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Decision Support System For A Jewellery Manufacturer
Decision Support System For A Jewellery Manufacturer
Abstract
Hong Kong’s jewellery industry has long been relying on traditional methods for production control and management
and it becomes necessary to search for ways to increase the efficiency and to improve the productivity. This paper
describes the development of a management information system with a specially designed decision support system to
meet the specific requirements of Hong Kong’s jewellery industry. It aims at assisting a jewellery manufacturer to make
decisions in various areas of operation, including price quotation, sales analysis, materials requirement planning, vendor
selection and job assignment. 1999 Elsevier Science B.V. All rights reserved.
Keywords: Decision support system; Jewellery industry; Manufacturing planning and control
0925-5273/99/$ - see front matter 1999 Elsevier Science B.V. All rights reserved
PII: S 0 9 2 5 - 5 2 7 3 ( 9 8 ) 0 0 1 4 2 - X
212 T.N. Wong et al. /Int. J. Production Economics 60—61 (1999) 211—219
Hong Kong manufacturers in China and improved By far the most numerous software packages for
crafting skills of mainland workers, re-exports of production planning and control fall into materials
fine jewellery from China increased briskly, though requirements planning (MRP) and manufacturing
the value remained relatively small. Nevertheless, resources planning (MRPII) systems. Recently,
domestic exports account for over 70% of the in- there is a tendency for the software vendors to
dustry’s total exports, reflecting the fact that pro- extend the MRP/MRPII approach into the more
duction is still concentrated in Hong Kong. comprehensive enterprise requirements planning
Production in China has expanded from basic- (ERP), aiming at the management and coordina-
style, lower value jewellery to higher value precious tion of all activities and resources of the entire
metal jewellery with gem-settings to cater for the corporation. Most of the manufacturing software
middle-end market. packages are able to provide a standard range of
Hong Kong’s jewellery industry has long been features to control areas and activities such as in-
relying on traditional methods for production con- ventory, bills of materials, master production
trol and management, it becomes necessary to scheduling, customer orders, materials require-
search for ways to increase the efficiency and to ments planning, capacity requirements planning,
improve the productivity. This paper describes the shopfloor control, purchasing, costing, financial
results of an ongoing research project that aims to planning, etc. However, they are in most cases too
exploit recent advancements in information tech- generalised; it is rarely possible to obtain a system
nology (IT) and artificial intelligence (AI), to devel- that completely satisfies the requirements of
op a manufacturing information and decision a manufacturing company. In practice, manufac-
support system that will enhance management de- turers prefer to develop and implement a versatile,
cisions at different operation areas of a manufactur- intelligent, and dedicated company specific in-
ing company. The company in this project is formation system.
a jewellery manufacturer in Hong Kong. It is the Traditionally, manufacturing planning and con-
aim to develop a management information system trol function are considered to be a manufacturing
with a specially designed decision support system discipline that requires heuristics and experimental
to meet the specific requirements of Hong Kong’s knowledge, and crisp mathematical models have
jewellery industry. been widely used to characterise the observed be-
haviour. These “quantitative-based models” are
found to be useful in some of the planning functions
2. A decision-support system for jewellery and they are capable of generating an optimal or
manufacturing near-optimal solution. However, deal to the diffi-
culties in achieving precise and reliable parameters
As computer hardware becomes available at and assumptions, appropriate mathematical mod-
higher performance and lower prices; and better, els are very difficult to obtain. The role of knowl-
more intelligent and user-friendly software comes edge-based systems and decision support systems
on the market, computers are now involved in in manufacturing has been growing over the past
almost every aspect of manufacturing. Typical years, in which “qualitative-based models” repres-
areas of computer applications in manufacturing enting the knowledge of the human expertise are
include computer-aided design (CAD), computer- captured to establish the experience-based models.
