Chapter 6

Schedule Management Chapter 6: Schedule Management 1

Schedule Management Chapter 6: Schedule Management 2

Introduction

Chapter 6: Schedule Management 3

Henry Ford Hospital

    Aggregate planning involves matching hospital’s available capital, workers, and supplies to a highly variable customer demand pattern 903 beds arranged into 30 nursing units Each nursing unit contains 8 to 44 beds Each nursing unit treated as independent production facility Chapter 6: Schedule Management 4

Factors Complicating Aggregate Planning at Henry Ford Hospital  High degree of demand variability     average number of occupied beds in 1991 was 770 in one 8-week period an average of 861 beds was occupied in another 8-week period an average of 660 beds were occupied number of beds occupied could change by as may as 146 beds in less than two weeks Chapter 6: Schedule Management 5

Complicating Factors

continued

   Large penalty for not being able to admit HMO patients    lost revenue must pay other hospital for patient’s stay a simple obstetrics case cost $5,000 Tight labor market for RNs  12 to 16 weeks to recruit and train nurses at cost of $7,600 Cost of 8-bed modules exceeds $35,000/ month Chapter 6: Schedule Management 6

Importance of Aggregate Planning     Without sufficiently long-term view may make short-term decisions that hurt the organization in the long-term For example, shortly after Henry Ford Hospital reduced staff, it determined the staff was needed New staff was recruited Both staff reduction and recruiting costs incurred Chapter 6: Schedule Management 7

Extremely Difficult Decision

   Demand can shift by more than 16% in a two-week period Takes 12 - 16 weeks and costs $7,600 a piece to recruit new nurses By time staff hired, demand may have shifted again Chapter 6: Schedule Management 8

Extremely Difficult Decision

continued

  If don’t have enough staff, cost $5,000 per patient turned away (simple cases) Cost of one idle 8-bed module is $35,000/month or $420,000/year Chapter 6: Schedule Management 9

Package Products Inc.

    Folding Carton Packing for baker and deli industry Significant growth during 1990s More demanding customers Needed to do better job of managing operations Chapter 6: Schedule Management 10

Producing Folding Cartons

 Four to eleven steps       rolls of pulpboard cut into sheets sheets run through printing presses to add four color images sheets dried and die cut cellophane window added cartons glued product prepared for shipping Chapter 6: Schedule Management 11

Scheduling at Package Products

  Initially used Gantt chart    manually schedule jobs using a board and magnetic strips capacity shortage problems critical information scattered throughout organization Acquired finite capacity scheduling (FCS) software package Chapter 6: Schedule Management 12

Using the FCS Package

        Runs on PC Updates previous day’s schedule Allows performing what-if analysis Used to generate schedules for next 3 to 6 months Overtime reduced by 300% On-time delivery performance improved by 32% Backorders reduced by 53% Respond to customer inquiries in 22 seconds Chapter 6: Schedule Management 13

Scheduling

   Ensuring the

right

tasks are conducted at the

right

time on the

right

items Productivity problems often attributable to poor schedule management Scheduling not anywhere as difficult for continuous flow and processing organizations as it is for job shops Chapter 6: Schedule Management 14

The Sequence of Scheduling Activities

Chapter 6: Schedule Management 15

Scheduling Activities

Chapter 6: Schedule Management 16

Demand Forecast

   Forecast supports entire scheduling process May not need forecast if customers place orders far in advance Forecast used for different purposes    Long-range forecasts used for capacity planning Forecast in range of 9 to 18 months used for aggregate planning Short-range forecasts used for loading and sequencing Chapter 6: Schedule Management 17

The Aggregate Plan

    Approximate schedule of overall operations that will satisfy demand forecast at minimum cost Planning horizon often a year or more and broken into monthly or quarterly periods Purpose is to minimize short-sighted effects Work with aggregate units and resources Chapter 6: Schedule Management 18

The Aggregate Plan

continued

  Equivalent units Relevant costs     hiring and layoff costs inventory and backorder costs wages and overtime charges subcontracting costs Chapter 6: Schedule Management 19

The Production Plan

  Result of managerial iteration and changes to aggregate plan Often disaggregated one level into major output groups   Aggregate Plan: number of automobiles to be produced in each of the upcoming 12 months Production Plan: number of compacts, mid size, full-size, light trucks, and minivans to produce in each of the upcoming 12 months Chapter 6: Schedule Management 20

The Master Schedule

  Point where actual orders incorporated into scheduling system Aggregate outputs broken down into individual end items Chapter 6: Schedule Management 21

Check for the Following Problems        Does schedule meet production plan?

Does schedule meet demand forecasts?

Are there priority or capacity conflicts?

Are other constraints violated?

Does schedule conform to policy?

