Operations planning and control (08) Flashcards
(27 cards)
SUMMARY
In summary, the following is covered in this topic:
1. All business need to plan and control its operations to fulfil customer demand.
2. Operations planning and control decisions need to be coordinated with other
departments in a business.
3. The activities of planning and control are loading, sequencing, scheduling and
monitoring and control.
4. Loading allocates the amount of work to each part of the operation. It can be
finite or infinite.
5. Sequencing decides the order in which tasks are assigned within the operation.
6. Scheduling determines the detailed timetable of activities, as well as when
activities begin and end.
7. Monitoring and control activities include assessing the operation, re-planning if
necessary, and intervening in order to impose new plans
8. Both supply and demand have great impact on operations planning and control.
What are the benefits of operations planning and control?
1) Enhanced customer service
Through improved scheduling and production, customers are likely to have a much more pleasant experience through better quality goods and on-time delivery.
These will ultimately win customers over and persuade them to establish an on-going and profitable relationship with the business.
2) Better control of inventory
A sound system of operations planning and control helps in maintaining inventory at proper levels and, thereby, minimising inventory costs.
It requires lower inventory of work-in-progress and less finished goods to provide efficient service to customers.
It also helps in exercising better control over raw-materials, which contributes to more effective purchasing.
3) More effective use of equipment
Operations planning and control accounts for any lack of productivity among equipment.
It allows for management to oversee productivity among equipment and ensure that resources are being used
efficiently.
4) Improved morale of production of workers
An effective system of operations planning and control coordinates the activities of all the departments involved
in the production activity. It ensures even flow of work and avoids rush orders.
It maintains healthy working conditions in the plant thus, there is improvement in the morale of production workers.
5) Reduced idle time
Operations planning and control helps in reducing idle time, where there is loss of time due to workers waiting for materials and other facilities.
Effective planning and control ensures that raw materials and other facilities are available to the workers in time as per the production schedule.
Consequently, less man-hours are lost, which has a positive impact on the cost of production.
Note:
For operations to be effective, it needs to be planned and controlled well.
It involves careful planning to ensure seamless coordination between departments for
business activities to carry out.
As such, operations decisions cannot be made independently of the rest of the business.
For example, an operations manager should not decide to increase output by 60% without coordinating this with other departments.
A series of problems would occur if the operations manager went ahead on his own:
Lack of funds to pay for stocks, machines and labour as the Finance department was not informed of the change and did not prepare the funds.
Insufficient workers to run the operations as the Human Resource department was not informed to increase the workforce.
Lack of customers to consume the increased amount of output as Marketing department was not informed to market the additional output.
What is Planning?
Planning is a formalisation of what is intended to happen at some time in the future.
What are the factors to consider during the planning process?
1) Demand from customers
Different customers may order different products with different specifications for delivery at different times. To fulfil the orders, the business must plan which orders to fulfil first.
2) Product design
Some product design may be more complex or require extra processes.
For example, a designer’s sofa might require certain materials or processes, such high quality finishing which may involve additional work from an external specialist.
Planning needs to take this important process into account which must be carried out to meet customers’ demand.
3) Availability of resources
Some businesses purchase raw materials and components and store them until they are needed.
Other businesses may prefer a lean operation where inventory levels are minimised.
What is Control?
Control is the process of coping with the changes during operations.
In essence, control activities deal with making adjustments to the process in order to to achieve the operational objectives that the plan has set.
What are the activities of planning and controlling?
1) Loading;
2) Sequencing;
3) Scheduling; and
4) Monitoring and Control
What is Loading?
Loading allocates the amount of work that is allocated to a part of an operation, sometimes known as a work centre.
A work centre may be an employee, a machine, a production cell or a process such as assembling.
What are the two approaches to the loading process?
1) Finite loading
2) Infinite loading
What is Finite loading?
In an operations process which uses finite loading, work is allocated up to a set limit which is the estimated capacity for the work centre.
The capacity is based on the times available for loading.
Any work beyond the capacity is not accepted.
What sort of operations is finite loading suitable for?
Finite loading is suitable for operations where:
Limits can be placed on the load.
For example, a fine dining restaurant runs an online table reservation system which automatically rejects new reservations when all the tables are fully booked.
Limiting the load is important for safety purposes.
For example, the number of people that can be allowed on thrilling boat ride in an amusement park.
The cost of limiting the load does not adversely affect the business.
For example customers will not mind choosing alternative dates to dine at Ritz Carlton’s Colony restaurant well-known for its sumptuous buffet offerings.
In this aspect, the cost of maintaining a finite table reservation does not have a negative impact on its reputation but rather enhance it.
What sort of operations is infinite loading suitable for?
This approach is suitable for operations where :
The nature of the operation makes it impossible to limit the load.
For example, a hospital’s Accident and Emergency department will attend to every patient that admits and require immediate attention.
Limiting the load is not necessary. For example, fast food outlets’ operations are designed to cope with varying arrival rates of customers throughout the day.
Furthermore, its customers accept that long queues during peak periods such as lunch time is normal.
The cost of limiting the load will adversely impact the business.
For example, turning retail banking customers away in the competitive banking industry may cause the bank to lose a valuable customer.
What is Sequencing?
Sequencing refers to the decisions on the order in which tasks will be assigned
within the operation.
In a manufacturing context, the production process usually involves arranging tasks and processes in a sequence to achieve production objectives.
Once a sequence is in place, it will usually remain unchanged unless it is necessary due to an upgrade of production process.
For example, the sequence in the production of bread at Gardenia bakery remains the same.
However, when a major customer requests for non-standard products, Gardenia may change the order in which the task and processes are arranged to fulfil the order.
