No Slide Title
Download
Report
Transcript No Slide Title
IE 5551 - Production Planning and
Inventory Control
Saif Benjaafar
Industrial & Systems Engineering
University of Minnesota
1
Course Objectives
Introduction to methods for managing production,
inventory, and distribution systems
Topics covered include demand forecasting,
capacity planning, production planning and
scheduling, production and inventory control, and
supply chain coordination
Use of quantitative models and analytical tools for
supporting decisions in each of the above areas
2
Course Objectives (Continued…)
Special emphasis will be given to the link between
operational issues and strategic objectives
Implications of various emerging technologies,
business practices, and government regulations
3
Prerequisites
An introductory course in probability and statistics
An introductory course in linear programming
Knowledge of Microsoft Excel & Microsoft Solver
4
Texts
Factory Physics by Wallace Hopp and Mark
Spearman
The Goal by Eliyahu Goldratt
Lean Thinking by James Womack and Daniel Jones
5
Lecture Topics
Week 1
Week 2
Week 3
Week 4
Week 5
Week 6
Introduction to Production Planning and
Inventory Control
Inventory Control – Deterministic
Demand
Inventory Control – Stochastic Demand
Inventory Control – Stochastic Demand
Inventory Control – Stochastic Demand
Inventory Control – Time Varying
Demand
6
Lecture Topics (Continued…)
Week 7
Week 8
Week 9
Week 10
Week 11
Week 12
Week 13
Week 14
Week 15
Inventory Control – Multiple Echelons
Demand Forecasting
Demand Forecasting
Production Planning and Scheduling
Production Planning and Scheduling
Managing Manufacturing Operations
Managing Manufacturing Operations
Managing Manufacturing Operations
Project Presentations
7
Group Projects
Teams of 2 or 3
Type of project
Problem solving
Case study
Reviews
Outcome
A proposal
Oral presentation
Written report
8
Problem Solving
A mathematical model
A computer model
Data collection and statistical analysis
9
Case Studies
Focus on one company and document:
managerial practice
use of a technology
decision making processes
10
Reviews
An industry
An emerging technology
A managerial practice
Academic research
11
Example Industries
Electronics
Automotive
Food
Clothing
Medical devices
Energy
12
Example Technologies
RFID
Wireless communication and mobile computing
Online procurement portals
Social media
13
Example Practices
Outsourcing
Vendor managed inventory (VMI)
Delayed product differentiation
Collaborative forecasting, planning, & replenishment
(CFPR)
Third & fourth party logistics (3/4PL)
Green/sustainable supply chains
14
This Year’s Theme
Energy efficient and sustainable supply chains
Energy consumption
Carbon footprint
Closed loop supply chains
Alternative sourcing, materials, processing
15
Production/Manufacturing
Production/manufacturing is the process of converting
raw materials or semi-finished products into finished
products that have value in the market place. This
process involves the contribution of labor, equipment,
energy, and information.
16
The Production System
Raw materials
Energy
Labor
Equipment
Information
Production
System
Finished products
Scrap
Waste
17
Inventory
Inventory is both an input and output of the production
process. Inventory can be in the form of raw materials,
semi-finished, and finished products.
18
The Inventory System
Supply source
Demand source
Inventory
19
The Production-Inventory System
Suppliers
Raw materials
Fabrication
Component parts
inventory
Assembly
Distribution
and sales
Finished goods
inventory
20
The Supply Chain
Assembly/
Manufacturing
2nd tier suppliers
1st tier
suppliers
Distribution
centers
Retailers
21
Supply Chain Management
Supply Chain Management (SCM) is the set of
functions concerned with the effective utilization of
limited resources that may reside with one or more
independent firms and the management of material,
information, and financial flows within and between
these firms, so as to satisfy customer demands and create
profits for all firms.
22
Production Planning and
Inventory Control
Production planning and inventory control is the subset
of SCM functions that focus on managing production
operations and inventory throughout the supply chain.
23
Examples of Decisions
24
Examples of Decisions
What should we produce, how much, and when
(forecasting)?
How much can we produce (capacity planning)?
How much do we have and how much do we
need (inventory management)?
When should we produce (production planning
and scheduling)?
