Important Ones Flashcards
What is the Difference between Planning and Scheduling?
Planning refers to establishing a set of tasks that need to be completed to achieve a desired goal
Scheduling refers to the timing of what needs to be completed
A plan may or may not have a “timing” associated with it, but scheduling is always about timing
What are the 4 fundamentals of General Supply Chain Matrix in order?
1) Procurement
2) Production
3) Distribution
4) Sales
What is the concept of rolling horizons?
Updating last planning runs on a certain frequence, whilst the actual month’s plan is held frozen
For example:
Frequency of planning: monthly
Planning horizon: 12 month plan, 1 month actual
What makes the optimization problem hard to solve? Especially the TSP?
Increasing problem size (due to variables and constraints) often means increasing number of feasible solutions.
The 3rd constraint of TSP the elimination of sub-tours is a such constraint. This makes it hard to solve!
What is a Master Plan?
What is a Master Plan used for?
A representation of the projects schedule, typically in a Gantt Chart format.
High-level schedule for the project, including major activities and key milestones.
3 Components of Master Project Planning & Scheduling?
1) Planning
2) Scheduling
3) Controlling
What are the 4 Criteria of the CPM? What do these criteria mean for the network?
- The Critical Path is the Longest Path through the Network
- The Critical Path is the Shortest Time in which the project can be completed
- Any delay in Critical Path Activities, delays the project
- Critical Path Activities have no Slack Time
CPM Algorithm?
1) Pass Forward Scheduling
• Begin at starting event and work forwards
• ES Rule:
> If an activity has only a single immediate predecessor, then its ES = EF of the predecessor
> If an activity has multiple immediate predecessors, then its ES = max of all the EF of its predecessors
• EF Rule:
> EF = ES + Activity Time
2) Backward Pass
• Begin with the last event and work backwards
• LF Rule:
> If an activity is an immediate predecessor for a single activity, then its LF = LS of the activity that immediately follows it
> If an activity is an immediate predecessor for multiple activities, then its LF = mn of all the LS of its predecessors
• LS Rule:
> LS = LF – Activity Time
3) Computing the Slack Time: Create the Table
• After computing the ES, EF, LS & LF for all activities, compute the Slack Time or Free Time for each activity
• Slack Time: Length of time an activity can be delayed without delaying the entire project
> Slack = LS – ES, or
> Slack = LF – EF
• Where the Slack = 0, is the Critical Path
4) Summarise the Results
• Expected Completion time is LF of last activity
• # of Activities are on Critical Path
• # of Activities are not on CP and have slack time
What are the goals of MTA?
- Early detection of schedule deviations
- Timely initiation of countermeasures
- Graphic representation of date trends showing comparison of milestones vs actual
- Overview of being able to meet deadlines or not
What Are Tech Push and Market Pull in New Product Development? Give examples
Technology PUSHES by latest science and technology advancements in society.
Night vision in s class (mainly because they could)
Market PULLS by needs of society and the market place. Electric car (demanded by customers)
What is OEE?
Overall Equipment Efficiency is a KPI to monitor and improve performance of production processes.
Availability * Performance * Quality = OEE
What Are OEE related losses?
All Time = Planned Production Time + Schedule Loss
Planned Production Time = Run Time + Availability Loss
Run Time = Net Run Time + Performance Loss
Net Run Time = Fully Productive Time + Quality Loss
What are the elements of Break-Even Computations ?
Q: Quantity (Volume of Production and Sales in Units) P: Price F: Fixed Costs V: Variable Costs TC = F + VQ TR = PQ TC = TR F + VQ = PQ => Q@BEP = F / (P – V) :For any Q larger than Q@BEP, the considered manufacturing scheme is feasible
What are the 4 Agency Problems?
1) Adverse Selection
2) Hold-Up
3) Moral Hazard Expertise
4) Moral Hazard Effort
Why do Complete Contracts not exist? Give 4 reasons!
I. Bounded Rationality: Limits in collecting information
II. Bounded Rationality: Difficulty in accurate forecasting
III. Measuring performance: Who? How?
IV. Asymmetric Information: Hidden Information / Hidden Action
How can unbalanced demand and supply can lead to vicious cycles?
Starts with “Make Vehicles to Forecast”, then 2 ways:
1) Push based selling using discounts and incentives
2) Reduced margins but attempt to reach EoS
3) More volume needed
And
1) Long lead times for custom-built vehicles
2) Build-to-order discouraged
3) Distorted demand information
Both end up back at “Make Vehicles to Forecast”
What are the 3 steps to Full Operations?
