Asgmt

OPERATIONS MANAGEMENT
Course Introduction
 Operations may be defined as a conversion (transformation) process that yields a
tangible output (goods) or an intangible output (services), a deed, a performance, an
effort
The value driven approach focuses on the value provided to the customer.
Customers are those who purchase final goods and services. Those who ultimately
use the products are called consumers
The four basic functions of management, i.e. planning, organising, directing and
controlling are performed by managers at all levels of an organisation.
Course Index
Sr.No. Reference No. Particulars

1. Basics of Operations Management
2. Chapter 1 Operations Management : Trends and Issues
3. Chapter 2 Facilities Location
4. Chapter 3 Plant Layout
5. Chapter 4 Productivity and Production
6. Chapter 5 Manufacturing Economics
7. Chapter 6 Inventory Management and Models
8. Chapter 7 Total Quality Management
9. Chapter 8 Theory of Constraints
Course Index
Sr.No. Particulars Particulars
Manufacturing & Service, Key Functional Area

1. Operations Management : Trends and Issues
(Fin/Mktg/HR), Operational Challenges
2. Facilities Location
3. Plant Layout Objectives; Types of Layout
4. Productivity and Production Aggregate Plan; Level/Chase Strategy
5. Manufacturing Economics MRP; MRP-II; CRP; DRP
Q & P system; Selective Control

6. Inventory Management and Models
(ABC/XYZ/VED/FSN/FNL)
Dimensions of Quality; Quality Tools (DOE,

7. Total Quality Management
Histogram, Check Sheet, CEDAC, PokaYoke,
Scheduling (Flow Shop / Job Shop);

8. Theory of Constraints
Drum-Buffer-Rope
Manufacturing Operations vs. Service Operations
Services as part of Operations Management
Characteristics of Services
Intangible nature
Human intervention and its degree
Mechanisation/automation
Perishability
Fluctuation of demand
Inseparability of service from provider
Heterogeneity and service quality
Pricing of services
Operations: Key Functional Area
Operations Management – Marketing Interface
Marketing is responsible for understanding customer needs, generating and maintaining demand
for the firm’s products, ensuring customer satisfaction, and developing new markets and product
potential.
Operations Management – Finance Interface
Finance provides data on product and service costs that help managers evaluate operational
performance. Operations managers should have knowledge of financial procedures, limits, and
capabilities.
Operations Management – Human Resource Interface
Operations Management and Human Resource departments have to cooperate for recruiting and
training employees, enhancing employee well-being and development, and fostering motivation
that are vital to the success of management policies in practice.
Operations Management: Systems Perspective
Challenges in Operations Management
•Competitive Pressure due to Economic Reforms

• Falling prices
• Shrinking delivery quote
• Build-to-order requirements
•Growing Customer Expectations
• Choice considerations
• Innovations
•Technological Developments
• Globalisation
• Obsolescence
•Environmental Issues
• According to Navigant Research, the world generated two billion tons of municipal
solid waste in 2011
• Municipal waste - 5%
• Construction waste - 5%
• Industrial waste - 75%
• Others wastes - 15%
Challenges in Operations Management
Challenges Faced by Service Operations Managers

• Managing a large number of customers having their specific requirements
• Understanding the nature of service and how different customers may differ in their expectations
from the service
• Managing the way in which a service process is carried out because it affects the final outcome
of service and the customer’s experience depends on it
• Interacting and managing each individual customer during the process of service and afterwards
in order to understand their experience and take a feedback of the same
• Coordinating and managing various assets, processes and human resources involved in the
service process
Chapter 2: Facilities Location
Sr.No. Particulars
1. Globalization of Operations
2. Factors Affecting Location Decisions
3. Location Planning Methods
Load Factor Rating Method
Center of Gravity Method
Transportation Method
Load – Distance Method
4. Other Issues in Location Planning
5. Lets Sum up
Factors Affecting Location Decisions
Location Planning Methods
•Factor Rating Method

•Center of Gravity Method
•Load – Distance Method
•Transportation Method
Factor Rating Method
SCORES (0 TO 100) WEIGHTED SCORES

LOCATION FACTOR WEIGHT Site 1 Site 2 Site 3 Site 1 Site 2 Site 3
Labor pool and climate .30 80 65 90 24.00 19.50 27.00
Proximity to suppliers .20 100 91 75 20.00 18.20 15.00
Wage rates .15 60 95 72 9.00 14.25 10.80
Community environment .15 75 80 80 11.25 12.00 12.00
Proximity to customers .10 65 90 95 6.50 9.00 9.50
Shipping modes .05 85 92 65 4.25 4.60 3.25
Air service .05 50 65 90 2.50 3.25 4.50
77.50 80.80 82.05

Weighted Score for “Labor pool and climate” for
Site 1 = (0.30)(80) = 24
Site 3 has the highest
factor rating
Centre-of-Gravity Technique: Example
y
700
C (135)
600
B (105)
500
A B C D
Miles
400 x 200 100 250 500

D (60)
300 y 200 500 600 300
A (75) Wt. 75 105 135 60
200
100
0 100 200 300 400 500 600 700 x

Miles
A B C D
x 200 100 250 500
y 200 500 600 300
Wt. 75 105 135 60
n
 xW
x= i=1
i i
= (200)(75) + (100)(105) + (250)(135) + (500)(60) = 238
n 75 + 105 + 135 + 60
W
i
i=1
n
 yW
i i
y= i=1 =(200)(75) + (500)(105) + (600)(135) + (300)(60) = 444
n 75 + 105 + 135 + 60
W
i
i=1
y
A B C D
700 x 200 100 250 500
C (135)
600 y 200 500 600 300
B (105) Wt. 75 105 135 60
500
Miles
400 Center of gravity (238, 444)

D (60)
300
A (75)
200
100
0 100 200 300 400 500 600 700 x

Miles
Load-Distance Model
• Example: Based on an initial survey of possible sites for the proposed facility, the manufacturer
identified four candidates. The figure has the location coordinates of the four candidates
(numbered 1 to 4).
• What is the best location for the proposed new facility?
600
A
Existing Supply Points Candidates for proposed facility 500
2 1
xi yi Wi Xj Yj B
A 125 550 200 1 300 500
400
3
D
B 350 400 450 2 200 500 300
C 450 125 175 3 500 350 200

