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Review for Exam II—Mar 20, 2002
Dr. Burns
Exam Format45-55 multiple choice3 problemsClosed-bookClosed-notesClosed-neighborBRING---pencil, calculator, scantron
Exam CoverageChapters 11, 12, 13, 14NO CHAPTER SUPPLEMENTS
No linear programming No simulation
Typical problems—see Practice Exam IIAggregate production planning Inventory with Independent DemandMaterial Requirements PlanningCapacity Requirements Planning
Chapter 11 -- Capacity Planning and Aggregate Production Planning
Long Range PlanningMedium Range PlanningAggregate Production Planning
What are the inputs to the aggregate planning system?? Demand forecasts Capacity constraints Strategic objectives Company policies Financial constraints NOT Size of workforce Inventory levels Units subcontracted
Capacity planning is….Long-term strategic decision-makingNOTCapacity requirements planning
When doing capacity planning, which of the following steps is accomplished first?
a. Resource requirements plan b. Rough-cut capacity plan c. Capacity requirements plan d. Input/output control
Aggregate Production Planning Strategies are….Pure (Trial-and-error)
Chase Demand Level production
Mixed (optimal) Linear programming Simulation
Which of the following strategies matches production to demand by hiring and firing workers?Chase demand strategiesLevel production strategiesStrategies the use subcontracting and
overtime
Which of the following is not a strategy for managing demand Shifting demand into other time periods with
incentives, sales promotions and advertising campaigns
Offering products or services with countercyclical demand patterns
Partnering with suppliers to reduce information distortion along the supply chain
Increasing inventories and laying off workers when demand is soft
Terms Aggregate
production planning Best operating level Capacity planning Capacity cushion Chase demand Pure
strategy
Level production Pure strategy
Mixed strategy Disaggregation Diseconomies of
scale Yield management
Chapter 12 – Inventory Management Inventory for Independent demand
Carrying costs Rent Lighting/heating Security Interest Taxes
Can also be expressed as a % of product cost
A rule of thumb is 30%
Ordering costs—costs related to
Transportation
Shipping
Receiving
Inspection
ABC Classification—what is the point?? To concentrate, focus on the those items in
inventory that constitute the highest dollar value to the firm Class A items constitute 5-15% of the items and
70 to 80% of the total dollar value to the firm Class B items constitute 30% of the inventory
items but only 15% of the dollar value Class C items constitute 50 to 60% of the items
but only 5 to 10% of the dollar value
ABC Classification.. Class A items are tightly controlled Class B items less so Class C items not at all
Dollar values are computed by multiplying the dollar cost by the annual demand for the item
This technique is used in all auto parts inventory control systems and have been for 15 years
Periodic inventory systems are….Fixed Time period systemsNOTEOQ Models
EOQ models have A fixed order quantity Deterministic demand No shortages Constant lead time Instantaneous or finite replenishment
EOQ models minimize ordering and holding costs
Which gives you lowest holding cost? Instantaneous replenishmentFinite replenishmentQuantity discounts
WHICH OF THE ABOVE GIVES YOU LOWEST TOTAL ORDERING COST?
How do we calculate a re-order point?
TermsABC system
Carrying costs
Continuous inventory system
Dependent demand
EOQ
Fixed-order quantity system
Fixed time period system
Independent demand Inventory In-process inventory Noninstantaneous
receipt Order cycle Quantity discount Stockout Service level
Chapter 13 – Material Requirements Planning Inventory for Dependent Demand
MRP is applied mostly toProject operations
Batch operationsAssembly line operationsContinuous operations
Material requirements planning is a system forComputing EOQ’sDetermining when to release ordersComputing safety stocksDetermining service levels
WHICH????
Formulas/Rules Projected on-hand = prev projected on-hand +
scheduled receipts + planned order receipts – gross requirements Is really the on-hand amount at the end of the period
Net requirements = gross requirements – previous projected on-hand If less than zero, set to zero
Planned order receipts must be sufficient to accommodate the net requirements
Planned order releases are the same in amount as planned order receipts, just offset one or more periods by the lead time
MRP led to…..MRP II, which led to….
???, which is where we are today
ERPLarge caps have been there and
done thatMid and small caps are getting
thereRead the book NECESSARY BUT
NOT SUFFICIENT by Eli Goldratt if interested
More ERPBased on an N-tier distributed
architectureNot on mainframe glasshouse
•Advantages of N-tier architectureData integrationBetter usage of MIPS on both
PCs and serversSolves the 36 month backlog of
the centralized MIS shopLeads to the decentralization of
MIS
ERP Modules Sales &
distribution Production &
Materials Management
Quality management
Human resource management
Project management Accounting and
controlling
TermsCapacity
Efficiency
Bill of Material
Product structure File
Master Production File
ExplosionExpeditingnetting
More terms Load profile MRP II CRP ERP Modular BOM
Utilization Time bucket Time fence Order splitting
Chapter 14 – Detailed SchedulingScheduling = assignment and
sequencingAssignment algorithm – won’t test you
on thisSequencing – must know EDD, SPT,
FCFS, LCLS, etc.
Ch 14 - 24© 2000 by Prentice-Hall IncRussell/Taylor Oper Mgt 3/e
Sequencing rules
FCFS 18.60 9.6 3 23DDATE 15.00 5.6 3 16SLACK 16.40 6.8 4 16CR 20.80 11.2 4 26SPT 14.80 6.0 3 16
* best values
Average Average No. of MaximumRule Completion Time Tardiness Jobs Tardy Tardiness
*
* **
**
*
*
TermsSequencingLoadingAssigningSPTEDD (DDATE)CRSLACKFCFS (FIFO)LCLS (LIFO)
See you Mon. morning, Mar 25, 8:00 a.m.