1) Production tests = TESTING
2) Ramp-Up = INCREASING CAPACITY
3) Operations = STEADY STATE CAPACITY
What is the MULTIPLE Heuristic Algorithm?
X: Number of non-fixed Departments with 1 to X referring to the sequence
T: # of iteration
1) Set:
a. MIN = cmin (cost of the current layout)
b. T = T+1
2) Exchange Departments I & J:
a. I = 1 to X-1
b. J = I+1 to X
3) Calculate & Set cij = cost of layout with the I & J exchanged
4) Is cij < cmin?
a. If YES, then Set cmin = cij and go to 5
b. If NO, then go to 5
5) Is this the LAST exchange for T?
a. If YES, then go to 6
b. If NO, then go to 2
6) Is AT LEAST ONE exchange IMPROVING the current layout cost?
a. If YES, then go to 7
b. If NO, Then END = NO FURTHER IMPROVEMENTS POSSIBLE FOR CURRENT LAYOUT
7) Layout cost MIN becomes current layout for next iteration, go to 1
What is the objective of the QAP in Layout Planning?
Minimise the total transportation costs
occurring due to the chosen layout
What is the objective function in QAP?
Min sumh=1sumi=1sumj=1sumk=1 thi * djk * xhj * xik
What are the 3 constraints of QAP?
1) sumj=1 xhj = 1 for h = 1,…,n : each OE h on exactly 1 location j
2) sumh=1 xhj = 1 for j = 1,…,n : each location j gets exactly 1 OE h
3) xhj = {0,1} : Binary Decision Variable
What are the components of Launch and Changeover, namely Product Creation Processes and Production Processes in order?
1) Prototyping
2) Pre-Series
3) Null-Series
4) Ramp-Up
5) Serial Production
What are the 6 factors of a Fast Ramp-Up?
1) High Costs
2) High Pace
3) Strong assistance needed
4) Introduction Volume is large
5) Quality-based ramp-up is difficult
6) Emphasis on Qualification of Workers
What are the 3 factors of a Slow Ramp-Up?
1) Volume too low (to allow simultaneous global introduction)
2) Follow-up deliveries difficult
3) Utilisation of Resources (in the Supply-Chain and Plant)
What does the trade-off between Fast and Slow Ramp-Up depend on?
1) Product/plant
2) Workforce Qualification
3) Car segment differences
4) New models and major product updates in the lifecycle
What can be a risk if you have a ramp-up plan, but cannot implement it fast enough?
Marketing perspective: grey market (trade of a commodity through distribution channels that are not authorized by the original manufacturer). Global introduction will be very slow, so in the foreign market you cannot put the new product out for a few years. Then customers see that in another country you can already order the new model. So, they don’t buy the product in their country thinking its old. Happens often in the SUV segment
For example, SUV segment sells good in Russia. But all German brands are introduced early in Europe and after 1-2 years in Russia. So, Russians come to Europe to buy.
> Global introduction has a huge impact
> When you introduce and don’t have enough volume, issues arise
What are the 3 different choices of Ramp-Up Curves?
1) Shutdown
> Production of old product completely stopped and new product’s production starts from zero to increase to steady production
2) Block Introduction (2 steady states for both new and old)
> Production of old product is taken down to a low level and new product’s production starts from zero to increase to a high level. Later when old production completely stops, new production reaches steady state
> Until meeting point old and new, they close orders for the old car and use them for fleets and similar wholesale activities
3) Step-by-step (many steady states for both)
> Production of old product is taken down gradually and new product’s production starts from zero to increase gradually to a steady state. When old production completely stops, new production reaches steady state
> In developed markets the step by step is usual. Most efficient method! But requires lots of volume of old product in the market, which marketing does not like
What are the 3 choices of operating patterns at ramp-ups?
3 Factors: Production Speed - # of Products on the Line - Operating Time
1) Adjusted Production Speed
> Production speed rising to steady state, other two stable all the time
2) Adjusted Number of Products – Empty Hanger
> Number of Products on the line rising to steady state, other two stable all the time
3) Adjusted Operating Time
> Operation Time per Day rising to steady state, other two stable all the time
What does a Step-by-step Empty Hanger with Stable Workforce imply?
Implies stability and control of the operating conditions and work assignments.
