FINAL

FINAL EXAM REVISION
PRODUCTION & OPERATION

MANAGEMENT
PREPARED BY: LUONG NGOC DIEP

© 2014 Pearson Education 8-1
Layout Decisions
9
PowerPoint presentation to accompany
Heizer and Render
Operations Management, Global Edition, Eleventh Edition
Principles of Operations Management, Global Edition, Ninth Edition
PowerPoint slides by Jeff Heyl
© 2014
© 2014
Pearson
Pearson
Education
Education 8-2
Types of Layout
1. Office layout
2. Retail layout
3. Warehouse layout
4. Fixed-position layout
5. Process-oriented layout
6. Work-cell layout
7. Product-oriented layout

Types of Layout p.394
1. Office layout: Positions workers, their

equipment, and spaces/offices to provide for
movement of information

OFFICE Relationship Chart
P.396
Figure 9.1
© 2014 Pearson Education VIRTUAL COMPANIES - MAJOR TREND 8-5
2. Retail layout: Allocates shelf space and responds

to customer behavior, maximize profitability per
square foot of floor space

Store Layout
Figure 9.2
3. Warehouse layout: Addresses trade-offs between

space and material handling
▶ Maximize the total “cube” of the warehouse –
utilize its full volume while maintaining low
material handling costs

4. Fixed-position layout: Addresses the layout

requirements of large, bulky projects such as
ships and buildings
5. Process-oriented layout: Deals with low-volume,

high-variety production
JOBSHOP - INTERMITTENT - BATCH

6. Work cell layout: Arranges machinery and

equipment to focus on production of a single
product or group of related products
7. Product-oriented layout: Seeks the best personnel

and machine utilizations in repetitive or continuous
production.
SMOOTH - RAPID - HIGH-VOLUME - REPETITIVE -
CONTINOUS
© 2014 Pearson Education 8 - 10

- EXAMPLES FOR EACH TYPE?

- MEANING/CHARACTERISTIC OF EACH
TYPE?
- EXPLANATION? (YOUR WORDS +
THEORY)

DEVELOP PRCEDENCE
DIAGRAM FOR AN
ASSEMBLY LINE
P.411 - 414

Wing Component Example
TABLE 9.2 Precedence Data for Wing Component
ASSEMBLY TIME TASK MUST FOLLOW
TASK (MINUTES) TASK LISTED BELOW
A 10 – This means that
B 11 A tasks B and E
cannot be done
C 5 B until task A has
D 4 B
been completed
E 11 A
F 3 C, D
G 7 F
H 11 E
I 3 G, H
Total time 65

Precedence Data for Wing
TABLE 9.2 Component 480 available mins
TASK MUST
per day
ASSEMBLY TIME FOLLOW TASK 40 units required
TASK (MINUTES) LISTED BELOW
A 10 –
B 11 A
C 5 B
Figure 9.12
D 4 B
5
E 11 A
C
F 3 C, D 10 11 3 7
G 7 F
A B F G
4
3
H 11 E D
11 11 I
I 3 G, H
E H
Total time 65

480 available mins
per day
40 units required
Production time available

per day
Cycle time = MAXIMUM TIME
ALLOWED AT EACH
Units required per day
WORKSTATION
= 480 / 40
= 12 minutes per unit
Minimum number
of workstations
= 65 / 12
=5.42, or 6 stations
Layout Heuristics That May Be Used to Assign Tasks
TABLE 9.3
to Workstations in Assembly-Line Balancing
1. Longest task time From the available tasks, choose the
task with the largest (longest) task time
2. Most following tasks From the available tasks, choose the
task with the largest number of following
tasks
3. Ranked positional From the available tasks, choose the
weight task for which the sum of following task
times is the longest
4. Shortest task time From the available tasks, choose the
task with the shortest task time
5. Least number of From the available tasks, choose the
following tasks task with the least number of subsequent
tasks

