Int. J.

Production Economics 60—61 (1999) 211—219

Decision support system for a jewellery manufacturer

T.N. Wong *, C.H. Cheung , H. Lau

Department of Industrial and Manufacturing Systems Engineering, The University of Hong Kong, Pokfulam Road,
Hong Kong, People+s Republic of China

Advanced Technology Education Centre, Regency Institute, Days Road, Regency Park, 5010, South Australia, Australia

Abstract
Hong Kong’s jewellery industry has long been relying on traditional methods for production control and management
and it becomes necessary to search for ways to increase the efficiency and to improve the productivity. This paper
describes the development of a management information system with a specially designed decision support system to
meet the specific requirements of Hong Kong’s jewellery industry. It aims at assisting a jewellery manufacturer to make
decisions in various areas of operation, including price quotation, sales analysis, materials requirement planning, vendor
selection and job assignment.  1999 Elsevier Science B.V. All rights reserved.

Keywords: Decision support system; Jewellery industry; Manufacturing planning and control

1. Introduction jewellery and their skills in gem setting as well as

Hong Kong’s jewellery industry is renowned for
both the quality of its workmanship and its flexibil-
ity in accommodating the needs of its customers. Its
designs meet international standards in terms of
originality, creativity and fashion. Production of
fine jewellery encompasses a wide range from me-
dium- to high-price products. Items include rings,
earrings, necklaces, bracelets, pendants, bangles,
brooches, beads, chokers, cuff-links, tie-pins, tie-
clips and collar bars. Diamonds and gemstones
used are mostly point-size, usually set with different
combinations of colours. Hong Kong manufac-
turers are strong at producing small stones fashion
* Corresponding author. Tel.: 852 2859 7055; fax: 852 2858
6535; e-mail:tnwong@hkuiea.hku.hk.
design are competitive with European manufac-
turers [1].
Today, there are more than 1300 jewellery manu-
facturers employing more than 12000 people in
Hong Kong [1]. The manufacturers are typically
small to medium sized, exporting products to large
volume wholesalers or retailers in the world. The
major markets of Hong Kong’s jewellery products
are the USA and Japan which accounted for more
than 54% of the total jewellery exports in 1996 [2].
In recent years, a mass relocation of local manu-
facturers to China occurs in order to lower the
production costs and to improve the competitive-
ness. Only by this can Hong Kong’s jewellery
manufacturers continue to survive under the keen
competition from neighbouring countries, such as
Thailand and India. With increased investment by

