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SCM 3301: Exam 2
EOQ ASSUMPTIONS:
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Demand, Delivery Time, Price, Holding Cost, Order Cost are Known & Constant
Replenishment is Instantaneous
Stock-outs are NOT Allowed |
INVENTORY TURNOVER CALC:
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Cost of Revenue / Avg. Inventory
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Avg. Inventory=
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(Beg. Invent. +End Invent.)/2
|
2 REVIEW SYSTEMS
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CONTINUOUS
PERIODIC |
CONTINUOUS REVIEW
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DIFFICULT to Achieve for all inventory Items
Very Expensive to Implement
Requires Less Safety Stock |
Continuous |
DIFFICULT
EXPENSIVE
REQ.S LESS SAFETY STOCK |
Periodic |
Reviewed Regular
Cheaper
Req.s More Safety Stock |
PERIODIC REVIEW
|
Physical Inventory is Reviewed at Regular Intervals (wkly, mthly, qrtly, annually)
Lower Cost to Implement
Requires more Safety Stock to buffer the added variation due to longer review period & to protect against inventory system errors. |
SIX SIGMA
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Stresses the Commitment by the Firms top management to help the firm Identify customers expectations & excel in meeting & exceeding their expectations
|
Six Sigma Goal:
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Reducing Variation in Processes
|
ELEMENTS OF SIX SIGMA:
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1)Demings
2)Phillip Crosby's
3)Joseph Juran
4)Malcolm Bridge Nat. Q Award
5) ISO 9000 & ISO 14,000 |
DEMINGS CONTRIBUTION
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14 POINTS FOR MANAGEMENT
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PHILLIP CROSBY'S CONTRIBUTION
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QUALITY IS FREE & QUALITY W/ TEARS
QUALITY & ZERO DEFECTS |
JOSEPH JURAN
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QUALITY CONTROL HANDBOOK
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KEY LEAN PERSPECTIVES:
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Workforce Commitment
Process Improvement
Waste Reduction-Customer Focus |
Workforce Commitment (empowerment)
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Process Owners are RESPONSIBLE FOR IMPROVEMENT NOT for Process Management experts |
PROCESS IMPROVEMENT
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PROCESS DESIGN causes More ORG. PROBLEMS NOT bad workers. |
WASTE REDUCTION
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The desired outcome of waste reduction is VALUE ENHANCEMENT
|
7 WASTES
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1) Over Production
2)Waiting
3)Transportation
4)Overprocessing
5)Excess Inventory
6)Excess Movement
7)Scrap & Rework |
Over Prod.
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Unnecessary prod. to maintain high utilizations |
Waiting:
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excess idle machine & operator & inventory wait time
|
Transporation |
Excess movement of materials & multi. handling
|
Over-processing
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Non-value adding manuf. & other activities
|
Excess Inventory:
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Storage of Excess Inventory
|
Excess Movement:
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Unnecessary movements of Employees
|
Scrap & Rework
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Scrap materials & rework due to poor quality
|
RIVER & ROCKS
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Continuous Improvement
Inventory Buffer Stock (hides problems)
Reducing Inventory makes problems visible
Visible Problems are an opport. to eliminate root cause |
CELLULAR LAYOUT ALLOWS:
|
Small batch sizes
Pull production
Minimal Transportation
Quality Visibility
Minimal Management
Short Throughput times |
CELLULAR LAYOUT REQUIRES:
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Duplicate work stations
Set up Reduction
Cross-training |
SIX SIGMA IMPROVEMENT CYCLE
|
DMAIC
|
DMAIC
|
Define
Measure
Analyze
Improve
Control |