OMT Reviewer Capacity Cushion – extra capacity

used to offset demand uncertainty.

Chapter 5: Strategic Capacity
Planning for Products and Services Steps in the Capacity Planning
Process
Capacity – the upper limit or ceiling on
the load that an operating unit can 1. Estimate future capacity
handle. requirements.

Capacity Decisions are Strategic 2. Evaluate existing capacity and

facilities and identify gaps.
1. Capacity decisions have a real impact
on the ability of the organization to meet 3. Identify alternatives for meeting
future demands for products and requirements.
services.
4. Conduct financial analyses of each
2. Capacity decisions affect operating alternative.
costs.
5. Assess key qualitative issues for each
3. Capacity is usually a major alternative.
determinant of initial cost.
6. Select the alternative to pursue that
4. Capacity decisions often involve long- will be best in the long term.
term commitment of resources.
7. Implement the selected alternative.
5. Capacity decisions can affect
competitiveness. 8. Monitor results.

6. Capacity affects the ease of Forecasting Capacity Requirements

management. Long-term Capacity Needs – it require
7. Globalization has increased the forecasting demand over a time horizon
importance and the complexity of and then converting those forecasts into
capacity decisions. capacity requirements.

8. Because capacity decisions often Short-term Capacity Needs – this are

involve substantial financial and other less concerned with cycles or trends
resources, it is necessary to plan for than with seasonal variations and other
them far in advance. variations from average.

Design Capacity – the maximum Organizations buy parts or conduct

designed service capacity or output rate. out services, for a variety of reasons:

Effective Capacity – design capacity 1. Available capacity

minus personal and other allowances. 2. Expertise
3. Quality considerations Seven Categories of Constraints

4. The nature of demand 1. Market

5. Cost 2. Resource

6. Risks 3. Material

Bottleneck Operation – an operation in 4. Financial

a sequence of operations whose
capacity is lower than that of the other 5. Supplier
operations. 6. Knowledge or competency
Seven Ways to Enhance 7. Policy
Development of Capacity Strategies:
Break-even Point (BEP) – the volume
1. Design flexibility into systems. of output at which total cost and total
2. Take stage of life cycle into account. revenue are equal.

3. Take a “big picture” approach to Indifference Point – the quantity that

capacity changes. would make two alternatives equivalent.

4. Prepare to deal with capacity chunks. Financial Analysis

5. Attempt to smooth out capacity  Cash flow – the difference

requirements. between cash received from
sales and other sources, and
6. Identify the optimal operating level. cash outflow for labor, material,
overhead, and taxes.
7. Choose a strategy if expansion is  Present Value (PV) – the sum, in
involved. current value, of all future cash
Economies of Scale – if the output rate flows of an investment proposal.
is less than the optimal level, increasing  Payback – it focuses on the
the output rate results in decreasing length of time it will take for an
average unit costs. investment to return its original
cost.
Diseconomies of Scale – if the output  Internal Rate of Return (IRR) -
rate is more than the optimal level, summarizes the initial cost,
increasing the output rate results in expected annual cash flows, and
increasing average unit costs. estimated future salvage value of
an investment proposal in an
Constraint – something that limits the
equivalent interest rate.
performance of a process or system.
Decisions Theory Certainty - environment in which
relevant parameters have known values.
Elements of Decision Theory
Approach: Risk – environment in which certain
future events have probable outcomes.
1. A set of possible future conditions
that will have a bearing on the results of Uncertainty – environment in which it is
the decision. impossible to assess the likelihood of
various future events.
2. A list of alternatives for the manager
to choose from. Decisions Making Under Uncertainty

