1
Aggregate Planning
Aggregate Units
The method is based on notion of aggregate units.
They may be
Actual units of production Weight (tons of steel) Volume (gallons of gasoline) Dollars (value of sales) Fictitious aggregate units
Relevant Costs Involved Regular time costs
Costs of producing a unit of output during regular working hours, including direct and indirect labor, material, manufacturing expenses
Overtime costs Costs associated with using manpower beyond normal working
hours Production-rate change costs
Costs incurred in substantially altering the production rate Inventory associated costs
Out of pocket costs associated with carrying inventory Costs of insufficient capacity in the short run
Costs incurred as a result of backordering, lost sales revenue, loss of goodwill + costs of actions initiated to prevent shortages
Control system costs Costs of acquiring the data for analytical decision,
computational effort and implementation costs
Introduction to Aggregate Planning
Constant production rate can be satisfied with constant capacity.
Work force is constant, production rate slightly less that capacity of people & machines: good utilization without overloading the facilities.
Raw material usage is also constant.
If supplier and customers are also close, frequent deliveries of raw material and finished goods will keep inventory low.
How realistic is this example?
Strategies to cope with fluctuating demand?-- change the demand -- produce at constant rate anyway-- vary the production rate -- use combination of above strategies
Production Planning Environment
Competitor’sBehavior
Raw MaterialAvailability
Market Demand
Planningfor
Production
ExternalCapacity
(outsourcing)
EconomicConditions
CurrentPhysicalCapacity
CurrentInventory
CurrentWork Force
RequiredProductionActivities
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Learning Objectives
Review of forecasting Forecast errors
Aggregate planning
7
Phases of Decisions
Strategy or design: Forecast Planning: Forecast Operation Actual demand
Since actual demands differs from forecasts so does the execution from the plans. E.g. Supply Chain concentration plans 40
students per year whereas the actual is ??.
8
Characteristics of forecasts
Forecasts are always wrong. Should include expected value and measure of error.
Long-term forecasts are less accurate than short-term forecasts. Too long term forecasts are useless: Forecast horizon Forecasting to determine
Raw material purchases for the next week Annual electricity generation capacity in TX for the next 30 years
Several ways to aggregate Products into product groups Demand by location Demand by time
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Planning Horizon
Aggregate planning: Intermediate-range capacity planning, usually covering 2 to 12 months. In other words, it is matching the capacity and the demand.
Shortrange
Intermediate range
Long range
Now 2 months 1 Year
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Short-range plans (Detailed plans) Machine loading Job assignments
Intermediate plans (General levels) Employment Output
Long-range plans Long term capacity Location / layout Product/Process design
Overview of Planning Levels
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Why aggregate planning Details are hard to gather for longer horizons
Demand for Christmas turkeys at Tom Thumb’s vs Thanksgiving turkeys
Details carry a lot of uncertainty: aggregation reduces variability Demand for meat during Christmas has less variability than
the total variability in the demand for chicken, turkey, beef, etc.
If there is variability why bother making detailed plans, inputs will change anyway Instead make plans that carry a lot of flexibility Flexibility and aggregation go hand in hand
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Aggregate Planning
Aggregate planning: General plan Combined products = aggregate product
Short and long sleeve shirts = shirt Single product
Pooled capacities = aggregated capacity Dedicated machine and general machine =
machine Single capacity
Time periods = time buckets Consider all the demand and production of a
given month together Quite a few time buckets When does the demand or production take place in
a time bucket?
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Planning Sequence
Corporatestrategies
and policies
Economic,competitive,and political conditions
Aggregatedemand
forecasts
Business Plan
Production plan
Master schedule
Establishes productionand capacity strategies
Establishesproduction capacity
Establishes schedulesfor specific products
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Resources Workforce Facilities
Demand forecast Policy statements
Subcontracting Overtime Inventory levels Back orders
Costs Inventory
carrying Back orders Hiring/firing Overtime Inventory
changes subcontracting
Aggregate Planning Inputs
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Total cost of a plan Projected levels of inventory
Inventory Output Employment Subcontracting Backordering
Aggregate Planning Outputs
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Strategies
Proactive Alter demand to match capacity
Reactive Alter capacity to match demand
Mixed Some of each
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Pricing Price reduction leads to higher demand
Promotion Not necessarily via pricing Free delivery, free after sale service
Some Puerto Rico hotels pay for your flight Back orders
Short selling: Sell now, deliver later New demand
Finding alternative uses for the product
Demand Options to Match Demand and Capacity
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Fundamental tradeoffs in Aggregate Planning
Capacity (regular time, over time, subcontract) Inventory Backlog / lost sales: Customer patience?