4
C
D 700 300 150 4 400 200 100
Existing Supply Points Candidates for proposed facility 0

xi yi Wi Xj Yj 0 100 200 300 400 500 600 700 800
A 125 550 200 1 300 500

B 350 400 450 2 200 500 Distance Measure: Dij  ( xi  X j ) 2  ( y i  Y j ) 2
C 450 125 175 3 500 350
n
D 700 300 150 4 400 200 Load – Distance: LD j   D *W
i 1
ij i
Load-Distance Model
Existing Supply Points Candidates for proposed facility
xi yi Wi Xj Yj
A 125 550 200 1 300 500
B 350 400 450 2 200 500
C 450 125 175 3 500 350
D 700 300 150 4 400 200
𝐷 𝐴 ..1 = √ ¿ ¿
𝐷 𝐵 ..1 = √ ¿ ¿ Dij values
1 2 3 4
A 182.00 90.14 425.00 445.11 n
B
C
111.80
403.89
180.28
450.69
158.11
230.49
206.16
90.14
Load – Distance: LD j   D *W
i 1
ij i
D 447.21 538.52 206.16 316.23
𝐿 𝐷1 =( 182×200 ) +(111.8×450)+(403.89×175)+(447.21×150)=22,4474.41
LDj values
1 2 3 4
224474.41 258801.57 227410.05 245000.8
Load-Distance Model

600
xi yi Wi Xj Yj A
2 1
A 125 550 200 1 300 500 500
B 350 400 450 2 200 500 B

400 3
C 450 125 175 3 500 350
D
D 700 300 150 4 400 200 300
4
200
C
xi yi Wi Xj Yj 100
A 125 550 200 1 300 500 0

0 100 200 300 400 500 600 700 800
B 350 400 450 2 200 500
C 450 125 175 3 500 350
LDj values
D 700 300 150 4 400 200 1 2 3 4
224474.41 258801.57 227410.05 245000.8
Solving Transportation Problems
• Determining the Initial Basic Feasible Solution (IBFS):
Northwest Corner Method
Minimum Cost Method
Vogel’s Approximation Method (VAM)

Chapter 3: Plant Layout
Sr.No. Particulars
1. The Process–Product Matrix
2. Objectives of a Good Layout
3. Types of Plant Layout
Process Layout
Product Layout
Group Layout
Fixed Position Layout
4. Performance Measures
5. Design of Layouts
6. Technology Issues
Lets Sum up
Objectives of a Good Plant Layout
•The main objective consists of organizing equipment and working areas in the most efficient way,
and at the same time satisfactory and safe for the personnel doing the work
• Sense of Unity
• Minimum Movement of people, material and resources
• Less Supervision and Indirect labor
• Safety
• Flexibility
•Determinants of Smooth Process Characteristics

• Volume of Production
• Variety of Products
• Flow of System Resources
Product Process Matrix
•.
Types of Plant Layouts
•Process Layout (Functional Layout)

• Job Shop Production
• Batch Production
•Product Layout
• Assembly Line Production
• Continuous Production
•Group Technology Layout (Combination Layout)
• Batch Production
•Fixed Position Layout
• Job Shop Production
Process Layout
•Similar machines/ operations are located at one place as per functions
•Milling, Lathes, grinding, finishing operations are carried out in separate locations
•Grouping is useful for non-repetitive manufacturing
•Work piece moves from one group of machines to another
Product Layout
•All products go through one sequence of operations
•Standardized products of high product volume characterize continuous operations
•Special purpose equipment and capital-intense operations with continuous product
flow characterizes these layouts
•Small product mix and products are made to store as inventory
Continuous Flow
Assembly Line
Group Technology Layout
Fixed Position Layout
•Used when product is large, heavy
•Product is difficult or impossible to move
•All resources must be brought to thee site
•Scheduling of crews and resources is a challenge
•Production of aircraft, ships, dams, etc
Other Layouts
Cellular Layout (Mini Assembly Lines)
•Grouping parts into families that follow a common sequence
of steps
•Identifying dominant flow patterns of parts families as a basis
for location or relocation of processes
Warehouse / Storage Layout

•Modern warehouses are automated storage and retrieval
systems (ASRSs)
•Trade-off between handling cost and cost associated with
warehouse.
-Maintain list of open location
-Maintain accurate records of existing inventory and its
location.
-sequencing items to minimize the travel time
Design of Process Layout
Qualitative Method Department 1

O
Value Closeness Department 2 A
U I
A Absolutely necessary
Department 3 O E
E Especially Important A X A
I Important Department 4 U U
U O
O Ordinary closeness OK Department 5 O
U Unimportant O
X Undesirable Department 6
2 4
1 3
5 6
Design of Process Layout
Quantitative Method
•A popular heuristic for the assignment problem forms the basis for the
computerized procedure known as computerized relative
allocation of facilities (CRAFT).
•In CRAFT, an initial feasible layout is formed and a series of improvement
opportunities explored through a pair-wise exchange of departments. If there
are n departments, a pair-wise comparison involves n(n – 1)/2 evaluations.
After all these evaluations, the best possible pair-wise exchange is identified.
2 4
1 3
5 6
Design of Product Layout
Example 1
•A factory working in 2 shifts each of 8 hours produces 24,000 electric bulbs using a
set of workstations. Using this information compute the actual cycle time of the plant
operation.
•There are 8 tasks required to manufacture the bulb. The sum of all task times is equal
to 12 seconds. How many workstations are required to maintain this level of
production if combining of tasks into that many workstations is a feasible alternative?
Available Time
Actual ( Desired ) Cycle Time 
Actual ( Desired ) Pr oduction
Sum of all task times

Minimum No. of work stations required 
Cycle Time
Sum of all task times
Average Re source Utilisation 
Number of workstations * Cycle time
Example 2
A computer manufacturer needs to design the assembly stations in the factory where the
cabinet housing the hard disk, motherboard and other accessories are to be done. The
factory currently works for one shift of 8 hours. The tasks, their duration and their
precedence relationships are given below:
Precedence relationship among the tasks
Task Description Duration B

(seconds)
F
A Assemble and position the base unit 70
B Install Hard disk 80
A C
C Install Mother Board 40 G H
D Insert Ports 20
E Install speaker 40 D
F Connect relevant modules to mother board & Disk 30
G Install controller 50
H Visually inspect & close with a cover plate 50 E
A) If the cycle time is 80 seconds, what will be the daily production of cabinets?
B) If the desired production rate is 320 cabinets per day, what is the maximum permissible
cycle time?
A) Total available time per day = 8*60*60 = 28,800 seconds
If the cycle time is 80 seconds, then
Daily production rate = Total Available Time 28,800