480 available mins
Figure 9.13 per day
40 units required
Cycle time = 12 mins
Minimum
Station 5 workstations = 5.42 or 6
2
C
10 11 3 7
A B F G
4 3
D Station 3
Station 4 I
11 11
Station 6
Station Station 6
1 E H
Station Station
3 5
Precedence Data for Wing 480 available mins
TABLE 9.2 Component per day
TASK MUST
ASSEMBLY TIME FOLLOW TASK
40 units required
TASK (MINUTES) LISTED BELOW Cycle time = 12 mins
A 10 –
Minimum
B 11 A workstations = 5.42 or 6
C 5 B
Figure 9.12
D 4 B
5
E 11 A
∑ Task times C
Efficiency
F = 3 C, D 10 11 3 7
(Actual number of workstations)
A B
x (Largest cycle
F
time)
G
G 7 F
4
= 65 minutes / ((6 stations) x (12 minutes)) 3
H 11 E D
11 11 I
I = 90.3%3 G, H
E H
Total time 65

Supply Chain
Management 11
Heizer and Render
© 2014
© 2014
Pearson
Pearson
Education
Education 8 - 19
Measuring Supply-Chain
Performance p.485
▶ Assets committed to inventory
Percentage Total inventory investment
invested in = x 100
inventory Total assets
► Home Depot had $11.4b inventory, total assets of

$44.4b
Percentage 11.4
invested in = x 100 = 25.7%
inventory 44.4

Performance
TABLE 11.5
Inventory as Percentage of Total Assets
(with examples of exceptional performance)
Manufacturer (Toyota 5%) 15%
Wholesale (Coca-Cola 2.9%) 34%
Restaurants (McDonald’s .05%) 2.9%
Retail (Home Depot 25.7%) 28%

Performance p.486
▶ Inventory turnover
Inventory Cost of goods sold

turnover = Inventory investment
► Inventory investment
► Average of several periods
► (beginning plus ending)/2
► Ending inventory

Performance p.486
▶ From PepsiCo, Inc. Annual Report
Net revenue $32.5
Cost of goods sold $14.2
Inventory:
Raw material inventory $.74
Work-in-process inventory $.11
Finished goods inventory $.84
Total inventory investment $1.69
Inventory 14.2
turnover = 1.69
= 8.4

Performance p.487
▶ Weeks of supply
Weeks of Inventory investment
=
supply Annual cost of goods sold
52 weeks
► For PepsiCo
Inventory investment = $1.69b

Average weekly cost of goods sold = $14.2b / 52 = $.273b
Weeks of supply = 1.69 / .273 = 6.19 weeks

Performance p.489
▶ Read SOLVED PROBLEM 11.1 PAGE

489 FOR EXAMPLE

Managing Inventory
12
Heizer and Render
© 2014
© 2014
Pearson
Pearson
Education
Education 8 - 26
Inventory Models for
Independent Demand
objective: Minimize total costs
1. Basic economic order quantity

(EOQ) model
2. Production order quantity model
(POQ)
3. Quantity discount model
EOQ - Minimizing Costs – P.521
Q = Number of pieces/units per order
Q* = Optimal number of pieces per order (EOQ)
D = Annual demand in units for the inventory item
S = Setup or ordering cost for each order
H = Holding or carrying cost per unit per year
(Number of orders placed per year)
x (Setup or order cost per order)
Annual demand Setup or order

=
Number of units in each order cost per order
D
=   S D
Q Annual setup cost = S
Q
Minimizing Costs
Annual holding cost = ( )
x (Holding cost per unit per year)
= (Holding cost per unit per year)
Q
=  H
2 Q
Annual holding cost = H
2
Minimizing Costs
Optimal order quantity is found 2DS = Q H 2
when annual setup cost equals

annual holding cost 2DS
æ *ö Q =
2
D Q H
S = ç ÷H
Q* è2ø 2DS
Q =
*
© 2014 Pearson Education