0925-5273/99/$ - see front matter  1999 Elsevier Science B.V. All rights reserved
PII: S 0 9 2 5 - 5 2 7 3 ( 9 8 ) 0 0 1 4 2 - X
212 T.N. Wong et al. /Int. J. Production Economics 60—61 (1999) 211—219
Hong Kong manufacturers in China and improved
crafting skills of mainland workers, re-exports of
fine jewellery from China increased briskly, though
the value remained relatively small. Nevertheless,
domestic exports account for over 70% of the in-
dustry’s total exports, reflecting the fact that pro-
duction is still concentrated in Hong Kong.
Production in China has expanded from basic-
style, lower value jewellery to higher value precious
metal jewellery with gem-settings to cater for the
middle-end market.
Hong Kong’s jewellery industry has long been
relying on traditional methods for production con-
trol and management, it becomes necessary to
search for ways to increase the efficiency and to
improve the productivity. This paper describes the
results of an ongoing research project that aims to
exploit recent advancements in information tech-
nology (IT) and artificial intelligence (AI), to devel-
op a manufacturing information and decision
support system that will enhance management de-
cisions at different operation areas of a manufactur-
ing company. The company in this project is
a jewellery manufacturer in Hong Kong. It is the
aim to develop a management information system
with a specially designed decision support system
to meet the specific requirements of Hong Kong’s
jewellery industry.
2. A decision-support system for jewellery
manufacturing
As computer hardware becomes available at
higher performance and lower prices; and better,
more intelligent and user-friendly software comes
on the market, computers are now involved in
almost every aspect of manufacturing. Typical
areas of computer applications in manufacturing
include computer-aided design (CAD), computer-
aided manufacture (CAM), computer-aided process
planning (CAPP), and computer-aided production
management (CAPM). The ultimate goal is to es-
tablish the computer-integrated manufacturing
(CIM) system, to integrate all manufacturing activ-
ities with computer technology. As a result, the
enterprise as a whole has the information it needs
to operate at maximum effectiveness.
By far the most numerous software packages for
production planning and control fall into materials
requirements planning (MRP) and manufacturing
resources planning (MRPII) systems. Recently,
there is a tendency for the software vendors to
extend the MRP/MRPII approach into the more
comprehensive enterprise requirements planning
(ERP), aiming at the management and coordina-
tion of all activities and resources of the entire
corporation. Most of the manufacturing software
packages are able to provide a standard range of
features to control areas and activities such as in-
ventory, bills of materials, master production
scheduling, customer orders, materials require-
ments planning, capacity requirements planning,
shopfloor control, purchasing, costing, financial
planning, etc. However, they are in most cases too
generalised; it is rarely possible to obtain a system
that completely satisfies the requirements of
a manufacturing company. In practice, manufac-
turers prefer to develop and implement a versatile,
intelligent, and dedicated company specific in-
formation system.
Traditionally, manufacturing planning and con-
trol function are considered to be a manufacturing
discipline that requires heuristics and experimental
knowledge, and crisp mathematical models have
been widely used to characterise the observed be-
haviour. These “quantitative-based models” are
found to be useful in some of the planning functions
and they are capable of generating an optimal or
near-optimal solution. However, deal to the diffi-
culties in achieving precise and reliable parameters
and assumptions, appropriate mathematical mod-
els are very difficult to obtain. The role of knowl-
edge-based systems and decision support systems
in manufacturing has been growing over the past
years, in which “qualitative-based models” repres-
enting the knowledge of the human expertise are
captured to establish the experience-based models.
The main advantage of using this kind of systems is
that the knowledge-base is separated from the sys-
tem inference logic, therefore it can be easily up-
dated when the manufacturing conditions are
changed. The human planning knowledge and deci-
sion making process, however, are usually fuzzy
and not well defined. It is very difficult to capture
the expertise knowledge into the knowledge-base,
 T.N. Wong et al. /Int. J. Production Economics 60—61 (1999) 211—219
and to represent the decision making logic in
a computer program.
The operations of a jewellery manufacturer are
similar to those of the manufacturers in other in-
