OM Study Guide Finals Supply Chain Management Supplier Selection Inventory Make vs Buy Quality Materials Requirements Plan MRP Long Term Capacity Plan Logistics Location Layout Process Analysis Job Design Aggregate Planning Concurrent Design Logistics the movement of goods in a supply chain Radio Frequency Identification RFID The use of tags that project information via radio waves to track goods in the supply chain Third Party Logistics 3PL the outsourcing of logistics management ex warehousing distribution etc Reverse logistics Closed loop supply chain the backward flow of goods returned to the supply chain ex defective unsold recycled etc Direct shipment items are shipped directly from suppliers to retail stores Warehousing Items are stocked in warehouses and shipped to stores as required Cross docking Warehouses function as shipping coordination points rather than inventory storage points o Items are transferred between trucks so outbound trucks to retailers have products from multiple suppliers Approaches to order fulfillment o Engineer to Order ETO most customized least responsive o Make to Order MTO o Assemble to Order ATO o Make to Stock MTS least customized most responsive Advantages disadvantages of different modes of transportation o Pallets and containers facilitate international trade o Pallets allow companies to unitize goods o Containers also allow unitization and ease of transport on ships and trains Many small and mid size companies outsource order fulfillment Location and Layout Center of Gravity technique o Minimizes transportation costs o Can include customers suppliers or both Sum of x coordinates times their weightings sum of weights Sum of y coordinates times their weightings sum of weights o Incorporates qualitative and quantitative factors into a single composite value Factor rating technique Regional factors o Location of raw materials o Location of markets o Cost and availability of labor o Taxes o Climate Community factors o Taxes and environmental regulations o Enticements tax abatements low cost loans o Attitude towards type of business o Quality of life schools cost of living recreation Important to attract retain employees o Services medical fire police o Cost and availability of utilities Site location factors o Land cost conditions o Room for future expansion o Transportation access roads rail spurs o Zoning restrictions Process types o Project o Job shop o Batch one of a kind work in a limited time frame Small scale highly flexible Moderate volume moderate variety o Repetitive assembly line High volume standardized goods or services o Continuous Very high volume standardized non discrete goods Facility layout the configuration of departments work centers and equipment o Product layout sequential Used for repetitive processing ex assembly line Advantages o High utilization of specialized labor and equipment o Low material handling cost and WIP inventory o Routine scheduling accounting and inventory control o Low unit cost U shaped is a type of Product layout o Process Layout functional Used for intermittent processing ex job shop Advantages o System can handle a variety of processing requirements o Not particularly vulnerable to equipment failures o General purpose equipment often less costly o Possible to use individual incentive systems o Fixed Position Layout Product is stationary workers and materials are brought to it Ex constructing a building Process Analysis and Job Design Process means for converting various inputs land labor capital information into outputs goods and services Work center people and or equipment that perform a task Setup time time to prepare for a task independent of of jobs in batch Run time time required to perform task Bottleneck the work center with the least capacity limits system capacity o Defines the cycle time Cycle time time between job completions the time between the completion of each successive unit the rate at which items are produced Capacity the ability to process work expressed in units of output or time o Capacity in units time available cycle time Utilization the extent to which installed capacity is used o Relationship between actual output and potential output o Capacity utilization capacity req capacity available Throughput time time for each unit to pass through the process including waits Yield percent of good items o Output quantity input quantity o Or 1 scrap rate Behavioral vs efficiency schools of thought o Efficiency approach to design Emphasizes specialization Utilizes methods analysis motion study and work measurement o Behavioral approach to design Emphasizes employee motivation Job enlargement Giving a worker a larger portion of the total task horizontal loading Job rotation Job enrichment Having workers periodically exchange jobs Increase responsibility for planning and coordination of tasks vertical loading Specialization o Advantages Simplifies training High productivity Low wage costs Low education skill reqs for labor Minimum responsibility for employees Little mental effort needed aka you can hire stupid cheap people Job enrichment increasing responsibility for planning and coordination tasks by vertical loading Ergonomics incorporation of human factors in the design of the workplace o Helps to increase productivity by reducing worker discomfort and failure Motion study systematic study of the human motions used to perform an operation Forms of compensation o Time based system o Output based system o Knowledge based system Compensated by time employee works during pay period Compensated by amount of output employee produces during pay period Rewards workers who undergo training that increases their skills Trend as companies shift to lean production Aggregate Planning Intermediate range capacity planning 2 12 month rolling horizon o Inputs o Output Production plan Forecast of aggregate demand Available resources for the planning period Policies regarding changes in employment levels Costs for different resources Includes output levels employment levels and finished goods inventory levels o Capacity levers Hire and layoff workers Overtime slack time Part time workers Subcontracting Inventories o Demand levers Pricing Promotion Back orders Complementary products o Level vs chase strategies Level strategy is producing a steady amount regardless of forecasted demand Chase strategy is exactly following forecasted demand o Balance equations Ending inventory Max beginning inventory