Managing Operations

Supply Chain Management

AGGREGATE PLANNING
1) Facility Utilization
2) Personnel Needs
3) Subcontracting Intermediate
- Term
MASTER SCHEDULE
1) MRP
2) Disaggregations of
Master Plan

SHORT-TERM
SCHEDULING ST
1) Work Center Loading
2) Job Sequencing
SCHEDULING
 pertains to establishing the TIMING
of the use of equipment, facilities,
and human activities in an
organization
 is the final step (in the operations
decision-making hierarchy) in the
transformation process before actual
output occurs
 Strategic Importance of
Scheduling
1) LOWER COST
 with better asset utilization
2) FASTER DELIVERY
 better customer service
3) DEPENDABLE DELIVERY
 competitive advantage
 Scheduling Criteria
The correct scheduling technique depends on
 Volume of orders
 Nature of operations
 Complexity of jobs
 Importance placed on each of the
following scheduling criteria:
1) Minimize completion time or process times
2) Maximize utilization of staff equipment and
facilities
3) Minimize Inventory (WIP & FG)
4) Minimize customer waiting time
SCHEDULING
 Involves assigning DUE DATES to
specific jobs, but many jobs
compete simultaneously for the
same resources
 Scheduling Techniques
1. Forward Scheduling – begins as soon
as the requirements are known
2. Backward Scheduling – begins with
the due date and schedules the final
operation first and the other job steps
in reverse order
Scheduling Operations
 Scheduling encompasses
a) allocating workloads to specific work
centers, and
b) determining the sequence in which
operations are to be performed
 Scheduling tasks are largely a
function of the volume of system
output
Scheduling in
High-Volume Systems
 High-volume systems: characterized by
standardized equipment and activities that
provide identical or highly similar
operations or products as they pass
through the system (often referred to as
Flow Systems)
 Goal: obtain a smooth rate of flow of
goods through the system in order to get
a high utilization of labor and equipment
 Flow Shop Scheduling: examples are
PCs, cars, appliances, toys, etc.
 Scheduling in
Intermediate-Volume Systems
 Standard Intermediate Made-to-
type of  Volume  Order of
Output System (job shop)
 More economical to process such items
intermittently, thus intermediate volume
centers periodically shift from one job
to another (e.g. canned foods, baked
goods, paints and cosmetics)
 3 basic issues:
 Run size of jobs
 Timing of jobs
 Sequence in which jobs are processed
Scheduling in
Low-Volume Systems
 Products are made to order
 Orders usually differ considerably in
 Processing requirements
 Materials needed
 Processing time
 Processing sequence & setups
 Job Shop Scheduling: scheduling for low-
volume systems with many variations in
requirements; fairly complex with 2 basic
issues:
a) How to distribute workload among work centers
b) What job processing sequence to use
Production Planning & Control
 To run a facility in a balanced and efficient
manner
 PPC system should
1. Schedule incoming order without violating capacity
constraints of individual work centers
2. Check the availability of tools and materials before
releasing an order to a department
3. Establish due dates for each job and check progress
against need dates and order lead times
4. Check work-in-progress as jobs move through the
shop
5. Provide feedback on plant and production activities
6. Provide work efficiency statistics and monitor operator
times for payroll and labor distribution analyses.
Scheduling System
 Whether manual or automated, must be
accurate and relevant; Requires a production
database with both planning and control files
 3 types of planning files
1) Item Master File contains information about each
component the firm produces or purchases
2) Routing File indicates each component’s flow through
the shop
3) Work-Center Master File contains information about
the work center, such as capacity and efficiency
 Control files track the actual progress made
against the plan for each work order
LOADING JOBS in WORK CENTERS
 Loading means the assignment of jobs to
work or processing centers so that costs,
idle time or completion times are kept to
a minimum
 2 forms of loading work centers:
 Oriented to capacity
 Technique: INPUT-OUTPUT CONTROL
 Related to assigning specific jobs to work
centers
 Approaches: GANTT-CHART
ASSIGNMENT METHOD
LOADING JOBS in WORK CENTERS
 Infinite Loading – jobs are assigned
to work centers without regard to
the capacity of the work center
 Finite Loading – jobs are assigned to
work centers taking into account the
work center capacity and job
processing times
LOADING JOBS in WORK CENTERS
 Vertical Loading – loading jobs at a
work center, job by job, usually
according to some priority criterion,
using infinite loading
 Horizontal Loading – loading each
job on all work centers it will
require, one at a time, according to
some priority criterion, using finite
loading
Input-Output Control
 A system that allows operations personnel
to manage facility work flows by tracking
work added to a work center and its work
completed.