3. A known payoff for each alternative Maximin – determine the worst possible
under each possible future condition. payoff for each alternative, and choose
the alternative that has the “best worst”.
Payoff Table – the table showing the The maximin approach is essentially a
expected payoffs for each alternative in pessimistic and establishes a
every possible state of nature. “guaranteed minimun”.
Steps in the Decisions Process: Maximax - determine the best possible
1. Identify the problem. payoff and choose the alternative with
that payoff. The maximax approach is
2. Specify objectives and criteria for a an optimistic, “go for it strategy” and
solution. does not take any payoff other than the
best.
3. Develop suitable alternatives.
Laplace – determine the average payoff
4. Analyze and compare alternatives.
for each alternative, and choose the
5. Select the best alternative. alternative with the best average. The
laplace approach treats the states of
6. Implement the solution. nature as equally likely.
7. Monitor to see that desired results is Minimax Regret – determine the worst
achieved. regret for each alternative, and choose
the alternative with “best worst”. This
Bounded Rationality – the limitations
approach seeks to minimize the
on decision making caused by costs,
difference between
human abilities, time, technology, and
the payoff that is realized and the best
availability of information.
payoff for each state of nature.
Sub Optimization – the results of
Regret (Opportunity Loss) – the
different departments each attempting to
difference between a given payoff and
reach a solution that is optimum for that
the best payoff for a state of nature.
department.
Expected Monetary Value (EMV) BATCH – it is used when a moderate
Criterion – the best expected value volume of goods or services is desired,
among the alternatives. and it can handle a moderate variety in
products or services.
Decision Tree – a schematic
representation of the available REPETITIVE - when higher volumes of
alternatives and their possible more standardized goods or services
consequences. are needed, repetitive processing is
used. The standardized output means
Expected Value of Perfect only slight flexibility of equipment is
Informatiov (EVPI) – the difference needed.
between the expected payoff with
perfect information and the expected CONTINUOUS - when a very high
payoff under risk. volume of non discrete, highly
standardized output is desired, a
Sensitivity Analysis – determining the continuous system is used.
range of probability for which an
alternative has the best expected payoff. PROJECT - a project is used for work
that is nonroutine, with a unique set of
Chapter 6: Process Selection and objectives to be accomplished in a
Facility Layout limited time frame.
Process Selection - determines how PRODUCT AND SERVICE PROFILING
goods or services are produced, - linking key product or service
impacting key aspects like capacity, requirements to process capabilities.
facility layout, equipment, and work This can be used to avoid any
systems. inconsistencies.
Capital Intensity - the balance between LEAN PROCESS DESIGN
equipment and labor used in production.
- a methodology that aims to eliminate
Process Flexibility - the system's waste, optimize value, and improve
ability to adapt to changes in processing customer satisfaction in any business
requirements. process.
PROCESS TYPES SUSTAINABLE PRODUCTION
JOB SHOP - according to the Lowell Center for
- a job shop usually operates on a Sustainable Production, sustainable
relatively small scale. It is used when a production is the creation of goods and
low volume of high-variety goods or services using processes and systems
services will be needed. that are non-polluting.
TECHNOLOGICAL INNOVATION FIXED AUTOMATION - fixed
automation is the least flexible. It uses
- the discovery and development of new high-cost, specialized equipment for a
or improved products, services, or fixed sequence of operations.
processes for producing or providing
them. PROGRAMMABLE AUTOMATION - it
uses high-cost, general-purpose
TECHNOLOGY equipment controlled by computer
- the application of scientific discoveries programs, producing low-volume, small
to the development and improvement of batches of products. Applications
products and services and operations include numerically controlled machines
processes. and robots.

