Chapter 5

Order processing and information systems The cost of providing timely and accurate information has dropped dramatically. The cost of labor and materials has risen. Increasing efforts to replace resources with information.
Order Processing and Information Systems 1

The five key elements of order processing

Order preparation. Order transmittal. Order entry. Order filling. Order status reporting. Represent 50% to 70% of the total order cycle time. See Figure 5-1
Order Processing and Information Systems 2

Order Processing and Information Systems

Order preparation
Determine:
Appropriate vendors. Order form Stock availability. Voice communication of order information.

Technology:
Electronic technology (EDI) Voice-actuated computers Wireless encoding of product information radio frequency and identification system (RF/ID) Order Processing and Information
Systems

Order transmittal
Manual transmission
mailing of orders or physical carrying by the sales staff to the order entry point. slow. inexpensive.

Electronic transmission
telephone, EDI, satellite communication. fast, reliability, accuracy. trade-off analysis.
Order Processing and Information Systems 5

Order entry
Checking the number, quantity and price. Checking the availability of the requested items. Preparing back order or order canceling documentation. Checking the customers credit status. Transcribing the order information. Billing.
Order Processing and Information Systems

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Bar coding and scanning have been especially important to entering order information. ==>accurately, quickly, low cost.

Order Processing and Information Systems

Order filling
Acquire the items through stock retrieval, production, or purchasing Pack the items for shipment Schedule the shipment for delivery Prepare the shipping documentation

Order Processing and Information Systems

Order filling
First-received, first-processed (First come, first served; FCFS). Shortest processing time (SPT). Prespecified priority number. Smaller, less-complicated orders first. Earliest promised delivery date(EDD). Orders having the least time before promised delivery date (slack per operation; S/O). Critical ratio (CR), according to smallest ratio of time remaining until due date to processing time remaining.
Order Processing and Information Systems 9

The factors affecting order cycle time

Split order
Partially filling the order from a backup source for the product. Ex:If an order contains five items, each of which has an in-stock probability of 0.90, the probability of filling the complete order is (0.90)(0.90)(0.90)(0.90)(0.90)=0.59

Holding the order until replenishment stocks for the out-of-stock items are available. Freight consolidation
Order Processing and Information Systems 10

Performance measures
Makespan:total time needed to complete a group of jobs. Average flow time =Total flow time / number of jobs. Average tardiness =Total hours late / number of jobs. Average number of jobs at workstation =Total floe time / makespan
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 Example:Processing times and due dates for six jobs waiting to be processed at a work center are given in the following table. Determine the sequence of jobs, the average flow time, average days late, and average number of jobs at the work center for each of there rule:(a)FCFS (b)SPT (c )DD (d)CR
Job
A B C D E F

processing time (days)

2 8 4 10 5 12 Order Processing and Information
Systems

due date (days)

7 16 4 17 15 18

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The

FCFS sequence is A-B-C-D-E-F.

(1) (2)
flow time 2 10 14 24 29 41 120

(3)
due date 7 16 4 17 15 18

(2)-(3)
days late (0 if negative) 0 0 10 7 14 23 54

Job processing sequence time A 2 B 8 C 4 D 10 E 5 F 12 41

Average flow time: 120/6=20 days. Average tardiness: 54/6=9 days. The makespan is 41 days. Average number of jobs at the work center: Order Processing and Information 120/41=2.93 Systems

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The

SPT sequence is A-C-E-B-D-F.

(1) (2)
flow time 2 6 11 19 29 41 108

(3)
due date 7 4 15 16 17 18

(2)-(3)
days late (0 if negative) 0 2 0 3 12 23 40

Job processing sequence time A 2 C 4 E 5 B 8 D 10 F 12 41

Average flow time: 108/6=18 days. Average tardiness: 40/6=6.67 days. The makespan is 41 days. Average number of jobs at the work center: Order Processing and Information 108/41=2.63 Systems

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The

EDD sequence is C-A-E-B-D-F.

