PROD 2100 - 2110

Production and Operations Management

2004-2005

Pierre Semal

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Introduction

Rules of the Game

Tutorials Readings
Morgan, Mechanization Takes Command in Images of Organizations, Sage Press, 1986. Meal, Putting production decisions where they belong, HBR, 1984. Zeithaml, Berry, Parasuraman, Communication and control processes in the delivery of service quality, Journal of marketing, 1988.

Working Sessions:
Individual Computerized Classical

Manuals:
commented transparencies (Culb IAG, web) exercise manual (Culb IAG, web) readings (Culb IAG) personal notes Chase and Aquilano, Production and Operations Management, Irwin (Edt). McLain, Thomas and Mazzola, Operations Management: Production of goods and services, Prentice Hall (Edt).

Objectives / Exam
... Winnie the Pooh spent the rest of the day by walking and happily humming a new hum, all about the common sense approach and what The Stranger has been teaching them and the hum went like this: Select the problem of the day Finding one thats right to do, You can choose it either way, You pick it ot it picks you. Observe it very carefully, Where do I start? Where am I going? And dont forget about the bee, Whats in the way of doing or knowing?

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Introduction

Introduction

What is POM ? What kind of problems are studied in POM ?

1. DEFINITIONS.................................................................................................................................... 3 1.1 PRODUCTION AND OPERATIONS .......................................................................................................... 3 1.2 PRODUCTION SYSTEM ......................................................................................................................... 4 1.3 EXAMPLES OF PRODUCTION SYSTEMS ................................................................................................. 5 1.4 SUMMARY ........................................................................................................................................... 8 2. PROBLEMS STUDIED IN POM ..................................................................................................... 9 2.1 THE MAKOFFEE PRODUCTION SYSTEM................................................................................................. 9 2.2 LIST OF POM QUESTIONS .................................................................................................................. 12 2.3 LIFE CYCLE OF A PRODUCTION SYSTEM ............................................................................................ 13 2.4 TABLE OF CONTENTS ......................................................................................................................... 14 2.5 THE GETUP PRODUCTION SYSTEM ................................................................................................... 15 3. PRODUCTION AND THE OTHER DEPARTMENTS ............................................................... 16

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Introduction

1.1 Production and Operations

The terms production management and operations management are often interchanged. See, for example, the titles of the above mentioned books.

1. Definitions

What is production ? What is operations

In order to define what is "production management" or "operations management", clear definitions of the terms production and operations are needed. Roughly: Production is directly related to the manufacturing of goods (products are produced). In the world of services, production refers to the service delivery. Operations has to be understood as in: Military operations or in Stock Exchange operations. It refers to the daily actions necessary for the production system to work.

What is production management ? What is operations management ?

Everybody has his/her own perception of what production is. Let us consider the following kinds of "industries" and try to determine what is produced in each of them.

Examples of industry - products

Steel Works
Production: steel beams or sheets from iron ore.

Automobile factory Bakery

Production: complete cars from components or from metal sheets ? The bakery produces breads, cakes, pies. The baker' shop exchanges these products. It is s not clear what is really the job.

Restaurant Airlines Bank

The problem is the same here: the kitchen produces meals and these meals are delivered in the dining room. A restaurant can be a meal factory, a meal delivery system or both. Here travel units are produced. They can be used to transport goods or people.

University Recreation center

In these industries, the goods/services that are produced are very different. Nevertheless, in each of them, a kind of production system has been designed and installed. Here is a very general definition of a production system:

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Introduction

1.2 Production System

Definition: A Production System is a system whose function is to transform an input into a desired output by means of a process (the production process) and of resources.

Resources Input

Production Process

Output

The definition of a production system is thus based on four main elements: the input, the resources, the production process and the output. The examples in the following three pages illustrate what these elements are in different types of industries.

Why such a broad Definition ?

This definition is so broad that most of the activities of a person can be seen as production systems. This is the goal we pursue with this definition. Indeed, the concepts, models and techniques developed in this course first apply to the industry world and to the classical manufacturing activities. However, most of these concepts, models and techniques apply to the normal activities of a person too. Looking at these activities as if they were production processes will show them in a different light. The example of preparing coffee that is given at the end of this section is a perfect example of such a light.

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1.3 Examples of Production Systems

Automobile Factory Input Output Process Resources raw material complete cars fabrication, assembly assembly line, workers

There are different levels of input: raw material such as steel or chestnut wood and semi-final products such as doors, seats or motors.

Bakery Input Output Process Resources

Here is the bakery described, not the shop.

water, flour breads, cakes fabrication oven, workers

Hospital Input Output Process Resources patients healthy individuals health care medical doctors, nurses, medical supplies, equipment

All three examples show processes which correspond to physical transformation of the input.

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Examples of Production Systems

Department Store Input Output Process Resources shoppers sales to satisfied customers transport, storage, promotion, information, exchange displays, stock of goods, clerks

The input here is not the goods but the shoppers. They undergo the transformation.

Restaurant Input Output Process Resources hungry customers satisfied customers prepare meals, serve customers in a comfortable environment food, chef, waiter, stove, environment

The process here is twofold: prepare the meal and serve it. Some restaurants focus on the meal preparation only, some on the service only and some on both.

