Syllabus Class 1 May 21

Syllabus • • • Class 1 (May 21): chap 1; chap 2, case study Class 2: (May 28) Chap 5; chap 6 ( thru 243) Jun 4 – no class Jun 11 – tour of Cabela’s – meet at Cabela’s at 5: 45 Class 3: (Jun 18) chap 7; chap 9 (answer questions) Jun 18 no class in class room - (Take home exam) Class 4: (Jun 25) chap 10, chap 11 Summer Break – Jun 29 – Jul 10 Class 5: (Jul 16) chap 6 (243 -250); chap 12, The Beer Game Class 6: (Jul 23) Reverse Logistics – need “The Forklifts Have Nothing To Do!” Available in the Lewis and Clark Bookstore; chap 14; chap 16; Supply Chain Security Class 7: (Jul 30) Chap 13; Chap 3 (take home exam) Other requirements: →visit Harley-Davidson Plant in Kansas City to see operations management in practice and write a 3 -5 page paper comparing the class slides and readings to the Harley operations → Paper comparing Harley to Cabela’s → Home Work and Quizzes

Facilities

Objectives of Facility Layout ü Minimize material handling costs ü Utilize space efficiently ü Utilize labor efficiently ü Eliminate bottlenecks ü Facilitate communication and interaction between workers, between workers and their supervisors, or between workers and customers ü Reduce manufacturing cycle time or customer service time

Objectives of Facility Layout ü Eliminate waste or redundant movement ü Facilitate the entry, exit, and placement of material, products, or people ü Incorporate safety and security measures ü Promote product and service quality ü Encourage proper maintenance activities ü Provide a visual control of operations or activities ü Provide flexibility to adapt to changing conditions ü Increase capacity

Basic Types of Layouts ü Process Layout ü Machines grouped by process they perform ü Product Layout ü Linear arrangement of workstations to produce a specific product ü Fixed Position Layout ü Used in projects where the product cannot be moved

Manufacturing Process Layout Lathe Department L L L L L Milling Department Drilling Department M M D D D D G G G P L Grinding Department Receiving and Shipping Painting Department A A Assembly A

A Product Layout In Out

Comparison Of Product And Process Layouts PRODUCT LAYOUT 1. Description 2. Type of Process 3. Product 4. 5. 6. 7. Demand Volume Equipment Workers Sequential arrangement of machines Continuous, mass production, mainly assembly Standardized made to stock Stable High Special purpose Limited skills PROCESS LAYOUT Functional grouping of machines Intermittent, job shop batch production, mainly fabrication Varied, made to order Fluctuating Low General purpose Varied skills

Comparison Of Product And Process Layouts PRODUCT LAYOUT 8. Inventory 9. Storage space 10. Material handling 11. Aisles 12. Scheduling 13. Layout decision 14. Goal 15. Advantage PROCESS LAYOUT Low in-process, high finished goods Small Fixed path (conveyor) Narrow Part of balancing Line balancing Equalize work at each station Efficiency High in-process, low finished goods Large Variable path (forklift) Wide Dynamic Machine location Minimize material handling cost Flexibility

Fixed-Position Layouts ü Typical of projects ü Equipment, workers, materials, other resources brought to the site ü Highly skilled labor ü Often low fixed ü Typically high variable costs

Designing Process Layouts ü Minimize material handling costs ü Block Diagramming ü Minimize nonadjacent loads ü Use when quantitative data is available ü Relationship Diagramming ü Based on location preference between areas ü Use when quantitative data is not available

Block Diagramming ü Create load summary chart ü Calculate composite (two way) movements ü Develop trial layouts minimizing number of nonadjacent loads

Block Diagrams (a) Initial block diagram 1 2 4 3 5

Block Diagrams (a) Initial block diagram 1 (b) Final block diagram 2 4 3 5 1 3 2 4 5

Relationship Diagramming (Murther’s Grid) ü Used when quantitative data is not available ü Muther’s grid displays preferences ü Denote location preferences with weighted lines

Relationship Diagramming Example Production Offices Stockroom Shipping and receiving Locker room Toolroom

Relationship Diagramming Example A Absolutely E Production Offices Stockroom Shipping and receiving Locker room Toolroom O U A U O A O U O I X O E U I O U X A necessary Especially important Important Okay Unimportant Undesirable

Relationship Diagramming Example 1 Absolutely 2 Production Offices Stockroom Shipping and receiving Locker room Toolroom 4 5 1 5 4 1 4 5 4 3 6 4 2 5 3 4 5 6 1 necessary Especially important Important Okay Unimportant Undesirable