dustries on one hand, but there are certain specific
aspects on the other. In particular, raw materials in
jewellery industry are comparatively expensive and
the manufacturing operation is labour-intensive re-
quiring a high level of skill. Specifically, gold price
fluctuates from time to time, which makes the time
of ordering an important factor. The price of dia-
mond or colour stones varies a lot with their quali-
ties. A suitable decision support system is greatly
important for the selection of an appropriate
vendor. A special policy is required for reorder-
ing expensive raw materials, such as gold and
diamond.
Respective to production, because of the skill-
oriented production process, a special policy of job
assignment has to be adopted in order to assign the
most suitable worker to a certain production step
of a design. For production control, much attention
and supervision is required to keep track of the loss
of the precious raw materials during each produc-
tion step.
In view of the above special requirements of the
jewellery industry, it is not possible to identify
a suitable commercially available manufacturing
software such as the sophisticated manufacturing
resource planning (MRPII) systems, to actually
cope with the unique requirements. In this project,
the aim is to establish a tailor-made information
system to provide decision making tools for various
jewellery manufacturing functions including price
quotation, sales analysis, purchase of precious raw
materials, selection of vendors and job assignment.
In this system, the knowledge and experience of the
human decision makers are captured and defined in
the knowledge base, some of them are composed of
if—then rules with fuzzy values. The theory of fuzzy
set [3] allows the existence of a type of uncertainty
due to vagueness or fuzziness. As a manufacturing
information system, inputs and rules required for
the planning and control functions in jewellery
manufacturing are imprecise and vague. With the
aid of fuzzy set methodologies, the vagueness of the
decision making process are captured and
modelled in the system [4].
213
3. Structure of the DSS
In the integrated manufacturing environment,
the manufacturing planning and control functions
require the knowledge and experience of the opera-
tions, as well as the powerful decision support ca-
pabilities for information exchange and decision
making. To assist the managers to make these deci-
sions and to provide them with the necessary data,
a decision support system (DSS) is needed for the
company wide manufacturing information system
[5]. The manufacturing company in this case is
a typical small jewellery factory. Using the IDEF
(ICAM Definition) methodology [6—8], functional
models of the current (as-is) manufacturing system
and environment were established. Evaluating the
requirements of the computerised manufacturing
decision support system, the future (to-be) manu-
facturing system was then designed. Subsequently,
functional models of the proposed computerised
manufacturing information system were prepared.
For instance, Fig. 1 depicts the IDEF0 model of the
proposed system showing the main functions and
the information flow.
The manufacturing information system employs
a modular structure, with a set of integrated mod-
ules covering all major areas of jewellery manufac-
turing and management including sales analysis,
purchasing, production and job assignment, pro-
duction control and invoicing. It has been decided
that the system should be implemented on the
low-cost microcomputers running under the MS
Windows environment. In the development of the
system, the main modules were written in Visual
Basic and MS Access was used for the development
of the database. According to the experience of
some previous work, Visual Basic has been found
to be an efficient and easy to use development tool
for manufacturing information systems for small-
and medium-size manufacturers [9].
The structure of the prototype DSS is shown in
Fig. 2. The system comprises a database and
a number of modules dealing with the different
functions such as sales, vendor, production, inven-
tory, product data, data and report processing,
customers, and employees. The database of the
prototype manufacturing decision support system
records the essential manufacturing information of
214 T.N. Wong et al. /Int. J. Production Economics 60—61 (1999) 211—219
Fig. 1. IDEF0 model of the proposed system.
Fig. 2. Structure of the DSS.
the jewellery manufacturer. The database was de-
veloped with MS Access. Information in the
database includes the vendor records, raw material
prices, inventory records, product information, cus-
tomer records, and employee records. Raw mater-
ials including gold and diamonds are expensive
items, it is therefore extremely important to keep an
