In this chapter, the following content will be discussed: Production activity control, gantt chart, critical ratio scheduling, finite loading, scheduling, assignment method, sequencing slack, Johnson''s rule, monitoring, advance planning and scheduling, scheduling procedure, employee scheduling.
LECTURE 20 LSM733-PRODUCTION OPERATIONS MANAGEMENT By: OSMAN BIN SAIF Summary of last Session ỵ Inventory Models for Independent Demand þ þ Production Order Quantity Model Quantity Discount Models Summary of last Session (Contd.) ỵ Probabilistic Models and Safety Stock ỵ ỵ Other Probabilistic Models Fixed-Period (P) Systems Agenda for this Session ỵ ỵ ỵ ỵ Global Company Profile: AnheuserBusch The Planning Process The Nature of Aggregate Planning Aggregate Planning Strategies ỵ ỵ ỵ Capacity Options Demand Options Mixing Options to Develop a Plan Agenda for this Session (Contd.) ỵ Methods for Aggregate Planning ỵ ỵ ỵ Graphical Methods Mathematical Approaches Comparison of Aggregate Planning Methods Chapter : Aggregate Scheduling Anheuser-Busch ỵ ỵ ỵ Anheuser-Busch produces nearly 40% of the beer consumed in the U.S Matches fluctuating demand by brand to plant, labor, and inventory capacity to achieve high facility utilization High facility utilization requires þ þ þ Meticulous cleaning between batches Effective maintenance Efficient employee and facility scheduling Anheuser-Busch ỵ ỵ Product-focused facility with high fixed costs High utilization requires effective aggregate planning of the four basic stages of production ỵ ỵ ỵ þ Selection and delivery of raw materials Brewing process from milling to aging Packaging Distribution Aggregate Planning Determine the quantity and timing of production for the immediate future ỵ Objective is to minimize cost over the planning period by adjusting ỵ ỵ ỵ ỵ ỵ ỵ Production rates Labor levels Inventory levels Overtime work Subcontracting rates Other controllable variables Aggregate Planning Required for aggregate planning ỵ ỵ ỵ þ A logical overall unit for measuring sales and output A forecast of demand for an intermediate planning period in these aggregate terms A method for determining costs A model that combines forecasts and costs so that scheduling decisions can be made for the planning period 10 Roofing Supplier Example Monthly Costs Calculations Cost Information Production at Demand Inventory Ending Month carry 50 Units Forecast Inventory $ 5Change perunits unit per monthx $5 Inventory cost per Day $9,250 Inventory carrying (= 1,850 carried unit) Jan 1,100 900 per +200 200 $10 per unit Subcontracting cost per unit Feb pay rate 900 700 (= 10 +200 400 Regular-time labor 49,600 x $40 per $ workers per hour ($40 per day) Average x+250 124 days) 650 Mar 1,050 800 day $ per hour Overtime pay rate (above day) Other Apr costs (overtime, 1,050 1,200 -150 hours per 500 hiring, layoffs, 1.6 hours Labor-hours to produce May 1,100 a unit 1,500 -400 per unit 100 subcontracting) $300-100 per unit Cost of increasing daily production rate June 1,000 1,100 Total cost $58,850 (hiring and training) 1,850 Cost of decreasing daily production rate (layoffs) $600 per unit Total units of inventory carried over from one Table 13.3 month to the next = 1,850 units Workforce required to produce 50 units per day = 10 workers 37 Roofing Supplier Example 7,000 – Reduction of inventory Cumulative demand units 6,000 – 6,200 units 5,000 – Cumulative level production using average monthly 4,000 forecast – requirements 3,000 – Cumulative forecast requirements 2,000 – 1,000 – – Jan Excess inventory Feb Mar Apr May June Figure 13.4 38 Roofing Supplier Example Month Expected Demand Jan Feb Mar Apr May June 900 700 800 1,200 1,500 1,100 Production Days 22 18 21 21 22 20 6,200 124 Plan Demand Per Day (computed) 41 39 38 57 68 55 Table 13.2 i ng t c a r t n o – sub c Minimum requirement = 38 units per day 39 Production rate per working day Roofing Supplier Example Forecast demand 70 – Level 60 –production using lowest monthly forecast 50 demand – 40 – 30 – – Jan Feb Mar Apr May June 22 22 22 22 22 22 40 = Month = Number o wor2ing d Roofing Supplier Example Cost Information Inventory carrying cost $ per unit per month Subcontracting cost per unit $10 per unit Average pay rate $ per hour ($40 per day) Overtime pay rate $ per hour (above hours per day) Labor-hours to produce a unit 1.6 hours per unit Cost of increasing