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Operations Management
Materials Flow
Methods & Analysis
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
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
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
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.
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
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
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.
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).
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.
OperationsManagement
Production
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
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 ?
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
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
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.
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
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
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
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.
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
OperationsManagement
JIT systems
• Reducing variance,
• Waste reduction
• Short lead time in supply chain
• Quality products
Specific Objectives
02
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
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
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
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
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
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
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
28

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Materials Flow Methods & Analysis

  • 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
  • 22. OperationsManagement JIT systems • Reducing variance, • Waste reduction • Short lead time in supply chain • Quality products Specific Objectives 02
  • 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 28