(1) (2)
flow time 4 6 11 19 29 41 108

(3)
due date 4 7 15 16 17 18

(2)-(3)
days late (0 if negative) 0 0 0 3 12 23 40

Job processing sequence time A 4 C 2 E 5 B 8 D 10 F 12 41

Average flow time: 110/6=18.33 days. Average tardiness: 38/6=6.33 days. The makespan is 41 days. Average number of jobs at the work center: Order Processing and Information 110/41=2.68 Systems

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The CR sequence [(due date current date) / processing time] is C-A-E-B-D-F. (1) (2) (3) (4) (3)-(4)
Job Critical processing flow sequence ratio time time C 1.0 4 4 F 1.5 12 16 D 1.7 10 26 B 2.0 8 34 E 3.0 5 39 A 3.5 2 41 41 160 due date 4 18 17 16 15 7 days late (0 if negative) 0 0 9 18 24 34 85

Average flow time: 160/6=26.67 days. Average tardiness: 85/6=14.17 days. The makespan is 41 days. and Information Average numberOrder of Processing jobs at Systems the work center:

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 Generally speaking, the FCFS rule and the CR rule be the least effective of the rules. SPT is superior in temrs of minimizing flow time and average number of jobs at the work center and completion time. DD rule on average lateness is very well.
Average flow time
Rule

Average lateness

Average number of jobs at the work center 2.93 2.63 2.68 3.90
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FCFS SPT DD CR

20 18 18.33 26.67

9.00 6.67 6.33 14.17

Order Processing and Information Systems

S/O rule
Note that processing time includes the time remaining for the current and subsequent operations. Remaining Remaining
Job A B C D E F

processing time 4 16 8 20 10 18

Due date 14 32 8 34 30 30

number of operations 3 6 5 2 4 2

Determine the difference between the due date and the processing time for each operation. Divide the amountOrder by Processing the number of remaining operations, and Information 18 Systems and rank them from low to high.

Job A B C D E F

(1) (2) Remaining processing Due time date 4 14 16 32 8 8 20 34 10 30 18 30

(4) (5) (6) Remaining (2)-(1) number of (3)/(4) Slack operations ratio Rank 10 3 3.33 3 16 6 2.67 2 0 5 0 1 14 2 7.00 6 20 4 5.00 4 12 2 6.00 5

(3)

The S/O rule sequence is C-B-A-E-F-D.

Order Processing and Information Systems 19

Job A B C D E F

(1) (2) Remaining processing Due time date 4 14 16 32 8 8 20 34 10 30 18 30

(4) (5) (6) Remaining (2)-(1) number of (3)/(4) Slack operations ratio Rank 10 3 3.33 3 16 6 2.67 2 0 5 0 1 14 2 7.00 6 20 4 5.00 4 12 2 6.00 5

(3)

The S/O rule sequence is C-B-A-E-F-D.

Order Processing and Information Systems 20

 Exercise:(a)FCFS (b)SPT (c )DD (d)CR

Job A B C D E processing time (days) 12 6 14 3 7 due date (days) 15 24 20 8 6

Exercise:S/O rule
Job A B C D
Remaining processing Due time date 20 30 11 18 10 6 Order Processing and Information 16 Systems 23 Remaining number of operations 2 5 2 4

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Order status reporting

Tracing and tracking the order through out the entire order cycle. Communication with the customer as to where the order may be in the order cycle and when it may be delivered. Example
EX:FedEX and UPS Laser-beam bar coding, a worldwide computer network. Design software for tracing and tracking systems.

Order Processing and Information Systems

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Example
Direct-to-customer delivery utilizing EDI

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Electronic commerce through the internet

Order Processing and Information Systems

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Other factors affecting order-processing time Processing priorities Parallel versus sequential processing Order-filling accuracy Order batching
Reduce processing costs Increase processing time

Shipment consolidation
Order Processing and Information Systems 25

The logistics information system

See figure 5-4. the input the data base and its associated manipulation the output

Order Processing and Information Systems

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Exploded view of the logistics information system

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Order Processing and Information Systems

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