H 8 - 30
An EOQ Example P.521-P.524
Determine optimal number of needles to order
D = 1,000 units
S = $10 per order
H = $.50 per unit per year
2DS
Q* =
H
2(1,000)(10)
Q =*
= 40,000 = 200 units
0.50

An EOQ Example
Determine expected number of orders
D = 1,000 units Q* = 200 units
S = $10 per order
H = $.50 per unit per year
Expected =N = =
D
number of =
orders Q *
1,000
N= = 5 orders per year
200

An EOQ Example
Determine optimal time between orders
S = $10 per order N = 5 orders/year
H = $.50 per unit per year 250-day working year
Expected time Number of working days per year

between orders =T =
Expected number of orders
250
T= = 50 days between orders
5

An EOQ Example
Determine the total annual cost
S = $10 per order N = 5 orders/year
H = $.50 per unit per year T = 50 days
Total annual cost = Setup cost + Holding cost

D Q* Thực chất Q ở
TC = S + H
Q* 2 đây chính là Q*
(optimal # of
1,000 200
= ($10) + ($.50) units).
200 2 thay vào
= (5)($10) + (100)($.50) công thức
= $50 + $50 = $100 luôn là Q*
The EOQ Model
When including actual cost of material P
Total annual cost = Setup cost + Holding cost +

Product cost
D Q
TC = S + H + PD
Q 2

Reorder Points
▶ EOQ answers the “how much” question
▶ The reorder point (ROP) tells “when” to order
▶ Lead time (L) is the time between placing and
receiving an order
Demand Lead time for a new

ROP = per day order in days
=dxL
D
d=
Number of working days in a year

Reorder Point Example
Demand = 8,000 iPods per year
250 working day year
Lead time for orders is 3 working days, may take 4
D
d=
Number of working days in a year
= 8,000/250 = 32 units
ROP = d x L
= 32 units per day x 3 days = 96 units
= 32 units per day x 4 days = 128 units

Production Order Quantity Model
P.527
1. Used when inventory builds up over a
period of time after an order is placed
2. Used when units are produced and
sold simultaneously Figure 12.6
Part of inventory cycle during which

Inventory level
production (and usage) is taking place

Demand part of cycle with
no production (only usage)
Maximum
inventory
t Time
Q = Number of pieces per order D = Annual demand in units
p =Daily production rate
d = Daily demand/usage rate
H = Holding cost per unit per year
t = Length of the production run in days
Annual = (Average inventory x Holding cost

inventory level) per unit per year
holding cost

p = Daily production rate
H = Holding cost per unit per year d = Daily demand/usage rate
Maximum = Total produced during – Total used during

inventory level the production run the production run
= pt – dt

p = Daily production rate
Maximum = –
Total produced during the
- Total used during the
inventory level production run production run
= pt – dt
However, Q = total produced = pt ; thus t = Q/p
Maximum inventory Q Q d
level =p –d =Q 1– p
p p

Q = Number of pieces per order= pt D = Annual demand in units
Setup cost = ( D / Q) S
Holding cost = 12 HQ1  d p 
2 DS
Q *
H 1  d p 
p

Q = Number of pieces per order= pt D = Annual demand in units
Total cost = Setup cost + Holding cost

Production run = D/Q
Product cost = PD
Daily demand rate = D/t
Length of production run = Q/P
Average inventory level = [ Q x (1 - d/p) ] /2

Production Order Quantity P.527
D = 1,000 units p = 8 units per day
S = $10 d = 4 units per day
H = $0.50 per unit per year
2DS
Q *p =
( )
H éë1- d p ùû
2(1,000)(10)
Q =
*
0.50éë1- (4 8)ùû
p
20,000
= = 80,000
0.50(1 2)
= 282.8 hubcaps, or 283 hubcaps
prob 12.17 p.545
t = 300 days
D = 12000/year a. Optimal size of production run:
p = 100/day
S = $50
2 DS
P = $1 Q*p  d = D/t
H = $ 0.1 H 1  d p 
c. Setup cost = ( D / Q) S
b. Holding cost = 12 HQ1  d p 
d. Total cost (include cost of light)

