OPMT 303 1st EditionFinal Exam Study Guide Chapters: 13, 16, 9, 10, 18Lecture 8 April 1Inventory management The functions of inventory management are to meet demand, to smooth production requirements (seasonality), to decouple operations (MRP), to protect against stock outs, to take advantage of order cycles, to hedge against price increase, to permit operations (WIPs), and to take advantage of quantity discounts. The objective of inventory management are to meet demand, to meet demand at the lowest cost, and to control stockouts. There are three basic questions when deciding on independent or dependent demand. They are: 1. When to order? (timing)2. How much to order (quantity)3. How to monitor the system? Continuous or periodicInventory CostThere are two groups of inventory costs, holding cost and order cost. Holding cost include carrying cost, material handling cost, manpower cost, and pilferage. Holding (carrying cost) is the building rent or depreciation, operating cost, taxes on building, and insurance on a building. Material handling cost is equipment lease or depreciation, power, equipment operating cost. Manpower cost is the cost from extra handling and supervision. Pilferage is scrap and obsolescence cost. ANY HOLDING COST LESS THAN 20% IS SUSPECT, BUT MANY EXCEED 40% Ordering cost include preparing invoices, inspecting, and shipping.Comparison of Q and P systemsThe Q models monitor is continuous while the P model is periodic. The Q models quantity is fixed and the P model is variable. The Q models timing is variable and the P model is fixed. The Q models vulnerability is lead time only and the P model is always. The Q models safety stock is smaller than the P models. The Q models implementation is difficult and the P model’s is easy. And lastly the Q models orders are done individually while the P models can be grouped.ABC ClassificationA items account for a large number of dollar value but relatively small percentage of total items. Complete and accurate records, continuous monitoring, high priorities, and maximum attention are all part of A items. C items account for a small number of dollar value but relatively high percentage of total items. Periodical reviews, simplified records, large safety buffer, and large orders are all parts of C items.B items are between class A and class C items. B items classification is arbitrary based on two steps: Calculate annual dollar usage and ranking items according to ADU. To calculate the annual dollar usage multiply the annual demand by the unit price.Lecture 9 April 8Management of qualityQuality is the ability of a product or service to consistently meet or exceed customer expectations. There are four categories of quality costs; appraisal cost, prevention costs, internal failure costs, and external cost. Appraisal costs are incurred to measure quality, assess customer satisfaction, and insect and test products. Prevention costs are associated with preventing defects before they happen. These include costs of process design, product design, employee training, and vendor programs. Internal failure cost results from yield losses and the need to rework products or services because of defective workmanship (Defective units are caught before being shipped to customers). External include those of warranty repairs, loss of market share, and lawsuits arising from injury or property damage from use of the product or serviceKey contributors to Quality managementShewhart refers to control charts. Deming refers to special and common causes of variation. Juran refers to quality in fitness for use; quality trilogy: planning, control, and improvement. Feignbaum refers to quality in a total field; the customer defines quality. Crosby refers to quality is free; zero defects. Ishikawarefers to cause and effect diagrams; quality circles. And lastly taguchi refers to loss of function.Lecture 10 April 15Production activity controlThe objectives of production activity control are to determine set of principles and techniques used by managers to plan, schedule, control, and evaluate shop production operations. The input is MRP, routing data, and due dates. The primary characteristics of production activity control is the operational decisions made daily and hourly and it uses backward and forward scheduling, sequencing, and dispatching. The Output is job status reporting. And the person responsible for production activity control is the foreman.Common scheduling criteriaFlowtime is the time an individual job spends in a system (shop). The goal is to find priority rule that minimizes average flowtime. Tardiness (lateness) is the amount of time a job is behind a due date. The best way to prevent tardiness is to find sequence that minimizes average tardiness, number of tardy jobs,maximum tardiness (max customer satisfaction). Makespan is the time it takes to process all jobs. The best way to have the most successful makespan is to find a sequence that minimizes makespan (max utilization).SPT, EDD, and CR characteristicsSPT always minimizes average flow time. It is also good for tardiness. It is often called “the prince of priority rules”. SPT is used in CPUs and printers but very seldom in production. Lastly truncated SPT is used for a certain period of time. EDD is very good for tardiness (always minimizes maximum tardiness). CR is extremely informative about a progress of each job.Johnson’s Priority ruleJohnson’s Priority rule always minimizes makespan and idle time on M2. It can either use forward and backward scheduling. Either schedule jobs forward starting today or backward starting from the due dates. It has inventories but there is a good chance of meeting fur date. You do not need inventories but that is risky.Lecture 11 April 22Quality controlThere are two causes of process variation. Random cause refers to random factors that are inherent in the process and beyond control. Inability of the process to execute perfection, exact duplication, on eachsuccessive output unit. Residual variations after all other behaviors are accounted for. Assignable cause refers to the malfunctions or specific faults in the system. Breakdown of equipment, absenteeism, lack oftraining are all assignable causes. Corrective actions should bring the process back to statistical control. The essence of statistical process control is to assure that the output of a process is random so that future output will be random.SPC ErrorsThere are two types of SPC