In Class Lecture 11/8/2010

Monday, November 08, 2010 8:05 PM

Went over class discussion assignment. Continued with PowerPoint lecture from last class: Focus Forcasting Follow several forecasts and find/use the one that works best CPFR: collaborative planning, forecasting, and replenishment

Sales and operations plans are aggregate plans Only look at the big picture, leaving details to lower level planning MPS (Master Production Schedule) Plans the actual end user productions For a finished product, such as a wheel barrow in the example MRP (Master Resource Planning) Plans the actual necessities of resources to be utilized For components of the finished product (ie: box, wheels, etc. for wheel barrow) ERP (Enterprise Resource Planning) Goes over the entire business planning and puts it together

Demand options:
Pricing

Promotion Back orders Complementary products

Capacity options:

Overtime/ slack time Part time workers Hire/lay off Inventories Subcontracting

See PowerPoint for a good example of a MPS for a wheel barrow company MORE AND MORE Planning Capacity Resource Planning (CRP) Manufacturing Resources Planning (MRP II = MRP + marketing and finance) Sales and Operations Planning Distribution Requirements Planning, Resources Planning (DRP)
Enterprise Resources Planning (ERP: entire enterprise on the same page)

Supply Chain Planning Advanced Planning & Scheduling (APS: link the ERPs in the supply chain) Customer Relationships Management (CRM) Supplier Relationships Management (SRM) Collaborative Planning, Forecasting, and Replenishment (CPFR)

Problems of MRP/ERP systems cost (total cost of ownership hardware, software, data migration, training, support, maintenance, replacement) magnitude of change, retraining, acceptance (may approach change in one of three ways: big bang, franchising, slam-dunk)

In Class Lectures Page 1

 time several months to years to implement (see http://www.cio.com/article/31518/Supply_Chain_Hershey_s_Bittersweet_Lesson ) software not capable of unique circumstances needs fine tuning
loss of trained staff

payback not perceived immediately

Issues in in aggregate planning for services: Services occur when they are rendered (no inventories; people may become impatient)

Demand can fluctuate wildly Labor flexibility (cross training) can help Yield management: anticipate and react to consumer behavior to maximize revenue Such as airlines No one usually pays the same price Many use coupons or sites like priceline.com, etc.

Inventory Management Average inventory in U.S. is 30-35% of its value Reduction is VERY cost effective Decisions How to order When to order Every time it goes below a certain amount Every certain day Inventory Costs Holding (carrying) cost
Set up (production change) cost

Ordering cost Generally excludes purchase price Shortage cost Inventory models Single period model Perishable product (newspapers, hotel rooms, airline seats)

Dn

Dn+1 Stock n Stock n + 1 Dn Dn+1

In Class Lectures Page 2

 Multi period models Constant rate of demand EOQ D(demand)/Q(quantity) * S(set up cost (order cost)) + Q/2*H(per unit holding cost) = Total Cost D/Q * S + Q/2*H = TC
Random rate of demand

Fixed order quantity model

Fixed time period model Copy paper, etc

In Class Lectures Page 3