HIGH TECHNOLOGY Computer-aided manufacturing

(CAM) - it refers to the use of computers
- the term high technology refers to the in process control, ranging from robots
most advanced and developed to automated quality control.
equipment and methods.
Numerically Controlled (N/C)
Machines - machines that perform
operations by following mathematical
Process technology and information
processing instructions.
technology. These two have a major
impact on costs, productivity, and Computerized numerical control
competitiveness. (CNC) and Direct numerical control
(DNC) are two types of machines used
PROCESS TECHNOLOGY - it includes
in manufacturing. N/C machines are
methods, procedures, and equipment
best for frequent processing and small
used to produce goods and provide
batches with complex part geometry.
services.
They require higher skill levels and can't
INFORMATION TECHNOLOGY (IT) - it detect tool wear or material variation.
is the science and use of computers and Robots, on the other hand, can handle
other electronic equipment to store, various tasks and relieve humans from
process, and send information. heavy or dirty work. They can follow a
Exed set of instructions, be
AUTOMATION - automation machinery programmable, or follow instructions
that has sensing and control devices from a computer
that enable it to operate automatically.
There are three kinds of automation:
fixed, programmable, and flexible.
FLEXIBLE AUTOMATION - a flexible Three Basic Types of Layout
manufacturing system (FMS) is a
group of machines that include  Product Layouts
supervisory computer control, automatic  Process Layouts
material handling, and robots or other  Fixed-position Layouts
automated processing equipment. Hybrid Layouts
Computer-integrated manufacturing  Cellular and Flexible systems
(CIM) - it is a system that integrates
various manufacturing activities, such as Product Layout - Product layouts are
engineering design, flexible systems, designed for efficient production of large
purchasing, order processing, and quantities of standardized goods or
production planning and control. services. Layout that uses standardized
processing operations to achieve
PROCESS STRATEGY smooth, rapid, high-volume flow.
1. Flexibility as a Strategic Advantage Production line - standardized layout
2. Cost vs. Efficiency arranged according to a fixed sequence
of production tasks.
3. When Flexibility is Unnecessary
Assembly line - standardized layout
 Mature Products arranged according to a fixed sequence
of assembly tasks.
4. Stable Production Requirements
U-Shaped Layouts
5. Implication
- while a straight production line seems
 Careful Adoption of Flexibility intuitive, U-shaped layouts offer several
6. Reasons for Choosing Flexibility advantages. They are more compact,
requiring less space than straight lines.
 Demand Variety This clustered arrangement also
 Uncertainty in Demand improves communication and teamwork
among workers. Additionally, U-shaped
The Main Goal of Layout Design
layouts allow for greater flexibility in
 Quality work assignments and minimize
 Worker and space efficiency material handling if entry and exit points
 Bottleneck avoidance are close.
 Minimal handling costs
Process Layouts
 Reduced movement
 Minimized production/service - Process layout or also known as
time functional layouts are designed for
 Safety handling items or services with diverse
processing requirements. This layouts reconfigured into a different cellular
that can handle varied processing layout in a different location.
requirements.
Group Technology
Intermittent Processing
- effective cellular manufacturing must
– Nonrepetitive processing. have groups of identified items with
similar processing characteristics. This
FIXED POSITION LAYOUTS - in fixed- strategy for product and process design
position layouts, the item being worked is known as group technology and
on remains stationary, and workers, involves identifying items with
materials, and equipment are moved similarities in either design
about as needed. Fixed-position layouts characteristics or manufacturing
are used in large construction projects characteristics, and grouping them into
(buildings, powerplan dams), part families.
shipbuilding, and production of large
aircraft and space missi rockets. Service Layouts

- fixed-position layouts are widely used - as is the case with manufacturing,

in farming, firefighting, road building, service layouts can often be categorized
home building, remodeling and repair, as product, process, or fixed-position
and drilling for oil. layouts. In a fixed-position service layout
(e.g.. appliance repair, roofing,
CELLULAR LAYOUTS landscaping, home remodeling, copier
Cellular Production service), materials, labor, and
equipment are brought to the customer's
- cellular production is a type of layout in residence or office). Process layouts are
which workstations are grouped into common in services due mainly to the
what is referred to as a cell. high degree of variety in customer
processing requirements.
Single-minute Exchange of Die
(SMED) Warehouse and Storage Layouts