Goal: minimize confusion in the production and to facilitate learning during ramp-up
What are the 5 Stages in the Product Life Cycle? Briefly explain
1) Product Development Stage > All the stages of product development until ready for sale 2) Introduction > Sales begin > Production & Marketing not yet at max > Profits negative 3) Growth > Sales grow dramatically > Production & Marketing grow dramatically > Profits begin 4) Maturity > Production at max, focusing on high-volume, efficiency, low costs > Marketing focus on competition > Sales, thus Profits peak 5) Decline > Declining sales and profits > Product might be dropped or replaced
What is the order-to-cash cycle?
O2C or OTC is the business process that covers the entirety of the order processing system right from receiving the order to up until the point the payment is made, and an entry is logged in your accounting books.
It is better as fast as possible. Shows the liquidity factor of the company
What 2 components create Gross Margin?
What components create Profit from Operations?
What components create Net Profit?
What components create Current Assets?
What components create Capital Charge?
What is EVA?
Gross Margin = Sales – COGS
Profit from Operations = Gross Margin – Total Expenses
Net Profit = Profits from Operations - Taxes
Current Assets = Inventory + Other Current Assets
Capital Charge (= Cost of Capital x Total Assets) = Currents Assets + Fixed Assets
EVA = Net Profit - Capital Charge
What are the 5 Headlines of Traditional Performance Measures in Order Fulfilment? Examples for each
1) Asset Management = Inventory Turns & Onsolescence + EVA
2) Cost = Inventory carrying cost
3) Service = Fill rate
4) Productivity = Equipment downtime
5) Quality = # of Returns
What are inventory turns?
Inventory turnover is a financial ratio showing how many times a company has sold and replaced inventory during a given period. A company can then divide the days in the period by the inventory turnover formula to calculate the days it takes to sell the inventory on hand.
What is Fill Rate?
The definition of fill rate is the percentage of customer orders you’re able to meet without running out of stock at any given time. A strong fill rate is at or near 100%, meaning you’re able to fulfil all of the wholesale sales you make without stockouts, backorders, or lost sales.
What are the 2 important basic factors in fulfilment?
What is the P:D Ratio?
1) Production Lead Time P
> How long does it take to produce the product?
2) Demand Lead Time D
> How long is the customer willing to wait for the product?
Overlapping of P and D so that both lead times end at the same time!
What are the 4 Standard Order Fulfilment Principles? Give example for each
Explain each for Pizza / Computer
1) Engineer-to-order
> Satellites
2) Make-to-order / Build-to-order
> Rolls-Royce
3) Assemble-to-order / Configure-to-order
> Dell Laptops
4) Make-to-stock / Make-to-forecast
> Toothpaste
What are the 5 Principles in Automotive Order Fulfilment?
Examples!
1) Make-to-Forecast Ford Model T 2) Locate-to-order One Tick Above Lowest Class like Hyundai 3) Amend-to-order VW Golf (customization in the feed possible) 4) Hybrid Build-to-order High Segment like S-Class with request queue at production (also without queue) 5) Full Build-to-order Rolls Royce only orders!
What are TSP, VRP and Inventory Routing?
1) TSP: Traveling Salesman Problem > Salesman visits n customers at minimum cost 2) VRP: Vehicle Routing Problem > m vehicles to deliver to n customers > with specific demand and time windows 3) Inventory Routing > m vehicles to deliver to n customers > with unspecified demand, time windows, vehicle and storage capacity constraints
What is the objective of a VRP?
Minimizing the total distance travelled by the vehicles and/or the number of vehicles used.
What are good measures of order fulfilment performance?
1) Inventory turns
2) Fill rate / Line fill rate
3) Inventory costs
4) C2C cycle
5) EVA
What is the cash-to-cash cycle equation
C2C = Total Inventory Days of Supply + Days Receivables - Days Payables
What is AHP and what is it used for? What is its general idea?
Analytic Hierarchy Process
Used for Multi-Criteria Decision Making
Develop an hierarchy of decision criteria and define the alternative courses of actions.
What kind of Comparisons are made with AHP? How does it work?
2 Types:
1) Quantitative Measures to rank
> Example: Government Expenditure / Company Expenditure
2) Pairwise comparison is made with grades 1 to 9
> A rated 9: A is absolutely more important than B
> B rated 1: B is absolutely less important than A
> Higher the grade higher the importance
How is Priority Vector calculated in AHP? What does it give? Explain in 4 steps!
1) First transform the ranking of criteria into the matrix A
2) Sum the columns
3) Normalize the matrix = divide each element in a column by the sum of column to get 1 for each sum of column
4) Take the average of every row to get a n*1 matrix X
= The priority vector gives the criteria weights of the criteria in the same order!