= Setup + Holding + Product cost (PD)

Quantity Discount Models
P.528
Total annual cost = Setup cost + Holding cost + Product cost
D Q
TC = S + H + PD
Q 2
where Q = Quantity ordered P = Price per unit
D = Annual demand in units H = Holding cost per unit per
year
S = Ordering or setup cost per order
2DS
Q =
*
IP
Because unit price varies, holding cost (H) is
expressed as a percent (I) of unit price (P)
EXAMPLE 9 P.529
P = $5
S = $49
D = 5000
I = 0.2
TABLE 12.2 A Quantity Discount Schedule

DISCOUNT DISCOUNT
NUMBER DISCOUNT QUANTITY DISCOUNT (%) PRICE (P')
1 0 to 999 no discount $5.00
2 1,000 to 1,999 4 $4.80
3 2,000 and over 5 $4.75

Quantity Discount Example
Calculate Q* for every discount 2DS
Q =
*
IP
2(5,000)(49)
Q1* = = 700 cars/order
(.2)(5.00)
2(5,000)(49)
(.2)(4.80)
2(5,000)(49)
(.2)(4.75)
Calculate Q* for every discount 2DS
Q =
*
IP
2(5,000)(49)
(.2)(5.00)
2(5,000)(49)
(.2)(4.80)
1,000 — adjusted
2(5,000)(49)
(.2)(4.75)
© 2014 Pearson Education
2,000 — adjusted 8 - 49
TABLE 12.3 Total Cost Computations for Wohl’s Discount Store
ANNUAL ANNUAL ANNUAL TOTAL=

UNIT ORDER PRODUC ORDERING HOLDING PRODUCT
DISC PRICE QUANTITY T COST COST COST + ORDER +
NUMBER (P') (Q adj) (P'xD) (DS/Q) (QIP')/2 HOLDING
1 $5.00 700 $25,000 $350 $350 $25,700
2 $4.80 1,000 $24,000 $245 $480 $24,725
3 $4.75 2,000 $23.750 $122.50 $950 $24,822.50
Choose the price and quantity that gives the

lowest total cost
Buy 1,000 units at $4.80 per unit
Material Requirements
Planning (MRP)
and ERP 14
Heizer and Render
© 2014
© 2014
Pearson
Pearson
Education
Education 8 - 51
Bills of Material
▶ List of components, ingredients, and
materials needed to make product
▶ Provides product structure
▶ Items above given level are called parents
▶ Items below given level are called
components or children

BOM P.593
Level Product structure for “Awesome” (A)

0 A
1 B(2) C(3)
2 E(2) E(2) F(2)
3 D(2) G(1) D(2)

BOM Example
For an order of 50 Awesome speaker kits
Level Product structure for “Awesome” (A)

Part B: 2 x number of As = (2)(50) = 100
0 C:
Part 3 x number of As = A (3)(50) = 150
Part D: 2 x number of Bs
1 B(2) + 2 x number of Fs = (2)(100) + (2)(300)
C(3) = 800
Part E: 2 x number of Bs
+ 2 x number of Cs = (2)(100) + (2)(150) = 500
Part
2 F: 2 x number
E(2) of Cs = (2)(150) =
E(2) F(2)300
Part G: 1 x number of Fs = (1)(300) = 300
3 D(2) G(1) D(2)

Lead Times for Components
▶ The time required to purchase,
produce, or assemble an item
▶ For production – the sum TABLE 14.2
of the move, setup, and Lead Times for Awesome
Speaker Kits (As)
assembly or run times COMPONENT LEAD TIME
▶ For purchased items – A 1 week
the time between the B 2 weeks