  360
Cycle Time 80
B) Since the desired production rate is only 320 cabinets, one can obtain the maximum
permissible cycle time for the assembly stations
Maximum Cycle Time = Total Available Time 28,800

  90 Seconds
Desired Pr oduction Rate 320
Minimum number of workstations is dictated by the maximum cycle time permissible
Sum of all task times = 380 seconds
Minimum number of workstations =
380
 4.22  5
Average Utilisation = 90
Sum of all task times 380
  84.4%
No. of work stations *Cycle time 5 * 90
Design of Group Technology Layout
Machine-component incident matrix
Before Grouping
Components
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20
A 1 1 1
B 1 1 1
Machines
C 1 1 1 1
D 1 1 1
E 1 1 1 1 1 1
F 1 1 1
G 1 1 1 1 1 1
H 1 1 1 1 1 1
I 1 1 1 1 1 1
J 1 1 1 1 1 1
Design of Group Technology Layout
Machine-component incident matrix
After Grouping
Components
Machines
Flexible Manufacturing Systems (FMS)
•A Flexible Manufacturing Systems (FMS) is
─ A system consisting usually of numerical control (NC) machines
─ Connected by an automated material handling system.
─ Operated under a central computer control
─ Capable of simultaneously processing a family of parts with low to medium demand,
different process cycles and operation sequences
•It is an attempt to solve the process complexities arising out of mid-volume and mid-
variety parts
Flexible Manufacturing Systems (FMS)
Automated Material Handling Systems
An automated storage system is used for large scale bulk storage as well as
for small in line buffer storage
Automated Storage and Retrieval System
(AS/RS)
Horizontal & Vertical Carousels

Automated Material Handling Systems
An automated transport system is used to move parts and products from the storage
systems to the production operations
• Automated Guided Vehicle (AGV) system
• Conveyors in a wide variety of forms such as overhead, monorail, carry and free,
power and free and under floor drag chain
• Gantry and Pick & Place Robots
Complexity in Operations
Chapter 4: Productivity and Production
Sr.No. Particulars
1. Planning Hierarchies in Operations
2. Aggregate Operations Planning
3. Strategies for Aggregate Planning
Level Strategy
Chase Strategy
Mixed Strategy
4. Aggregate Operations Planning Methods
Heuristic Methods
Optimal Methods
5. Master Operations Scheduling
Lets Sum up
Planning Hierarchies in Operations
Product decisions and Capacity Planning
1. Facility Size Long-term
2. Equipment Procurement (3-5 years +)
Aggregate Planning
1. Facility Utilization
2. Personnel needs Intermediate-term
(6 to 18 months)
3. Sub-contracting
Master Production Scheduling

1. MRP Short-term
2. Disaggregation of master plan (in weeks)
Short-term Scheduling
1. Work center loading Very Short-term
(hours – days)
2. Job sequencing
Steps in Aggregate Planning
1. Determine the demand for each product for a time period (i.e. weeks or months)
over the planning horizon ( 6 to 18 months)
2. Determine the aggregate demand by summing up the demand for individual
products
3. Transform the aggregate demand for each time period into workers, materials,
m/c required to meet aggregate demand
4. Identify company policies that are pertinent (i.e. policy regarding safety stock,
maintaining stable workforce, overtime etc.)
5. Determine unit costs for regular time, overtime, subcontracting, holding inventory,
backorder, layoff etc.
6. Develop alternative resource plan for providing necessary production capacity to
support cumulative aggregate demand and compute the cost of each alternate plan
7. Select the resource plan among the alternatives considered that meets aggregate
demand and objectives of the firm.
Strategies in Aggregate Planning
Level Strategy
Maintaining a steady rate of regular-time
output while meeting variations in demand
by a combination of options.
Chase Strategy
Matching capacity to demand; the
planned output for a period is the
expected demand for that period.
Mixed Strategy
Master Operations Scheduling
Linkage of Forecast-AOP-MOS
Operations Management Session 6
Chapter 5: Manufacturing Economics
Sr.No. Particulars
1. Dependent Demand Attributes
2. Planning A Framework: The Basic Building Blocks
3. Material Requirement Planning (MRP)
4. Capacity Requirement Planning (CRP)
5. Distribution Requirement Planning (DRP)
6. Manufacturing Resource Planning (MRP-II)
7. Enterprise Resource Planning (ERP)
8. Resource Planning in Services
Lets Sum up
Demand Attributes
Two types of inventories exist in any operations system

Operating Inventory:
Denotes all the resources (broadly of material and capacity) that are available
for the operating system to consume in the production process
Example: Number of steering wheels required for a day’s production of 5,000 cars
in Maruti Plant
Exhibit Dependant demand attributes
Distribution Inventory:
Meant for market consumption
Exhibit Independent demand attributes
Example: Number of Alto’s to be stocked to meet a day’s demand
They differ in their demand attributes & therefore require alternative planning
methodologies
Demand Attributes
Attribute Dependant Demand Independent Demand
No uncertainty; Dependant;
Considerable Uncertainty,
Nature of Demand Parent - Child relationships cause
Independent
dependency
Make availability meet Make availability meet estimated

Goal
requirements exactly demand for a targeted service level
100% a necessity, Feasible to

Service Level 100% is not feasible
achieve
Demand Occurrence Often lumpy Often continuous
Estimation of demand By Production Planning By Forecasting
How much to order? Estimated based on past

Known with certainty
(Quantity) consumption
When to order? (Timing) Very critical, can be estimated Cannot be answered directly
Planning a Framework: A Building Block
•Multiple Levels in Products

o Parent-Child Dependency
•Product Structure
o The Bill of Materials (BOM)
•Time Phasing the Requirement
•Determining the Lot Size
•Incorporating Lead-time Information
•Establishing the Planning Premises
•Product Structure
o The Bill of Materials (BOM)
Product Structure graphically depicts the dependency relationships among

various items that make up the final product
A Bill of Material (BOM) is a list of all materials needed to assemble or put

together one unit of the final product
BOM exists in various formats
• Single level BOM
• Indented BOM
• Modular BOM
•Product Structure Telephone Level 0
Base Unit Connecting Connecting Hand Set (1)

(1) Cable (1) Jack (2) Level 1
Operating Panel B. Cover Lug Speaker Mic. H. Cover

Unit (1) Board (1) Plate (2) (4) (1) (1) Plate (2) Level 2
Button Control
Assy. (1) Panel (1) Level 3
Button Screw Dial (3) Screw Screw Screw

