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Flashcards in Automotive Production Deck (26)
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Master Production Scheduling

Service-oriented Efficiency-oriented
Delivery capability Leveling
Scheduling costs in order promising Costs due to unbalanced
(e.g., discounts due to late delivery) production programs

Delivery reliability Inventory
Costs of delayed completion Costs of early
delivery (e.g., penalty payment)


of assembly line balancing:

Minimizing the number of stations for a given cycle time (1P)
 Minimizing the cycle time for a given number of stations (1P)


Subject (Planning Task) of assembly line balancing:

Assignment of elementary work operations (1P) including the required
equipment to the productive units (stations) (1P) of a flow production


Introduction to Assembly Line Sequencing
Planning task

Avoidance of work overload(The process times of some stations exceed or undercut the determined average time
Balancing of labor-intensive and less labor-intensive process steps(Example: Electric vs. manual sunroof)

Continuous material flow
A great variety of options calls for a high variety of materials and parts
Sequencing has to consider this if the individual parts shall be delivered JIT to the line

High product variety
Mostly fixed costs
Dynamic interdependencies between production and logistics

Planning task
Determing a production sequence for multiple variants within a flow production system


Overview of planning tasks in order-driven automotiveproduction

longterm: Network Planning (Demand Forecasting & Planning)

mediumterm: Purchasing Structure and Logistics - Assembly Line Balancing - Capacity Planning - Distribution Structure and Logistics (Demand Forecasting & Planning)

shortterm:Material Requirement Planning - Order Promising and Master Production Scheduling
Inventory Management- Assembly Line Sequencing
(Distribution Planning - Order Promising)

Supplier--Purchase--Production--Distribution--Sales--dealer/ end customer


Name two planning tasks that are closely interlinked with assembly line sequencing and answer the following questions for each of them: What decisions are made within the planning task? How do these de-cisions affect assembly line sequencing?


Assembly line balancing (1 point): Within assembly line balancing the work elements are assigned to the stations of the line (1 point). Thus, the processing times of the different models/variants at the sta-tions are determined. These station times have to be considered with-in assembly line sequencing to minimize work overload. A poor line balance will generally result in many work overload situations. (2 points)

Master production scheduling (1 point): Within MPS the production quantities per day/shift for the product variants are determined (1 point). Assembly line sequencing has to create a production se-quence based on these quantitieswith the objective of minimizing work overload and/or leveled material supply.If the MPS is not care-fully planned many work overload situations will occur. (2 points)


Name and describe two events that affect the production sequence and therefore require reshuffling an initial sequence during production.

Material shortages: In the event of defects or missing parts for a certain model the production sequence cannot be produced as planned. The model has to be removed from the sequence which might require reshuffling the sequence to avoid work overload / smoothen material supply.

Machine failures: In the event of a failure of a machine that is required to perform a certain work step (e.g., handling robot to assemble a panoramic sunroof) the production sequence also has to be reshuffled.

Rush orders: In the event of rush orders the sequence has to be reshuffled to expedite the completion of the rush order.


task of capacity planning

Determine the mix of flexibility instruments that allows for the economic adjustment of production and labor capacities und stocks of an existing flow production to satisfy a given demand for multiple products.

Main challenges:
o Resources with limited flexibility (1 point)
o Fluctuating demand (1 point)

Importance of long-term planning horizon:
Long-term planning
horizon necessary since most of the flexibility instruments require a lead time (1 point). For instance, adjusting the labor capacity requires several months since qualified personnel has to be recruited (1 point).


What happens to the production plan from
Figure AP 2.1 if only two
changes of the production capacity are allowed over the whole planning horizon? Explain the effect
of this restriction on the total cost of
the production plan and the stock levels.

Effects of restricting the number of changes to two:
Total costs will increase (1 point) since capacity cannot be adjusted for each period based on the demand and therefore more expensive capacity stages with a higher capacity have to be used for a longer period of time. (1 point)

Stock levels will increase (1 point) to satisfy the demand in the last periods from stock and change into a capacity stage that leads to lower costs. (1 point)


Assumptions of SALBP

1. Mass production of a homogeneous product
2. All working processes are performed in a predefined form (no alternative)
3. Assembly line with (fixed) cycle time corresponding to the planned demand
4. No consideration of pre-assembly and parallel stations
5. A well-defined precedence graph is available
6. Deterministic processing times
7. No assignment of secondary activities beyond the precedence graph
8. One operation takes a maximum of the cycle time
9. All stations can be equally equipped with machines and workers
10. Sequential execution of operations (no parallel work)


Shortly explain
thefunction of nodes
, edges and edge ratings
in the context of precedence graphs.

 Nodes correspond to operations; identification through number

 Edges (i, j) correspond precedence relations between nodes i and j

 The edge rating equals the processing time of the upstream node i


Planning Approaches

Mixed-model sequencing
Minimization of work overload by a detailed classification, which explicitly considers processing times, movements of workers and station boundaries.

Car sequencing
Minimization of work overload by an implicit consideration of the restrictions. Sequencing-rules of the type Ho:No – for No sequence positions, a maximum of Ho units with option o are permitted.

Level scheduling
Orientation at the JIT philosophy: Ideal production rates are specified and the sequence is designed to minimize the difference between ideal and real planning. The material requirements can additionally be considered.


Which type of production networkdoesthe German car manufac-turer currentlyusefor customers from all over the world? Namethetype of networkand two advantagesof thistype of network. Whichtype of production networkwould you recommendtothe company to enter the Chinesemarket? Namethe type of networkand give two argumentsfor your recommendation.