Lower the weight, less important the criteria
Higher the weight, more important the criteria
How do you rank the alternatives to get the Benefits Vector, when you have achieved the normalised vectors in AHP?
1) Create the tree again with objective at top, criteria on level underneath and choices for each criteria at the bottom. Write down the calculated priority vector values fo all
2) Now create a priority matrix with the priority values of the alternatives
3) Multiplicate it with the criteria weights from the criteria
4) You get the benefits vector with high number means more benefits
How would you add another criteria to the calculated benefits vector? Example: Cost
1) Given costs for each alternative, normalise the costs just like other vectors
2) Then DIVIDE this vector by the Benefits Vector calculated before
3) Now you have a Cost/Benefit Ratio that can be plotted on a graph where it will be shown in percentage!
What are all steps of AHP?
1) Calculate the priority vector for the decision criteria for their weights
2) Calculate consistency ratio (not in exam)
3) Calculate priority vectors individually for each criteria for ranking
4) Create the tree with the calculated values
5) Calculate the benefits vector
6) Add another criteria if available (such as cost)
7) Plot the calculated cost/benefits values in a graph
What is the objective function in Strategic Network Planning?
Minimize all variable costs along the supply chain
Decide where to put the production plant
What is the bullwhip effect?
What are the 6 stages of Bullwhip effect?
The amplitude of error increases backwards on the supply chain
1) Customer demand begins moderately high
2) Supply cant meet demand at the early stages = shortages
3) Partners down the supply chain over-order due to the shortages attempting to meet demand and stock shelves
4) Supply catches up with demand, whilst there are cancellations and returns too
5) Production still continues through this due to the misalignment of financial and production planning
6) Demand declines at the last stages of life-cycle = attempts to drain inventory
What are the 4 Building Blocks of successful automotive supplier systems?
1) Long-Term Collaboration
2) Tough, but helpful
3) Improvement is realised in collaboration not isolation
4) Trust but verify
What is Push-Scheduling?
= Orders (calculated as net requirements at MRP level) are planned and issued centrally = given to suppliers & to process 1 & to process 2
= Upon completion, the order is moved forward until the next process is issued with the order to start processing it
This means: the LONGEST LEAD TIME Process sees the NEW ORDER FIRST
Also called BACKWARDS scheduling
What is the definition of MRP?
What are the 3 Inputs and 3 Outputs of MRP?a
Material Requirements Planning is a set of priority planning techniques for planning component items.
1) Inputs > Master Production Schedule > Product Structure File > Inventory Master File 2) Outputs > Work Orders > Purchase Orders > Rescheduling Notices
What are the 4 problems with MRP Systems?
MRP Systems…
1) Tend to hold more inventory then necessary
2) Lengthen lead times unnecessarily = BULLWHIP EFFECT is created
3) Designed for batch and queue, NOT flow
4) Distort demand pattern in the supply chain
What is Pull-Scheduling?
In a pull system process are trigged by a replenishment signal =
Upon withdrawal of material from inventory, the preceding processes are authorised to start processing, and ONLY then
What are the Trade-Offs in Order Decisions?
=Too Much / Too Little Problem 1) Order TOO MUCH and inventory left over at the end > Discounts and costs to get rid of them 2) Order TOO LITTLE and sales are lost > Lost profits
Newsvendor Variables: What are: p c v A/F Ratio F(Q) 𝜇 𝜎 Expected Actual Demand, StdDev of Demand z Q co cu Expected Loss on Qth unit Expected Benefit on Qth unit
p : Selling Price
c : Production / Procurement Costs
v : Salvage Costs / Price (discounted sells for v=…$)
A/F Ratio : Actual Demand / Forecast
F(Q) = Prob {Demand<=Q} = Cu/(Co+Cu)
𝜇 : Average of A/F Ratio = (All A/F Ratios)/N
𝜎 : Std. Dev of A/F Ratio = Kök(Var(All A/F Ratios))
Exp. Act. Demand : Exp. Avg. A/F Ratios * Forecast
Std. Dev of Demand : Std Dev of A/F Ratios * Forecast
z = (Q-𝜇)/sigma
Q = 𝜇 + z * 𝜎
co : Overage Cost = Cost - Salvage = c - v
cu : Underage Cost = Price - Cost = p - c
Expected loss on Qth unit = Co * F(Q)
Expected benefit on Qth unit = Cu * (1 - F(Q))