- it enables an organization to quickly - the design of storage facilities presents

convert a machine or process to a different set of factors than the design
produce a different (but similar) product of factory layouts. Frequency of order is
type. an important consideration; items that
are ordered frequently should be placed
Right-sized Equipment
near the entrance to the facility, and
- it is often smaller than equipment used those ordered infrequently should be
in traditional process layouts, and placed toward the rear of the facility.
mobile, so that it can quickly be
Retail Layouts LINE BALANCING - it is the process of
assigning tasks to workstation stations
- the objectives that guide design of in such a way that the workstations have
manufacturing layouts often pertain to approximately equal time requirements.
cost minimization and product flow. The goal of line balancing is to obtain
However, with retail layouts such as task groupings that represent
department stores, supermarkets, and approximately equal time requirements.
specialty stores, designers must take
into account the presence of customers Cycle time
and the opportunity to influence sales
volume and customer attitudes through - it is the maximum time allowed at each
carefully designed layouts. workstation to perform assigned tasks
before the work moves on.
Office Layouts
Minimum Cycle Time
- office layouts are undergoing
transformations as the flow of - it is equal to the longest task time
paperwork is replaced with the Maximum Cycle Time
increasing use of electronic
communications. This lessens the need - it is equal to the sum of the task times.
to place office workers in a layout that
Precedence Diagram
optimizes the physical transfer of
information or paperwork. - it is a diagram that shows elemental
tasks and their precedence
Automation in Services
requirements.
- One way to improve productivity and
Technological Constraints
reduce costs in services is to remove
the customer from the process as much - it tell us which elemental tasks are
as possible. Automated services is one eligible to be assigned at a particular
increasingly used alternative. position on the line.
Automating services means more-
standardized services and less need to Output Constraints
involve the customer directly.
- it determine the maximum amount of
The goal of a product layout is to work that a manager can assign to each
arrange workers or machines in the workstation.
sequence that operations need to be
performed. The sequence is referred to
as a production line or an assembly line.
Chapter 7: Work Design and basic causes of accidents are worker
Measurement carelessness and accident hazards.

WORKING CONDITIONS Ethical Issues - can affect operations

through work methods, working
Temperature and Humidity - work conditions and employee safety,
performance tends to be adversely accurate record keeping, unbiased
affected if temperatures or humidities performance appraisals, fair
are outside a very narrow comfort band. compensation, and opportunities for
Ventilation - unpleasant and noxious advancement.
odors can be distracting and dangerous COMPENSATION - compensation is a
to workers. significant issue for the design of work
Illumination - the amount of illumination system. It is important for organizations
required depends largely on the type of to develop suitable compensation plans
work being performed; the more detailed for their employees. Organizations use a
the work, the higher the level of variety of approaches to compensate
illumination needed for adequate employees, including time based
performance. Other important systems, output-based systems, and
considerations are the amount of glare knowedge-based systems. Time-based
and contrast. systems, also known as hourly and
measured daywork systems
Noise - a unwanted sound, it is caused
by both equipment and humans. Output-based (incentive) systems - it
compensate employees according to the
Vibrations - can be a factor in job amount of output they produce during a
design even without a noise component, pay period.
so merety eliminating sound may not be
sufficient in every case. Individual Incentive Plans - take a
variety of forms. The simplest plan is
Work Time and Work Breaks straight piecework. Under this plan, a
worker's pay is a direct linear function of
- reasonable and sometimes flexible
his or her output.
work hours can provide a sense of
freedom and control over one's work Group Incentive Plans - a variety of
group incentive plans, which stress
Occupational Health Care - good
sharing of productivity gains with
worker health contributes to productivity,
employees, are in use.
minimizes health care costs, and
enhances workers sense of well-being. Knowledge-Based Pay Systems - as
companies shift toward lean production,
Safety - worker safety is one of the
a number of changes have had a direct
most basic issues in job design. The two
impact on the work environment.
- Knowledge-based pay has three SPECIALIZATION
dimensions: Horizontal skills, vertical
skills, and depth skills. - The term specialization describes jobs
that have a very narrow scope.
Management Compensation - many
organizations that traditionally rewarded - It is an ability to concentrate one's
managers and senior executives on the efforts and thereby become proficient at
basis of output are now seriously that type of work.
reconsidering that approach. JOB ENLARGEMENT - giving a worker
Recent Trends - many organizations a larger portion of the total task, by
are moving toward compensation horizontal loading.
systems that emphasize flexibility and Horizontal Loading - the additional
performance objectives, with variable work is on the same level of skill and
pay based on performance. responsibility as the original job.
JOB DESIGN - the act of specifying the JOB ROTATION - workers periodically
contents and methods of jobs. exchange jobs.
JOB DESIGNERS FOCUS ON: JOB ENRICHMENT - increasing
 WHAT will be done in a job responsibility for planning and
 WHO will do the job coordination tasks, by vertical loading.
 HOW the job will be done Vertical Loading - the additional work
 WHERE the job will be done entails more challenging tasks and more
responsibility.

