2. OperationsManagement
Lecture Outline
Definitions of forecasting
Roles of Forecasting and applications
Components of Forecasting Demand
List the elements of a good forecast
The steps in the forecasting process
Compare and contrast qualitative and
quantitative approaches to forecasting
Advantages and disadvantages of each
Time Series Methods
Forecast Accuracy
Time Series Forecasting Using Excel (if possible)
Regression Methods
Forecasting: Models and Applications
3. OperationsManagement
Materials Flow
Material flow (MF) is the description of the
transportation of raw materials, pre-
fabricates, parts, components, integrated
objects and finally products as a flow of
entities.
The term applies mainly to advanced modeling of
Supply chain management.
As industrial material flow can easily become
very complex, several different specialized
simulation tools have been developed for
complex systems. Typical tools are: AnyLogic,
AutoMod for logistics systems, Plant Simulation for
production systems.
Forecasting: Models and Applications
4. OperationsManagement
Material flow management (MFM) is a method of
efficiently managing materials.
The triple jump of environmental, social and
economical orientation makes MFM a tool of
high importance in the field of Sustainable
Development (SD) and Circular Economy (CE).
Material flow management is the goal oriented,
efficient use of materials, material streams
and energy.
The goals are given by ecological and
economical areas and by observing social
aspects.
Materials Flow Management
5. OperationsManagement
In a very comprehensive view, MFM in industrial
engineering comprises:
optimization techniques for
• procurement,
• usage,
• handling,
• transformation and disposal
of physical mobile entities like tools and
parts in manufacturing architectures.
MFM is a set of simulation and optimization
rules for managing the industrial materials.
6. OperationsManagement
Raw materials are the basic materials from
which a product is made.
A raw material, also known as a feedstock or
most correctly unprocessed material, is a
basic material that is used to produce goods,
finished products, energy, or intermediate
materials which are feedstock for future
finished products.
For example, crude oil, which is a raw material and a
feedstock used in the production of
industrial chemicals, fuels, plastics,
and pharmaceutical goods; lumber is a raw
material used to produce a variety of products
including furniture.
Raw Materials
7. OperationsManagement
Material handling equipment is mechanical
equipment used for the movement, storage,
control and protection of materials, goods
and products throughout the process of
manufacturing, distribution, consumption and
disposal.
The different types of material handling
equipment can be classified into four major
categories:
1. transport equipment,
2. positioning equipment,
3. unit load formation equipment, and
4. storage equipment.
Raw Materials Transportation
8. OperationsManagement
Transport equipment is used to move material
from one location to another (e.g., between
workplaces, between a loading dock and a
storage area, etc.).
The major subcategories of transport equipment
are conveyors, cranes, and industrial trucks.
Positioning equipment is used to manipulate
material at a single location.
It can be used at a workplace to feed, orient,
load/unload, or otherwise manipulate materials
so that are in the correct position for
subsequent handling, machining, transport, or
storage.
9. OperationsManagement
Unit load formation equipment is used to
restrict materials so that they maintain their
integrity when handled a single load during
transport and for storage.
Examples of unit load formation equipment
include pallets, skids, slipsheets, tote pans,
bins/baskets, cartons, bags, and crates.
Storage equipment is used for holding or
buffering materials over a period of time.
The design of each type of storage equipment,
along with its use in warehouse design,
represents a trade-off between minimizing
handling costs, by making material easily
accessible, and maximizing the utilization of
space (or cube).
10. OperationsManagement
Following are the objectives of material handling:
Minimize cost of material handling.
Minimize delays and interruptions by making
available the materials at the point of use at right
quantity and at right time.
Increase the productive capacity of the production
facilities by effective utilization of capacity and
enhancing productivity.
Safety in material handling through improvement in
working condition.
Maximum utilization of material handling equipment.
Prevention of damages to materials.
Lower investment in process inventory.
12. OperationsManagement Different Production Processes
What is production ?
Inputs Processing Outputs
Raw vegetables
Metal Sheets
Water
Energy
Labor
Building
Equipment
Cleaning
Making cans
Cutting
Cooking
Packing
Labeling
Canned
vegetables
Doctors, nurses Examination
Healthy
patients’
cure
Hospital Surgery
Medical Supplies Monitoring
Equipment Medication
Laboratories Therapy
GoodsServices
13. OperationsManagement Different Production Processes
Productivity ?
A measure of the effective use of resources, usually
expressed as the ratio of output to input.
Productivity ratios are used for
• Planning workforce requirements
• Scheduling equipment
• Financial analysis
Productivity measurements:
• Partial measures = output/(single input)
• Multi-factor measures = output/(multiple inputs)
• Total measure = output/(total inputs)
Productivity =
Outputs
Inputs
Productivity ?
14. OperationsManagement
Capital Quality
Technology Management
• Standardization
• Quality
• Use of computers
• Lost or misplaced items
• Scrap rates
• Workers’ skillness
Factors Affecting Productivity
Main factors:
Other factors:
• Safety
• Expertize of workers
• Layouts
• Labor turnover
• Design of the workspace
• Incentive/ reward plans
Different Production Processes
15. OperationsManagement
Capital intensive – equipment/labor
Process flexibility
Technology
Adjust to changes
– Design
– Volume
– technology
Key aspects of process selection
• Volume - how much expected outcomes ?