Service Layouts ü Usually process layouts due to customers needs ü Minimize flow of customers or paperwork ü Retailing tries to maximize customer exposure to products ü Computer programs consider shelf space, demand, profitability ü Layouts must be aesthetically pleasing

Designing Product Layouts ü Product layouts or assembly lines ü Develop precedence diagram of tasks ü Jobs divided into work elements ü Assign work elements to workstations ü Try to balance the amount work of each workstation

Line Balancing ü Precedence diagram ü Network showing order of tasks and restrictions on their performance ü Cycle time ü Maximum time product spends at any one workstation

Hybrid Layouts ü Cellular layouts ü Group machines into machining cells ü Flexible manufacturing systems ü Automated machining & material handling systems ü Mixed-model assembly lines ü Produce variety of models on one line

Cellular Layouts 1. Identify families of parts with similar flow paths 2. Group machines into cells based on part families 3. Arrange cells so material movement is minimized 4. Locate large shared machines at point of use

Advantages Of Cellular Layouts ü Reduced material handling and transit time ü Reduced setup time ü Reduced work-in-process inventory ü Better use of human resources ü Easier to control - visibility ü Easier to automate

Disadvantages Of Cellular Layouts ü Inadequate part families ü Poorly balanced cells ü Expanded training and scheduling of workers ü Increased capital investment

Paths of three workers moving within cell Material movement Key: S L HM VM G Direction of part movement within cell Manufacturing Cell = Saw = Lathe = Horizontal milling machine = Vertical milling machine = Grinder HM VM Worker 3 VM L Worker 2 G L Final inspection S Worker 1 In Finished part Out

Flexible Manufacturing Systems ü Automated machining operations ü Automated material handling ü Automated tool changers ü Computer controlled system ü Designed around size of parts processed & average processing time for parts ü Can process wide variety of items quickly

Mixed Model Assembly Lines ü Produce multiple models in any order on one assembly line ü Harley, Opel ü Issues in mixed model lines ü Line balancing ü U-shaped line ü Flexible workforce ü Model sequencing

Facility Location Models

Types Of Facilities ü Heavy manufacturing üAuto plants, steel mills, chemical plants ü Light industry üSmall components mfg, assembly ü Warehouse & distribution centers ü Retail & service

Factors in Heavy Manufacturing Location ü Construction costs ü Land costs ü Raw material and finished goods shipment modes ü Proximity to raw materials ü Utilities ü Labor availability

Factors in Light Industry Location ü Construction costs ü Land costs ü Easily accessible geographic region ü Education & training capabilities

Factors in Warehouse Location ü Transportation costs ü Proximity to markets (Customers)

Transportation and distribution industry--based on business and employment base providing transportation, distribution, warehousing and related services. Work force--geared to existing and available logistics-related workers in the area. Road infrastructure--measures factors like available lane miles per capita, interstate highway access, miles of paved roads etc. Road density, congestion and safety--ranks the city on traffic volumes and delays as well as accident statistics and other factors affecting the smooth flow of traffic. Road condition--draws on state performance and includes condition of highways and bridges among other measures. Interstate highway--includes access to interstate highways, spending on highway construction and maintenance. Taxes and fees--provides a measure of logistics-related costs, including highway and fuel taxes and related business activity taxes. Railroad--offers a state-based rank of access to Class 1 and other rail services and miles of track. Waterborne commerce--includes ocean port capacity as well as inland waterways. Air cargo--ranks the city on its access to cargo services, including wide-body passenger service by combination carriers, international and expedited services. Source: Logistics Today, “The Logistics Quotient: Midwest

Source: Logistics Today, “The Logistics Quotient: Midwest

Layout Considerations • • Cross docking dock doors - how many picking techniques bulk storage safety/backup stocks product flow conveyors? Vehicle flow

Warehouse Size Considerations • • • Customer service level layout # of products (Stock Keeping Units - SKUs) customer base size of products racks/shelving demand variability MHE requirements/aisle size regulations - CAL OSHA - earthquake; safety; fire

Factors in Retail Location ü Proximity to customers ü Ease of customer entry and exit ü Location is everything

Global Location Factors ü ü ü ü Government stability Government regulations Political and economic systems Economic stability and growth Exchange rates Culture Climate Export import regulations, duties and tariffs ü Raw material availability ü Number and proximity of suppliers ü Transportation and distribution system ü Labor cost and education ü Available technology ü Commercial travel ü Technical expertise ü Cross-border trade regulations ü Group trade agreements