MOTIVATION - motivation is a key

CURRENT PRACTICE IN JOB
factor in many aspects of work life. Not
DESIGN CONTAINS ELEMENTS OF
only can it influence quality and
TWO BASIC SCHOOLS OF THOUGHT
productivity, it also contributes to the
EFFICIENCY SCHOOL work environment.

- it emphasizes a systematic, logical TRUST - a factor that influences

approach to job design motivation, productivity, and employee-
management relations.
- It is a refinement of Frederick Winslow
Taylor's scientific management concepts TEAMS - a group of people who work
collaboratively towards a common goal
BEHAVIORAL SCHOOL or purpose.
- it emphasizes satisfaction of wants and
needs.
TWO FORMS OF TEAMS analysts to focus on understanding how
a job is done.
SHORT-TERM TEAMS
- It is an analysis of the overall operation
- Formed to collaborate on a topic such before delving into specific details.
as quality improvement, product or Methods analysis is conducted for both
service design, or solving a problem, existing and new jobs.
LONG-TERM TEAMS FLOW PROCESS CHART
-it also known as SELF DIRECTED - Flow process charts help to analyze
TEAMS/SELF-MANAGED TEAMS. the sequence of an operation by
- Groups empowered to make certain examining operator movements and
changes in their work processes. material flow.
Designed to achieve a higher level of WORKER-MACHINE CHART
teamwork and employee involvement.
- Chart used to determine portions of a
ERGONOMICS work cycle during which an operator and
- Incorporation of human factors in the equipment are busy or idle. Chart is
design of the workplace. In the work. used to assess operator's capacity to
environment, ergonomics also helps to manage machines or equipment.
increase productivity by reducing worker MOTION STUDY
discomfort and fatigue.
- Motion study is the systematic study of
THE INTERNATIONAL ERGONOMICS the human motions used to perform an
ASSOCIATION ORGANIZES operation.
ERGONOMICS INTO THREE
DOMAINS: - The purpose is to eliminate
unnecessary motions and to identify the
- Physical (e.g., repetitive movements, best sequence of motions for maximum
layout, health, and safety). efficiency..
- Cognitive (mental workload, decision The most-used techniques are the
making, human-computer interaction, following:
and work stress).
 Motion study principles
- Organizational (eg, communication,  Analysis of therbligs
teamwork, work design, and telework).  Micromotion study
METHODS ANALYSIS  Charts

- Methods analysis is a technique used

by self-directed teams and work
Gilbreth's work laid the foundation for Release load - means to deposit the
the development of motion study object
principles, which are guidelines for
designing motion-efficient work Some other therbligs are inspect,
procedures. position, plan, rest, and delay.

The guidelines are divided into three Micromotion study - it is the use of
categories: motion pictures and slow motion to
study motions that otherwise would be
1. Principles for use of the body too rapid to analyze.

2. Principles for arrangement of the SIMO CHART - A simultaneous motion

workplace chart.

3. Principles for the design of tools and Work measurement - it is concerned

equipment. with determining the lenght of time it
should take to complete the job.
THERBLIGS
Standard Time - it is the amount time it
- Therbligs are basic elemental motions. should take a qualified worker to
The term therblig is Gilbreth spelled complete a specified task, working at a
backward (except for the th). The sustainable rate, using given methods,
approach is to break jobs down into tools and equipment, raw materials, and
basic elements and base improvements workplace arrangement.
on an analysis of these basic elements
by eliminating combining, or rearranging MOST COMMONLY USED METHODS
them. OF WORK MEASUREMENT

Here's a list of some common ones that  Stopwatch Time Study

will illustrate the nature of these basic  Standard Elemental Times
elemental motions:  Predetermined Data
 Work Sampling
Search - it implies hunting for an item
with the hands and/or the eyes. Select STOPWATCH TIME STUDY
means to choose from a group of
objects. - development of a time standard based
on observations of one worker taken
Grasp - means to take hold of an object. over a number of cycles.

