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