Basic Strategies Chase (the demand) strategy; Matching capacity to demand;
the planned output for a period is the expected demand for
that period fast food restaurants
Time flexibility from high levels of workforce or capacity; machining shops, army
Level strategy; Maintaining a steady rate of regular-time
output while meeting variations in demand by a combination
of options. swim wear
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Matching the Demand with Level or Time flexibility strategies
Use
in
vento
ry
Use delivery time
Use cap
acity
Demand
Demand
Demand
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Chase vs. Level
Chase Approach Advantages
Investment in inventory is low
Labor utilization in high
Disadvantages The cost of adjusting
output rates and/or workforce levels
Level Approach
Advantages– Stable output rates and
workforce
Disadvantages– Greater inventory costs
– Increased overtime and idle time
– Resource utilizations vary over time
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Inputs: Determine demand for each period Determine capacities for each period Identify policies that are pertinent Determine units costs
Analysis Develop alternative plans and costs Select the best plan that satisfies
objectives
Techniques for Aggregate Planning
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Summary of Planning Techniques
Technique Solution Characteristics
Graphical/ charting
Trial and error
Intuitively appealing, easy to understand; solution not necessarily optimal.
Linear programming
Optimizing Computerized; linear assumptions not always valid.
Simulation Trial and error
Computerized models can be examined under a variety of conditions.
Linear decision rule???
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Services occur when they are rendered Limited time-wise aggregation
Services occur where they are rendered Limited location-wise aggregation
Demand for service can be difficult to predict Personalization of service
Capacity availability can be difficult to predict Labor flexibility can be an advantage in services
Human is more flexible than a machine, well at the expense of low efficiency.
Aggregate Planning in Services
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Aggregate Plan to Master Schedule
AggregatePlanning
Disaggregation
MasterSchedule
For a short planning range 2-4 months:
Master schedule: The result of disaggregating an aggregate plan; shows quantity and timing of specific end items for a scheduled horizon.
Rough-cut capacity planning: Approximate balancing of capacity and demand to test the feasibility of a master schedule.
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Master Scheduling
Master schedule Determines
quantities needed to meet
demand Interfaces with
Marketing Capacity planning Production planning Distribution planning
Master Scheduler– Evaluates impact of new orders– Provides delivery dates for
orders– Deals with problems
» Production delays» Revising master
schedule» Insufficient capacity
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Master Scheduling Process
MasterScheduling
Beginning inventory
Forecast
CommittedCustomer orders
Inputs Outputs
Projected inventory
Master production schedule
ATP: Uncommitted inventory
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Preview of Materials Requirement Planning Terminology Net Inventory
After ProductionRequirements=Forecast
Assuming that the forecasts include committed orders
Net inventory before production=Projected on hand inventory in the previous period- Requirements
Produce in lots if Net inventory is less than zero
Net inventory after production=Net inventory before production+ Production
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Summary
Aggregate planning: conception, demand and capacity option Basic strategy: level capacity strategy, chase demand
strategy Techniques: Trial and Error, mathematical techniques Master scheduling
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Practice Questions
1. The goal of aggregate planning is to achieve a production plan that attempts to balance the organization's resources and meet expected demand.
Answer: True 2. A “chase” strategy in aggregate planning would
attempt to match capacity and demand. Answer: True 3. Ultimately the overriding factor in choosing a
strategy in aggregate planning is overall cost. Answer: True
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Practice Questions1. Which of the following best describes aggregate
planning? A) the link between intermediate term planning and short term operating decisions
B) a collection of objective planning tools C) make or buy decisions D) an attempt to respond to predicted demand
within the constraints set by product, process and location decisions
E) manpower planning Answer: D
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Practice Questions
2.Which of the following is an input to aggregate planning?
A) beginning inventory B) forecasts for each period of the
schedule C) customer orders D) all of the above E) none of the above Answer: D
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Practice Questions
3.Which of the following is not an input to the aggregate planning process:
A) resources B) demand forecast C) policies on work force changes D) master production schedules E) cost information Answer: D
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Practice Questions
4. Which one of the following is not a basic option for altering demand?
A) promotion B) backordering C) pricing D) subcontracting E) All are demand options. Answer: D
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Practice Questions
5. Which of the following would not be a strategy associated with adjusting aggregate capacity to meet expected demand?
A) subcontract B) vary the size of the workforce C) vary the intensity of workforce utilization D) allow inventory levels to vary E) use backorders Answer: E
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Practice Questions
6. Moving from the aggregate plan to a master production schedule requires:
A) rough cut capacity planning B) disaggregation C) sub-optimization D) strategy formulation E) chase strategies Answer: B
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LESSON 12: INTRODUCTION TO OPERATIONS SCHEDULING
Outline
Hierarchy of Production Decisions Operations Scheduling Production Systems
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Hierarchy of Production Decisions
• After a production facility and processes are set up, a series of production planning decisions are required. The entire decision making process may be viewed as a hierarchical process. A conceptual view of the hierarchical process is given in Text Figure 8-1 (see the next slide).