 If the work is arriving faster that it is being
processed, the facility is overloaded and
backlog develops
 Overloading causes crowding in the facility, leading to
inefficiencies and quality problems
 If the work is arriving at a slower rate than
jobs are being performed, the facility is
underloaded and the work center may run
our of work
 Underloading results in idle capacity and wasted
resources
Assignment Method
 A special class of linear programming models
that involves assigning tasks or jobs to resources
(e.g. jobs to machines, contracts to bidders,
people to projects, and salespeople to territories)
 The objective is most often to minimize total
costs or time required to perform the tasks at
hand
 One important characteristics of assignment
problems is that only one job (or worker) is
assigned to one machine (or project)
Assignment Method
 Each assignment problem uses a
table
 The numbers in the table will be
the costs or times associated with
each particular assignment
 The assignment method involves
adding and subtracting appropriate
numbers in the table in order to
find the lowest opportunity cost for
each assignment
Assignment Method Steps:
1. Subtract the smallest number in each row from every
number in that row and then, from the resulting matrix,
subtract the smallest number in each column from
every number in the column. This step has the effect
of reducing the numbers in the table until a series of
zeros, meaning zero opportunity costs, appear. Even
though the numbers change, this reduced problem is
equivalent to the original one, and the same solution
will be optimal.
2. Draw the minimum number of vertical and horizontal
straight lines necessary to cover all zeros in the table.
If the number of lines equals either the number of rows
or the number of columns in the table, then an optimal
assignment can be made (see step 4). If the number
of lines is less than the number of rows or columns,
proceed to step 3.
Assignment Method Steps:
3. Subtract the smallest number not covered by a line from
every other uncovered number. Add the same number
to any number(s) lying at the intersection of any two
lines. Do not change the value of the numbers which
are covered by only one line. Return to step 2 and
continue until an optimal assignment is possible.
4. Optimal assignments will always be at zero locations in
the table. One systematic way of making a valid
assignment is first to select a row or column that
contains only one zero square. An assignment can be
made to that square and then draw lines through its row
and column. From the uncovered rows and columns,
choose another row or column in which there is only one
zero square. Make that assignment and continue the
procedure until assigning each person or machine to one
task.
SEQUENCING JOBS
in WORK CENTERS
Scheduling provides a basis for assigning
jobs to work centers.
Loading is a capacity-control technique that
highlights overloads and underloads.
Sequencing specifies the order in which
jobs should be done at each center
 PRIORITY RULES for dispatching jobs to
work centers are rules that are used to
determine the sequence of jobs in process-
oriented facilities.
Priority Rules
 FCFS: First Come, First Served. The first
job to arrive at a work center is
processed first.
 SPT: Shortest Processing Time. The
shortest jobs are handled first and
completed
 EDD: Earliest Due Date. The job with
the earliest due date is selected first
 LPT: Longest Processing time. The
longer, bigger jobs are often very
important and are selected first.
