Matching Supply and Demand Flashcards
(20 cards)
Plan and Control
Planning and control is about matching supply and demand
One of the most difficult tasks in OM due to uncertainty about by
- Production or service systems (supply)
- Consumer behaviour (Demand)
Planning
- What is intended to happen in the future?
- Short, medium and long-term planning
- No guarantee it will happen
- Planning decisions include: capacity, loading, scheduling
Control
- Keeping the operation to the plan
- Day-to-day
- Coping with uncertainty
- Daily management of planning decisions
Long term planning: strategic, high level of aggregation
Medium term: partial disaggregation of demand forecasts
Short term: day to day, total disaggregation of demand forecasts
Dealing with uncertainty
Independent
- external
- varying degrees of uncertainty
Dependent
- internal
- no varying and can be calculated
How demand uncertainty can affect manufacturing/production strategy
- Very high uncertainty - resource to order
- Uncertainty so high don’t attempt to anticipate and propose completely reactive process
- Common with low volume and high variety
- Actions triggered by request
- High lead time
EG - Construction site, movie production
How demand uncertainty can affect manufacturing/production strategy
- Mid-Level uncertainty - make to order
- Demand stable enough to invest in fixed transforming assets
- Uncertainty is high enough to only produce when an order comes in
- Common in high variety,
EG - fast food, car production
How demand uncertainty can affect manufacturing/production strategy
- Low uncertainty - make to stock
- Demand is predictable enough to produce and stock
- Common in high volume low variety
- Speculative approach
- Short lead time
EG - coca cola, clothes
Three main activities to planning
Loading
Sequencing
Scheduling
Loading
- How much to be allocated to a work centre?
- Difference between ‘max available time’ and ‘valuable operating time’
Finite loading and infinite loading
- Is it suitable to limit the load
- Is it necessary to limit the load
- Is the cost of limiting the load prohibitive?
Sequencing
In what order will the work be tackled once it's been allocated to a work centre? Predetermined set of rules - Physical constraints - Customer priority - First in first out
Choice will depend on operation’s objectives
Scheduling
Timetabling ob jobs and tasks to be completed by each work centre
Control system
A control system can determine how the transformed resources move through the process
Push- make to stock
Pull - make to order
Capacity planning
Capacity: maximum level of value added activity over a period of time
Match up capacity with demand
Long term planning
Medium planning
Short term planning
Capacity planning
- Measuring capacity and demand
- Design capacity is theoretical and can be viewed as the maximum capacity of the system
- Effective capacity is what remains after time lost through set up changes; maintenance and technical difficulties are deducted
- Further time may be lost through quality issues
Capacity planning
- Identifying alternative capacity plans
Consider different approaches to managing supply given the variation caused by demand
- Level capacity plan
- Chase demand plan
- Demand management
Level Capacity plan
Capacity stays fixed despite fluctuations in demand
Suitable when Inventory can be accumulated
+ High process utilisation, high productivity
- Highly speculative
Suitable for demand with low uncertainty, stackable products
Chase demand plan
Capacity moves in an attempt to match or chase demand. Suitable when cannot be stored
+ No need for inventory and so less wasteful
- Quite difficult to achieve
Suitable for demand with high uncertainty
Demand Management
Capacity is fixed and demand changes around it
Yield Management
Suitable for operations where
- Capacity is relatively fixed
- Market fairly segmented
- Service cannot be stored
- Service sold in advance
- Over booking capacity
- Price discounted at low demand
EG - Airline, Hotel
Capacity planning
Step 3. Choosing a capacity planning approach
Depending on if we can stock items, we will either use
- Cumulative capacity
- Queuing system
Capacity as a queuing problem
- Customers satisfied immediately or have to wait
- Customers arrive and are processed accordingly to the same probability distribution