• First, one would like to know how much demand may be expected and when the demand may be expected. This question is addressed by forecasting.
• An aggregate plan determines the aggregate production levels and resource capacities over the planning horizon. The production levels are often different from the
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Aggregate Plan
Forecast of demand
Material Requirements Planning System
Master Production Schedule
Detailed Job Shop Schedule
Figure 8-1: Hierarchy of Production Decisions
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Hierarchy of Production Decisions
forecasted demand levels because of seasonality associated with the demand, constraints on the availability of production resources, etc. The resource capacities such as workforce levels are determined assuming one aggregate unit of production.
• Master production schedule (MPS) translates the aggregate plan in terms of specific units of production and time period. For example, an aggregate plan may require 550 units of chairs in April. MPS then translates the requirement into 200 units of desk chair in Week 1, 150 units of ladder-back chair in Week 2 and 200 units of Kitchen chair in Week 3.
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Hierarchy of Production Decisions
• The MPS generates the production plan in terms of finished products which often require components or subassemblies. The materials requirements planning (MRP) computes the changes in the inventory levels of components and subassemblies over the planning horizon and determines the size and timing of ordering the components and subassemblies.
• Next comes operations scheduling. After generating demand forecast, workforce capacities, production plan, and purchasing plan, it’s logical to ask which worker or machine will be used to produce which product and when the products will be produced. This is answered by operations scheduling.
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• An operations scheduling question is given in the previous slide. In more general terms, operations scheduling is the allocation of resources over time to perform a collection of tasks.
• Examples of resources:– Workers, Machines, Tools
• Examples of tasks:– Operations that bring some physical changes to material in order to eventually
manufacture products– Setups such as walking to reach the workplace, obtaining and returning tools,
setting the required jigs and fixtures, positioning and inspecting material, cleaning etc.
Operations Scheduling
42
• Operations and Jobs– The above definition of scheduling uses the more general term of task that
includes both operations and setup. – We shall most often use the terms operation and job.– A collection of operations on a single product is a job.
• The planning horizon– The planning horizon of a scheduling decision is very short say days, weeks or
months.• Schedule
– A schedule is the final outcome of operations scheduling and gives a detail chart of what activities will be done using various resources over the planning horizon.
Operations Scheduling
43
• Sequencing– Sequencing and scheduling are similar terms. But sequencing does not refer to
time. For example, if a bank teller processes 5 customers, the bank teller may just process the customers on a first come first served basis without any planning about exact start and end times for each customer. That’s sequencing. Scheduling, in contrast, produces a detail plan of various activities over time.
• A Gantt chart representation of a schedule– A Gantt chart representation of a schedule is shown on the next slide. Suppose
that there are two machines: one lathe machine and one grinding machine. Two jobs Job A12 and Job B23 are to be produced over the next 14 days.
Operations Scheduling
44
Operations Scheduling
G rinding m achine
2 4 6 8 10 12
D ays
14
Lathe m achine Job A12
Job A12
Job B23
Job B23
45
– The schedule shown on the Gantt chart gives a detail plan:• The lathe machine will be used by Job A12 on days 1-4, and Job B23 on
days 5-8• The grinding machine will be used by Job A12 on days 5-10 and Job B23
on days 11-14.– Notice that
• No job uses more than one machine simultaneously• No machine processes more than one job simultaneously. • The above are some standard assumptions/ requirements which will be
maintained throughout this chapter/ course.
Operations Scheduling
46
– As it is in the example Gantt chart, it is customary to show:• resources such as machines on the y-axis • time on the x-axis and • each job (or operation) by a rectangle proportional to the length of the time
required to process the job (or operation).– The Gantt chart is used not only for planning but also for monitoring. For
example, on Day 8, one can check if Job B23 is completed by the lathe machine.
– There will be more exercises on Gantt chart in Lessons 2, 5, 6 and 9.
Operations Scheduling
47
Operations Scheduling
• Generalization of scheduling models, job and machine– The scheduling models use the terms like job and machine. However, the
models actually apply to many processes that has nothing to do with jobs and machine at all!
– For example, suppose that Mary and Marcia require advising in three subjects: business, computer science and mathematics. Each of Mary and Marcia will see the advisors separately. They would like to complete discussions as soon as possible. One can view the situation a 3-machine, 2-job problem where the machines represent the advisors and jobs represent Mary and Marcia.
48
Production Systems
• Product characteristics differ. • Some products are standard and require minimal or no variation from one item
to another. These products are produced in large volume on the basis of demand forecast. Examples of standard products include staple products, economy cars, etc.
• Some other products are produced only on the basis of customer order and there exist significant differences among the items. These products are produced in low volumes. Examples of custom products include luxury cars, fashion clothes, etc.