(12) (12) (3) (4) (2)
Level 4
•Time Phasing the Requirement
Deciding on the planning horizon. Lets assume a two-month period as the

planning horizon
Computation without
A: On hand = 50
Time phasing of data B: On order = 300
C: Required = 470 (200 + 120 + 150)
X: Net Qty. = -120
Period (Week)
1 2 3 4 5 6 7 8
On hand 50
On order 300
Required 200 120 150
Net Quantity 50 50 -150 -150 30 30 30 -120
•Determining the Lot Size
•Lot for Lot (LFL) Rule

Item: Operating Unit Period (Week)
Lot size rule: Lot for Lot 1 2 3 4 5 6 7 8
Gross requirements 200 120 130 150
On hand* 50 50 50
Net Requirements 150 120 130 150
Lot size 150 120 130 150
* On hand data pertains to the inventory at the end of the period
•Fixed Order Quantity (FOQ) Rule

Item: Operating Unit Period (Week)
Lot size rule: Fixed Order Qty. 1 2 3 4 5 6 7 8
On hand* 50 50 50
Lot size 300 300
* On hand data pertains to the inventory at the end of the period

•Incorporating Lead-time Information
Planned Order Release Time = Planned Receipt Time – Lead Time
Manufacture 200
Operating Units
Assemble
200 base units
LT for manufacture of Operating Unit Assemble
200 telephones
Offset Offset
Weeks 5 - 6 Week 7 Week 8

Manufacture of Assembly of Assembled
Operating units begin Base units begin Base units arrive
Item: Operating Unit; LT = 2 Wks. Period (Week)

Lot size rule: Lot for Lot 1 2 3 4 5 6 7 8
On hand* 50 50 50
Planned receipts 150 120 130 160
Planned Order releases 150 120 130 160
•Establishing the Planning Premises
•Master Production Schedule (MPS)
o Drives MRP process with a schedule of finished products
o Quantities represent production not demand
o Quantities may consist of a combination of customer orders & demand
forecasts
o Quantities represent what needs to be produced, not what can be produced
Master Production Schedule Period

Item 1 2 3 4 5 6 7 8
Aggregate Production Plan
Basic Telephone 1200 1400
Phone - Basic 80 190 110 100 100 100 100
Phone - Deluxe 0 50 0 50 0 50 0 50
Phone - Home Office 75 120 40 20 70 60 0 0
Phone - Enterprise 90 125 125 125 125 245 200 200
Material Requirement Planning (MRP)
MRP CORE LOGIC
Inventory
MPS Net Status
Explode Lot
Lot Sizing
BOM Rules
Offset
Lead
Shop Procurement Time
Orders Notices
Developing MRP
Master Production Schedule for the next six periods
1 2 3 4 5 6
Product A 100 150 200 100 0 200
Component C 50 60 70
A Component On hand Lead time Lot size

A 150 1 LFL
B 1000 2 LFL
B3 C1 C 300 1 LFL
D 750 2 3 periods
E 700 6 3 periods
E 2 D1 D1 F1 F 200 1 400
G 500 3 500
Product Structure
G1
Developing
MRP
Developing
MRP
Developing
MRP
Issues & Challenges
Handling uncertainties affecting the system by incorporating:
Safety Stock & Safety Lead times
Safety Stock Safety Lead times

Capacity Requirement Planning (CRP)
CRP is a technique that applies logic similar to MRP to address the capacity issues in an
organization.
Similar to MRP, CRP develops schedules for planned releases of capacities to specific work orders
as identified in an MRP schedule.
The output of an MRP process becomes the basis for the CRP exercise.
MRP planned
Order releases
Capacity
Routing File Capacity
Requirements
(Process Plan) Status
Planning
Loading schedules
for each resource
Distribution Requirement Planning (DRP)
•A Distribution Requirement Planning (DRP) exercise will help organizations and their supply
chain partners to jointly plan and reduce investment in inventory in the supply chain.
•They will be in a position to respond to changes in the demand, such as sudden surges and drops,
and have a cost-effective operation
•Unlike the MRP exercise, a DRP exercise relies on key information pertaining to planned order
releases outside the domain of an organization
•Retailers should be willing to share with dealer the planned order releases and their estimates of
upcoming demand, for better planning. Similarly, dealers need to share similar information with
the manufacturer
Manufacturing Resource Planning (MRP-II)
MRP-II is an extension of MRP

Plans for all resources needed for running a business
A typical MRP II system will consist of the following modules:

•Business planning
•Purchasing
•Forecasting/demand management
•Inventory control
•Order entry and management
•Shop-floor control
•Master production scheduling (MPS)
•Distribution requirements planning (DRP)
•Material requirements planning (MRP)
•Service requirements planning (SRP)
•Capacity requirements planning (CRP)
•Accounting
Enterprise Resource Planning (ERP)
The following are the typical modules in ERP software:

• Sales and distribution
• Production planning
• Logistics
• Accounts payable/receivable, treasury
• Operational (shop floor) control
• Purchasing
• Finance and cost control
• Human resources
• Information Technology
• R&D
•Prior to the implementation of ERP, an organization re-engineers its processes. It also identifies
the level of customization it needs on various functionalities in the software. Usually, a consulting
firm assists the whole process and the software is implemented in a project mode.
•A wide number of software options are available for ERP today.
•The most popular among them include SAP, Oracle, Ramco Systems, PeopleSoft, and JD
Edwards.
Resource Planning in Services
Service resource Planning (SRP) provides industry specific applications for the services sector.
•SRP provides seamless real-time flow of information between multiple departments within the
company such as HR, Finance, Project Control Office, and Resource Management Group.
•Employees, who form the core of services industry, can be managed very efficiently by
optimizing their skills and effort across multiple projects or assignments simultaneously.
•On the whole, SRP reduces the time and effort spent in manual activities through process
automation and also makes day-to-day transactions of the organization paperless by providing a
single electronic source of information as a global data repository.
Chapter 6: Inventory Management and Models
Sr.No. Particulars
1. Inventory & Types of Inventory
2. Independent Demand Attributes
3. Inventory Costs
4. Inventory Mgmt for Deterministic Demand
5. Inventory Control Systems
6. Inventory Control/ Classification Systems
7. Inventory Mgmt for Single period Inventory
8. Issues in Inventory Planning and Control
Lets Sum up
Types of Inventory
According to Production requirements
Raw Materials
Work in Progress
Finished Goods
MRO goods (Maintenance, Repair & Operating goods)
According to Demand Characteristics

