Aggregate Planning

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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

6

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 ??.

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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

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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.

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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

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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.