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Production Systems
• Different product characteristic requires a different production system. • Standard products require a
– make-to-stock or assemble-to-stock production system • Custom products require a
– make-to-order or assemble-to-order production system
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LESSON 13: SCHEDULING OBJECTIVES
Outline
• Job Characteristics• Comparison of Schedules• Scheduling Terms• Scheduling Objectives
51
Job Characteristics
• Lesson 1 provides a brief discussion on production systems. We have discussed some alternative ways of arranging machines. In this lesson, we shall first discuss some job characteristics and scheduling objectives.
• Generally, every job is different (an exception is an assembly line where the jobs are identical). For example, in case of a make-to-order or an assemble-to-order production system, every order – is placed at a different time, – requires a different amount of processing time and – is delivered at a different time.
52
Job Characteristics
• Job characteristics are important inputs to job shop, batch production and flow shop scheduling. Every job has a– ready time: the time when the job arrives at the shop floor– processing time: the time required to process the job– due date: the time when the job must be completed
• Notation:
jd
jt
jr
j
j
j
job for date Due
job for time Processing
job for timeReady
53
Job Characteristics
• Assumptions: – A machine can process one job at a time– A job can be processed by one machine at a time– We usually assume an equal importance and the same arrival time for all jobs
(Example 1 is an exception, where jobs arrive at different times). Further, we assume that preemption is not allowed. So, once a job is started on a machine, the job must be completed before another job can be processed by that machine.
54
Comparison of Schedules
• There are two alternative schedules (sequences)
Schedule 1: process Job 1 first, then Job 2.
Schedule 2: process Job 2 first, then Job 1.• Schedule 1 (see the next slide):
– Only 3 hours will be needed to complete the jobs. – However, Job 2 can be completed at time 3 which is late by 1 hour.
• Schedule 2 (see the next slide): – Both the jobs are completed right when they are needed. – However, a total of 4 hours will be needed
55
Comparison of Schedules
• Schedule 1 requires the facility to be open for fewer hours (3 hours only in contrast to 4 hours required by Schedule 2)
• Schedule 2 meets the due dates (Schedule 1 does not)
T im e,
Job 1
t1 2 3 40
Schedule 1
Job 2
2d 1d
T im e, t
Job 1
1 2 3 40
Schedule 2
Job 2
2d 1d
56
Comparison of Schedules
• Next, we shall see a similar example with a different pair of criteria.• Example 2: An auto repair shop has a space problem and requires parking
fees for all cars waiting for service. The shop starts at 8:30 am and two cars are waiting to be repaired. Car 1 will require 1 hour and the customer wants the job done by 12:30 pm. Job 2 will require 3 hours and the customer wants the job done by 11:30 am.
C arR eady
T im e (hr)P rocess ingT im e (hr)
D ueD ate (hr)
1 0 1 42 0 3 3
j jr jt jd
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Comparison of Schedules
• Schedule 3 requires less parking fees (1 hour only in contrast to 3 hours required by Schedule 4)
• Schedule 4 meets the due dates (Schedule 3 does not) T im e,
C ar 2
t1 2 3 40
Schedule 3
C ar 1
2d 1d
T im e,
C ar 2
t1 2 3 40
Schedule 4
C ar 1
2d 1d
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Scheduling Terms
• Makespan, maximum lateness, total completion time– In Example 1, Slides 5-8, Schedule 1 minimizes makespan and Schedule
2 minimizes maximum lateness.– Total completion time is the sum of all completion times. Notice that total
completion time is not the same as makespan. Total completion time is denoted by
– In Example 2, Slides 9-10, Schedule 3 minimizes not only parking fees but also total completion time. In general, if a schedule frees up space fast, the schedule minimizes total completion time. Schedule 4 minimizes maximum lateness. nj CCCCC 321
jC
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Scheduling Objectives
• As it may be observed from Examples 1 and 2, different schedule may be better with respect to different criterion (scheduling objective).
• So, it’s very important to set up a suitable scheduling objective in order to get a suitable schedule.
• There are many scheduling objectives and different situation calls for a different objective.
• The next slide provides a brief list of scheduling objectives divided into four groups.
• See Section 8.5, pp. 423-424 for a discussion on how different situation requires a different schedule.
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Scheduling Objectives
• Conformance to prescribed deadlines– Meet customer due dates, minimize job lateness, minimize maximum
lateness, minimize number of tardy jobs• Response time or lead time
– Minimize mean completion time, minimize average time in the system• Efficient utilization of resources
– Maximize machine or labor utilization, minimize idle time, maximize throughput, minimize the length of time the shop is open, minimize utilities and wages
• Costs– Minimize work-in-process inventory, minimize overtime
LESSON 14: SCHEDULING WITH PRIORITY SEQUENCING RULES
Outline
• Sequencing• Sequencing Rules• Sequencing Rule Example• Remarks
Chapter 11: Project Management 62
Background
Project management concerned with managing organizational activities.