World factory (1p)
Advantages:Low production costs (1p)Economies of scale and synergies (1p)
Local production (1p)
Reasons (max. 2p)
:High local adaption requirements (1p)
High local-content-requirements resp. high transactional costs (e.g. transport, tariffs) (1p)
New model
lower opportunities for economies of scaleat existing plant(1p)(Further criteria: Image in local countries)


Typical Allocation Strategies

􀂃 Allocation is the assignmentof a product to a location(product-plant-link)
􀂃 Allocation strategy defines underlying principles of
allocation decisions in the production network
􀂃 Allocation strategy determines the degree ofallocation flexibility

„Peak breakerplant“

Chain Strategy best.
Argumentation (3P):
 Need for a flexible and robust production system due to fluctuating demand
 Need for an efficient production
system due to high investments
 Uncorrelated demand allows for compensation of capacity utilization
between different car models that can be produced in the same plant


Name two kinds of coststhatwould still differ between the locations despite the trade agreement? Would theworldwide trade agreement reduce the relevance of model-based location and allocation planning? Briefly explainyour answer.

Max 2PLogistics costs (1P)
Labor costs (1P)Material costs (different prices in different countries because of differ-ent labor and logistics costs) (1P)
With a world-wide trade agreement, the complexityof the decision problem wouldbe lower because uncertainties in exchange rates and tariffs can be disregarded. However,it is still necessary to evaluate the material and logis-tics costs and network effects of location and allocation decisions.Material availability and costs, as wellas local demand patterns and distribution costs still have to be considered.Necessity of planning and planning effort remain high, model-based decision support remains relevant.


Location Planning und Allocation Planning

Location Planning

Planning task:
Opening and closing of plants
Definition of aggregate capacities

High investments for new plants
Challenge of demand prediction for each
More flexible equipment leads to more
flexible in production
Political influence regarding opening and
closing of plants
Local content restrictions
Selected location influence material,
logistics, personnel costs, as well as
delivery times

Allocation Planning
Planning task:
Allocation of models/products to plants/locations
Definition of product-specific capacities

Product-specific equipment at each plant
Irreversible decisions about capacities at the beginning of the product life cycle
Challenge of demand prediction for each product
Depending on the selected location, allocation has great influence on material, logistics and personnel costs, as well as delivery times


Based on the mathematical optimization model given above, the ob-jective is to maximize production volume. From a business economics perspective, elaborate why this objective functio is reasonable. What kind of objective function would you choose if the model would additionally decide on the capacity level of every plant?

Explanation given obj
ective function (4P) (2P for each correct
 Capacity, capabilities,
and demand are assumed to be given and thus
fixed costs are independent of model decisions (2P)
 Assuming a positive contribution margin, it makes most sense to max-
imize production volume to maximize revenue and profit (2P)
New objection function if model decides on capacity level (2P):
 Maximize profit, as costs are now dependent on the capacity le
vel chosen by the model and so are the revenues (because of variable production volume)


Briefly explain the differences between a “Chain” and a “Hub and Spoke” production network. Make use of the criteria “economies of scale and synergies” and “transportation and transactional costs” to explain under which conditions which network type should be preferred.


Chain: Different production steps are carried out at different locations. The markets are then supplied centrally from the plant with the last production step (1P)
-->Utilization of economies of scale when transaction costs to the markets hardly play a role (2P).

Hub and Spoke: Only the last production step is executed in the target country. Vehicles are completed in the target country (1P)
-->Exploiting economies of scale when transaction costs are very high (2P).


There are two different approaches Multi Variant Models
(MALBP) can be modelled. Name bothof them

SALBP with mixed precedence graph (1P)
MALBP with variant-specific processing times (1P)


Nametwo flexibility instruments of capacity adjustment. Explain
briefly how capacity adjustment
can reduce the work overload.

Overtime hours (1P)
Changing number of shifts (1P)
Longer/shorter shifts (1P)
Labour time account (1P)
Leased workers (1P)
Variable cycle time (1P)

By using the flexibility instruments the capacity can be changed. With a
higher capacity per day/shift ,more cars can be produced at the same time
respectively. Therefore,
there is more capacity/time to produce one car and the work overload will be reduced. (2P)


Order Processing Strategies
order penetration point (OPP)

The order fulfillment process (also: order-to-delivery-process) comprises the set of virtual and physical activities to provide each customer with the vehicle of his or her chosen specification.

The order penetration point (OPP) separates forecast-based and order-related processes. It materializes as a stock for compensating imperfect forecasts.


Global Production Networks of the Automotive Industry

Production location
Procurement market
Sales market
Trade Area

Relations between the elements:
Material and product flows
Trade agreements
Local content restrictions

Global production network with locations in various trade areas, different sales
markets, and interconnected material-flow relations


Assessment of SALBP

(+) Basic structuring of the decision situation
(+) Easy to use, but already NP-hard
(+) Output or standard model as a basis for adjustments
(+) Solution method - at least in broad terms - transferable
(-) Due to simplifications (rather) unrealistic


Assessment of MALBP

Still rather unrealistic
Hard to solve-->use of heuristics
Determination of the variant-specific processing times at the stations is difficult due to the high volume of data
Only time-oriented objective functions
No consideration of cash flows and investments


Capacity Planning
Model Assumptions

Focus on an assembly line
Measurement of the labor capacity in car equivalents
Production costs per car are independent from the quantity of cars produced and date of
Overtime and negative hours increase or decrease the level of the labor time account
Basic model: The labor time in the selected production capacity level (regular production
capacity) corresponds to the regular labor time (i.e., attendance time is equal to labor
No use of flexible (temporary) workers at regular production capacity


World factory 2 advantages

 Low production costs (1p)
 Economies of scale and synergies (1p)