accurate inventory record. For a jewellery manu-
facturer, gold may exist in different states in the
manufacturing process. Thus, it is necessary to keep
track of the location and the transformation pro-
cess of gold and the amount of different forms of
gold in the company. Similarly, it is also necessary
to keep all records of the amount of precious stones
on hand. Sometimes the precious stone dealers may
consign some stones to the manufacturer to choose.
It is also required to keep a record, including the
price and payment terms, etc., of the consignments.
The product files record all the details of a product
design, including the materials used, the material
suppliers, and the labour charge. With respect to
user enquiries, products can be categorised in terms
of price range, customers, etc. The employee record
provides the appropriate information required for
workload calculations and job assignment, it keeps
the data of each employee including the personal
details, skill level and performance records. One
particular important aspect is that the file also
provides information on the amount of gold and
 T.N. Wong et al. /Int. J. Production Economics 60—61 (1999) 211—219
gold accessories being held by each worker. The
usage of gold accessories such as solder is also
recorded.
In addition to the basic database, to establish the
company-specific decision support system for
a jewellery manufacturer, the knowledge and ex-
perience of the human decision makers are cap-
tured and defined in the knowledge base. Some of
knowledge is composed of if—then rules with fuzzy
values.
4. Sales analysis and price quotation
The sales function of the DSS comprises a num-
ber of functions including sales analysis; price quo-
tation; and order confirmation. The sales analysis
function is a forecasting tool to help the manager in
market planning by analysing product sales. The
analysis is made over the sales of past products
with reference to their types, price ranges, designs
and markets (exporting countries), etc. The results
are shown in the form of charts and tables so that
the relationships between product sales and the
various factors can be easily visualised. Thus, the
system helps the manager to analyse the market
trend more easily and accurately in long-term deci-
sion making.
Price quotation is an important step in winning
an order. Like most of the jewellery manufacturers
in Hong Kong, the studied company always en-
gages in jobs which are in fact repeat orders of
similar but not identical products. To reduce the
effort in quoting, it is common practice to retrieve
previous similar quotations, which can then be
modified to suit the new requirements. Thus, the
price quotation module is designed to run on an
interactive environment that allows users to call-up
previous quotations, and then vary the parameters
and view the calculated price simultaneously. This
enables users to make the best use of resources
given the same target price. The parameters in-
clude: gold karat; order quantity; kind and quality
of diamond; kind and quality of colour stones;
gold price (highest or average monthly gold price,
etc.); profit margin (10%, 20%, etc.); payment
terms (cash, 30 days, 90 days, etc.); and labour
cost.
215
It is possible to retrieve the basic production cost
data from the database; the estimated labour cost
of handmade jobs can then be assessed and decided
by the production manager using his professional
experience. The cost of gold is calculated in accord-
ance with the gold weight of the finished jewellery,
while taking into consideration the wastage and the
daily gold price. Regarding the use of precious
stones including diamond, ruby, sapphire and em-
erald, etc., they are priced according to the stone
weight. The weight unit used is Carat, where
1 Carat is equal to 0.02 g. A special adjustment
ratio is also used to adjust the stone price to the
market price.
5. Purchasing
Three types of raw materials are usually em-
ployed in jewellery production: precious metals,
stones and accessories.
Precious metals (gold & platinum): When a new
order is received from a customer, the manager will
make a rough estimate of the amount of pure gold
(or platinum) required. An order to buy gold in
units of 500 g, which can only be settled by cash,
will be placed. The price is therefore highly depen-
dent on the gold price that fluctuates from time to
time. The gold bought is then transformed to differ-
ent gold karats as required by the customer order.
The system is designed to help the purchasing man-
ager to accurately calculate the amount of pure
gold to be purchased by reviewing the stock on
hand and estimating the amount required by the
order. In addition, the purchasing manager has to
decide at which point of time to purchase the gold
since the gold price fluctuates from time to time.