Often used to integrate and coordinate diverse activities.
Projects are special types of processes.
Chapter 11: Project Management 63
Defining a Project
Projects are processes that are performed infrequently and ad hoc, with a clear specification of the desired objective.
Chapter 11: Project Management 64
Examples of Projects
Constructing highways, bridges, tunnels and dams
Erecting skyscrapers, steel mills, and homes
Organizing conferences and conventions
Managing R&D projects Running political
campaigns, war operations, and advertising campaigns
Chapter 11: Project Management 65
Reasons for Growth in Project Operations
More Sophisticated Technology
Better-Educated Citizens
More Leisure Time Increased
Accountability Higher Productivity Faster Response to
Customers Greater
customization for customers
Chapter 11: Project Management 66
Planning and Scheduling Projects
Planning. Determining what must be done and which tasks must precede others.
Scheduling. Determining when the tasks must be completed; when they can and when they must be started; which tasks are critical to the timely completion of the project; and which tasks have slack and how much.
Productivity Management
Basic concerns: how are the organizational resources managed in achieving the desired results?
* All resources should be fully utilized or * Results should be achieved with
minimum use if resources
Productivity Management (II)
General Guidelines: * Productivity improvement should be an
integral part of firm’s strategic plan. * Productivity objectives and measures should
be derived firm’s business and operations strategies
* Productivity plan should cover both short-term and long-term objectives.
* Productivity objectives should be linked with quality and customer service concerns
* Make productivity improvement an organizational culture and involve all functional areas.
Productivity Management in Service
White-collar productivity is more important than ever before.
Need different and unique productivity measurement in different service industries in terms of input, output and processing time.
Productivity Management in Service (II)
New approaches in service:--More effective design of service jobs.--Effective use of incentive and rewarding system--Participative management style.--Direct feedback from customers.--Organizational design and development--System approach vs behavioral approach--…………………………
Variables Affecting Labor Productivity
Productivity
The Physical Work Environment Employee Job Performance
MotivationEmployee Ability
Formal Organization
Informal Groups
Job Design
Leadership
Union Individual Employee
Psychological Needs
Economic Conditions
Individual Employee Personal Situations
Job Design
Why job design? Organizing work content in a best way to improve labor productivity-consideration of human factors.
Classical approach: labor specialization: through standardization/ mechanization/fixed job layout/fixed work method/…..
New approach: Human factors are must considered in job design
Job Design (II)
Major objectives of job design: improve labor efficiency and productivity with high worker satisfaction.
* Job design is a complex task. ---A major topic in IE ,many guidelines
are suggested. * Job design in service operations: less
formalized, more flexible.
Job Design Considerations
Job design: decision relate to how much jobs should be specialized or enlarged.
Benefits of specialization: * less training time * faster work pace * lower wages
Human Relations: Motivation and Morale
Maslow’s Ladder: Needs People Fill Through Work
Physiological needs
Safety needs
Social needs
Esteem needs
Self realization needs
Job Design Considerations (II)
Disadvantages of narrowly defined jobs: * Poor employee morale, high turnover, low
quality * The need for more management attention * Less flexibility to handle changes, absences Alternatives to specialization: * Job enlargement * Job rotation * Job enrichment
New Job Design Approaches
Job Rotation: training workers to perform several jobs so that they can be moved about from job to job during their work shift
Job Enlargement: adding more tasks to a worker’s job. Adding more similar tasks is referred to as horizontal job enlargement
Job Enrichment: adding more planning, inspecting, and tasks that have been regarded as management functions. Job enrichment is often referred to as vertical job enlargement
Sociotechnical System Studies: attempts to design jobs that adjust the production technology to the needs of the workers
Employee Empowerment Team Production
Practical Guidelines for Designing Workers Jobs
Elements of worker’s jobs
Suggested design guidelines Worker’s needs affected
Worker’s job tasks
•Avoid machine pacing•Combine inspection tasks into jobs so that workers inspect their own output•Allow open communication•Combine machine changeover, new job layouts, setups and other elements of immediate job planning into workers’ jobs
•Self control•Self direction/ control•Socialization, team building
Immediate job setting
•Rotate workers where practical between jobs that are repetitive•Assign new workers to undesirable jobs for fixed periods of time then transfer them to more preferred jobs
•Variety and relief of boredom and monotony•equity
Larger work environment
•Select and train supervisors who openly communicate•Remove barriers between managing and other employees
• recognition and socialization•Equity and recognition
Work Measurement
Work Measurement: establish a measurable work standard upon which to evaluate, compare and improve labor productivity.