Priority Rules - Assumptions
 The ser of jobs is known; no new jobs arrive
after processing begins; and no jobs are
cancelled
 Setup time is independent of processing
sequence
 Setup time is deterministic
 Processing times are deterministic rather than
variable
 There will be or interruptions in processing
such as machine breakdowns, accidents, or
worker illness
 Performance Measures in judging
the effectiveness of any given
sequence
 Job Flow Time – length of time a job is at
a particular workstation or work center
(Average Flow Time = total flow time 
number of jobs)
 Job Lateness – length of time the job
completion date is expected to exceed the
date the job was due or promised to a
customer. It is equal to the difference with
compliance times that exceed due dates,
with zeros assigned to jobs that are early
(average tardiness = sum of the differences
from due dates  no. of jobs)
Performance Measures in judging
the effectiveness of any given
sequence
 Makespan – total time needed to
complete a group of jobs; length of times
between the start of the first job in the
group and the completion of the last job in
the group (makespan = sum of the given
processing times of all jobs)
 Utilization – Total job work (processing) 
sum of total flow time or makespan
 Average Number of Jobs - computed as
total flow time  makespan (this ratio
reflects the average work-in-process
inventory)
Critical Ratio
 A sequencing rule that is an index number
computed by dividing the time remaining until
due date by the work time remaining
 As opposed to the priority rules, critical ratio is
dynamic and easily updated. It tends to perform
better than FCFS, SPT, EDD, or LPT on the
average job-lateness criterion.
 CR gives priority to jobs that must be done to
keep shipping on schedule.
 Formula:
CR = Time remaining = Due date - Today’s date
Workdays remaining Work(lead)time remaining
Critical Ratio
 A job with a low critical ratio (less
than 1.0) is one that is falling behind
schedule.
 If CR is exactly equal to 1.0, the job
is on schedule.
 A CR greater than 1.0 means the job
is ahead of schedule and has some
slack.
 Sequencing N Jobs on Two
Machines: Johnson’s Rule
 The next step in complexity is the case in which N jobs
(where N is 2 or more) must go through two different
machines or work centers in the same order. This is called
the N/2 problem.
 Johnson’s Rule: minimizes the processing time for
sequencing a group of jobs through two work centers; also
minimizes total idle time on the machines; involves 4
steps:
1. All jobs are to be listed, and the time that each requires on a
machine to be shown
2. Select the job with the shortest activity time. If the shortest
time lies with the first machine, the job is scheduled first. If
the shortest time lies the second machine, schedule the job
last. Ties in activity times can be broken arbitrarily.
3. Once a job is scheduled, eliminate it.
4. Apply steps 2 and 3 to the remaining jobs, working toward the
center of the sequence.
THEORY of CONSTRAINTS
 The body of knowledge that deals with
anything that limits an organization’s
ability to achieve its goals
 Managers need to identify the operations
(bottlenecks) that constrain output
because it is throughput – that is, units
processed through the facility and sold –
that makes the difference.
 Constraints can be physical (such as
personnel availability, raw materials or
supplies) or non-physical (such as
procedures, morale, training)
THEORY of CONSTRAINTS
 Avoided scheduling complexities and
focused on bottleneck operations (i.e.,
those for which there was insufficient
capacity – in effect, a work center with
zero idle time)
 Output of the system is limited by the
output of the bottleneck operation(s)
 Idle time of nonbottleneck operations was
not a factor in overall productivity of the
system, as long as the bottleneck
operations were used effectively.
 THEORY of CONSTRAINTS
 “drum-buffer-rope” technique
 Drum = is the schedule that sets the pace of
production, the goal of which is to schedule to
make maximum use of bottleneck resources
 Buffer = refers to potentially constraining
resources outside of the bottleneck; its role is to
keep inventory from piling up on either side of the
bottleneck operation
 Rope = represents the synchronizing of the
sequence of operations to insure effective use of
the bottleneck operations; the goal is to avoid
costly and time-consuming multiple setups,
particularly of capacity of constrained resources,
so they do not become bottlenecks too.
 THEORY of CONSTRAINTS
 system of varying “batch” sizes to
achieve the greatest output of bottleneck
operations
 Process Batch – denotes the basic lot size for a
job
 Transfer Batch – denotes a portion of the basic
lot that could be used during production to
facilitate utilization of bottleneck operations
 In effect, a lot could be split into two or more parts.
 Splitting a large lot at one or more operations preceding
a bottleneck operation would reduce the waiting time of
the bottleneck operation.