Hold- it refers to retention of an object Observed Time - it is simply the

after it has been grasped. average of the recorded times.

Transport load - means movement of

an object after hold.
Normal Time - it is the observed time Random number table - a table
adjusted for worker performance. It is consisting of unordered sequences of
computed by multiplying the observed numbers, used to determine random
time by a performance rating. observation schedules.

Standard time - for a job is the normal Chapter 8: Scheduling

time multiplied by an allowance factor
for these delays. Scheduling – it pertains to establishing
the timing of the use of specific
Standard Elemental Time - a time resources of that organization. It relates
standard derived from a firm's historical to the use of equipment, facilities, and
time. human activities.

Predetermined time - standards - In the decision-making hierarchy,

Published data based on extensive scheduling decisions are the final step in
research to determine standard the transformation process before actual
elemental times. output occurs.

Scheduling Hierachies For

Manufacturing
A commonly used system is methods-
time measurement (MTM), which was  Aggregate Planning
developed in the late 1940s by the  Master Production Planning
Methods Engineering Council. The MTM  Material Requirements Planning
tables are based on extensive research  Shop Floor Schedule
of basic elemental motions and times.
Scheduling Hierachies for Service
Work sampling - a technique for
estimating the proportion of time that a  Aggregate Planning
worker or machine spends on various  Master Schedule
activities and the idle time  Monthly or Weekly Schedule
 Daily Schedule
- although work sampling is occasionally
used to set time standards, its two Objectives of Scheduling
primary uses are in ratio-delay studies  Efficient utilization of staff,
and analysis of nonrepetitive jobs. equipment and facilities
Nonrepetitive jobs - it typically involve  Minimization of customer waiting
a broader range of skills than repetitive time, inventories and process
jobs, and workers in these jobs are often times.
paid on the basis of the highest skill High-volume Systems – this are
involved. characterized by standardized
equipment and activities that provide
identical or highly similar operations on Material Requirements Planning
customers or products as they pass (MRP) – approach to determine the
through the system. quantity and projected timing of jobs for
components.
Flow System - it refers to a structured
approach to managing the movement of Low-volume System – products are
materials, information, or tasks through made to order, and orders usually differ
a series of processes or stages. considerably in terms of processing
requirements, materials needed,
– high-volume system in which jobs all processing time, and processing
follow the same sequence. sequence and setups.
Flow-shop Scheduling – scheduling Job-shop Scheduling – scheduling for
for flow systems. low-volume systems with many
High-volume Manufacturing – also variations in requirements
known as mass production, refers to Loading – it refers to the assignment of
producing large numbers of identical jobs to processing centers.
parts or products in one run.
Gantt Charts - it is used as visual aid
Factors That Often Determine the for loading and scheduling purposes.
Success of Such a System The purpose of Gantt charts is to
 Process and product design organize and visually display the actual
 Preventive maintenance or intended use of resources in a time
 Rapid repair when breakdowns framework.
occur TWO OF THE MOST USED TYPES OF
 Optimal product mixes GANTT CHARTS
 Minimization of quality problems
 Reliability and timing of supplies  Load Chart – a gantt charts that
shows the loading and idle times
Intermediate-volume System - outputs for a group of machines or list of
that fall between the standardized type departments.
of output of the high-volume systems  Schedule Chart - A Gantt chart
and made-to-order output of job shops. that shows the orders or jobs in
Three Basic Issues in these systems: progress and whether they are on
schedule.
1. Run size of jobs
2. Timing of jobs Two Different Approaches Are Used
3. Sequence in which jobs will be To Load Work Centers:
produced  Infinite Loading – jobs are
assigned to work centers without
 regard to the capacity of the Priority Rules – it is used to select the
work center. order in which jobs will be processed.
 Finite Loading - work centers
taking into account the work First come, first served (FCFS) – jobs
center capacity and job are processed in the order in which they
processing times. arrive at a machine or work center.