Dependant Demand
Raw Materials
Work in Progress
Independent Demand
Seasonal inventory
Decoupling Inventory
Cyclical Inventory
Pipeline Inventory
Safety Stock
Independent Demand Attributes
While planning for a dependent demand item is done to meet manufacturing
requirements, in the case of independent demand items, it is done to meet customer
requirements
In manufacturing organizations, finished goods and spare parts typically belong to the
category of independent demand items
Two attributes characterize and distinguish independent demand items

Continuous
Uncertainty
Two questions to address for independent demand items

How much ?
When ?
Types of Inventory
Seasonal Inventory
Organizations carry inventory to meet fluctuations in demand arising out of seasonality
Inventory plays the crucial role of addressing short-term capacity issues in an

organization.
•During festival periods, the demand for consumer durables may be high due to an
increase in disposable income in the hands of consumers. In order to meet this surge in
demand, there is inventory build-up during non-peak periods.
•Similarly, in a fast-food restaurant, a certain amount of inventory build-up happens

during non-peak hours to handle the increase in demand during peak hours
Types of Inventory
Complexity of production control is reduced by splitting manufacturing into stages and
maintaining inventory between these stages
Production System without any decoupling inventory
1 2 3 4 5 6 7 8 9 10
Production System with decoupling inventory
1 4 5 8 9
Stage 1 Stage 2
3 Stage 3
2 7 6 10
Types of Inventory
Cyclical Inventory
Periodic replenishment causes cyclic inventory
Organizations order inventory in repeated cycles and consume them over time. Each cycle begins
with replenishment and ends with complete depletion of the inventory
Pipeline Inventory
Exists due to lead time considerations
Because of the geographical distances between the buyers and the suppliers and the host of business
processes involved in ordering and receiving material, there is a time delay between order placement
and order receipt. The inventory carried to take care of these delays is known as pipeline inventory.
Safety Stock
Used to absorb fluctuations in demand due to uncertainty
The higher the uncertainty, the greater is the need for safety stock
Inventory Costs
There are several costs associated with inventory planning and control. These costs could
be classified under three broad categories:
➱ Inventory carrying/Holding Costs

All costs related to maintaining inventory in organizations will be classified under this.
➱ Inventory Ordering Costs
The cost associated with ordering material and replenishing it in cyclic intervals.
➱ Inventory Shortage Costs
The cost arising out of shortages of inventory
Carrying Cost
• Interest for short-term borrowals for working capital
• Cost of stores and warehousing
• Administrative costs related to maintaining and accounting for inventory
• Insurance costs, cost of obsolescence, pilferage, damages and wastage
• All these costs are directly related to the level of inventory
Let Cc denote the inventory carrying cost per unit per unit time.
For an order quantity of Q, the average inventory carried by an organization is Q/2.
Therefore,
Cost associated with carrying inventory =

Ordering Cost
• Search and identification of appropriate sources of supply
• Price negotiation, contracting and purchase order generation
• Follow-up and receipt of material
• Eventual stocking in the stores after necessary accounting and verification
• A larger order quantity will require less number of orders to meet a
known demand & vice versa
For an order quantity of Q, and annual demand D. The number of orders to

be placed to satisfy a demand of D = D/Q. If C0 denotes the cost of ordering
per order, then:
Total ordering cost =
Cost of carrying and cost of ordering are fundamentally two opposing cost
structures in inventory planning
Shortage Cost
• Costs arising out of pushing the order back and rescheduling the production
system to accommodate these changes
• Rush purchases, uneven utilization of available resources and lower capacity
utilization
• Missed delivery schedules leading to customer dissatisfaction and loss of
good will
• The effects of shortage are vastly intangible, it is indeed difficult to accurately
estimate
Inventory Control for Deterministic Inventory
Economic Order Quantity (EOQ) Model
TC=Total annual cost
Total Annual Annual Annual D =Demand
Annual = Purchase Ordering Holding C =Cost per unit
+ +
Cost Cost Cost Cost
Q =Order quantity
S =Cost of placing an order or
setup cost
D Q R =Reorder point
TC = DC + S+ H L =Lead time
Q 2 H=Annual holding and storage
cost per unit of inventory
By adding the item, holding, and ordering costs together, we
determine the total cost curve, which in turn is used to find the Q opt
inventory order point that minimizes total costs
Total Cost
C
O
S
T Holding
Costs
Annual Cost of
Items (DC)
Ordering Costs
QOPT (EOQ)
Order Quantity (Q)
Deriving the EOQ
Using calculus, we take the first derivative of the total cost function with
respect to Q, and set the derivative (slope) equal to zero, solving for the
optimized (cost minimized) value of
Qopt or (EOQ)
2DS 2(Annual Demand)(Order or Setup Cost)

Q OPT = =
H Annual Holding Cost
We also need a reorder point to tell us when to place an order
_
Reorder point, R = d * L
_
d = average daily demand (constant)
L = Lead time (constant)
EOQ Example (Page 186, Example 2)
An auto-component manufacturer requires a certain steel forging in large
quantities. The annual requirement is 40,000 pieces, each costing Rs. 450.
The ordering cost is Rs. 600 per order and the carrying cost is Rs. 100 per
unit per year.
(a) What is the optimal order quantity?
(b) How frequently should the manufacturer place the order with the
supplier?
(c) Compute the total ordering cost and total carrying cost. Do you notice
anything?
𝑎¿ 𝐸𝑂𝑄=
2 𝐷𝑆
𝐻
=
√ 100 √
2 × 40000 ×600
=692.8=69 3
Days
𝐷
Total Ordering Cost = × S =58 ×600=34800
𝑄
Q 693
Total Holding Cost = ×H= × 100=34650
2 2
Inventory Control Systems
• Single-Period Inventory Model
• One time purchasing decision (Example: vendor selling t-
shirts for IPL)
• Seeks to balance the costs of inventory overstock and under
stock
• Multi-Period Inventory Models
• Fixed-Order Quantity Models (also called EOQ and Q-
model)
• Event triggered (Example: running out of stock)
• Fixed-Time Period Models (also called as periodic review
system, fixed-order interval system and P-model)
• Time triggered (Example: Monthly sales call by sales representative)
Q- Model P- Model
Idle State Idle State