The system is therefore designed to keep in the
database, a record of the daily 9999 gold price in
the gold market. This daily 9999 gold price is
then transformed to the respective prices of differ-
ent gold karats such as 14 kt, 18 kt, etc. This
enables the trend of the gold price to be easily
observed by the purchasing management, thus
allowing the manager to buy gold at the best time.
With the help of this system, the manager will be
able to purchase the right amount of pure gold at
the best price.
216 T.N. Wong et al. /Int. J. Production Economics 60—61 (1999) 211—219
Precious stones (for instance, diamond, ruby, sap-
phire and emerald): Different qualities, sizes and
kinds of diamond and colour stones can be readily
purchased in the market. Diamond is sold in
packets, each packet contains pieces of similar
quality in a range of sizes. The price of precious
stones varies with different vendors. It is therefore
the responsibility of the purchasing manager to
bargain with the vendors using his professional
knowledge. After making a compromise on the
price, the stones are left as a consignment for check-
ing and selection. Payment is usually made after
three months and a few percentages’ discount will
be granted for making immediate payment in cash.
Stones of different sizes are consumed at different
rates because different designs require different
sizes. Most of the time, a particular size is con-
sumed faster than the others are. Hence, it is impor-
tant to know the amount of diamond in different
sizes on hand. Information is available to show the
weight of each size of diamond on hand with re-
spect to each kind of diamond. It thus helps the
purchasing manager to have an idea of the inven-
tory status of different sizes of diamond. When
a new order is placed, the manager, by referring
to the information generated by the system, can
decide the amount of diamond to be purchased
perfectly.
Accessories: Accessories of jewellery include
chains, earclips, locks, etc. Some of these accessor-
ies may be imported from other countries, such as
Italy, Japan, etc.
5.1. Selection of vendors
This system provides a vendor database that
keeps all the relevant information of different
vendors and suppliers. The vendor database re-
cords the different vendors who have been sup-
plying materials including gold, diamond, precious
stones, semi-precious stones, accessories, etc. In ad-
dition, the transaction history of each vendor is
also recorded. Users can enquire the vendor
database for a specific material vendor, the system
will rank the vendors accordingly. Regarding the
purchasing feature, the quantity and the kind of
material purchased is calculated based on the order
requirements and the inventory on hand. A pur-
chase order will then be generated accordingly.
As there are a lot of suppliers of precious stones
in the market, it is necessary to select the one who
can provide precious stones suitable for a particu-
lar requirement. This part of the system is de-
veloped to help the manager to select the most
suitable supplier. In the knowledge base of the
decision support system, all the past records of
consignment and transaction with each of the sup-
pliers are kept properly. The record is then ana-
lysed by the system and each supplier is ranked
accordingly. For each vendor, the selection criteria
are represented by the corresponding values, for
instance:
E Price of precious stone — good price to expensive.
This is expressed in fuzzy values as REASON-
ABLE, GOOD, EXPENSIVE, or VERY EX-
PENSIVE.
E Payment terms offered — cash on delivery to
6 months payment term.
E Quality of diamond — this is expressed as NOT
GOOD, GOOD or VERY GOOD.
E Percentage of reject allowed — some vendors do
not accept any reject at all, whilst some vendors
can accept up to 10% rejects.
E Delivery time — from one day to one week.
E Range of goods kept by the vendor — from all
kinds of stones to a particular stone.
Each criterion is ranked into four grades: A, B, C,
and D, with scores 4, 3, 2 and 1, respectively. The
criteria are prioritised according to the importance,
with price being the most important and delivery
time being the least.
According to the different requirements of
precious stones, different suggestions of suppliers
are generated by the system. For example, if it is
necessary to find a diamond supplier with light
brown diamond. The system will first retrieve the
candidate suppliers. According to the selection cri-
teria, the suppliers will then be ranked and a score
will be generated for each supplier. The decision
table employed by the system is illustrated by the
example shown in Table 1. The vendor is con-
sidered to offer a REASONABLE price; demand-
ing a payment term of 1—3 MONTHS; the quality
 T.N. Wong et al. /Int. J. Production Economics 60—61 (1999) 211—219 217