• Variety – what type?
• Flexibility - what degrees of freedom ?
• Velocity - speed and direction, rate of production
Summary
Factors Affecting Processes
Different Production Processes
4 V
16. OperationsManagement Different Production Processes
Production System
Production is an organized activity, where the raw materials
are transformed to an output unit through a systematic way.
Therefore, production system are those activities of an
organization where
resources flowing within a definite direction,
are combined and transformed,
in a controlled manner,
to add value,
in accordance to the policies communicated by the
management.
there exists a feedback about the activities, which is
essential to control and improve system performance.
17. OperationsManagement Different Production Processes
Types of Production Systems
The types of production processes /systems are classified on
the basis of product / output variety, operations and output
volume as:
Intermitted production process
• Job shop production
• Batch production
• Project production
Continuous production process
• Mass production
• Process / flow production
Variety
Volume
18. OperationsManagement Different Production Processes
Intermitted production process:
• Volume of each product is low,
• Generally produces make-to-order, custom products in accordance
with design supplied by the customer,
• Each job may be unique and may require a special set of
production steps,
• Each job may require a particular routing (no standard routing),
• Products may follow different paths,
• Needs general purpose production equipment.
Continuous production process:
• Volume of each product is high,
• There are mass production facilities that produce high volume of
same products, make- to- stock orders,
• Each job follows a sequences of operations, and standard routing,
• Needs automatic or semi automatic, special purpose equipments.
Types of Production Systems
19. OperationsManagement Different Production Processes
Producing goods (or services) to meet specific customer
requirements or special order, thus this process is always
non-standardized.
Job Shop Production System
The complete task is handled by a single worker or
group of workers.
Jobs can be small-scale/low technology as well as
complex/high technology.
It is inefficient, where quality is greatly depends on
the skillness of the operator,
Two important varieties are:
1. Low technology jobs
2. High technology jobs
20. OperationsManagement Different Production Processes
Batch Production System
The manufacture of a product in batches (small or large) or
lots by a series of operations, each operation being carried out
on the whole batch before any subsequent operation is
undertaken.
Main features:
A batch of items produced only once, at irregular intervals
when a need is felt,
A batch of items produced periodically at known intervals to
satisfy the continuous demand,
Batch methods require that the work for any task is divided
into parts or operations,
Each operation is completed through the whole batch before
the next operation is performed, by specialized labors.
21. OperationsManagement
Manufacture of a product through a series of interconnected
operations where material moves from one stage to another
without interruption.
Production activity continues for 24 hours or on three shifts
a day basis.
Example: A steel plant, it is impossible to stop the
production process on a short notice without causing a great
damage to its blast furnace and related equipment.
Other examples: bottling plant, soft drink industry, fertilizer
plant, power plant, etc).
Two distinct sub-systems are:
• Mass Production system
• Process production system
Continuous Production System
Different Production Processes
23. OperationsManagement
• A company strategy
• A philosophy
• A targeting system
• A corporate system designed to produce
output within the minimum lead time and at
the lowest total cost by continuously
identifying and eliminating all forms of
corporate waste and variance.
• A highly coordinated processing system in
which goods move through the system, and
services are performed, just as they are
needed,
What is JIT
The ultimate goal of JIT is a balanced system.
Achieves a smooth, rapid flow of materials through the system
Goals:
04
24. OperationsManagement
Seven basic types of waste
• Transportation waste
• Process waste
• Inventory waste
• Waste in/of motion
• Waste from product defects
• Waiting time/idle time
• Overproduction
08
25. Waste is ‘anything other than
the minimum amount of
equipment, materials, parts,
space, and worker’s time, which
are absolutely essential to add
value to the product.’
— Shoichiro Toyoda
President, Toyota
Quotation by Shoichiro Toyoda
09
26. OperationsManagement
Common causes of waste
• layout (distance)
• setup time (long)
• incapable processes
• poor maintenance
• poor work methods
• lack of training
• inconsistent performance measures
• Ineffective production planning
• lack of workplace organization
• poor supply/ reliability 11
27. OperationsManagement
produce the products what customer wants
produce products only at the rate that the customer
wants
production with perfect quality
production with minimum lead time
product products only those features what the customer
wants
product with no waste of labor, material, equipment etc…
movement must have a purpose so that there is no idle
inventory
produce with methods that allow for the development of
people
Objectives of JIT
12
28. OperationsManagement
JIT Tactics
Single Minute Exchange of Dies (SMED)
• statistical process control
• use of standard containers
• doable stable schedule with adequate visibility
Establish ‘TAKT’ time (taktzeit– cycle time)
• 5s program
• Kaizen event
• visual control
• flexible worker
• tools at the point of need
• product redesign
• group technology
• total productive maintenance 14
29. OperationsManagement
Benefits of JIT
1. Reduced inventory
2. Improved quality
3. Lower costs
4. Reduced space
requirements
5. Reduced lead times
6. Increased productivity
7. Greater flexibility
8. Reduced scrap and
rework
8. Better relations with
suppliers
9. Simplified scheduling and
control activities
10. Increased capacity
11. Increased equipment
utilization
12. Better use of human
resources
13. More product variety
14. Reduced need for indirect
labor
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