # 2
this stage is C and; it will be
assigned to the remaining

Job
unassigned position 3.

The final sequence is given

below.
The value of make-span for this Schedule
A A1 A2 M1 M2 8 3
sequence will be determined by d
Schedule
drawing the Gantt chart. B B1 B2 M1 M2 5 7 d

C C1 C2 M1 M2 6 9
E B C A D D D1 D2 M1 M2 7 1
Schedule
d
Schedule
E E1 E2 M1 M2 4 6 d
 Finding Make-span
The sequence E-B-C-A-D identified by Johnson’s rule guarantees
the minimum value of make-span.
However, Johnson’s rule does not give the value of make-span. It
only identifies the best sequence.
The value of make-span is obtained either by drawing the Gantt
chart or a computerized algorithm can be developed.
The Gantt chart for this optimal sequence is given in the next
slide.
The Gantt chart for the sequence E-B-C-A-D is

Operation # 1

Operation # 2

Operation # 1

Operation # 2

Operation # 1

Operation # 2
Machine for

Machine for

Time for

Time for
given below. The value of make-span is 31 days.

(Days)

(Days)
Job
The optimal (minimum) value of make-span for
this problem is therefore, 31 days. A A1 A2 M1 M2 8 3
B B1 B2 M1 M2 5 7

Sequence E-B-C-A-D C
D
C1
D1
C2
D2
M1
M1
M2
M2
6
7
9
1
E E1 E2 M1 M2 4 6

Gantt Chart for Sequence E-B-C-A-D

Time (Days)

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36

M1 E1 E1 E1 E1 B1 B1 B1 B1 B1 C1 C1 C1 C1 C1 C1 A1 A1 A1 A1 A1 A1 A1 A1 D1 D1 D1 D1 D1 D1 D1

M2 E2 E2 E2 E2 E2 E2 B2 B2 B2 B2 B2 B2 B2 C2 C2 C2 C2 C2 C2 C2 C2 C2 A2 A2 A2 D2
 Single Machine Scheduling

There is one machine on which several jobs have to be

processed.

The order in which these jobs will be processed needs to be

specified. This schedule will not be changed until all jobs
have been processed. This is the “static” version of the
problem.

In the “dynamic” version, the schedule can be altered. The

dynamic version is studied later in this presentation.
 Scheduling Rules

There are several rules that can be used to find the order of
processing. We will study the following three rules.

➢First Come First Served (FCFS)

➢Shortest Processing Time (SPT). This is also called as

Shortest Operation Time.

➢Earliest (shortest) Due Date (EDD)

 Introduction to Supply Chain

Supply chain management (SCM) is the discipline that manages

supplies and processes through all of the stages of a project,
product or business deliverable. Getting through these various
stages efficiently requires control—that’s where supply chain
management comes in.

Supply chain management is used to describe a number of different

approaches that are used to integrate the flow of materials, finances and
information efficiently. These items are usually outsourced from any
number of places. These sources include suppliers, manufacturers,
wholesalers, distributors and retailers. Items can pass through several
hands until they reach the customer.
Supply Chain Management - Advantages
Supply Chain Management - Goals
Supply Chain
Management
- Process
Transportation
Warehousing
 Post - Sales Service

The post sales services comprise selling spare parts,

installing upgrades, performing inspection, maintenance
and repairs, offering training & education and consulting.

Presently, with the growing demands of the clients, a high

volume of after sales service proves to be a profitable
business. Here, the services are basically heterogeneous
and the value-added services are different from those
provided prior to sales service.
 Inventory Control and management

• At first glance, inventory control and inventory management seem similar. After all, they
both cover similar bases revolving around the question, “How much stock should I order?”

• Although these two terms are often used interchangeably, they actually deal with different
aspects of inventory optimization.

Inventory management, is a broader term that covers how you obtain, store,
and profit from raw materials and finished goods alike. The right stock, at the
right levels, in the right place, at the right time, at the right cost.
Inventory management is a systematic approach to sourcing, storing, and selling inventory—
both raw materials (components) and finished goods (products).
In business terms, inventory management means the right stock, at the right levels, in the
right place, at the right time, and at the right cost as well as price.

Inventory control involves warehouse management. This includes:

• Barcode scanner integration

• Reorder reports and adjustments
• Product details, histories, and locations
• Comprehensive inventory lists and counts
• Variants, bundles and kitting
• Syncing stock on hand with sales orders and purchase orders

The goal of inventory control procedures is to maximize profits with minimum inventory
investment, without impacting customer satisfaction levels
 Types of inventory management

Typically, inventory types can be grouped into four categories:

(1) raw materials,

(2) works-in-process,

(3) maintenance, repair, and operations (MRO) goods , and

(4) finished goods.