Waiting for demand Waiting for demand
Demand occurs Demand occurs

Units withdrawn from inventory Units withdrawn from
or backorder inventory or
backorder
No
Has review
time
Compute inventory position
arrived? Multiple
Position= On-hand + On order -
Backorder Periods
Yes
Compute inventory position
Inventory
Position= On-hand + On order - models
No Is position<= Backorder
Reorder
point? Compute order quantity to
bring inventory up to required
Yes level
Issue an order for Issue an order for the

exact Q units number of units needed
Fixed-Order Quantity Model Assumptions
1. You receive an order
quantity Q. 4. The cycle then
repeats.
Number
of units
on hand Q Q Q
R
2. Your start using L L
them up over time. Time
3. When you reach down to a

R = Reorder point level of inventory of R, you
Q = Economic order quantity place your next Q sized order.
L = Lead time
Fixed Time Period Models
Inventory Position
Physical Inventory
QR Q2R Q3R
Order Up to Level
S
Inventory Level
SS
Safety Stock
R 2R 3R
L
Time
Selective Inventory Control / Classification
(Inventory Management Models)
• ABC Classification (on the basis of consumption value)

• High consumption (A Class item)
• Medium consumption (B Class item)
• Low consumption (C Class item)
• XYZ Classification (on the basis of unit cost of the item)
• High Unit cost (X Class item)
• Medium Unit cost (Y Class item)
• Low unit cost (Z Class item)
• FSN Classification (on the basis of movement of inventory)
• Fast Moving or Slow Moving or Non-moving
• VED Classification (on the basis of criticality of items)
• Vital or Essential or Desirable
• On the basis of sources of supply
• Imported (Foreign Suppliers)
• Indigenous (National Suppliers)
• Indigenous (Local Suppliers)
ABC Analysis
• Items kept in inventory are not of equal importance in terms of:
– Money invested
% of 60
– profit potential
– sales or usage volume
Money 30 A
– stock-out penalties
Value
0 B
C
% of 30
Use 60
So, identify inventory items based on percentage of total money value, where “A” items
are roughly top 10-15 %, “B” items as next 20-30 %, and the lower 60-75% are the “C”
items
• XYZ Analysis
This classification is based only on the unit cost, whereas ABC
classification, takes the consumption pattern also into account
• High Unit cost (X Class item)
• Medium Unit cost (Y Class item)
• Low unit cost (Z Class item)
VED Analysis
• This type of classification is applicable mostly in the case of spare parts on
the basis of criticality of requirement
• V-E-D stands for vital, essential and desirable.
• Spare parts does not follow a predictable demand pattern as in the case of
raw materials. The result is that if we follow the usual methods outlined
earlier, we might get into difficulties when the demand suddenly changes.
• For V items a reasonably large quantum of stocks might be necessary,

while for D items, no stocks need perhaps be kept. Especially if that item
also happens to be in the A or B classification, close control should be kept
on stock levels, but if it is a C item, then large quantities may be stored.
FSND Analysis
• The basis of classification in FSND is
Consumption pattern of the component.
• F - Fast moving,
• S - Slow moving,
• N - Non-moving,
• D - Dead items
• It is mainly used to control obsolescence.

• Items classified as S and N require very great
attention, especially N items.
FNL or GOLF
• The basis of classification is On the basis of sources of supply
• F - Foreign,
• N - National,
• L - Local
• Imported items are usually of high value. Moreover, they have

long lead times owing to several statutory and procedural
complexities involved in the buying process. Therefore, they
may require tighter control.
• On the other hand, items procured from the local suppliers are
available “off the shelf”.
• Also can be identified as GOLF analysis
• G – Government sources
• OL – ordinary / local sources
• F – Foreign Sources
Single Period Inventory Control
•In a single-period demand, the unfulfilled demand cannot be back-ordered to the next period
because the demand ceases to exist after the period for which planning is done.
•In other cases, even though demand exists in the future, what is ordered for a period cannot be used
for future periods due to the perishable nature of the item.
•Planning for appropriate levels of inventory in such situations requires careful balancing of two
opposing costs.
cost of under stocking - carrying lesser inventory than demand directly results in lost opportunity
to make profit.
cost of overstocking - any excessive inventory cannot be consumed afterwards. At the most, the
unused inventory may fetch some salvage value
•Let Co = Cost of overstocking per unit
•Cu = Cost of understocking per unit
•Q = Optimal number of units to be stocked
•d = Single-period demand
•P(d ≤ Q) = The probability of the single-period demand being at most Q units
Cu
P
Co  Cu
•Now Q = μ + ZP (σ)
Single Period Inventory Control
•Our college Cricket team is playing in a tournament game this weekend. Based
on our past experience we sell on average 2,400 shirts with a standard deviation
of 350. We make INR. 10 on every shirt we sell at the game, but lose INR. 5 on
every shirt not sold. How many shirts should we make for the game?
•Cu = INR. 10 and Co = INR. 5; σ = 350; μ = 2400
•P ≤ 10 / (10 + 5) = 0.667
•Z(p=0.667) = 0.432 (from normal distribution values)
•Now Q = μ + ZP (σ)
•therefore we need Q = 2,400 +0.432(350) = 2,551.2 ~ 2551 shirts

Chapter 7: Total Quality Management
Sr.No. Particulars
1. Quality & its Concept
2. Dimensions of Quality
3. Quality Gurus
4. Total Quality Management
5. Quality Management Tools
6. Quality Costs
7. Quality Certifications & Awards
8. Quality Assurance Systems
Lets Sum up
Quality
“The quality of a product or service is a customer’s perception of the
degree to which the product or service meets his or her expectations.”
Quality is
• Conformance to Specifications
• Fulfilling Customer needs
• Fitness for Use
Sr. Types of
Attributes
No. Quality
Indifferent Customers often do not appreciate or
1.
quality notice it.
Expected
2. Customer expects and demands it.
quality
One- Customer expects it but does not
3. dimensional cancel order in the absence of the
quality quality.
It results in exceeding the customer
4. Exciting quality
expectations.
Dimensions of Quality
Garvin’s Dimensions of Quality
Performance Reliability Features
Conformance Durability Serviceability
Other
Aesthetics Safety
perceptions
Quality Gurus
EDWARDS DEMING WALTER A. SHEWHART
•Plan–Do–Check–Act (PDCA) cycle •Statistical Quality control charts
•Statistical Quality control (SQC) •Plan-Do-Study-Act
•Deming’s 14 point Principle
GENICHI TAGUCHI
PHILIP B. CROSBY •Design of Experiments (DOE)
•Quality is free •Taguchi loss function
•Zero Defects
•Absolutes of Quality ARMAND V. FEIGENBAUM
•Father of Total Quality management (TQM)
JOSEPH M. JURAN
•Top management commitment
•Fitness for use
•Juran’s Trilogy
KAORU ISHIKAWA
•Cause- and-Effect diagrams
•Quality circles
•Cause & Effect Diagram with Action Card
(CEDAC)
Total Quality Management
Four Pillars Of TQM

