question

Deciding in Location of a New Factory

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Requires use of both qualitative and quantitative factors but most factors are qualitative

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Reason Saturn chose Tennesse

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2/3 of reasons were qualitative; topography, access to roads, 600 miles within 65% of population

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When receiving reports

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Never fully trust the numbers and look into them yourself

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Cost Factors

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quantitative information in building new factory fixed and variable Fixed costs usually make the difference

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Center of Gravity Method (BOLD)

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Takes location and shipping volume into consideration to determine a site that minimizes shipping costs

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Forecasts are used by:

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Everyone

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Forecast factors not under control of managment

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Changes in: Competitors design, quality, price and service Business cycle Product life cycle Product perception (pubic views) Demographics Government regulations

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Product Life Cycle

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Introduction Growth Maturity Decline

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Marketing Forecast (BOLD)

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Generally a polling of opinion or a survey of sales people

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Downside to a marketing forecast (BOLD)

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They can come back to the forecaster, introduces bias Forecaster might fear submitting a forecast with bad news

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Production Forecasts (BOLD)

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The past is a prelude to the future

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Naive production forecast

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Equals last years sales

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Three-year running average

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Sum of past three years divided by 3

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Three-year weighted average

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sum of: (3x last year)+(2x year before last)+(1x two years before last) Divided by 6

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Benefit and downside of Production Forecast (BOLD)

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can obtain a forecast quickly Business factors affecting sales are not accounted for (Must consult Marketing dept.)

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Process Layout (BOLD)

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Common for flows where the product flow is smooth, consistent and continuous

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Product Layout (BOLD)

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Groups of processes that are assigned different jobs

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Cell or Cellular Layout (BOLD)

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Self-contained groups; each group acts an an independent factory within a factory (output reflects performance per group)

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Fixed Production Layout (BOLD)

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Resources sent to single location for construction (planes, ships, buildings)

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System Output and Line Balancing

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Each system is constrained to lowest output station Balancing requires discovery of correct number of each station to maximize output

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Subassembly Line

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First station can start production of two halves Next halves split different stations to be completed simultaneously Finally comeback together to be assembled

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The slowpokes output

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must be greater than the systems output

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The Taylor Way (system efficiency)

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Split tasks up to simplest elements and assign a person to each Boring for positions with less time consuming tasks Many employees needed

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The Juran Way (system efficiency)

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Assign entire process to one person Less workers needed Absentee does not slow down line No assistant manager needed Flexible working hours Workers feel like they make a difference Must invest in training and education

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Benefits of Juran way

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1. absentee does not shut down a line 2. assistant managers do not need to recruit for 5 brain dead position 3. flexible work hours or working from home; allows for smaller office space; cannot hide output 4. Job meaningful to person responsible for whole job; increased moral and productivity

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The Taylor Way (manufacturing)

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Workers do not know the meaning of their work

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The Juran or Ishikawa Way (manufacturing)

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Cell Manufacturing: Workers feel important Workers see entire process Small group dynamics

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Responsibility of Work Teams

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1. Responsibility for quality; workers control output 2. Job assignment, rotation, and hiring; workers assign and hire 3. Preventive Maintenance; TPM 4. Statistical Process Control Charts 5. Workers suggest reasons for defects; Deming chain reaction

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TPM

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Total Preventative Maintenance fix before broken operate machines with care give workers responsibility to fix allows little inventory

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Blue Collar Contribution to Making a Better Product

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All workers give suggestions to better the company or process. Those closest to the process know the most and have best suggestions

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Steps to making a better product Blue Collar Contribution steps (BOLD)

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1. Detect defects and keep record 2. Create Pareto Digram 3. Create Ishikawa or Fishbone Diagram for cause of defect 4. Deming's PDCA Cycle 5. Repeat

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Pareto Digram

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Shows that 20% of the types of defects make up 80% of total defects

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Ishikawa or Fishbone Diagram purpose

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Quickly Brainstorm many possible causes of a defect Get rid of causes and thus the defect

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Fishbone Diagram Layout

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Machine causes Man causes Method causes Material causes

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Deming PDCA Cycle

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Plan a course of action (take suggestion from fishbone) Do a test Check results Act on results

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Kaizen

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Never ending or continuous improvement

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Functions of Managers

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1. Deals with any problem work teams cannot solve 2. Leads work teams in coming up with suggestions 3. Deals with outside environment; management, etc. 4. Reduce common cause variation

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Product Design (old way) (BOLD)

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Each step would be in separate buildings and areas Information would be rejected over and over before moving on Took over 7 years to create and sell new product

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Product Design (new way) (BOLD)

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Concurrent/ Simultaneous Engineering Everyone involved in development are in the same building, floor, and desks are mixed up Everyone has a HOLISTIC VIEW No meetings without reps from other departments

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Benefits of Concurrent Engineering (BOLD)

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Cut development cycle in half Fewer parts and easier to produce Higher quality due to fewer parts

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Aggregate Planning

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Initial planning to try to match productive capacity with forecast of demand