25
A Hierarchy of Decisions
Sales &
Marketing
Long term
forecasting
Transportation
& Distribution
Capacity
Planning
Warehousing &
order fulfillment
Network design
& facility location
Inventory
Management
Production
Planning
Production
Scheduling
26
Example Performance Measures
27
Examples of Performance Measures
Cost (are products being created at minimum or
acceptable cost?)
Quality (what are the specifications of the
products? What percentages of shipped products
meet specification?)
Variety (how many types of products are - or
can be – simultaneously produced?)
Service (how long does it take to fulfill a
customer order? how often are quoted lead times
28
met?)
Examples of Performance Measures
(continued…)
Flexibility (how quickly can existing resources
be reconfigured to produce new products?)
Worker satisfaction (are workers and managers
throughout the supply chain happy and
motivated?)
Safety (are work environments safe for workers
and the surrounding community?)
Environmental impact (how environmentally
friendly are the supply chain processes and the
29
products?)
The Bottom Line
In the long run, the supply chain must be
profitable by delivering value to the end customer
and to do so over the long run.
30
Classification of the Production
Process
Production quantity
31
Classification of the Production
Process
Production quantity
– Mass production
– Batch production
– Job shop production
32
Classification of the Production
Process
Production quantity
– Mass production
– Batch production
– Job shop production
Product variety
33
Classification of the Production
Process
Production quantity
– Mass production
– Batch production
– Job shop production
Product variety
– Single product or product line
– Family of similar products
– One-of-a-kind products
34
Mass Production Systems
35
Mass Production Systems
Low product variety
High production volumes
Specialized labor
Dedicated equipment
High reconfiguration costs
Make-to-stock production
36
Batch Production Systems
37
Batch Production Systems
Medium product variety
Products are made in larger lots
products are made to stock
Programmable/reconfigurable equipment
Significant setup costs
38
Job Shops
39
Job Shops
High product variety
Products are made in small lots
Products are made to order
Flexible equipment and labor
Small setups
40
Classification of Production Systems
(continued…)
Order fulfillment
41
Classification of Production Systems
(continued…)
Order fulfillment
– Make-to-stock systems (MTS)
– Make-to-order systems (MTO)
– Hybrid MTO/MTS
42
Classification of Production Systems
(continued…)
Order fulfillment
– Make-to-stock systems (MTS)
– Make-to-order systems (MTO)
– Hybrid MTO/MTS
Resource configuration
43
Classification of Production Systems
(continued…)
Order fulfillment
– Make-to-stock systems (MTS)
– Make-to-order systems (MTO)
– Hybrid MTO/MTS
Resource configuration
– Product layout
– Process layout
– Cellular layout
– Fixed position layout
44
Classification of Production
Systems (continued…)
Inputs/outputs
45
Classification of Production
Systems (continued…)
Inputs/outputs
– Discrete production systems (discrete inputs and
outputs - cars, computers, machine tools, etc)
– Continuous production systems (continuous inputs
and outputs - chemicals, textiles, food processing,
pharmaceuticals)
– Hybrid systems (Discrete inputs/continuous outputs
or continuous inputs/discrete outputs - steel, plastics,
recycling)
46
Process capabilities
& business strategy
Example product attributes: price, quality,
variety, service, demand uncertainty
Example process attributes: cost, quality,
flexibility, lead time
47
A firm must choose a business strategy - attribute
values for its portfolio of products - that
differentiates it from the competition.
A firm must choose process capabilities, attribute
values for its process, that support its business
strategy.
48
A business strategy can be driven by market
opportunities or by a competitive advantage in
process capabilities.
In both cases, there must be a fit between process
capability and business strategy.
49
Process flexibility
High
Matching Process Choice with
Product Strategy Choice
Low
Area of
strategic fit
Low
High
Product variety
50
Lead time
Low
Matching Process Choice with Product
Strategy Choice (Continued…)
High
Area of
strategic fit
Low
High
Demand uncertainty
51
The Evolution of Process
Capabilities
Volume (1920/30/40’s)
Cost (1950/60’s)
Quality (1970/80’s)
Time (1980/1990’s)
Flexibility (1990/2000’s)
Mass customization (2000’s & beyond)
52
Other Emerging Trends
Resiliency
Sustainability (and stewardship)
53
Assignment
Read Chapters 0, 1 & 2 of text book (Factory Physics)
Read paper 1 from the reading list
54