Does schedule conform to laws and rules?

Does schedule provide flexibility?

Chapter 6: Schedule Management 22

Rough-Cut Capacity Planning

   Feasibility check of master production schedule Historical ratios of loads placed on workcenters used Workloads assumed to fall in period end items demanded Chapter 6: Schedule Management 23

Priority Planning

    What materials are needed when Feasibility check of master production schedule to make sure all materials will be available when needed Determine when order is needed and schedule backwards from that date Material Requirements Planning (MRP) systems often used Chapter 6: Schedule Management 24

Capacity Planning

   Inventory control system and master schedule used to determine required capacity over planning horizon Load reports generated for each work center Inventory and lead times considered Chapter 6: Schedule Management 25

Loading

  Deciding which jobs to assign to which work centers Often some equipment or workers better for certain jobs Chapter 6: Schedule Management 26

Sequencing

   After jobs assigned to work centers, order in which to process the jobs must be decided Sequencing can have impact on timeliness of job completions Priority rules often used Chapter 6: Schedule Management 27

Detailed (Short-Term) Scheduling   Detailed schedules itemizing specific jobs, times, materials developed Typically done for only a few days in advance Chapter 6: Schedule Management 28

Dispatching

  All previous activities are planning activities Dispatching is the physical release of a work order from production planning Chapter 6: Schedule Management 29

Expediting

  Task of getting job done on time once it is released to the shop floor Special tags used to identify hot jobs Chapter 6: Schedule Management 30

Aggregate Planning

Chapter 6: Schedule Management 31

Capacity Options

         Overtime Additional or fewer shifts Hiring or laying off workers Subcontracting Building up inventories Leasing facilities Backlogging demand Changing demand Undersupplying the market Chapter 6: Schedule Management 32

Pure Aggregate Planning Strategies   Level Production    Equal amount produced each period Steady employment Inventory costs and risks Chase Demand    Production matched to demand for the period Minimal inventory High overtime or hire/fire costs Chapter 6: Schedule Management 33

Personnel Needed by Rap-X-Press Chapter 6: Schedule Management 34

Level Production at 40 Workers

Chapter 6: Schedule Management 35

Cost of Chase Demand with 40 Workers Chapter 6: Schedule Management 36

Master Scheduling

Chapter 6: Schedule Management 37

Master Production Schedule

    Production plan disaggregated into individual end items Final word about what will be built and when Altering the master schedule can alter inventory levels, lead times, capacity requirements and so on Should not be a “wish list” Chapter 6: Schedule Management 38

Master Production Schedule

    Sales and operations key players in developing master schedule MPS usually stated in terms of weekly periods (buckets) Rolling schedule Four periods     frozen period firm period full open Chapter 6: Schedule Management 39

Orders Replacing the Forecast in the Master Schedule Chapter 6: Schedule Management 40

Master and Final Assembly Schedules Chapter 6: Schedule Management 41

Four Periods in the Rolling MPS

Chapter 6: Schedule Management 42

Scheduling Services

Chapter 6: Schedule Management 43

Hospitals

     Patient arrivals somewhat uncontrollable Specialized and expensive equipment Nurses must always be available Nurses represent large expense Constraints associated with scheduling nurses Chapter 6: Schedule Management 44

Urban Alarm Services

   Quick response required Personnel is a major expense Use of duty tours can complicate scheduling Chapter 6: Schedule Management 45

Educational Services

    Scheduling of classes Assignment of classes to students Allocation of faculty to classes Allocation of facilities to classes Chapter 6: Schedule Management 46

Yield/Revenue Management and Overbooking  Attempt to allocate the fixed capacity of a service to match the revenue demand in the market place Chapter 6: Schedule Management 47

When is Yield Management Appropriate?

      Fixed Capacity Perishable Capacity Segmentable Market Capacity Sold in Advance Uncertain Demand Low Marginal Sales Cost, High Marginal Capacity Addition Cost Chapter 6: Schedule Management 48

Overbooking

  An attempt to reduce costs through better schedule management.

Based on inventory solution for the “newsboy problem.” Chapter 6: Schedule Management 49

Copyright

Copyright 2006 John Wiley & Sons, Inc. All rights reserved. Reproduction or translation of this work beyond that named in Section 117 of the United States Copyright Act without the express written consent of the copyright owner is unlawful. Requests for further information should be addressed to the Permissions Department, John Wiley & Sons, Inc. Adopters of the textbook are granted permission to make back-up copies for their own use only, to make copies for distribution to students of the course the textbook is used in, and to modify this material to best suit their instructional needs. Under no circumstances can copies be made for resale. The Publisher assumes no responsibility for errors, omissions, or damages, caused by the use of these programs or from the use of the information contained herein.

Chapter 6: Schedule Management 50