 Inventory management techniques

• Bulk Shipments
• ABC Inventory Management
• Backordering
• Just in Time (JIT)
• Consignment
• Dropshipping and Cross-docking
• Cycle Counting
 1. Bulk shipments
This method banks on the notion that it is almost always cheaper to purchase and ship goods in
bulk. Bulk shipping is one of the predominant techniques in the industry, which can be applied
for goods with high customer demand.
The downside to bulk shipping is that you will need to lay out extra money on warehousing the
inventory, which will most likely be offset by the amount of money saved from purchasing
products in huge volumes and selling them off fast.
 2. ABC inventory management
ABC inventory management is a technique that’s based on putting products into categories in
order of importance, with A being the most valuable and C being the least. Not all products are
of equal value and more attention should be paid to more popular products.
Although there are no hard-and-fast rules, ABC analysis leans on annual consumption units,
inventory value, and cost significance. Categories typically look something like:
 3. Backordering

Backordering refers to a company’s decision to take orders and receive payments for out-of-stock
products. It’s a dream for most businesses but it can also be a logistical nightmare … if you’re not
prepared.
When there’s just one out-of-stock item, it’s simply a case of creating a new purchase order for
that one item and informing the customer when the backordered item will arrive. When it’s tens
or even hundreds of different sales a day, problems begin to mount.
 4. Just in Time (JIT)
Just In Time (JIT) inventory management lowers the volume of inventory that a business keeps on
hand. It is considered a risky technique because you only purchase inventory a few days before it
is needed for distribution or sale.
JIT helps organizations save on inventory holding costs by keeping stock levels low and eliminates
situations where deadstock - essentially frozen capital - sits on shelves for months on end.
 5. Consignment
Consignment involves a wholesaler placing stock in the hands of a retailer, but retaining
ownership until the product is sold, at which point the retailer purchases the consumed stock.
Typically, selling on consignment involves a high degree of demand uncertainty from the
retailer’s point of view and a high degree of confidence from the wholesaler’s point of view.

For retailers, selling on consignment can have several benefits, including the ability to:
•Offer a wider product range to customers without tying up capital
•Decrease lag times when restocking products
•Return unsold goods at no cost

While most of the risk in selling on consignment falls on the wholesaler, there are still a
number of potential advantages for the supplier:
•Test new products
•Transfer marketing to the retailer
•Collect useful information about product performance
If you consider selling on consignment — as either a retailer or wholesaler — set terms
clearly regarding the:
•Return, freight, and insurance policies
•How, when, and what customer data is exchanged
•Percentage of the purchase price retailer will be taking as sales commission
 6. Dropshipping and cross-docking

This inventory management technique eliminates the cost of holding inventory altogether.
When you have a dropshipping agreement, you can directly transfer customer orders and
shipment details to your manufacturer or wholesaler, who then ships the goods.

Similar to dropshipping, cross-docking is a practice where incoming semi-trailer trucks or

railroad cars unload materials directly onto outbound trucks, trailers, or rail cars.
 7. Inventory Cycle counting

Cycle counting or involves counting a small amount of inventory on a specific day without
having to do an entire manual stocktake. It’s a type of sampling that allows you to see how
accurately your inventory records match up with what you actually have in stock.
This method is a common part of many businesses’ inventory management practices, as it
ultimately helps ensure that customers can get what they want, when they want it, while
keeping inventory holding costs as low as possible.

Pros of cycle counting

•More time- and cost-efficient than doing a full stocktake
•Can be done without disrupting operations
•Keeps inventory holding costs low

Cons of cycle counting

•Less comprehensive and accurate than a full stocktake
•May not account for seasonality
 Deterministic Models

A deterministic model does not include elements of randomness. Every time you run
the model with the same initial conditions you will get the same results.

Most simple mathematical models of everyday situations are deterministic, for

example, the height (h) in metres of an apple dropped from a hot air balloon at 300m
could be modelled by h = - 5t2 + 300, where t is the time in seconds since the apple
was dropped.

Simple statistical statements, which do not mention or consider variation, could be

viewed as deterministic models. The linear regression equation in a bivariate analysis
could be applied as a deterministic model if, for example, lean body mass =
0.8737(body weight) - 0.6627 is used to determine the lean body mass of an elite
athlete.
 Probabilistic Models

A probabilistic model includes elements of randomness. Every time you run the model,
you are likely to get different results, even with the same initial conditions. A probabilistic
model is one which incorporates some aspect of random variation.