aided manufacture (CAM), computer-aided process The main advantage of using this kind of systems is
planning (CAPP), and computer-aided production that the knowledge-base is separated from the sys-
management (CAPM). The ultimate goal is to es- tem inference logic, therefore it can be easily up-
tablish the computer-integrated manufacturing dated when the manufacturing conditions are
(CIM) system, to integrate all manufacturing activ- changed. The human planning knowledge and deci-
ities with computer technology. As a result, the sion making process, however, are usually fuzzy
enterprise as a whole has the information it needs and not well defined. It is very difficult to capture
to operate at maximum effectiveness. the expertise knowledge into the knowledge-base,
T.N. Wong et al. /Int. J. Production Economics 60—61 (1999) 211—219 213
gold accessories being held by each worker. The It is possible to retrieve the basic production cost
usage of gold accessories such as solder is also data from the database; the estimated labour cost
recorded. of handmade jobs can then be assessed and decided
In addition to the basic database, to establish the by the production manager using his professional
company-specific decision support system for experience. The cost of gold is calculated in accord-
a jewellery manufacturer, the knowledge and ex- ance with the gold weight of the finished jewellery,
perience of the human decision makers are cap- while taking into consideration the wastage and the
tured and defined in the knowledge base. Some of daily gold price. Regarding the use of precious
knowledge is composed of if—then rules with fuzzy stones including diamond, ruby, sapphire and em-
values. erald, etc., they are priced according to the stone
weight. The weight unit used is Carat, where
1 Carat is equal to 0.02 g. A special adjustment
4. Sales analysis and price quotation ratio is also used to adjust the stone price to the
market price.
The sales function of the DSS comprises a num-
ber of functions including sales analysis; price quo-
tation; and order confirmation. The sales analysis 5. Purchasing
function is a forecasting tool to help the manager in
market planning by analysing product sales. The Three types of raw materials are usually em-
analysis is made over the sales of past products ployed in jewellery production: precious metals,
with reference to their types, price ranges, designs stones and accessories.
and markets (exporting countries), etc. The results Precious metals (gold & platinum): When a new
are shown in the form of charts and tables so that order is received from a customer, the manager will
the relationships between product sales and the make a rough estimate of the amount of pure gold
various factors can be easily visualised. Thus, the (or platinum) required. An order to buy gold in
system helps the manager to analyse the market units of 500 g, which can only be settled by cash,
trend more easily and accurately in long-term deci- will be placed. The price is therefore highly depen-
sion making. dent on the gold price that fluctuates from time to
Price quotation is an important step in winning time. The gold bought is then transformed to differ-
an order. Like most of the jewellery manufacturers ent gold karats as required by the customer order.
in Hong Kong, the studied company always en- The system is designed to help the purchasing man-
gages in jobs which are in fact repeat orders of ager to accurately calculate the amount of pure
similar but not identical products. To reduce the gold to be purchased by reviewing the stock on
effort in quoting, it is common practice to retrieve hand and estimating the amount required by the
previous similar quotations, which can then be order. In addition, the purchasing manager has to
modified to suit the new requirements. Thus, the decide at which point of time to purchase the gold
price quotation module is designed to run on an since the gold price fluctuates from time to time.
interactive environment that allows users to call-up The system is therefore designed to keep in the
previous quotations, and then vary the parameters database, a record of the daily 9999 gold price in
and view the calculated price simultaneously. This the gold market. This daily 9999 gold price is
enables users to make the best use of resources then transformed to the respective prices of differ-
given the same target price. The parameters in- ent gold karats such as 14 kt, 18 kt, etc. This
clude: gold karat; order quantity; kind and quality enables the trend of the gold price to be easily
of diamond; kind and quality of colour stones; observed by the purchasing management, thus
gold price (highest or average monthly gold price, allowing the manager to buy gold at the best time.
etc.); profit margin (10%, 20%, etc.); payment With the help of this system, the manager will be
terms (cash, 30 days, 90 days, etc.); and labour able to purchase the right amount of pure gold at
cost. the best price.
216 T.N. Wong et al. /Int. J. Production Economics 60—61 (1999) 211—219
Precious stones (for instance, diamond, ruby, sap- requirements and the inventory on hand. A pur-
phire and emerald): Different qualities, sizes and chase order will then be generated accordingly.
kinds of diamond and colour stones can be readily As there are a lot of suppliers of precious stones
purchased in the market. Diamond is sold in in the market, it is necessary to select the one who
packets, each packet contains pieces of similar can provide precious stones suitable for a particu-
quality in a range of sizes. The price of precious lar requirement. This part of the system is de-
stones varies with different vendors. It is therefore veloped to help the manager to select the most
the responsibility of the purchasing manager to suitable supplier. In the knowledge base of the
bargain with the vendors using his professional decision support system, all the past records of
knowledge. After making a compromise on the consignment and transaction with each of the sup-
price, the stones are left as a consignment for check- pliers are kept properly. The record is then ana-
ing and selection. Payment is usually made after lysed by the system and each supplier is ranked
three months and a few percentages’ discount will accordingly. For each vendor, the selection criteria
be granted for making immediate payment in cash. are represented by the corresponding values, for
Stones of different sizes are consumed at different instance:
rates because different designs require different
sizes. Most of the time, a particular size is con- E Price of precious stone — good price to expensive.