Regional Location Factors ü Labor (availability, education, cost and unions) ü Proximity of customers ü Number of customers ü Construction/leasing costs ü Land costs ü Modes and quality of transportation ü Transportation costs ü Incentive packages ü Governmental regulations ü Environmental regulations ü Raw material availability ü Commercial travel ü Climate ü Infrastructure ü Quality of life

Regional Location Factors ü Community government ü Local business regulations ü Government services ü Business climate ü Community services ü Taxes ü Availability of sites ü Financial Services ü Community inducements ü Proximity of suppliers ü Education system

Site Location Factors ü Customer base ü Construction/ leasing cost ü Land cost ü Site size ü Transportation ü Utilities ü Zoning restrictions ü Traffic ü Safety/security ü Competition ü Area business climate ü Income level

Location Incentives ü Tax credits Wal-Mart in Wyandotte ü Relaxed government regulation ü Job training ü Infrastructure improvement ü Money

Center-of-Gravity Technique ü Locate facility at center of geographic area ü Based on weight and distance traveled ü Establish grid-map of area ü Identify coordinates and weights shipped for each location

Project Management and Operations

Project Management First Essay on Project Management: 1697 – “An Essay Upon Projects” 1959 HBR Article – “The Project Manager Air Force Manual 1964

Project Management Project management is the discipline of organizing and managing resources in such a way that these resources deliver all the work required to complete a project within defined scope, quality, time and cost constraints. A project is a temporary and one-time endeavor undertaken to create a unique product or service, that brings about beneficial change or added value. This property of being a temporary and a one-time undertaking contrasts with processes, or operations, which are permanent or semipermanent ongoing functional work to create the same product or service over and over again. (wikipedia)

Project Management In today’s global marketplace, complexity and speed are certainties. In such an environment, a good axiom for project management is, Do It Right, Do It Right Now. Creating clear direction, efficiency, timely response, and quality outcomes requires project managers who are agile -- adept at change. The associated disciplinary areas are clearly spelled out in the following PMI definition. “Project management is the application of knowledge, skills, tools, and techniques to a broad range of activities in order to meet the requirements of a particular project. Project management is comprised of five Project Management Process Groups – Initiating Processes, Planning Processes, Executing Processes, Monitoring and Controlling Processes, and Closing Processes. Source: Project Management Institute - http: //www. pmi. org/info/PP_About. Profession. Overview. asp? nav=0501

Program Management Program management is the process of managing multiple ongoing interdependent projects. An example would be that of designing, manufacturing and providing support infrastructure for an automobile manufacturer. This requires hundreds, or even thousands, of separate projects. (wikipedia)

Elements of Project Management ü Project team ü Individuals from different departments within company ü Matrix organization ü Team structure with members from different functional areas depending on skills needed ü Project manager - Leader of project team ü Project Charter – high level description of what is to be accomplished in a project and delegates authority to project manager to implement actions to complete project

Project Planning ü Statement of work ü Written description of goals, work & time frame of project ü Activities require labor, resources & time ü Precedence relationship shows sequential relationship of project activities

Elements of Project Planning ü Define project objective(s) ü Identify activities ü Establish precedence relationships ü Make time estimates ü Determine project completion time ü Compare project schedule objectives ü Determine resource requirements to meet objective

Work Breakdown Structure ü Hierarchical organization of work to be done on a project ü Project broken down into modules ü Modules subdivided into subcomponents, activities, and tasks ü Identifies individual tasks, workloads, and resource requirements

Project Control ü All activities identified and included ü Completed in proper sequence ü Resource needs identified ü Schedule adjusted ü Maintain schedule and budget ü Complete on time

A Gantt Chart Around since 1914 ü Popular tool for project scheduling ü Graph with bar for representing the time for each task ü Provides visual display of project schedule ü Also shows slack for activities ü Amount of time activity can be delayed without delaying project

Gantt Charts Gantt described two principles for his charts: 1. measure activities by the amount of time needed to complete them 2. the space on the chart can be used the represent the amount of the activity that should have been done in that time. Gantt charts were employed on major infrastructure projects including the Hoover Dam and Interstate highway system and still are an important tool in project management.

A Gantt Chart 0 | 2 | Month 4 | 6 | 8 | Activity Design house and obtain financing Lay foundation Order and receive materials Build house Select paint Select carpet Finish work 1 Figure 6. 2 3 Month 5 7 9 10

Example of Gantt Chart Problem

CPM/PERT ü Critical Path Method (CPM) ü Du. Pont & Remington-Rand (1956) ü Deterministic task times ü Project Eval. & Review Technique (PERT) ü US Navy, Lockheed ü Multiple task time estimates

PERT/CPM Program Evaluation and Review Technique (PERT): developed in conjunction with the development of the Polaris missile program for submarines – developed by the US Navy with Lockheed as the lead contractor Critical Path Method (CPM): developed through a joint venture between the Du. Pont Corporation and the Remington Rand Corporation – the original purpose was to monitor and evaluate plant maintenance management projects.

