Chapter 6

Schedule Management

Chapter 6: Schedule Management

Schedule Management

Chapter 6: Schedule Management

Introduction

Chapter 6: Schedule Management

Henry Ford Hospital

Aggregate planning involves matching hospitals 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 patients stay a simple obstetrics case cost $5,000 12 to 16 weeks to recruit and train nurses at cost of $7,600

Tight labor market for RNs

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 dont 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 days 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, midsize, 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 Production matched to demand for the period Minimal inventory High overtime or hire/fire costs
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Chase Demand

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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Copyright
Copyright 2006John Wiley & Sons, Inc. All rights reserved. Reproduction or translation of this work beyond that named in Section 117 of the United States Copyright Act without the express written consent of the copyright owner is unlawful. Requests for further information should be addressed to the Permissions Department, John Wiley & Sons, Inc. Adopters of the textbook are granted permission to make back-up copies for their own use only, to make copies for distribution to students of the course the textbook is used in, and to modify this material to best suit their instructional needs. Under no circumstances can copies be made for resale. The Publisher assumes no responsibility for errors, omissions, or damages, caused by the use of these programs or from the use of the information contained herein.
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