daily production rate (hiring and training) $300 per unit Cost of decreasing daily production rate (layoffs) $600 per unit Table 13.3 41 Roofing Supplier Example Cost Information Inventory carry cost In-house production Subcontracting cost per unit Average pay rate Overtime pay rate $ per unit per month = 38 units per day $10 per unit x $124 per days hour ($40 per day) = 4,712 $ per units hour (above hours per day) Labor-hours to produce a unit Subcontract units 1.6 hours per unit = 6,200 - 4,712 $300 per unit Cost of increasing daily production rate = 1,488 units (hiring and training) Cost of decreasing daily production rate (layoffs) $600 per unit Table 13.3 42 Roofing Supplier Example Cost Information Inventory carry cost In-house production Subcontracting cost per unit Average pay rate Overtime pay rate $ per unit per month = 38 units per day $10 per unit x $124 per days hour ($40 per day) = 4,712 $ per units hour (above hours per day) Costs Subcontract Labor-hours to produce a unit units 1.6 hours per unit = Calculations 6,200 - 4,712 $300 per unit x $40 per Cost of increasing daily production rate Regular-time labor $37,696 (= 7.6 workers = 1,488 units (hiring and training) day x 124 days) per unit Cost of decreasing daily production rate (= $600 Subcontracting 14,880 1,488 units x $10 per (layoffs) unit) Table 13.3 Total cost $52,576 43 Roofing Supplier Example Month Expected Demand Jan Feb Mar Apr May June 900 700 800 1,200 1,500 1,100 Production Days 22 18 21 21 22 20 6,200 124 iring h – Plan Demand Per Day (computed) 41 39 38 57 68 55 Table 13.2 ng and firi Production = Expected Demand 44 Production rate per working day Roofing Supplier Example Forecast demand and 70 – monthly production 60 – 50 – 40 – 30 – – Jan Feb Mar Apr May June 22 22 22 22 22 22 45 = Month = Number o wor2ing d Roofing Supplier Example Cost Information Inventory carrying cost $ per unit per month Subcontracting cost per unit $10 per unit Average pay rate $ per hour ($40 per day) Overtime pay rate $ per hour (above hours per day) Labor-hours to produce a unit 1.6 hours per unit Cost of increasing daily production rate (hiring and training) $300 per unit Cost of decreasing daily production rate (layoffs) $600 per unit Table 13.3 46 Roofing Supplier Example Basic Production Cost Inventory carrying cost (demand x Daily Forecast Prod 1.6 hrs/unit x Subcontracting cost Month (units) Rate per unit $5/hr) Cost Information Jan 900 rate Average pay Extra Cost of Extra Cost of $ perDecreasing unit per month Increasing Production Production $10 per(layoff unitcost) Total Cost (hiring cost) 41 $ 7,200 — — ($40 per $ 7,200 $ per hour day) $1,200 $ per(=hour 6,800 x $600) (above hours per day) Feb 700 39 5,600 — Mar 800 38 6,400 — Overtime pay rate Labor-hours to produce a unit 1.6 $600 hours unit (= xper $600) 7,000 $5,700 $300 per unit Cost rate Apr of increasing 1,200 57daily production 9,600 — (= 19 x $300) (hiring and training) 15,300 May Cost 15,300 1,500 68daily production 12,000 decreasing of (layoffs) June 1,100 Table 13.3 55 8,800 $49,600 $3,300 $600 rate (= 11 x $300) — per unit — $7,800 (= 13 x $600) 16,600 $9,000 $9,600 $68,200 47 Table 13.4 Comparison of Three Plans Cost Plan Plan Inventory carrying $ 9,250 $ Regular labor 49,600 37,696 49,600 Overtime labor 0 Hiring 0 9,000 Layoffs 0 9,600 Subcontracting 14,880 $58,850 $52,576 $68,200 Total cost Plan $ Plan is the lowest cost option 48 Table 13.5 Summary of this Session ỵ ỵ ỵ ỵ Global Company Profile: AnheuserBusch The Planning Process The Nature of Aggregate Planning Aggregate Planning Strategies ỵ ỵ ỵ Capacity Options Demand Options Mixing Options to Develop a Plan 49 Summary of this Session (Contd.) þ Methods for Aggregate Planning þ Graphical Methods 50 THANK YOU 51 ... 1 ,200 1,500 1,100 Production Days 22 18 21 21 22 20 6 ,200 124 Demand Per Day (computed) 41 39 38 57 68 55 Table 13.2 Average requirement = = Total expected demand Number of production days 6 ,200 ... (overtime, 1,050 1 ,200 -1 50 hours per 500 hiring, layoffs, 1.6 hours Labor-hours to produce May 1,100 a unit 1,500 -4 00 per unit 100 subcontracting) $30 0-1 00 per unit Cost of increasing daily production. .. 700 800 1 ,200 1,500 1,100 Production Days 22 18 21 21 22 20 6 ,200 124 iring h – Plan Demand Per Day (computed) 41 39 38 57 68 55 Table 13.2 ng and firi Production = Expected Demand 44 Production