C 1 week
recognition of a need
D 1 week
and when its available E 2 week
for production F 3 weeks
G 2 weeks
Net Requirements ITEM ON
HAND
ITEM ON
HAND
A 10 E 10
Plan P.597 B 15 F 5
C 20 G 0
D 10

Net Requirements Plan

Net Requirements Plan
The logic of net requirements
Gross + Allocations
requirements
Total requirements
On Scheduled Net
– + = requirements
hand receipts
Available inventory

Lot-Sizing Techniques
▶ Periodic order quantity (POQ) orders
quantity needed for a predetermined time
period
▶ Interval = EOQ / average demand per period
▶ Order quantity set to cover the interval
▶ Order quantity calculated when order is
released
▶ No extra inventory

Lot-for-Lot P.600
WEEK 1 2 3 4 5 6 7 8 9 10
Gross
35 30 40 0 10 40 30 0 30 55
requirements
Scheduled
receipts
Projected on
35 35 0 0 0 0 0 0 0 0 0
hand
Net
0 30 40 0 10 40 30 0 30 55
requirements
Planned order
30 40 10 40 30 30 55
receipts
Planned order
30 40 10 40 30 30 55
releases
Holding cost = $1/week; Setup cost = $100; Lead time = 1 week

Lot-for-Lot Example
No on-hand inventory is carried through the system
TotalWEEK
holding cost1 = $0
2 3 4 5 6 7 8 9 10
Gross
There are seven35setups for this
30 40 0 item
10 in this
40 30 plan
0 30 55
requirements
Total ordering cost = 7 x $100 = $700
Scheduled
receipts
Projected on
35 35 0 0 0 0 0 0 0 0 0
hand
Net
0 30 40 0 10 40 30 0 30 55
requirements
Planned order
30 40 10 40 30 30 55
receipts
Planned order
30 40 10 40 30 30 55
releases

EOQ Lot Size P.601
Average weekly gross requirements = 27;
2DS = Q H 2 AVER usage = 27/week

52 weeks / year => 52x27 = 1404 = D
Holding cots = 1x52 = 52 = H
2DS
Q = 2 Setup cost = 100 = S
H
=> Q = 73
2DS
Q = *
H D = Annual demand in units for the inventory item

EOQ Lot Size P.601
WEEK 1 2 3 4 5 6 7 8 9 10
Gross
35 30 40 0 10 40 30 0 30 55
requirements
Scheduled
receipts
Projected on
35 35 0 43 3 3 66 26 69 69 39
hand
Net
0 30 0 0 7 0 4 0 0 16
requirements
Planned order
73 73 73 73
receipts
Planned order
73 73 73 73
releases

Average weekly gross requirements = 27; EOQ = 73 units
EOQ Lot Size Example
Annual demand D = 1,404
Holding cost = 3751 units
WEEK 2
x3$1 (including
4 5 6
577units
8
on9 10
hand at end of week 10)
Gross
Ordering 35 30 40 0 10 40 30 0 30 55
requirements cost = 4 x $100 = $400
Total cost = $375 + $400 = $775
Scheduled
receipts
Projected on
35 35 0 43 3 3 66 26 69 69 39
hand
Net
0 30 0 0 7 0 4 0 0 16
requirements
Planned order
73 73 73 73
receipts
Planned order
73 73 73 73
releases

Average weekly gross requirements = 27; EOQ = 73 units
POQ Lot Size P.602
Average weekly gross requirements = 27;
AVER usage = 27/week

52 weeks / year => 52x27 =
1404 = D POQ INTERVAL
Holding cots = 1x52 = 52 = H
= EOQ / AVER WEEKLY USAGE
Setup cost = 100 = S
= 73/27 ~ 3 weeks
=> Q = 73

POQ Lot Size P.602
WEEK 1 2 3 4 5 6 7 8 9 10
Gross
35 30 40 0 10 40 30 0 30 55
requirements
Scheduled
receipts
Projected on
35 35 0 40 0 0 70 30 0 0 55
hand
Net
0 30 0 0 10 0 0 55 0
requirements
Planned order
70 80 0 85 0
receipts
Planned order
70 80 85
releases
EOQ = 73 units; Average weekly gross requirements = 27;

