chapter 6: schedule management1 operations management for mbas third edition prepared by e. sonny...
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Chapter 6: Schedule Management 1
OPERATIONS MANAGEMENTfor MBAs Third Edition
Prepared byE. Sonny Butler
Georgia Southern University
Meredith and Shafer
John Wiley and Sons, Inc.
Chapter 6: Schedule Management 2
Chapter 6
Schedule Management
Chapter 6: Schedule Management 3
Schedule Management
Chapter 6: Schedule Management 4
Introduction
Chapter 6: Schedule Management 5
Henry Ford Hospital
Aggregate planning involves matching hospital’s available capital, workers, and supplies to a highly variable customer demand pattern
903 beds arranged into 30 nursing units Each nursing unit contains 8 to 44 beds Each nursing unit treated as independent
production facility
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Factors Complicating Aggregate Planning at Henry Ford Hospital
High degree of demand variability average number of occupied beds in 1991
was 770 in one 8-week period an average of 861 beds
was occupied in another 8-week period an average of 660
beds were occupied number of beds occupied could change by as
may as 146 beds in less than two weeks
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Complicating Factors continued
Large penalty for not being able to admit HMO patients lost revenue must pay other hospital for patient’s stay a simple obstetrics case cost $5,000
Tight labor market for RNs 12 to 16 weeks to recruit and train nurses at cost
of $7,600 Cost of 8-bed modules exceeds $35,000/
month
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Importance of Aggregate Planning
Without sufficiently long-term view may make short-term decisions that hurt the organization in the long-term
For example, shortly after Henry Ford Hospital reduced staff, it determined the staff was needed
New staff was recruited Both staff reduction and recruiting costs
incurred
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Extremely Difficult Decision
Demand can shift by more than 16% in a two-week period
Takes 12 - 16 weeks and costs $7,600 a piece to recruit new nurses
By time staff hired, demand may have shifted again
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Extremely Difficult Decision continued
If don’t have enough staff, cost $5,000 per patient turned away (simple cases)
Cost of one idle 8-bed module is $35,000/month or $420,000/year
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Package Products Inc.
Folding Carton Packing for baker and deli industry
Significant growth during 1990s More demanding customers Needed to do better job of managing
operations
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Producing Folding Cartons
Four to eleven steps rolls of pulpboard cut into sheets sheets run through printing presses to
add four color images sheets dried and die cut cellophane window added cartons glued product prepared for shipping
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Scheduling at Package Products
Initially used Gantt chart manually schedule jobs using a board
and magnetic strips capacity shortage problems critical information scattered throughout
organization Acquired finite capacity scheduling
(FCS) software package
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Using the FCS Package
Runs on PC Updates previous day’s schedule Allows performing what-if analysis Used to generate schedules for next 3 to 6 months Overtime reduced by 300% On-time delivery performance improved by 32% Backorders reduced by 53% Respond to customer inquiries in 22 seconds
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Scheduling
Ensuring the right tasks are conducted at the right time on the right items
Productivity problems often attributable to poor schedule management
Scheduling not anywhere as difficult for continuous flow and processing organizations as it is for job shops
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The Sequence of Scheduling Activities
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Scheduling Activities
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Demand Forecast
Forecast supports entire scheduling process May not need forecast if customers place orders far in
advance Forecast used for different purposes
Long-range forecasts used for capacity planning Forecast in range of 9 to 18 months used for
aggregate planning Short-range forecasts used for loading and
sequencing
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The Aggregate Plan
Approximate schedule of overall operations that will satisfy demand forecast at minimum cost
Planning horizon often a year or more and broken into monthly or quarterly periods
Purpose is to minimize short-sighted effects
Work with aggregate units and resources
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The Aggregate Plan continued
Equivalent units Relevant costs
hiring and layoff costs inventory and backorder costs wages and overtime charges subcontracting costs
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The Production Plan
Result of managerial iteration and changes to aggregate plan
Often disaggregated one level into major output groups Aggregate Plan: number of automobiles to
be produced in each of the upcoming 12 months
Production Plan: number of compacts, mid-size, full-size, light trucks, and minivans to produce in each of the upcoming 12 months
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The Master Schedule
Point where actual orders incorporated into scheduling system
Aggregate outputs broken down into individual end items
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Check for the Following Problems
Does schedule meet production plan? Does schedule meet demand forecasts? Are there priority or capacity conflicts? Are other constraints violated? Does schedule conform to policy? Does schedule conform to laws and
rules? Does schedule provide flexibility?
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Rough-Cut Capacity Planning
Feasibility check of master production schedule
Historical ratios of loads placed on workcenters used
Workloads assumed to fall in period end items demanded
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Priority Planning
What materials are needed when Feasibility check of master production
schedule to make sure all materials will be available when needed
Determine when order is needed and schedule backwards from that date
Material Requirements Planning (MRP) systems often used
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Capacity Planning
Inventory control system and master schedule used to determine required capacity over planning horizon
Load reports generated for each work center
Inventory and lead times considered
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Loading
Deciding which jobs to assign to which work centers
Often some equipment or workers better for certain jobs
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Sequencing
After jobs assigned to work centers, order in which to process the jobs must be decided
Sequencing can have impact on timeliness of job completions
Priority rules often used
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Detailed (Short-Term) Scheduling
Detailed schedules itemizing specific jobs, times, materials developed
Typically done for only a few days in advance
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Dispatching
All previous activities are planning activities
Dispatching is the physical release of a work order from production planning
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Expediting
Task of getting job done on time once it is released to the shop floor
Special tags used to identify hot jobs
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Aggregate Planning
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Capacity Options
Overtime Additional or fewer shifts Hiring or laying off workers Subcontracting Building up inventories Leasing facilities Backlogging demand Changing demand Undersupplying the market
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Pure Aggregate Planning Strategies
Level Production Equal amount produced each period Steady employment Inventory costs and risks
Chase Demand Production matched to demand for the
period Minimal inventory High overtime or hire/fire costs
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Personnel Needed by Rap-X-Press
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Level Production at 40 Workers
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Cost of Chase Demand with 40 Workers
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Master Scheduling
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Master Production Schedule
Production plan disaggregated into individual end items
Final word about what will be built and when
Altering the master schedule can alter inventory levels, lead times, capacity requirements and so on
Should not be a “wish list”
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Master Production Schedule
Sales and operations key players in developing master schedule
MPS usually stated in terms of weekly periods (buckets)
Rolling schedule Four periods
frozen period firm period full open
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Orders Replacing the Forecast in the Master Schedule
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Master and Final Assembly Schedules
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Four Periods in the Rolling MPS
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Scheduling Services
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Hospitals
Patient arrivals somewhat uncontrollable
Specialized and expensive equipment Nurses must always be available Nurses represent large expense Constraints associated with scheduling
nurses
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Urban Alarm Services
Quick response required Personnel is a major expense Use of duty tours can complicate
scheduling
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Educational Services
Scheduling of classes Assignment of classes to students Allocation of faculty to classes Allocation of facilities to classes
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Yield/Revenue Management and Overbooking
Attempt to allocate the fixed capacity of a service to match the revenue demand in the market place
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When is Yield Management Appropriate?
Fixed Capacity Perishable Capacity Segmentable Market Capacity Sold in Advance Uncertain Demand Low Marginal Sales Cost, High
Marginal Capacity Addition Cost
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Overbooking
An attempt to reduce costs through better schedule management.
Based on inventory solution for the “newsboy problem.”
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