sumed faster than the others are. Hence, it is impor- This is expressed in fuzzy values as REASON-
tant to know the amount of diamond in different ABLE, GOOD, EXPENSIVE, or VERY EX-
sizes on hand. Information is available to show the PENSIVE.
weight of each size of diamond on hand with re- E Payment terms offered — cash on delivery to
spect to each kind of diamond. It thus helps the 6 months payment term.
purchasing manager to have an idea of the inven- E Quality of diamond — this is expressed as NOT
tory status of different sizes of diamond. When GOOD, GOOD or VERY GOOD.
a new order is placed, the manager, by referring E Percentage of reject allowed — some vendors do
to the information generated by the system, can not accept any reject at all, whilst some vendors
decide the amount of diamond to be purchased can accept up to 10% rejects.
perfectly. E Delivery time — from one day to one week.
Accessories: Accessories of jewellery include E Range of goods kept by the vendor — from all
chains, earclips, locks, etc. Some of these accessor- kinds of stones to a particular stone.
ies may be imported from other countries, such as
Italy, Japan, etc. Each criterion is ranked into four grades: A, B, C,
and D, with scores 4, 3, 2 and 1, respectively. The
criteria are prioritised according to the importance,
5.1. Selection of vendors with price being the most important and delivery
time being the least.
This system provides a vendor database that According to the different requirements of
keeps all the relevant information of different precious stones, different suggestions of suppliers
vendors and suppliers. The vendor database re- are generated by the system. For example, if it is
cords the different vendors who have been sup- necessary to find a diamond supplier with light
plying materials including gold, diamond, precious brown diamond. The system will first retrieve the
stones, semi-precious stones, accessories, etc. In ad- candidate suppliers. According to the selection cri-
dition, the transaction history of each vendor is teria, the suppliers will then be ranked and a score
also recorded. Users can enquire the vendor will be generated for each supplier. The decision
database for a specific material vendor, the system table employed by the system is illustrated by the
will rank the vendors accordingly. Regarding the example shown in Table 1. The vendor is con-
purchasing feature, the quantity and the kind of sidered to offer a REASONABLE price; demand-
material purchased is calculated based on the order ing a payment term of 1—3 MONTHS; the quality
T.N. Wong et al. /Int. J. Production Economics 60—61 (1999) 211—219 217
Table 1
Table for calculating vendorC1’s score
of stone offered by that vendor is however BAD; the production control and scheduling functions.
the vendor agrees to accept a reject rate of up to This includes the generation of the work and cost
10%; and the vendor can meet 1-DAY delivery. sheet which is used to record the production in-
Thus, the total score for that vendor is calculated to formation such as the time of production, the
be 2.30. worker responsible for the job, the quantities of
gold throughout the production process. The work
and cost sheet of each design is generated automati-
6. Production cally by the system according to the sales order.
The workload of each worker is also managed in
In general, three types of jobs are usually found this module. Management can review the produc-
in jewellery production and the proportion of each tion progress of each job being held by each
job type depends mainly on the business nature of worker. The time used by each worker is recorded
the jewellery manufacturer: and then used for costing or assessment of each
worker’s performance. Workers are ranked accord-
E Repair work — Resizing of rings, repairing broken ing to their workload. The ranking is used for job
jewellery, modification of designs. assignment and production scheduling. On the
E Handmade jobs — To meet small orders with other hand, the workload of each production line is
specific customer designs, it is not economical to also shown, if there is an overload in a certain
use the casting process to produce the production process, management will be recom-
mountings. Workers have then to manually craft mended to consider assigning some jobs to subcon-
the precious metal mountings. This kind of hand- tractors. In Hong Kong, there are many small and
made job is also required to prepare the proto- medium factories provide subcontracting services
type for mould making. including mould making, precision casting, gem-
E Casting jobs — It is an important step in the mass setting, polishing, and electroplating. In this proto-
production of jewellery products. It involves the type decision support system, subcontractor re-
production of the complete jewellery mounting. cords are retained in the database. Similar to the
Post-treatment of the cast objects involves filing workers, subcontractors are ranked according to
to remove ripples and streaks on the surface. their previous performance as well.
Precious stones are then set into the mounting in
accordance with the design. Finally, a polishing
machine is used to polish the surface of the 6.1. Job assignment
mounting.
In practice, a job is assigned to a worker by the
In the manufacturing information system, the pro- production manager according to his experiences or
duction module is designed with features to handle will only. But it may not be the optimal assignment
218 T.N. Wong et al. /Int. J. Production Economics 60—61 (1999) 211—219
Table 2
Table for determining worker C1’s score
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