University Input Output Process Resources students educated individuals imparting knowledge and skills teachers, books, classrooms

Other output can be specified for a university. After this course, should you be able to solve all the basic production problem, should you be able to deal with any new problem related to production or should you have a diploma that states you followed a course in production management ?

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Examples of Production Systems

Here we want to show other dimensions in the service industry. They are production systems too.

Carrier

Input Output Process Resources

things things at another place transport cars, trucks, planes, sorting devices, storage areas

Examples are express carriers such as DHL, Federal Express or UPS and classical carriers such as the mail or the railway organizations.

Warehouse Input Output Process Resources things things at a later time store and preserve vaults, storage areas, storage devices

Think at banks, at movers or at parking lots.

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1.4 Summary

Let us try to summarize the various forms the four elements of a production system can take.

Resources Input Input Output Process types

Production Process

Output

Resources

raw material people with requests products service serviced people physical exchange location storage educational tools labor energy

Definition of POM: Production and Operations Management (POM) provides: tools, techniques, concepts, models, ideas, to: design, dimension, control, improve production systems

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2.1 The Makoffee production system

Preparing coffee in the morning is a nice example of a production system.

In this section we will first look at an example which will allow us to list the kind of problems studied in POM. Then, we will try to structure these problems.

2. Problems Studied in POM

coffee machine electricity operator water, filter, coffee

0. When do you make coffee in the morning ?

scheduling / project management

When somebody prepares coffee in the morning, she/he performs different operations and makes different decisions. Here we will review these operations and decisions and draw a parallel between the problems the coffee maker faces and those faced by a production manager in his/her company.

Prepare

drinkable coffee

Before washing is convenient because it is ready when you come back from the bathroom. You must here schedule the production of coffee and the other activities. In a company, you need to organize the different activities (sequence, priority, ...)

1. Get water, coffee, filter and coffee machine.

location

Where is the coffee machine? Usually, the coffee machine is in the kitchen where you get the water and drink the coffee. You locate the production system where you get the raw materials and where you use the finished products. Where are the different ingredients? Usually, the coffee and the filters are together and close to the coffee machine. The coffee machine is close to the water faucet. You place the different elements to avoid useless trips and handling.

layout

2. Estimate how much coffee must be prepared.

forecasting

In a company, where to locate your plant or your shop is a strategic question. The layout is also critical. It usually follows the material flow.

How many people will drink coffee today and at what time? You take into account your experience, the day of the week and anything you know. Then, you must decide whether you prepare the coffee for the breakfast or for the whole day. Your aim is a compromise between work and quality.

lot sizing

You do no want to run out of coffee this morning but you do not want to waste coffee either.

inventory control

The baker faces the same problem when he decides how many loaves of bread to bake in the morning. Prod 2100/2110 Introduction 7

3. Prepare the coffee

How do you really prepare coffee? Which operations are needed? In which order ? If it takes a long time to fill the can with water, you prepare the filter with coffee while the can is filling. Here, you want to minimize the time needed to prepare the coffee.

process design

You measure each operation in order to check whether your process is still optimal. If it takes too much time, perhaps you should buy other filters or a new machine ?

productivity measurement

4. drink coffee

In a company, the production processes are specified with lots of details. They are permanently controlled and many redesigns take place.

You want to check the quality of the products and of the process. By drinking a single cup, you decide about the quality of the whole pot. You do not want to drink the whole pot before deciding it' a good coffee. s

quality control: statistical process control

5. wash and descale the coffee machine

If you do not want the machine to require one hour for one coffee can, you should descale it from time to time.

maintenance

You should keep your production system in good shape. Keeping a clean environment also prevents dirt from mixing with the coffee when you prepare it.

quality control : total quality management

Getting the opinion of the customers is another important quality control check.

6. buy filters and coffee

How much coffee and how many filters are required depends on the consumption of coffee.

material requirement planning (MRP)

If you have to drive a long way to buy the raw material, you will buy in big quantities. If the coffee is very expensive, you will buy quite often small quantities. A compromise must be found.

lot sizing

You do not want to run out of coffee or of filters. But if the shop is quite often closed, you could keep some safety stock of raw material..

inventory control

How to choose between different coffee qualities at different prices in different shops which are accessible at different times?

purchasing

7. buy a new coffee machine ?

You must choose between different options here too. However, the size (or type) of the machine will first depend on the amount of coffee you drink every day.

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If you can foresee that the people you will invite in the near future are hard coffee drinkers, you could perhaps already buy a higher capacity machine. Furthermore, this machine can be used for normal coffee in the morning and for expresso in the evening.

forecasting

aggregate/capacity planning
If you need this higher capacity only in a few months, delaying the investment could perhaps be more profitable.

investment analysis

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Here is the list of problems/subjects encountered during the description of the Makoffee production system.

