Session 4 - Important Slides Flashcards
What is Capacity Planning?
Determining the amount of capacity required to produce in the future
This process may be performed at:
1) Aggregate or Product-Line Level
2) Master-Scheduling Level
3) Material Requirements Planning Level
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
Explain the Make-or-Buy Decision Tree
1) Are there existing suppliers that can attain EoS that an in-house unit could not? Do they possess execution capabilities that an in-house unit does not?
> Yes go to 2
> No go to 5
2) Are there relationship specific assets? coordination problems? Leakage of private info?
> Yes go to 3
> No = USE THE MARKET!
3) Detailed contracting infeasible or too costly?
> Yes go to 4
> No = USE THE MARKET!
4) Common Ownership needed to mitigate contracting problems?
> Yes = VERTICAL INTEGRATION!
> No = ALLIANCES, JOINT VENTURES, NON OWNERSHIP ARRANGEMENTS
5) Would intermediate arrangements (alliance, joint venture etc) suffice?
> Yes = ALLIANCES, JOINT VENTURES, NON OWNERSHIP ARRANGEMENTS
> No = VERTICAL INTEGRATION!
Why do Complete Contracts not exist? Give 4 reasons!
I. Bounded Rationality
> Limits in ability to collect, assimilate, process and act upon information
II. Bounded Rationality
> Difficulty in complete and perfect forecasting (unforseen circumstances)
III. Measuring performance ex post
> Who measures performance?
IV. Asymmetric Information
> Hidden Information (one party knows, other does not)
> Hidden Action (one party cannot observe)
What are the 4 Agency Problems?
1) Adverse Selection
2) Hold-Up
3) Moral Hazard Expertise
4) Moral Hazard Effort
What is the Information Asymmetry, Time, Behaviour Form, Behaviour Transparency, Basic Condition and Solution of Adverse Selection?
> Qualification of the Agent unknown > Before conclusion > Given exogenously (qualification etc) > Known ex post > Information efficiency > Signalling, Screening
What is the Information Asymmetry, Time, Behaviour Form, Behaviour Transparency, Basic Condition and Solution of Hold-Up?
> Intention of the Agent unknown > After signing > Will-dependent (fairness etc) > Known ex post > Sunk Cost > Game Theory Solution (prisoners dilemma)
What is the Information Asymmetry, Time, Behaviour Form, Behaviour Transparency, Basic Condition and Solution of Moral Hazard Expertise?
> Expertise / Knowledge of the Agent unknown > After signing > Given Exogenously > Hidden ex post > Information efficiency > Incentive Systems
What is the Information Asymmetry, Time, Behaviour Form, Behaviour Transparency, Basic Condition and Solution of Moral Hazard Effort?
>
Effort of the Agent not observable or assessable After signing Will-dependent (exertions etc) Hidden ex post Resource Plasticity Incentive Systems, self-binding, control systems
What are the 6 Objectives of Aggregate Master Planning (considered during plan development)?
I. Min Costs or(=) Max Profits II. Max Customer Service III. Min Inventory Investment (costs) IV. Min Changes in Production Rates V. Min Changes in Workforce Levels VI. Max Utilisation of Plant & Equipment
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 and pressure on residual values
3) More volume needed to achieve EoS
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 8 Decision Variables of AMP?
Wt = Number of employees in month t Ht = Number of employees hired at the beginning of t Lt = Number of employees laid offat the beginning of t Pt = Production in units in t It = Inventory at the end of t St = Number of units backordered at the end of t Ct = Number of units subcontracted for t Ot = Number of overtime hours worked in t
What is the objective function of AMP?
MINIMISE COSTS OF: > Workforce > Hiring > Layoff > Production > Inventory > Backorder > Overtime > Outsorcing
What are the constraints of AMP?
>
Workforce size for each month is based on hiring and layoffs
Production (in units) for each month cannot exceed capacity (in hours)
Inventory balance for each month
Overtime for each month
Non negative constraints
Decision variables {elemanıdır} Real Numbers (to make it harder Natural Numbers)