Work (labor) Standard: Determine on average-how many labor-hour are required to produce one unit of desired output for a well-trained worker under normal operating conditions
Work Measurement (II) Level of standard: * Operations/Department/Plant standards * Element/Operations/Product standards Use of work standard: * Work and personnel planning * Cost estimation for labor and machine Techniques to set work standard: * Time study * Work sampling * Elemental timing * Predetermined motion-time study
Three Levels of Standards
Production and operations standards: individuals job standards
Department standards: sum of performance of the individual and team in a department
Plant standards: quantity and labor standards of the plant are the goals management strives to meet
Evaluation Performance
Evaluating individual performance: subsequent compensation
Evaluating department performance: subsequent supervisor compensation
Evaluating process design, layout, and work methods
Estimating expense and revenue streams in equipment evaluation as alternative are compared
Formulating standards costs
Predicting, Planning, and Controlling Operations
Aggregate planning of work force levels and production rates
Capacity planning and utilization Scheduling operations: time sequencing
jobs Cost estimating of products and
production lots Planning types of labor skills necessary
and budgeting labor expenses
Work Measurement- Average Worker
Determined by observing several workers and estimating their average performance
Sampling costs increase with number of workers sampled: accuracy of estimate increases as sample size increases
Must tradeoff sampling cost and accuracy (See Supplement Example p.6-8)
Work Measurement Techniques
Time study (stopwatch and micromotion analysis)
Elemental standards time data Predetermined motion- time data Work sampling
Work Measurement Time Study
Standards time=
Normal time= (average cycle time)* (rating factor)
Average cycle time=
Allowance fraction= fraction of time for personal needs, unavoidable work delays, fatigue
Normal time
(1-allowance)
Time recorded to perform an element
Number of cycles observed
Work Measurement- Work Sampling
Purpose: To estimate what proportion of a worker’s time is
devoted to work activities Main Issues:
What level of statistical confidence is desired in the results?
How many observations are necessary Primary Applications:
Time standards: to obtain the standards time for a task
Work Measurement- Work Sampling Formulas
Normal Time=
Total Study Time *
Proportion of Time EmployeeObserved Working *
PerformanceRating Factor
Number of Units Produced
Proportional ofTime EmployeeObserved Working
=Number of observations in which working occurred
Number of Observations
OrP =
x
n
Work Measurement- work Sampling Formulas
Example: N= 100 (observations)X= 83 (sampled worker is working)P= 83/100 = 0.83
Given: Total Study Time = 37.5 (hours)Rating Factor = 1.05Number of Units Produced = 100
Normal Time = (37.5*0.83*1.05)/100 = 1/3 (hours) = 20 (min)
Work Measurement- Predetermined Motion- Time
Study Description: used in the planning process
when the jobs are not currently being performed
Can also be an alternative to observed time studies
Basis in the historical information on basic human movement and motion such as reaching, gasping, lifting, etc.
Elemental times have been developed for the basic human motion
Commonly industry specific
New Approaches and Concepts in Job Design and Work
Measurement New Trend Job Design: * Efficiency: more simple, easy-eliminate all
unnecessary moves/operations/ materials/……
* Motivation: more responsible/more creative/more control more challengeable/
New Approaches and Concepts in Job Design and Work
Measurement (II) Learning (experience) curve in work
measurement: Learning curve: representing the
relationship between the time used in producing an item and the quantity to be reproduced repeatedly.
VALUE METHODOLOGY
Value Methodology (also called ValueEngineering, Value Analysis or ValueManagement) is a powerful problem-solving tool that can reduce costs whilemaintaining or improving performanceand quality requirements.
It is a function-oriented, systematicteam approach to providing value in a product or service
The value methodology helps organizationscompete more effectively in local, national and international markets by:
Decreasing costs
Increasing profits
Improving quality Expanding market share
Saving time
Solving problems
Using resources more effectively
Value Analysis
VA is an step by step approach to identify thefunctions of a product, process, system or service; to establish a monetary value for that function and then provide the desired functionat an overall minimum cost without affectingany of the existing parameters like Quality,Maintainability, Productivity, Safety and other Performance characteristics
Value Engineering
Value Engineering is where the value of allthe components used in the construction of a product from design to final delivery stage arecompletely analyzed and pursued
Diffn between
VALUE ANALYSIS Indicates application onthe product that is
intomanufacturing. All factors come togetherincluding
workers,subcontractors, engineersto make a team with totalexperience and knowledge
VALUE ENGINEERING
Indicates application onthe product at its designstage.
It is always done by aspecific product design(engineers) team.
Diffn between
VALUE ANALYSIS It may change thepresent stage of
theproduct or operation It is worked out mostly with help of
knowledgeand experience VALUE ENGINEERING the changes are executedat the initial
stages only. It requires specifictechnical knowledge
Value anaylsis Tests
Does its use contribute value? Is its cost proportional to its usefulness? Does it need all its features? Is there anything better for the intended use? Can a usable part be made by a lower cost method?
Can a standard product be found which will beusable?
Is it made on proper tooling, considering quantitiesused?