2.2 List of POM Questions

Scheduling / project mngt. Facility location Facility layout Forecasting Lot sizing Inventory control Process design Work measurement Quality control Maintenance and reliability Material req. planning Lot sizing Inventory control Purchasing Forecasting Aggregate planning Investment analysis

when do you schedule "makoffee"? where is the coffee machine? where are the components? how much coffee for today? do I prepare coffee for the whole day? what is the risk of running out of coffee? how do I make coffee? can I improve the time it takes? is the coffee good? how often do I clean the coffee machine? how many filters do I need and when? do I buy them one by one? what if the shop is closed? what is the best shop? will I always drink as much coffee? shall I buy a bigger pot now? or do I go on with my small pot?

Decision Horizons
Short (hours / days) Scheduling Forecasting Lot sizing Inventory control Quality control Maintenance

All these subjects can be organized according to the length of the time horizons to which they refer.

Intermediate (weeks / months) Measurement Process review MRP Lot sizing Inventory control Purchasing

Long (year or years) Facility location Facility layout Process design Forecasting Aggregate planning Investment analysis

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These POM subjects/problems can also be organized according to the life of the product itself.

2.3 Life Cycle of a Production System

Decisions

Period
Birth of the system

Goals of the firm? What product or service is offered? Product design What is the product form? Process selection How to make the product? What capacity is needed? Where should the facility be located? Design of the system How should the facility be organized? How long does each job take? What job will each worker perform? How will the job be measured? Startup of the system How do we start the system? How long will it take to reach the desired output rate? How do we manage daily activities? Control of the system How do we maintain the system? How can we improve the system? How do we revise the system if corporate strategy changes? Termination How does the system die? How can the resources be salvaged?

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2.4 Table of Contents

Week from Courses with P. Semal Exercises Exercises Prod2100: Mont03 with M. in groups Prod2110: Crteur or alone Mont01/Agor13 5 1/2 Introduction + Prob/Stat. Product & Process 1 revisions 6 8/2 Product & Process 2, 3 7 15/2 half-time 8 22/2 Product & Process 4, 5 Xcell + Simulation 9 10 11 12 13 14 15 16 17 1/3 Strategic Planning 8/3 Aggregate Planning 15/3 MRP + Lot Sizing 22/3 29/3 5/4 12/4 19/4 26/4 Miscellaneous

22/2, 12.45, ? soft introd.

18 19 20

3/5 10/5 17/5

Q/A on Aggregate 15/3, 12.45, P&P + AP planning ? soft introd. JIT + MRP CEMS on Inventory Control 1 24-26th/3 Inventory Control 2, 3 2/4, 12.45, ? soft introd. Easter holiday Inventory control Easter holiday Inventory control Forecasting Methods Inventory control Quality Management Q/A on Forecast. 26/4, 12.45, Inventory methods ? control soft introd.; IAG Fellow Project Management Q/A on Forecast. Project Mngt.

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2.5 The GETUP production system

This example aims at illustrating the theme: project management.

soap, clothes, food alarm clock, coffee machine bathroom, kitchen friend, parents Student asleep "Morning" Student listening

This is a special kind of production system since only one piece of output is produced at a time. You cannot automate the process for producing several units of output because of time constraints. In other words you cannot wash yourself in advance. Such a process is usually called a project.

Project features
cannot be automated
This project is of the type: one-of-a-kind. Examples are: building a bridge or a house, transferring a plant or analyzing a problem.

can be decomposed into a set of tasks

The project is made of a set of tasks which are rather independent. You need to get up, to wash, to prepare coffee, to eat breakfast, to dress and finally to go to the auditorium.

show precedence aspect

Some of the tasks cannot be done at any time. You need to wash before dressing and prepare coffee before having breakfast. However, you can eat before or after getting dressed.

Project Management Objectives

Here is a rough list of objectives:

All you can do is to organize the different tasks in the best possible way.

On time Quality Cost

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1. Production and Marketing

Design (R&D) Market Analysis Customers

How is the production function related to the other functions, such as marketing, finance, etc. ? Such relationships are key questions for a company. In some cases, the cooperation between the different functions is more important than the individual performance of each function. Here we briefly sketch the kind of relationships between the production department and the other departments. More information will be given in due time.

3. Production

and the other departments

Production Promote Product

At the interface between production and marketing are discussed all the product (production) specifications and the production characteristics: lead times, flexibility, inventory strategy, forecasts.

Distribution-Sales

2. Production and Human Resources

skills motivation formation labor specialization

For example, TQM and JIT require highly motivated, responsible and respected people.

3. Production and Finance

investments cash flows

4. Production and Information Systems

The large investments required by large scale production plants must be evaluated through a clear financial plan. Productivity increases obtained at the cost of increased inventories must also be carefully analyzed.

Do I get the information I need for deciding? or how much would it cost me to get this information on-line? are the kind of questions to be debated at this interface.

Question: buffer or integrate Production?

All the interfaces call for the following basic question, for which no absolute answer exists. Two attitudes are possible. Either you keep a tight contact with all these perturbing factors (the market, mainly) or you build a wall to protect your production unit. In the first case, you will try to follow the market and the reality at the cost of an under-optimized ever-disturbed production system. Your priority is then flexibility. The danger is a complete disorganized system. In the other case, the wall allows you to operate in a stable and optimized way. However, the weakness of the contact with the reality could be extremely dangerous.

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