Foundations of Industrial Engineering PDF

Foundations of Industrial Engineering Overview of Operations Management Asst. Prof. Sarah Castillo Vanguardia Intended Learning Outcome (ILO) At the end of the discussion, the students should be able to identify the key concepts of operations management in relation to the Industria...

Foundations of Industrial Engineering Overview of Operations Management Asst. Prof. Sarah Castillo Vanguardia Intended Learning Outcome (ILO) At the end of the discussion, the students should be able to identify the key concepts of operations management in relation to the Industrial Engineering discipline. DISCUSSION OUTLINE Operations Management in the BSIE Curriculum Definition of Operations Management Production Control Facilities Planning 2023 BSIE CURRICULUM IEP115: OPERATIONS MANAGEMENT PRE-REQUISITE: IEP111 (OR 1); IEP112 (QMS) CO-REQUISITE: IEP114 (OR 2) TERM: 3RD YEAR, 2ND SEMESTER UNITS: 4 (3 LEC / 1 LAB) COURSE DESCRIPTION: Production control, inventory policy, facilities planning, methods improvement. Technological assessment and revenue management.  OPERATIONS MANAGEMENT  the design, operation, and improvement of the systems that create and deliver the firm’s primary products and services  it involves the transformation of resources: goods and services LABOR MATERIALS CAPITAL OPERATIONS MANAGEMENT Systematic Approach to Org. Processes Business Education Operations Career Opportunities Management Cross-Functional Applications OPERATIONS MANAGEMENT PRODUCTION SYSTEM framework that helps to convert inputs into desired outputs in the form of goods and services through the systematic organization of people, materials, and processes (Heizer, Render, and Munson, 2020) PRODUCTION PLANNING AND CONTROL (PPC) “The highest efficiency in production is obtained by manufacturing the required quality of product, of required quantity, at the required time by the best and cheapest method.” PPC is a tool to coordinate all manufacturing activities in a production system. OPERATIONS MANAGEMENT FUNCTIONS OF PPC PPC PLANNING PHASE CONTROL PHASE ACTION PHASE ACTIVE PRIOR PLANNING PLANNING PROGRESS CORRECTIVE ACTION PROCESS REPORTING PLANNING AND FORECASTING ROUTING EXPEDITING DATA MATERIAL PROCESSING ORDER WRITING CONTROL REPLANNING TOOL CONTROL PRODUCT DESIGN DISPATCHING LOADING SCHEDULING OPERATIONS MANAGEMENT ROUTE CARD (EXAMPLE ONLY) OPERATIONS MANAGEMENT ROUTE SHEET (EXAMPLE ONLY) ROUTE SHEET PART NAME : - MATERIAL : _____________ PART DRAWING : PART NO. : HARDNESS : ____________ QUANTITY : DUE DATE : _____________ OPERATION OPERATION MACHINE DEPT TOOLS TIME (MIN) NO. DESCRIPTION REQUIRED SET UP OPERATION TOTAL TIME TIME TIME OPERATIONS MANAGEMENT INVENTORY MANAGEMENT Inventory is the stock or store of any items or resources used in an organization, ranging from small things such as paper clips, bolts and nuts, to large items such as machines, equipment, trucks, or even airplanes and ships. OPERATIONS MANAGEMENT INVENTORY MANAGEMENT Managing the stock or store of any items or resources used in an organization to achieve satisfactory levels of customer service while keeping the costs associated to its minimum. Objective - “inventory proportionality” to have the same number of days or hours worth of inventory on hand across all products so that the time of run-out of all products would be simultaneous, hence, no “excess inventory” Inventory minimization – keeping inventory within reasonable bounds OPERATIONS MANAGEMENT INVENTORY MANAGEMENT: KEY CONCEPTS Economic Order Quantity (EOQ) The quantity of stock that minimizes the total cost of ordering and holding inventory. It balances order costs with inventory holding costs. Ordering costs associated with costs of placing order and receiving goods ( supplies, forms, order processing, clerical support, etc.) Holding costs costs for storage, handling, insurance, obsolescence, extra staffing, interest, pilferage, damage, warehousing, etc. OPERATIONS MANAGEMENT INVENTORY MANAGEMENT: KEY CONCEPTS Economic Order Quantity (EOQ) Example: 2𝐷𝐷𝐷𝐷 𝐸𝐸𝐸𝐸𝐸𝐸 = 𝐻𝐻 ABC Manufacturing uses 10,000 units of a particular raw material annually. The company D = Annual demand incurs an order cost of $50 per order and a S = Cost per order holding cost of $2 per unit per year. The supplier H = Holding/Carrying cost takes 5 days to deliver an order, and the company operates 250 days a year. Calculate the EOQ. OPERATIONS MANAGEMENT INVENTORY MANAGEMENT: KEY CONCEPTS Economic Order Quantity (EOQ) 2𝐷𝐷𝐷𝐷 2 ∗ 10,000 ∗ 50 𝐸𝐸𝐸𝐸𝐸𝐸 = 𝐸𝐸𝐸𝐸𝐸𝐸 = 𝐻𝐻 2 D = 10, 000 units 𝐸𝐸𝐸𝐸𝐸𝐸 = 500,000 S = $50 H = $2 𝐸𝐸𝐸𝐸𝐸𝐸 = 707.11 𝑜𝑜𝑜𝑜 707 OPERATIONS MANAGEMENT INVENTORY MANAGEMENT: KEY CONCEPTS Reorder Point (ROP) The inventory level at which a new order should be placed to avoid stockouts. 