Two General Approaches To Shortest processing time (SPT) – jobs

Scheduling are processed according shortest job
first.
 Forward Scheduling –
scheduling ahead from a point in Earliest due date (EDD) – jobs are
time. processed according to due date,
 Backward Scheduling – earliest due date first.
scheduling backward from a due Critical Ratio (CR) – jobs are
date. processed according to smallest ratio of
time until due date.
Input/Output Control – it refers to
monitoring the work flow and queue Slack per operation (S/O) – jobs are
lengths at work centers. processed according to average slack
time.
Assignment Method – the assignment
method is a special purpose linear Rush – emergency or preferred
programming model that is useful in customers first.
situations that call for assigning tasks or
other work requirements to resources. The Priority Rules Can Be Classified
As Either :
Hungarian Method – method of
assigning jobs by a one-for-one  Local Priority Rules - Focus on
matching to identify the lowest-cost information pertaining to a single
solution. workstation when estab lishing a
job sequence.
Sequencing – determing the order in  Global Priority Rules –
which jobs at a work center will be incorporate information from
processed. multiple workstations when
Workstation – an area where the establishing a job sequence.
workers and machines perform similar Most Frequently Used Performance
work. Measures Follow:
Job Time – time needed to setup and  Job Flow Time – it is the a
processing of a job. amount of time it takes from
 when a job arrives until it is Approaches to Scheduling in
complete. Service System
 Job Lateness - Is the amount of
time the job completion date is Process Batch – the economical
expected to exceed the date the quantity to produce upon the
job was due or promised to a activation of a given operation.
customer. Transfer Batch – the quantity to be
 Makespan - Is the total time transported from one operation to
needed to complete a group of another, assumed to be smaller than
jobs. the first operation’s process batch.
 Average number of jobs - Jobs
that are in a shop are considered Theory of Constraints Three
to be work-in-process inventory. Metrics to Assess the
Effectiveness of Improvements
Johnson’s Rule – a technique that
managers can use to minimize the 1. Operating Expense
makespan of a group of jobs to be 2. Inventory
processed on two machines or work 3. Throughput
centres.
Appointment System – it manage
Why Scheduling Can Be Difficult customer arrivals to minimize wait times
and maximize resource use, commonly
 Setup times used in medical and legal settings.
 Processing time
 Interruptions Reservation System - often used in
 Changes in set of jobs hotels, restaurants, and transportation,
 No method for identifying the allow businesses to estimate demand
optimal schedule and reduce customer disappointment.

Bottleneck Operations – it can’t keep Yield Management - It involves

up with the inputs/demand. Determines adjusting pricing to balance advance
the overall capacity of the system. reservations and walk-ins, using
demand forecasts. It is is critical in
Nonbottleneck Operations – whose industries with fixed capacities, like
capacity is greater than the demand airlines or hotels.
placed upon.
Cyclical Scheduling – it is a method
Theory of Constraints used to assign employees to work shifts
and days off in a repeating pattern,
 Drum – schedule/pace
commonly seen in services like
 Buffer – Constraining resources.
hospitals, restaurants, and
 Rope – synchronizing of the
supermarkets.
sequence of operations.
Challenges in Scheduling Multiple rather than relying on a once-a-year
Resources: forecast.