Do materials, reasonable labour, overhead, andprofit total its cost?
Will another dependable supplier provide it for less? Is anyone buying it for less?
Basic Quality Concepts A History of Quality An overview of how the concepts and processes of quality have evolved from the craft guilds of
medieval Europe to the workplaces of today. Continuous Improvement How to take your products, services and processes to the next level through an ongoing cycle of
activities that capitalize on improvement opportunities. Cost of Quality Quality doesn't cost money. It's poor-quality products and services that pile up extra costs for your
organization. Here's how to get started eliminating these expensive shortcomings. Customer Satisfaction Tips and resources for helping you identify your customers and what it will take to satisfy them. Glossary A handy guide to the unique terminology of quality. Problem Solving Using four basic steps to implement solutions by accurately defining problems and identifying
alternatives. Process View of Work Analyze how work gets done so that you can increase efficiency, effectiveness, and adaptability. Quality Assurance and Quality Control What's the difference? In the world of quality, these terms have very different meanings. Root Cause Analysis Use a wide range of approaches, tools, and techniques to uncover causes of problems. Supplier Quality The quality of what goes into a product or service determines the quality of what comes out. Here's
how to keep costs low and quality high. Variation Variation represents the difference between an ideal and an actual situation.
Basic Quality Concepts Continuous improvement is an ongoing effort to improve products,
services or processes. These efforts can seek “incremental” improvement over time or “breakthrough” improvement all at once.
Among the most widely used tools for continuous improvement is a four-step quality model—the plan-do-check-act (PDCA) cycle, also known as Deming Cycle or Shewhart Cycle:
Plan: Identify an opportunity and plan for change. Do: Implement the change on a small scale. Check: Use data to analyze the results of the change and
determine whether it made a difference. Act: If the change was successful, implement it on a wider scale
and continuously assess your results. If the change did not work, begin the cycle again.
Other widely used methods of continuous improvement — such as Six Sigma, Lean, and Total Quality Management — emphasize employee involvement and teamwork; measuring and systematizing processes; and reducing variation, defects and cycle times.
Continuous improvement is an ongoing effort to improve products, services or processes. These efforts can seek “incremental” improvement over time or “breakthrough” improvement all at once.
Among the most widely used tools for continuous improvement is a four-step quality model—the plan-do-check-act (PDCA) cycle, also known as Deming Cycle or Shewhart Cycle:
Plan: Identify an opportunity and plan for change. Do: Implement the change on a small scale. Check: Use data to analyze the results of the change and determine whether it made a
difference. Act: If the change was successful, implement it on a wider scale and continuously assess
your results. If the change did not work, begin the cycle again. Other widely used methods of continuous improvement — such as Six Sigma, Lean, and
Total Quality Management — emphasize employee involvement and teamwork; measuring and systematizing processes; and reducing variation, defects and cycle times.
Continuous or Continual?The terms continuous improvement and continual improvement are frequently used interchangeably. But some quality practitioners make the following distinction:
Continual improvement: a broader term preferred by W. Edwards Deming to refer to general processes of improvement and encompassing “discontinuous” improvements—that is, many different approaches, covering different areas.
Continuous improvement: a subset of continual improvement, with a more specific focus on linear, incremental improvement within an existing process. Some practitioners also associate continuous improvement more closely with techniques of statistical process control.
Cost of Quality
"The cost of quality." It’s a term that's widely used – and widely misunderstood. The "cost of quality" isn't the price of creating a quality product
or service. It's the cost of NOT creating a quality product or service.
Every time work is redone, the cost of quality increases. Obvious examples include:
The reworking of a manufactured item. The retesting of an assembly. The rebuilding of a tool. The correction of a bank statement. The reworking of a service, such as the reprocessing of a loan
operation or the replacement of a food order in a restaurant. In short, any cost that would not have been expended if quality
were perfect contributes to the cost of quality.
Prevention Costs The costs of all activities specifically
designed to prevent poor quality in products or services.
Examples are the costs of: New product review Quality planning Supplier capability surveys Process capability evaluations Quality improvement team meetings Quality improvement projects Quality education and training
Appraisal Costs The costs associated with measuring, evaluating
or auditing products or services to assure conformance to quality standards and performance requirements.
These include the costs of: Incoming and source inspection/test of purchased
material In-process and final inspection/test Product, process or service audits Calibration of measuring and test equipment Associated supplies and materials
Failure Costs The costs resulting from products or services not conforming
to requirements or customer/user needs. Failure costs are divided into internal and external failure categories.
Internal Failure Costs Failure costs occurring prior to delivery or shipment of the
product, or the furnishing of a service, to the customer. Examples are the costs of: Scrap Rework Re-inspection Re-testing Material review Downgrading
External Failure Costs Failure costs occurring after delivery or shipment of the
product — and during or after furnishing of a service — to the customer.