𝑅𝑅𝑅𝑅𝑅𝑅 = 𝐷𝐷𝐷𝐷𝐷𝐷𝐷𝐷𝐷𝐷 𝐷𝐷𝐷𝐷𝐷𝐷𝐷𝐷𝐷𝐷𝐷𝐷 𝑥𝑥 𝐿𝐿𝐿𝐿𝐿𝐿𝐿𝐿 𝑇𝑇𝑇𝑇𝑇𝑇𝑇𝑇 Example: ABC Manufacturing uses 10,000 units 10,000 of a particular raw material annually. ROP = ( x 5) The company incurs an order cost of 250 $50 per order and a holding cost of $2 ROP = (40 x 5) per unit per year. The supplier takes 5 days to deliver an order, and the ROP = 200 company operates 250 days a year. Calculate the EOQ. OPERATIONS MANAGEMENT Therefore The company should order 707 units every time the inventory level drops to 200 units to minimize total costs while avoiding stockouts. OPERATIONS MANAGEMENT INVENTORY MANAGEMENT: KEY CONCEPTS Safety Stock Additional inventory held as a buffer against unexpected demand fluctuations or supply chain disruptions. ABC Analysis A classification method for inventory based on value.  A-items are high-value but low-quantity products  B-items are moderate in both value and quantity  C-items are low-value but high-quantity products OPERATIONS MANAGEMENT FACILITIES PLANNING Facility Layout Location or arrangement of everything within & around buildings Ensures best placement of machines (production), offices and desks (in office), or service centers (hospitals and department stores). Specific objectives are to maximize Customer satisfaction Utilization of space, equipment, & people Efficient flow of information, material, & people Employee morale & safety FACILITIES PLANNING Principles No food prepared ahead except patty Elimination of some steps, shortening of others New bun toasting machine (11 seconds vs 30 seconds) Repositioning condiment containers (one motion, not two) Sandwiches assembled in order Production levels controlled by computer Discard only meat when sandwiches do not sell fast enough Savings of $100,000,000 per year in food costs  OPERATIONS MANAGEMENT FACILITIES PLANNING: Common Types of Layout  Fixed-position layout  Addresses lay-out requirements of large bulky projects such as ships and buildings  OPERATIONS MANAGEMENT FACILITIES PLANNING: Common Types of Layout  Process layout  deals with low-volume, high-variety production (job shop, intermittent production)  OPERATIONS MANAGEMENT FACILITIES PLANNING: Common Types of Layout  Product layout  seeks the best personnel and machine use in repetitive or continuous production OPERATIONS MANAGEMENT FACILITIES PLANNING Requirements of a Good Layout  an understanding of capacity and space requirements  selection of appropriate material handling equipment  decisions regarding environment and aesthetics  identification and understanding of the requirements for information flow  identification of the cost of moving between the various work areas REFERENCES Heizer, J., Render, B., & Munson, C. (2020). Operations Management: Sustainability and Supply Chain Management (13th ed.). Pearson Education. Chase, R. B., Jacobs, F. R., & Aquilano, N. J. (2013). Operations and Supply Chain Management (14th ed.). McGraw-Hill Education. Stevenson, W. J. (2021). Operations Management (14th ed.). McGraw-Hill Education. Russell, R. S., & Taylor, B. W. (2019). Operations and Supply Chain Management (9th ed.). Wiley. Slack, N., Brandon-Jones, A., & Johnston, R. (2019). Operations Management (9th ed.). Pearson Education. Shingo, S. (1989). A Study of the Toyota Production System: From an Industrial Engineering Viewpoint. CRC Press. Womack, J. P., Jones, D. T., & Roos, D. (2007). The Machine That Changed the World: The Story of Lean Production. Free Press. A study on Manufacturing of Deformed Bar (G 60-400W) at Elite Iron and Steel Industries - Scientific Figure on ResearchGate. Available from: https://www.researchgate.net/figure/a-fixed-position-layout- b-process-layout-c-process-layout-and-d-product_fig4_325178996 [accessed 22 Oct 2024] DISCLAIMER Every reasonable effort is made to ensure the accuracy of the information used in the creation of this reference material, without prejudice to the existing copyrights of the authors. As an off-shoot of the innumerable difficulties encountered during these trying times, the authors endeavored to ensure proper attribution of the esteemed original works, by way of footnotes or bibliography, to their best abilities and based on available resources, despite the limited access and mobility due to quarantine restrictions imposed by the duly constituted authorities. We make no warranties, guarantees or representations concerning the accuracy or suitability of the information contained in this material or any references and links provided here. 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