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Matching production with projected demand

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Leaves no inventory More layoffs Unemployment payments Low class workers Poor quality Large investment for plant that is idle in off seasons

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Normal working time

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Workers employed all year Inventory cost Inventory throughout year handles peak season Smaller plant needed

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Offer incentives

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During peak season offer overtime Hire temporary help in peak season

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If forecast exceeds production capacity

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Stockout- lose money on potential sales Subcontract- another factory picks up slack but becomes competition Expand Factory

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Master Schedule (BOLD)

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Show what percent of demand each product produced is responsible for and shows annual sales forecast of each product, monthly production to meet projection, and daily production Share of each product is taken from total forecast of all widgets for annual sales divided by 12 for monthly production and # of days in a month for daily production

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Orders per year =

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Annual Demand divided by Order Quantity

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Cycle Stock =

answer

1/2 shipment size

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Safety Stock

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Amount of inventory needed to absorb fluctuations in demand and delivery time ex. no more than 3 days late, safety stock= 3x shipment

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Warehouse inventory =

answer

Safety Stock + Cycle Stock

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As Is (weekly deliveries)

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Larger: shipments, cycle stock, safety stock, and warehouse inventory

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JIT (daily deliveries)

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Smaller: shipments, cycle stock, safety stock, and warehouse inventory 90% reduction in inventory

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Cost of Inventory

answer

30% of total value Second largest investment after plant and equiptment

question

Inventory in Japan

answer

Used to: 1. Service customers 2. Level production activities to stabilize employment

question

Inventory in U.S.

answer

Used to: 1. Service Customers 2. Protect against raw material and component supply shortage 3. Truckload purchases yield discounts 4. Protect against price increase and delivery uncertainties 5. Level production activities to stabilize employment

question

Benetton

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Manufactured what was sold at night to replenish stock and instantly knew if styles were not selling. Cut inventory costs and little risk of obsolescence

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Types of inventory

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1. components and raw materials 2. finished goods 3. work in process

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Machine Clusters (BOLD)

answer

1 man 4 machines new part production, man switches machines Results in no set up costs

question

Benefits on Machine Clusters

answer

no interruption of line when switching production no idle workers no poor quality because each machine is set up correct

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Kanban

answer

use of carts and cards. empty cart starts process cannot fill 4th cart until one is empty/consumed CONSUME THEN MAKE

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Sell then make

answer

make initial stock for shelves replace what has been sold (benneton) PULL SYSTEM

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Make then sell

answer

PUSH SYSTEM

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Risks of inventory

answer

1. Risk of obsolescence 2. Risk of spoilage 3. Risk of pilferage

question

US purchasing practices

answer

Truckloads More the greater the discount Short term contracts As many suppliers as possible Selection based on price attitude toward buyer based on price supplier likely to get even with buyer market intelligence valuable intense pricing competition

question

Japan Purchasing practices

answer

opposite of US

question

Three pieces of paper to make money

answer

1. Charter/lease 2. Contract to operate 3. Bank loan for equiptment

question

Xerox Steps

answer

1. single source supplier for long term 2. negotiate on open books basis with supplier 3. get financing for advanced technology that'll cut cost 4. savings for buyer and seller 5. If supplier does not perform he goes bankrupt

question

Flexible Manufactoring systems

answer

cut costs use of robots

question

Brazil factory

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US wouldn't allow use of robots that would remove jobs Unions opposed as well

question

The bullwhip

answer

inconsistent orders create larger safety stock eventually enough excess stock to sustain consumption lower tier suppliers lose months of business

question

Supply Chain Management

answer

Communication down the supply chain to coordinate efforts Pull system

question

Supply chain mgmt: Manufacturer to retailer:

answer

1. reduces inventory 2. more quickly sense changes in consumer sentiment to product 3. tie production closer to actual demand

question

Supply chain mgmt: Manufacturer to suppliers:

answer

1. reduce component inventory by eliminating bullwhip effect 2. foster collaborative product development with suppilers

question

Purpose of supply chain management

answer

1. minimize costs; maximize profits 2. maximize customer service; repeat customers 3. minimize investment in inventories 4. minimize changes in production schedule 5. minimize change in work force; less training costs 6. maximize utilization of plant and equiptment

question

Benefits of supply chain management

answer

more responsive to customers eliminate duplication of effort, information, planning eliminate operations that do not add value improve efficiency and productivity; lower costs reduce inventory and response time to orders actual demand triggers production fosters product development more quickly share information through supply chain for order efficiency

question

Fundamentals of Operations Management

answer

1. produce with low cost; kaizen 2. distribute competitively priced products with high quality 3. great customer service post sale 4. develop supplier relationships to cut down inventory costs (JIT deliveries)

question

Correct Business Strategy

answer

creates increased shareholder value backed by an effective operations strategy or plan to carry it out

question

Postponement

answer

final stage of completion at time of purchase save on inventory costs

question

Bill of Material

answer

list of parts needed to make a product

question

Inventory Status

answer

list of lead times, current inventories, we

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