Table 1
Table for calculating vendorC1’s score

VendorC1 Grade Priority Rating Score

A(4) B(3) C(2) D(1)

Price Good Reasonable Expensive V. Expensive 1 0.30 3;0.30

Payment '6 months 3-5 months 1–3 months Cash 2 0.25 2;0.25
Quality V. Good Good Not Good Bad 3 0.20 1;0.20
Rejection Not Fixed '10% max. 10% No 4 0.15 2;0.15
Delivery 1 day 2—3 days 3—6 days '6 days 5 0.10 4;0.10

Total score 2.30

of stone offered by that vendor is however BAD;
the vendor agrees to accept a reject rate of up to
10%; and the vendor can meet 1-DAY delivery.
Thus, the total score for that vendor is calculated to
be 2.30.
6. Production
In general, three types of jobs are usually found
in jewellery production and the proportion of each
job type depends mainly on the business nature of
the jewellery manufacturer:
E Repair work — Resizing of rings, repairing broken
jewellery, modification of designs.
E Handmade jobs — To meet small orders with
specific customer designs, it is not economical to
use the casting process to produce the
mountings. Workers have then to manually craft
the precious metal mountings. This kind of hand-
made job is also required to prepare the proto-
type for mould making.
E Casting jobs — It is an important step in the mass
production of jewellery products. It involves the
production of the complete jewellery mounting.
Post-treatment of the cast objects involves filing
to remove ripples and streaks on the surface.
Precious stones are then set into the mounting in
accordance with the design. Finally, a polishing
machine is used to polish the surface of the
mounting.
In the manufacturing information system, the pro-
duction module is designed with features to handle
the production control and scheduling functions.
This includes the generation of the work and cost
sheet which is used to record the production in-
formation such as the time of production, the
worker responsible for the job, the quantities of
gold throughout the production process. The work
and cost sheet of each design is generated automati-
cally by the system according to the sales order.
The workload of each worker is also managed in
this module. Management can review the produc-
tion progress of each job being held by each
worker. The time used by each worker is recorded
and then used for costing or assessment of each
worker’s performance. Workers are ranked accord-
ing to their workload. The ranking is used for job
assignment and production scheduling. On the
other hand, the workload of each production line is
also shown, if there is an overload in a certain
production process, management will be recom-
mended to consider assigning some jobs to subcon-
tractors. In Hong Kong, there are many small and
medium factories provide subcontracting services
including mould making, precision casting, gem-
setting, polishing, and electroplating. In this proto-
type decision support system, subcontractor re-
cords are retained in the database. Similar to the
workers, subcontractors are ranked according to
their previous performance as well.
6.1. Job assignment
In practice, a job is assigned to a worker by the
production manager according to his experiences or
will only. But it may not be the optimal assignment
218 T.N. Wong et al. /Int. J. Production Economics 60—61 (1999) 211—219

Table 2
Table for determining worker C1’s score

WorkerC1 Grade Urgent job Normal job

Skilful Non-Skilful Skilful Non-Skilful

A B C Rating Priority Rating Priority Rating Priority Rating Priority

Workload 3 2 1 0.28 1 0.28 1 0.18 3 0.28 1

Skill 3 2 1 0.18 3 0.05 6 0.28 1 0.10 5
Efficiency 3 2 1 0.15 4 0.24 2 0.10 5 0.15 4
Attendance 3 2 1 0.10 5 0.10 5 0.05 6 0.05 6
Labour cost 3 2 1 0.05 6 0.15 4 0.15 4 0.24 2
Experience 3 2 1 0.24 2 0.18 3 0.24 2 0.18 3

For an urgent and skillfull job, score"2;0.28#3;0.18#1;0.15#1;0.10#3;0.05#3;0.24"2.22

and also it is too subjective. In the production 7. Concluding remark

module, therefore, the system is designed to take
care of all the factors of job assignment. The factors
of job assignment are: (a) urgency of job; (b) skill
requirement of job; (c) workload of worker;
(d) performance or skill of workers; (e) efficiency
of workers; (f) attendance; (g) wages; and (h)
experience.
These factors are expressed by different values as
different skill levels. Each factor is then rated ac-
cording to different jobs and a final score is as-
signed to each worker accordingly. The workers are
then ranked with the score of each job and the one
with the highest score is assigned to the job. As
given in Table 2, the score of Worker C1 for an
urgent and skilful job is 2.22. According to the
scores of the workers, the manager can carry out
a more appropriate and reasonable assignment.
6.2. Control of precious raw materials
Gold loss occurs during each step in the produc-
tion process. A fixed percentage of wastage is there-
fore assigned to some of the steps, such as casting
and filing. However, for production processes such
as setting and polishing, it is impossible to set
a definite percentage as gold loss varies a great deal
under various conditions. The weight of gold before
and after each step is thus recorded in a table for
wastage calculation.
The decision support system is designed to assist
in the operations of a typical jewellery manufac-
turer in Hong Kong. In this case study, it was found
out in the initial stage that none of the commercial-
ly available software packages could provide all or
most of the company’s needs. The company is com-
mitted to a low cost specially designed manufactur-
ing information system with decision support
capabilities. A structured approach was adopted to
develop the manufacturing information system.
The design of the DSS has put together expertise in
both management and computer information sys-
tems. With the proper production factors such as
labour and vendor information and ratings, the
system enables the company to reduce the cost of
production. Moreover, it helps in creating an effi-
cient production environment with better inven-
tory control and production scheduling. Besides,
the system generates the best price quotation and
delivery time to the customers, while at the same
time balancing the company goals. In general, the
DSS actually reflects the hierarchical nature of busi-
ness decision making in jewellery manufacturing.
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