POQ interval = 73/27 ≅ 3 weeks
POQ Lot Size Example
Setups = 3 x $100 = $300
WEEK 1 2 3 4 5 6 7 8 9 10
Holding cost = (40 + 70 + 30 + 55) units x $1 = $195
Gross
Total cost = $30035+ $195
requirements
30 = $495
40 0 10 40 30 0 30 55
Scheduled
receipts
Projected on
35 35 0 40 0 0 70 30 0 0 55
hand
Net
0 30 0 0 10 0 0 55 0
requirements
Planned order
70 80 0 85 0
receipts
Planned order
70 80 85
releases
EOQ = 73 units; Average weekly gross requirements = 27;

POQ interval = 73/27 ≅ 3 weeks
Scheduling in the
Short-Term 1
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5
© 2014
© 2014
Pearson
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Education
Education 8 - 68
Assignment Method P.633
▶ A special class of linear programming

models that assigns tasks or jobs to
resources
▶ Objective is to minimize cost or time
▶ Only one job (or worker) is assigned
to one machine (or project)

Assignment Method
▶ Build a table of costs or time associated
with particular assignments
TYPESETTER
JOB A B C
R-34 $11 $14 $ 6
S-66 $ 8 $10 $11
T-50 $ 9 $12 $ 7

Assignment Method
1. Create zero opportunity costs by
repeatedly subtracting the lowest costs
from each row and column
2. Draw the minimum number of vertical and
horizontal lines necessary to cover all the
zeros in the table. If the number of lines
equals either the number of rows or the
number of columns, proceed to step 4.
Otherwise proceed to step 3.

Assignment Method
3. Subtract the smallest number not covered
by a line from all other uncovered numbers.
Add the same number to any number at the
intersection of two lines. Return to step 2.
4. Optimal assignments are at zero locations
in the table. Select one, draw lines through
the row and column involved, and continue to
the next assignment.

Sequencing Jobs P.635
▶ Specifies the order in which jobs should
be performed at work centers
▶ Priority rules are used to dispatch or
sequence jobs
▶ FCFS: First come, first served
▶ SPT: Shortest processing time
▶ EDD: Earliest due date
▶ LPT: Longest processing time

Sequencing Example
Apply the four popular sequencing rules to
these five jobs
Job Work (Processing) Job Due
Time Date
Job (Days) (Days)
A 6 8
B 2 6
C 8 18
D 3 15
E 9 23

Sequencing Example
FCFS: Sequence A-B-C-D-E
Job Work
Job (Processing) Flow Job Due Job
Sequence Time Time Date Lateness
A 6 6 8 0
B 2 8 6 2
C 8 16 18 0
D 3 19 15 4
E 9 28 23 5
28 77 11

Sequencing Example
FCFS: Sequence A-B-C-D-E
Sum of total flow time

Average completion time = Number of jobs
= 77/5 = 15.4 days
Total job work time

Utilization metric = Sum of total flow time = 28/77 = 36.4%
Average number of Sum of total flow time

jobs in the system = Total job work time = 77/28 = 2.75 jobs
Total late days

Average job lateness = Number of jobs = 11/5 = 2.2 days

Sequencing Example
SPT: Sequence B-D-A-C-E
Job Work
B 2 2 6 0
D 3 5 15 0
A 6 11 8 3
C 8 19 18 1
E 9 28 23 5
28 65 9

Sequencing Example
SPT: Sequence B-D-A-C-E

= 65/5 = 13 days
Total job work time


jobs in the system = = 65/28 = 2.32 jobs
Total job work time
Total late days


Sequencing Example
EDD: Sequence B-A-D-C-E
Job Work
B 2 2 6 0
A 6 8 8 0
D 3 11 15 0
C 8 19 18 1
E 9 28 23 5
28 68 6