 Resource Coordination Strategies Used to Counter With

 Variable Nature of Systems Variations
 Complexity Increases with
1. Maintaning a certain amount of
Resources
excess capacity to handle
 Bottlenecks in Service Systems
increases in demand.
Chapter 9: Aggregate Planning and 2. Maintain a degree of flexibility in
Master Scheduling dealing with changes.
3. Delayed differentiation and
Aggregate Planning – it is a modular design.
intermediate-range capacity planning 4. Scheduling products or services
that typically covers a time horizon of 2 with known demands first.
to 12 months and may extend to as
much as 18 months. Decisions are An Overview of Aggregate
strategic that define the framework Planning
within which operating decisions will be
1. Forecast of aggregate
made.
Demand
Sales and Operations Planning – 2. General plan to meet demand
intermediate-range decisions to balance requirements
supply and demand, integrating financial 3. Aggregate plans are updated
and operations planning. periodically, often monthly.
4. Rolling planing horizon.
Ogranizations Make Capacity
Decisions on Three Levels: INPUTS TO AGGREGATE PLANNING

 Long-term 1. First, the available resources

 Intermediate Term over the planning period must be
 Short Term known.
2. Then, a forecast of expected
Business Planning – it is used to demand must be available.
coordinate the intermediate plans of 3. Finally, planners must take into
various organization functions, such as account any policies regarding
marketing, operations and finance. changes in employment levels.
Master Scheduling – they provide input Aggregate Planning Strategies
for financial plans, involve forecasting
input and demand management.  Proactive Strategies – they
attempt to alter demand so that it
Rolling 3,6,9 and 12-month Forecast matches capacity
– forecasts that are updated periodically
  Reactive Strategies – they Techniques for Aggregate Planning
attempt to alter capacity so that it
matches demand. Informal trial-and-error Technique –
 Mixed Strategies – it involve an the most often utilized strategy for
element of each of these aggregate planning since it involve
approaches. budgeting in production and selecting
the lowest cost.
DEMAND OPTIONS
Mathematical Techniques – a number
1. Pricing of mathematical strategies have been
2. Promotion developed to deal with aggregate
3. Back Orders planning.
4. New Demand
Procedure for Aggregate Planning
SUPPLY OPTIONS
1. Determine demand for each
1. Hire and lay off workers period.
2. Overtime/Slack Time 2. Determine capacities for each
3. Part-time workers period.
4. Inventories 3. Identify polices that are pertinent.
5. Subcontracting 4. Determine units costs for regular
time, overtime, subcontracting,
Basic Strategies for Meeting Uneven holding inventories, back orders,
Demand layoffs, and other relevant costs.
 Maintain a level workforce. 5. Develop alternative plans and
 Maintain a steady output rate. compute the cost for each
 Match demand period by period Linear Programming – the goal is
 Use a combination of decision usually to minimize the sum of costs and
variable cost associated with changing the size
Level Capacity Strategy – a stready of the workplace.
rate of regular-time output while meeting Stimulation Models – the essence of
variations in demand. simulation is the development of
Chase Demand Strategy – matching computerized models to attempt to
capacity to demand. identify reasonably acceptable solutions
to problem.
Three Important Factors in Choosing
Strategies Differences Between Manufacturing
and Services
1. Company policy
2. Flexibility  Demand for services can be
3. Costs difficult to predict.
  Capacity availability can be OUTPUTS
difficult to predict.
 Labor flexibility can be an  Projected Inventory
advantage in services.  Master Production Schedule
 Services occur when they are  Uncommited Inventory
rendered. Time Fences
Master Production Schedule (MPS)  Frozen – no changes, ensuring
- this schedule indicates the quantity that current production is stable.
and timing of planned completed This is the closest to the present,
production. covering the near-term time
periods (Period 1 to 3).
Master Scheduling – it is the heart of  Slushy – some flexibility to adapt
production planning and control. It to demand shifts without
determines the quantities needed to excessive risk. This zone covers
meed demand and activities throughout the mid-term planning period
the organization. (Periods 4 and 5).
 Liquid – freedom to make
Master Scheduler – most substantial changes since
manufacturing organizations have a production is far enough away to
master scheduler. accommodate modifications. This
Duties of the Master Scheduler zone covers the farthest planning
horizon (Periods 6 to 9).
1. Evaluating the impact of new
orders.
2. Providing delivery dates for
orders.
3. Dealing with problems.

The Master Scheduling

INPUTS

 Beginning Inventory
 Forecast
 Customer Orders