Pillar 1: Synergistic Relationships
Pillar 2: Continuous Improvement and Self-

evaluation
Pillar 3: A System of Ongoing Process
Pillar 4: Leadership
Salient Features of TQM

• Customer-oriented
• Emphasises developing quality in processes, people and leadership to attain customer
satisfaction
• Proactive process
• Emphasizes on Benchmarking
• Recognizing and rewarding for the quality achievements
Quality Management Tools
Control Charts
Scatter Diagrams
Histograms
Pareto Diagrams
•Often called the 80-20 Rule, Vital
few and Useful many
•Principle is that quality problems
are the result of only a few
problems e.g. 80% of the
problems caused by 20% of
causes
Cause and Effect Diagram
CEDAC
(Cause & Effect Diagram and Action Cards)
Poka Yoke
Mistake proofing by identifying root cause & eliminating
the cause
Matrix Diagrams
Quality Function Deployment

Based on a set of structured information gathering, QFD helps an organization to capture
the qualitative attributes of the quality as perceived by the customers and translate them
into meaningful quantitative measures.
QFD utilizes a set of four “houses of quality”. Each house of quality captures certain
information
and uses a structured methodology to translate customer needs to actionable ideas and
quantifiable attributes pertaining to the product/service.
Quality Costs
Quality affects all aspects of the organization
Quality has dramatic cost implications of:-
Quality control costs
Prevention costs
Appraisal costs
Quality failure costs
Internal failure costs
External failure costs
Quality Certifications & Awards
Quality Assurance Systems
Chapter 8: Theory of Constraints
Sr.No. Particulars
1. Need for Scheduling & Alternative terms
2. Loading of Machines
3. Scheduling Context
Scheduling Rules
Performance Criteria
4. Scheduling of Flow shops (Johnson’s Rule)
5. Scheduling of Job shops
6. Operational control in Mass Production Systems
7. Operation Planning based on ‘Theory of Constraints’
Analogy of Marching Soldiers & Synchronous Manufacturing
Drum Buffer Rope methodology
Lets Sum up
Need for Scheduling
Scheduling
•A methodology to fine tune planning and decision making due to the
occurrence of random events
•Operations scheduling uses a defined framework to address issues associated
with the use of available resources and the delivery of products and services as
promised to the customers.
•Scheduling is ‘short term’ planning
Need for Scheduling

• As we approach real time, several kinds of additional information become
available to an organization. using this information makes operations more
accurate than choosing to simply ignore them.
•The occurrence of random events is inevitable in business
•In the short term, we need to focus on micro-resources, a single machine, a set
of workers, and so on
Need for Scheduling
Scheduling Terminologies
•Loading is defined as a planning methodology using which the resources in an
operating system are assigned with adequate number of jobs during the planning
horizon
•Scheduling is defined as the process of rank ordering the jobs in front of each
resource with a view to maximize some chosen performance measure
•Routing is defined as the order in which the resources available in a shop are
used by the job for processing
•Sequencing is the ordering of operations of the jobs in the operating system
•Dispatching is defined as the administrative process of authorizing processing

of jobs by resources in the operating system as identified by the scheduling
system
Loading of Machines
• ‘N’ jobs and ‘N’ machines

One – One Assignment of Jobs-Machines by Assignment Method
•Fewer jobs than machines

Idle machine scenario; rotating shifts; maintenance schedules
•Fewer machines than Jobs

Several jobs scheduled on the same machine
Scheduling context
•Number of jobs (n)
•Number of machines (m)
•Shop Configuration
• Flow shop
• Job Shop
• Cellular Manufacturing System
Scheduling Context
Scheduling Rules
•Shortest processing time (SPT): Chooses the job with the least processing
time among the competing list and schedules it ahead of the others
•Longest processing time (LPT): The job with the longest processing time is
scheduled ahead of other competing jobs
•Earliest Due Date (EDD): Establishes priorities on the basis of the due date for
the jobs.
•Critical Ratio (CR): Critical ratio estimates the criticality of the job by
computing a simple ratio using processing time information and due date. A
smaller value of CR indicates that the job is more critical.
*Critical Ratio = Remaining time = (Due Date – Current Date)
Remaining Work Remaining Processing Time
•First Cum First Served (FCFS): Schedules jobs simply in their order of job
arrival
•Random Order (RAN): Assign priorities to jobs on a random basis.
Scheduling Context
Scheduling Rules
Current time = 0
Processing Order of Random
Job No. time (mins) arrival Due by CR Number
1 12 1 23 1.92 0.233
2 9 2 24 2.67 0.857
3 22 3 30 1.36 0.518
4 11 4 20 1.82 0.951
Rule Rank ordering of jobs based on

SPT 2–4–1–3
LPT 3–1–4–2
EDD 4–1–2–3
CR 3–4–1–2
FCFS 1–2–3–4
RAN 1–3–2–4
Scheduling Context
Flow time is defined as the elapsed time between releasing a job into the shop
and the time of completion of processing of the job
Release time of the job : Ri
Completion time of the job : Ci
Flow time of the job : Fi = (Ri – Ci)
Make span is defined as the time taken to complete all the jobs released into the
shop for processing Cmax  max{Ci }
Make span (Max. Completion time): i
Lateness defined as the difference between completion time and due date.
If the due date for a job i is denoted as Di, then
Lateness of the job : Li = (Ci – Di)
If a job is completed ahead of time, instead of computing a negative value for L i if we

take zero, then the resulting measure is known as Tardiness
Tardiness of the job : Ti = max(0, Li)
Scheduling Context
Processing Release Completion Due by Flow