Sequencing Example
EDD: Sequence B-A-D-C-E

= 68/5 = 13.6 days
Total job work time


Total job work time
Total late days


Sequencing Example
LPT: Sequence E-C-A-D-B
Job Work
E 9 9 23 0
C 8 17 18 0
A 6 23 8 15
D 3 26 15 11
B 2 28 6 22
28 103 48

Sequencing Example
LPT: Sequence E-C-A-D-B

= 103/5 = 20.6 days
Total job work time


Total job work time
Total late days


Sequencing Example
Summary of Rules
Average
Average Number of Average
Completion Utilization Jobs in Lateness
Rule Time (Days) Metric (%) System (Days)
FCFS 15.4 36.4 2.75 2.2
SPT 13.0 43.1 2.32 1.8
EDD 13.6 41.2 2.43 1.2
LPT 20.6 27.2 3.68 9.6

Johnson’s Rule P.639
1. List all jobs and times for each work center
2. Choose the job with the shortest activity
time. If that time is in the first work center,
schedule the job first. If it is in the second
work center, schedule the job last.
3. Once a job is scheduled, it is eliminated
from the list
4. Repeat steps 2 and 3 working toward the
center of the sequence

Johnson’s Rule Example
WORK CENTER 1 WORK CENTER
JOB (DRILL PRESS) 2 (LATHE)
A 5 2
B 3 6
C 8 4
D 10 7
E 7 12

Johnson’s Rule Example
WORK CENTER 1 WORK CENTER
JOB (DRILL PRESS) 2 (LATHE)
A 5 2
B 3 6
C 8 4 B E D C A
D 10 7
E 7 12
WORK 3 7 10 8 5
CENTER 1
WORK 6 2 7 4 2
CENTER 2


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FINAL EXAM REVISION

PRODUCTION & OPERATION

PREPARED BY: LUONG NGOC DIEP

PowerPoint slides by Jeff Heyl

© 2014 Pearson Education 8-3

1. Office layout: Positions workers, their

© 2014 Pearson Education 8-4

2. Retail layout: Allocates shelf space and responds

© 2014 Pearson Education 8-6

3. Warehouse layout: Addresses trade-offs between

© 2014 Pearson Education 8-8

4. Fixed-position layout: Addresses the layout

5. Process-oriented layout: Deals with low-volume,

JOBSHOP - INTERMITTENT - BATCH

© 2014 Pearson Education 8-9

6. Work cell layout: Arranges machinery and

7. Product-oriented layout: Seeks the best personnel

© 2014 Pearson Education 8 - 10

- EXAMPLES FOR EACH TYPE?

© 2014 Pearson Education 8 - 11

© 2014 Pearson Education 8 - 12

© 2014 Pearson Education 8 - 13

© 2014 Pearson Education 8 - 14

Production time available

© 2014 Pearson Education 8 - 16

© 2014 Pearson Education 8 - 18

PowerPoint slides by Jeff Heyl

► Home Depot had $11.4b inventory, total assets of

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Inventory Cost of goods sold

► (beginning plus ending)/2

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Inventory investment = $1.69b

Weeks of supply = 1.69 / .273 = 6.19 weeks

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▶ Read SOLVED PROBLEM 11.1 PAGE

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PowerPoint slides by Jeff Heyl

1. Basic economic order quantity

Annual demand Setup or order

= (Holding cost per unit per year)

Optimal order quantity is found 2DS = Q H 2

when annual setup cost equals

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Expected time Number of working days per year

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Total annual cost = Setup cost + Holding cost

Total annual cost = Setup cost + Holding cost +

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Demand Lead time for a new

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Part of inventory cycle during which

production (and usage) is taking place

Annual = (Average inventory x Holding cost

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Maximum = Total produced during – Total used during

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However, Q = total produced = pt ; thus t = Q/p