Matching Supply and Demand Flashcards
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