order time (Ri) time (Ci) (Di) time (Fi) Lateness Tardiness
2 0 6 6 6 0 0
3 0 13 9 13 4 4
1 0 2 19 2 -17 0
4 0 21 17 21 4 4
Mean 10.50 10.50 -2.25 2.00
Maximum 21.00 21.00 4.00 4.00
Minimum 2.00 2.00 -17.00 0.00
No. of tardy jobs = 2; Make span = 21
Scheduling of Flow Shops
Johnson’s Rule Job No
Processing time
Machine 1 Machine 2
1 4 7
2 6 3
3 2 3
4 7 7
5 8 6
Job Sequence - Job 3 Job 1 Job 4 Job 5 Job 2
Machine 1 3 3 1 1 1 1 4 4 4 4 4 4 4 5 5 5 5 5 5 5 5 2 2 2 2 2 2
Machine 2 3 3 3 1 1 1 1 1 1 1 4 4 4 4 4 4 4 5 5 5 5 5 5 2 2 2
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30
Time units
Scheduling of Job Shops
Operational Control in Mass Production Systems
•Much of control and scheduling boils down to appropriately

arriving at balanced flow of components in the shop floor
• Given a certain availability of resources modify the cycle time to
meet daily production targets
• Machine Redeployment
• Altering Operator Allocations
• Adjusting Material Feed rates
• TAKT time provides a rhythm for the overall functioning of the

shop
• TAKT time is the maximum amount of time in which a unit of
product needs to be produced in order to satisfy customer
demand.
Operational Control in Mass Production Systems
•Illustration for Worker deployment for adjusted TAKT:
Required output per day 400 450 371

7 x 60
No. of shifts per day (7 hrs per shift) 2 2 2
Required output per shift 200 225 185.5
Net available production time (Mins) 420 420 420
=(420x60)
TAKT Time (Seconds) 126 112 136 200
Work Content (Seconds) 1,764 1,764 1,764
= 1764
No. of Operators required per shift 14 16 13 126
Total number of operators required 28 32 26

= 14 x 2
Operational Planning & Theory of Constraints (TOC)
•The operational philosophy behind TOC is that capacity of shop does not reflect the cumulative
capacity of the different workstations.
•TOC does this by devising a scheduling system wherein the bottleneck “pulls” its requirements
from other stations.
Any resource whose capacity is equal to or less than the demand placed on it is a bottleneck
resource.
•Theory of Constraints is a systematic body of knowledge, which recognizes that

o Resources in manufacturing organizations differ from one another in their ability to process
components
o Statistical fluctuations and dependant events are characteristic of resources in a manufacturing
organization
o Uses specific methods to improve the performance of the system under these conditions.
Analogy of Marching Soldiers
Resource Marching Soldiers Production System

Processing Ground to be covered Raw Material to be processed
WIP Gap between the first and the Work in Process in the shop floor
last soldier
Throughput The extent of ground covered Amount produced and sold by the
by the marching soldiers production system
Operating Amount of energy expounded Cost of transforming the raw
Expenses by the soldiers to complete material into throughput
the march
Objective To cover a certain extent of To achieve a certain throughput in
the ground in a given time a given time
Synchronous Manufacturing
Synchronous manufacturing is a specific application of theory of constraints to
scheduling and operational control of manufacturing systems
In synchronous manufacturing the focus is on synchronizing flow rather than balancing
capacities
Drum Buffer Rope (DBR) Methodology

•Develop a schedule so that it is consistent with the constraints of the systems (Drum)
•The schedule is actually the drum beat
•Protect the throughput of the system from statistical fluctuations through the use of
buffers at some critical points in the system (Buffer)
•Tie the production at each resource to the drum beat (Rope)
Lets Sum up
Operations may be defined as a conversion (transformation) process that yields a
tangible output (goods) or an intangible output (services), a deed, a performance, an
effort.
Where Operations Management was once viewed primarily as a manufacturing
function, service firms are now recognizing its tremendous competitive potential.
Shift from ‘Transformation Approach’ to “Value Driven Approach’.
Importance of Customers as they are the requestors/receivers/“payers” of the
service/output of the process.
The concept of internal customer has profoundly changed Operations Management
thinking.
Importance of Automation
Instead of a focus on cost, the focus now encompasses reliability as well as delivery
times.
U say it…
Organisational Excellence in Operations - ______________
Operations Manager - ______________

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OPERATIONS MANAGEMENT

Sr.No. Reference No. Particulars

Manufacturing & Service, Key Functional Area

3. Plant Layout Objectives; Types of Layout

4. Productivity and Production Aggregate Plan; Level/Chase Strategy

5. Manufacturing Economics MRP; MRP-II; CRP; DRP

Q & P system; Selective Control

Dimensions of Quality; Quality Tools (DOE,

Scheduling (Flow Shop / Job Shop);

Human intervention and its degree

Inseparability of service from provider

Heterogeneity and service quality

•Competitive Pressure due to Economic Reforms

Challenges Faced by Service Operations Managers

2. Factors Affecting Location Decisions

3. Location Planning Methods

Load Factor Rating Method

Center of Gravity Method

Load – Distance Method

4. Other Issues in Location Planning

•Factor Rating Method

SCORES (0 TO 100) WEIGHTED SCORES

77.50 80.80 82.05

400 x 200 100 250 500

0 100 200 300 400 500 600 700 x

400 Center of gravity (238, 444)

0 100 200 300 400 500 600 700 x

C 450 125 175 3 500 350 200

Existing Supply Points Candidates for proposed facility 0

A 125 550 200 1 300 500

D 447.21 538.52 206.16 316.23

Existing Supply Points Candidates for proposed facility

B 350 400 450 2 200 500 B

A 125 550 200 1 300 500 0

• Determining the Initial Basic Feasible Solution (IBFS):

Northwest Corner Method

Minimum Cost Method

Vogel’s Approximation Method (VAM)

•Determinants of Smooth Process Characteristics

•Process Layout (Functional Layout)

Warehouse / Storage Layout

Qualitative Method Department 1

Sum of all task times

Task Description Duration B

Daily production rate = Total Available Time 28,800

Maximum Cycle Time = Total Available Time 28,800

Machine-component incident matrix

Machine-component incident matrix

Horizontal & Vertical Carousels

Master Production Scheduling

1. Dependent Demand Attributes

2. Planning A Framework: The Basic Building Blocks

3. Material Requirement Planning (MRP)

4. Capacity Requirement Planning (CRP)

5. Distribution Requirement Planning (DRP)

6. Manufacturing Resource Planning (MRP-II)

7. Enterprise Resource Planning (ERP)

8. Resource Planning in Services

Two types of inventories exist in any operations system

Make availability meet Make availability meet estimated

100% a necessity, Feasible to

Demand Occurrence Often lumpy Often continuous

Inseparability of service from provider