Project Network for a House Lay foundation 1 3 Design house and obtain financing 2 3 2 Dummy 0 1 Order and receive materials 4 Select paint Build house 1 1 5 Figure 6. 4 6 3 Select carpet Finish work 1 7

Critical Path ü A path is a sequence of connected activities running from start to end node in network ü The critical path is the path with the longest duration in the network ü Project cannot be completed in less than the time of the critical path

The Critical Path 1 3 Lay foundation 2 3 Design house and obtain financing 2 Dummy Build house 0 1 Order and receive materials 4 Select paint Finish work 6 3 1 1 Select carpet 5 A: 1 -2 -3 -4 -6 -7 3 + 2 + 0 + 3 + 1 = 9 months B: 1 -2 -3 -4 -5 -6 -7 3 + 2 + 0 + 1 + 1 = 8 months C: 1 -2 -4 -6 -7 3 + 1 + 3 + 1 = 8 months D: 1 -2 -4 -5 -6 -7 3 + 1 + 1 = 7 months 1 7

The Critical Path 3 Lay foundation 2 3 1 Build house 0 1 2 Design house and obtain financing Dummy Order and receive materials 4 Select paint Finish work 6 3 1 1 7 1 Select carpet 5 Activity Start Times 3 Start at 5 months 2 1 3 2 0 1 4 6 3 1 1 Start at 3 months 5 Figure 6. 6 Finish at 9 months 1 7 Start at 8 months

Early Times 3 Lay foundation 2 1 3 2 Design house and obtain financing Dummy Build house 0 1 Order and receive materials 4 Select paint Finish work 6 3 1 1 1 7 Select carpet 5 ü ES - earliest time activity can start ü Forward pass starts at beginning of CPM/PERT network to determine ES times ü EF = ES + activity time ü ü ESij = maximum (EFi) EFij = ESij - tij Why is ES 12 = 0 EF 12 = ES 12 - t 12 = 0 + 3 = 3 months this important?

Late Times Who Cares? Why is this Important? ü LS - latest time activity can start & not delay project ü Backward pass starts at end of CPM/PERT network to determine LS times ü LF = LS + activity time üLSij = LFij - tij üLFij = minimum (LSj)

Activity Slack Data 1 2 3 2 Design house and obtain financing Activity *1 -2 *2 -3 2 -4 *3 -4 4 -5 *4 -6 5 -6 *6 -7 * Critical path 3 Lay foundation Dummy Build house 0 1 Order and receive materials 4 Select paint Finish work 6 3 1 1 Select carpet 5 LS ES LF EF Slacks 0 3 4 5 6 5 7 8 0 3 3 5 5 5 6 8 3 5 5 5 7 8 8 9 3 5 4 5 6 8 7 9 0 0 1 0 1 7

Activity Slack Data 1 2 3 LS *1 -2 S=0 *2 -3 2 -4 3 *3 -4 1 2 S=0 4 -5 *4 -6 5 -6 *6 -7 Figure 6. 10 * Critical path ES Dummy Build house 0 1 2 Design house and obtain financing Activity Slack 3 Lay foundation Order and receive materials 4 Select paint Finish work 6 3 1 1 1 Select carpet 5 LF 0 3 S=0 0 3 3 2 0 4 3 1 5 5 4 S=1 6 5 5 5 S=1 7 6 8 8 EF 3 5 5 =0 S 5 3 7 1 1 8 8 5 9 3 5 4 5 6 6 8 =1 S 7 9 Slacks 0 0 1 1 0 S=0 1 0 7 7

Project Crashing ü Crashing is reducing project time by expending additional resources ü Crash time is an amount of time an activity is reduced ü Crash cost is the cost of reducing the activity time ü Goal is to reduce project duration at minimum cost

Time-Cost Relationship ü Crashing costs increase as project duration decreases ü Indirect costs increase as project duration increases ü Reduce project length as long as crashing costs are less than indirect costs

Life Cycle Management • Long term view of projects to guide decision making – solutions that provide life time success vice short term • Acquisition; development; production; introduction; sustainment; disposal • Links system costs to big picture; better use of resources; minimize total cost of ownership

What’s Next • Mid Term - due in 2 weeks • Chapters 10, 11