Transcript Manufacturing Planning and Control

Manufacturing
Planning and Control
MPC 6th Edition
Chapter 10a
McGraw-Hill/Irwin
Copyright © 2011 by The McGraw-Hill Companies, Inc. All rights reserved.
Management of Supply
Chain Logistics
Supply chain logistics encompasses all
material flows–from the flow of purchased
materials into a facility, through the
manufacturing process, and out to the final
customers.
Improved management of supply chain
logistics can lead to improvements in
customer service with simultaneous
reductions in total inventory, transportation,
and warehousing costs.
10a-2
Agenda
Supply Chain Logistics Scope
Supply Chain Logistics Framework
Supply Chain Logistics Elements
Warehouse Replenishment Systems
Warehouse Location Analysis
Vehicle Scheduling Analysis
Customer Service Management
Principles
10a-3
Supply Chain Logistics
(SCL) Framework



SCL Breadth–all material flow decisions, from raw
materials to final customers
Total Cost Concept–the general goal is to minimize the
overall cost while meeting customer-service goals
Design, Operation, and Control Decisions–logistics
decisions can be far reaching, SCL management must
provide leadership for continued evolution
10a-4
Supply Chain Logistical
Elements
Inventory
Transportation
Warehouses
10a-5
Transportation



Common modes include air, rail, truck, pipeline, and
combinations
Ownership/management may be private carriage, courier,
common carrier, and contract services
Prime consideration is cost, main cost factors are quantity
discounts and selection of routing
10a-6
Warehouses

Customer benefits from warehouses in terms of
time and place utility



Closer warehouses offer reductions in service time
and service costs
Customers also derive a level of comfort from
having a warehouse nearby (warm puppy effect)
Warehouses offer the firm a number of benefits



Mixing products from several plants
Completing or packaging the product
Breaking bulk–taking advantage of carload rates for
long-distance shipments to warehouses
10a-7
Inventory

Inventory fulfills several marketing requirements
Maintenance of a full line of products
 Provision of adequate display stock
 Maintaining full inventory pipelines to customers


Inventory also serves a buffering role
Safety stock
 Cycle stock


Pooling of safety stock over several locations
can lead to significant savings
10a-8
Warehouse Replenishment
Systems
Advantages-Low
complexity
DisadvantagesFiltered data,
allocation is arbitrary,
decentralized data
Advantagesunfiltered data, better
coordination of
resources
Disadvantages-More
complex, works best
with steady demand
Advantages-reflects
projected
requirements, local
decisions with central
visibility
DisadvantagesHighly complex
10a-9
Warehouse Location
Analysis
The number and location of warehouses is a
key element of managing the supply chain
 Common approaches include simulation,
heuristics, and mathematical programming

10a-10
Simulation


Evaluate likely candidate solutions and compare results
Computer-based approach can evaluate many candidates to
identify good (but not always the best) solution
Fixed costs  8  7  15
Variable costs ( Ham m ond)  10  22  32
Variable costs ( Indianapol
is)  20  5  3  14  8  4  11 19  18  102
Total costs  15  32  102  149
Fixed costs  6  7  13
Variable costs (Colum bus)  12  3  11 17  43
Variable costs ( Indianapol
is)  13  30  20  5  3  8  19  98
Total costs  13  43  98  154
Fixed costs  8  5  13
Variable costs ( Ham m ond)  10  22  7  4  43
Variable costs (Terre Haute)  22  17  10  2  12  20  15  98
Total costs  13  43  98  154
Candidate 1
Serve Gary and Michigan City
from Hammond, all other
locations from Indianapolis
Candidate 2
Warehouses in Columbus and
Indianapolis
Candidate 3
Warehouses in Hammond and
Terre Haute
10a-11
Heuristic Processes


Heuristics allow rapid identification of a good solution by following a
procedure that is known to work well
Add and Drop Procedure–consider a single warehouse, then add the
best of the remaining warehouses, repeat until addition results in a
worse solution
Best initial choice
is Indianapolis
Best second choice
is Hammond
No other warehouse
reduces costs, so stop
10a-12
Mathematical Programming
Exact procedures to solve the location
problem exist, but can be time consuming
 Linear programming with branch-and-bound
methodology

10a-13
Mathematical Programming
Typical problems (<200 facility options) can
be solved exactly to find optimal solutions
 Branch-and-bound approach

10a-14
Vehicle Scheduling Analysis
With a given set of customer and warehouse
locations, how should vehicles be schedule to
meet objectives at the lowest cost?
 Route problem–order in which customers will
be visited by delivery/pickup vehicles
 Analytical framework–travelling salesman
problem


Given a set of cities, what is the least-cost
method of visiting each of them, starting from
and returning to a single point?
10a-15
Travelling Salesman Problem–
Solution Methodologies

Zero-One Integer Programming


Computational requirements increase rapidly
with problem size
Heuristics

Time-saved–consider time savings from
visiting two customers on a single trip, this
identifies favorable combinations which can be
combined into tours
10a-16
Customer Service
Measurement

Make-to-Stock–major issue is delivery timing
Speed of delivery
 Consistency of delivery
 Percent of items demanded that are supplied
from stock
 Percent of line items in an individual customer
order delivered from inventory
 Percent of customers with all line items filled
from inventory

10a-17
Customer Service
Measurement

Make-to-Order–primary issue is meeting
promised delivery dates

Time from order placement to delivery
Changes to customer requested dates
complicates the measurement system
 The need for coordination between order
entry and master production scheduling is
critical

10a-18
Principles
The role and contributions of each element of a
supply chain must be determined and managed.
 Management must provide the integration for the
elements of these systems and evaluate
alternatives in terms of total cost.
 The information from distribution requirements
planning systems should be used for planning
produce deliveries.

10a-19
Principles
The design of warehouse systems should
incorporate the locational effect on sales.
 Vehicle scheduling activities must be coordinated
with customer service requirements.
 Customer service objectives and standards must
be set and monitored. These should reflect the
types and classes of customers and products.

10a-20
Quiz – Chapter 10a





When stages of the supply chain are considered separately,
sub-optimization is likely to occur? (True/False)
In general, shipping full loads will be less costly (per unit)
than using the services of a less than carload (LCL) carrier?
(True/False)
Warehouses are beneficial to customers in terms of both
__________ and _________.
When the safety stock requirements of several warehouses
are consolidated to a single location the total required stock
is likely to increase? (True/False)
Base stock systems reduce or eliminate the problem of
amplification of orders? (True/False)
10a-21