What are the set of predefined rules for sequencing operation?
1) Due date
In this case, work is sequenced according to when it is ‘due’ for delivery with the earliest due date as priority.
For example, a business providing photocopying or printing services does not take into account the job size or the
importance of each customer.
The benefit of sequencing by due date is that it improves delivery dependability and delivery speed.
The limitation is that it may not be the most productive and efficient method.
It can be flexible though to cater to urgent cases.
2) Last in First Out (LIFO)
This method of sequencing is selected for practical reasons.
For example, tourists taking the elevator to ascend to the top of Tokyo Tower will find LIFO the most practical and convenient method to exit the elevator as there is only one entrance and exit.
However, customers at banks may get angry if they notice new walk-ins are served first.
3) First in First Out (FIFO)
Some operations serve customers in exactly the sequence they arrive in.
For example, queues in theme park like Universal Studio will allow customer to enjoy the ride in the order of when they started to queue.
An exception is if customers purchase a priority tickets that allow them to skip the queue and take the rides ahead of the queue.
4) Longest Operation Time (LOT)
Some operations may sequence their longest jobs as priority, as it has the advantage of occupying work centres for long periods.
Having small jobs progressing through an operation will take up time at each workcentre due to change over from one job to the next, which may involve resetting the equipment.
LOT keeps utilisation high but the limitation is that it may not achieve delivery speed or reliability.
5) Shortest Operation Time (SOT)
This sequencing rule tackle short jobs first.
The benefit is that it will help ease cash flow as the business can issue invoice and receive payments for these jobs.
Larger jobs will take longer time to complete, and businesses can only issue invoice and receive payment later.
Though SOT improves delivery performance, it does not take into account total productivity and can damage service to larger customers.
What are other conditions which may affect sequencing decisions?
1) Physical constraints
This is where the sequencing is affected by the physical nature of the inputs being processed.
For example, in order to reduce fabric wastage, a garment manufacturer may decide to cut the fabric to a required size and shape for a clothing and simultaneously use the remaining fabric to make another product.
2) Customer priority
Some operation will sometimes allow a preferred customer to be ‘processed’ prior to others regardless of the order of arrival of the customer.
Some banks use this method by having a priority customer queue.
Businesses with a few large VIP customers and many small customers tend to use this approach for practical reasons.
However, it is worthwhile to take note that customer priority sequencing, although giving a high level of service to
some customers, may erode the service given to many other customers.
This may lower the overall performance of the operations if the work flows are disrupted to accommodate important customers.
What are the performance objectives used for sequencing?
Meeting ‘due date’ promised to customer (dependability);
Minimising the time job spends in the process, also known as ‘flow time’ (speed);
Minimising work-in-progress inventory (an element of cost); and
Minimising idle time of work centres (another element of cost).
What is Scheduling?
Scheduling follows after sequencing, where operations need a detailed timetable to
show at what time and date a job should start and when it should end.
For example, MRT schedule shows that more trains are put on routes at more frequent intervals
during rush-hour periods.
It shows the expected arrival time of each train at each station.
In most operations, work schedules are used where some planning is required to ensure customer demand is met.
However, there are other operations such as a hospital’s Accident & Emergency department, where it is not possible to pre-determine patients’ arrival.
In this case, it is not possible to plan a schedule.
Scheduling is very important in managing large projects, such as the construction of a highway or public housing.
It helps to ensure that resources such as workers, equipment and materials are available and are not idle while waiting for a preceding task to complete before the next task begins.
What is Forward and Backward Scheduling?
1) Forward scheduling involves starting work once it arrives;
2) While Backward scheduling start jobs at the last possible moment to meet the deadline.
*See notes for example pg 8
What are the advantages of Forward Scheduling?
The advantages of forward scheduling include:
High labour utilisation as workers are fully utilised
More flexibility as the time slack in the system allows unexpected work to be
loaded.
What are the advantages of Backward Scheduling?
The advantages of backward scheduling include:
Lower material costs as materials are not used until required
Less exposed to risk in case of schedule change by the customer
Tends to focus the operation on customer due dates
What is Staff Rostering?
In operations where workers are the main resources, the schedule of work times
effectively determines the capacity of the operation itself.
The main task of scheduling is to ensure that there is enough people working at any point in time to
provide the appropriate capacity to fulfil the demand.
Note:
In scheduling work patterns, besides ensuring capacity matches demand, the operations need to also ensure that each shift duration is appropriate, vacation and ‘time-off’ blocks are included and that there is flexibility built into the schedule to activate staff to cover for unexpected changes in supply (e.g. staff illness) or demand (e.g. surge in orders).
What is Monitoring and Control?
In essence, monitoring and control activities include assessing the operation, checking for deviation and conducting re-planning and intervening in order to impose new plans.
If there are further deviation from planned activity, the cycle is repeated.
Look at pg 9 for the simple model of control
What is Push and Pull control?
In a push system of control, activities are scheduled by means of a centralised system.
Each work centre pushes out work without considering whether the succeeding work centre can make use of it.
This means that there may be instances of inventory build-up or bottlenecks occuring.
The consequence of bottlenecks or excessive inventory build-up in the process sums up the push system.
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In a pull system of control, the pace and specification of what is done are set by the ‘customer’ workstation, which ‘pull’ work from the preceding (supplier) workstation.
The ‘internal customer’ acts as the only trigger for movement.
A request from a customer not only triggers activity at the supplying stage, but also prompts the supplying stage to request a further delivery from its own suppliers.
As a consequence, a pull system of control is less likely to result in inventory build-up.
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*Look at pg10 for visual representation for clearer understanding