Examples are the costs of: Processing customer complaints Customer returns Warranty claims Product recalls Total Quality Costs: The sum of the above costs. This represents the difference
between the actual cost of a product or service and what the reduced cost would be if there were no possibility of substandard service, failure of products or defects in their manufacture.
Customer Satisfaction
Organizations of all types and sizes have come to realize that their main focus must be to satisfy their customers.
This applies to industrial firms, retail and wholesale businesses, government bodies, service companies, nonprofit organizations and every subgroup within an organization.
Two important questions: Who are the customers? What does it take to satisfy them?
Supplier-customer relationship examples
Supplier Customer Product or Service
Automobile manufacturer Individual customers Cars
Automobile manufacturer Car dealer Sales literature, etc.
Bank Checking account holders Secure check handling
High school Students and parents Education
County recorder Residents of county Maintenance of records
Hospital Patients Healthcare
Hospital Insurance company Data on patients
Insurance company Hospital Payment for services
Steel cutting department Punch press department Steel sheets
Punch press department Spot weld department Shaped parts
All departments Payroll department Data on hours worked, etc.
What Does It Take to Satisfy Customers? Don’t assume you know what the customer wants. There
are many examples of errors in this area, such as “new Coke” and car models that didn’t sell. Many organizations expend considerable time, money and effort determining the “voice” of the customer, using tools such as customer surveys, focus groups and polling.
Satisfying the customer includes providing what is needed when it’s needed. In many situations, it’s up to the customer to provide the supplier with requirements. For example, the payroll department should inform other departments of the exact format for reporting the numbers of hours worked by employees. If the payroll department doesn’t do this job properly, it bears some responsibility for the variation in reporting that will occur.
Problem Solving An organization needs to define some standard of problem solving,
so that leadership can effectively direct others in the research and resolution of issues.
In problem solving, there are four basic steps. 1. Define the problem Diagnose the situation so that your focus is on the problem, not just
its symptoms. Helpful techniques at this stage include using flowcharts to identify the expected steps of a process and cause-and-effect diagrams to define and analyze root causes.
The chart below identifies key steps for defining problems. These steps support the involvement of interested parties, the use of factual information, comparison of expectations to reality and a focus on root causes of a problem. What’s needed is to:
Review and document how processes currently work (who does what, with what information, using what tools, communicating with what organizations and individuals, in what time frame, using what format, etc).
Evaluate the possible impact of new tools and revised policies in the development of a model of “what should be.”
Generate alternative solutions
Postpone the selection of one solution until several alternatives have been proposed. Having a standard with which to compare the characteristics of the final solution is not the same as defining the desired result. A standard allows us to evaluate the different intended results offered by alternatives. When you try to build toward desired results, it’s very difficult to collect good information about the process.
Considering multiple alternatives can significantly enhance the value of your final solution. Once the team or individual has decided the “what should be” model, this target standard becomes the basis for developing a road map for investigating alternatives. Brainstorming and team problem-solving techniques are both useful tools in this stage of problem solving.
Many alternative solutions should be generated before evaluating any of them. A common mistake in problem solving is that alternatives are evaluated as they are proposed, so the first acceptable solution is chosen, even if it’s not the best fit. If we focus on trying to get the results we want, we miss the potential for learning something new that will allow for real improvement.
Evaluate and select an alternative
Skilled problem solvers use a series of considerations when selecting the best alternative. They consider the extent to which:
A particular alternative will solve the problem without causing other unanticipated problems.
All the individuals involved will accept the alternative.
Implementation of the alternative is likely. The alternative fits within the organizational
constraints.
Implement and follow up on the solution
Leaders may be called upon to order the solution to be implemented by others, “sell” the solution to others or facilitate the implementation by involving the efforts of others. The most effective approach, by far, has been to involve others in the implementation as a way of minimizing resistance to subsequent changes.
Feedback channels must be built into the implementation of the solution, to produce continuous monitoring and testing of actual events against expectations. Problem solving, and the techniques used to derive elucidation, can only be effective in an organization if the solution remains in place and is updated to respond to future changes.
Quality Assurance and Quality Control
The terms “quality assurance” and “quality control” are often used interchangeably to refer to ways of ensuring the quality of a service or product. The terms, however, have different meanings.
Assurance: The act of giving confidence, the state of being certain or the act of making certain.Quality Assurance: The planned and systematic activities implemented in a quality system so that quality requirements for a product or service will be fulfilled.
Control: An evaluation to indicate needed corrective responses; the act of guiding a process in which variability is attributable to a constant system of chance causes.Quality Control: The observation techniques and activities used to fulfill requirements for quality.
Root Cause analysis
A factor that caused a nonconformance and should be permanently eliminated through process improvement.
Root cause analysis is a collective term that describes a wide range of approaches, tools, and techniques used to uncover causes of problems.