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Transcript of Production
The Industrial Revolution
Machines were invented which replaced human labor
New energy sources were developed to power the new machinery – water, steam, electricity, oil (gas, kerosene)
Some historians place advances in atomic, solar, and wind energy at the later stages of the Industrial Revolution
Increased use of metals and minerals
Aluminum, coal, copper, iron, etc.
Basic of production/Manufacturing
Manufacturing is the changing of raw or processed materials into usable products.
Manufacturing occurs in manufacturing plants, or factories.
An ancient Greek or Roman would have been just as comfortable in Europe in 1700 because daily life was not much different – agriculture and technology were not much changed in 2000+ years
The Industrial Revolution changed human life drastically
More was created in the last 250+ years than in the previous 2500+ years of known human history
What was the Industrial Revolution?
The Industrial Revolution was a fundamental change in the way goods were produced, from human labor to machines
The more efficient means of production and subsequent higher levels of production triggered far-reaching changes to industrialized societies
Mass production of goods
Development of factory system of production
Development of capitalism
Development and growth of new socio-economic classes
Commitment to research and development
-Increased numbers of goods
-Increased diversity of goods produced
-People left farms to work in cities
-Financial capital for continued industrial growth
-Working class, bourgeoisie, and wealthy industrial class
-Investments in new technologies
-Industrial and governmental interest in promoting invention, the sciences, and overall industrial growth
Atmosphere of discovery and free intellectual inquiry
-17th and 18th centuries
-Discoveries of Boyle, Lavoisier, Newton, etc.
-17th and 18th centuries
-Writings of Locke, Voltaire, etc.
-Greater knowledge of the world
-Weakened superstition and tradition
-Encouraged learning and the search for better and newer ways of doing things
Development of the Domestic System of Production
Domestic system developed in England
Late 1600s-late 1800s
Domestic system of production – “putting out” system
Domestic system could not keep up with demand
-Businesspeople delivered raw materials to workers’ homes
-Workers manufactured goods from these raw materials in their homes (typically articles of clothing)
-Businesspeople picked up finished goods and paid workers wages based on number of items
Textiles – cloths or fabrics
First industry to be industrialized
Great Britain learned a lot about textiles from India and China
Search for more makers and raw materials
Better and faster means of transportation
Thomas Telford and John
Orville and Wilbur Wright
Steam boat (1807)
Sped water transportation
Macadamized roads (1810-1830)
Fast land transport of people and goods
Gasoline engine 1885
Led to the invention of the automobile
Diesel engine 1892
Samuel F.B. Morse
Alexander Graham Bell
Cyrus W. Field
Rapid communication across continents
Human speech heard across continents
Atlantic cable (1886)
United States and Europe connected by cable
Wireless Telegraph, an early form of the radio 1895
No wires needed for sending messages
Lee de Forest
Radio Tube (1907)
Radio broadcast could be sent around the world
Simultaneous audio and visual broadcast
Printing – 1800-1830
Rotary press – 1870
Linotype machine – 1884
Newspapers became much cheaper to produce
-Iron printing press
-Invented by Richard Hoe
-Printed both sides of a page at once
-Invented by Ottmar Mergenthaler
-A machine operator could create a “line of type” all at one go, rather than having to individually set each letter
-Cost of a newspaper plummeted
-Number of newspapers increased
Second Industrial Revolution
The first, or old, Industrial Revolution took place between about 1750 and 1870
The second Industrial Revolution took place between about 1870 and 1960
The First and Second Industrial Revolutions
-Took place in England, the United States, Belgium, and France
-Saw fundamental changes in agriculture, the development of factories, and rural-to-urban migration
-Saw the spread of the Industrial Revolution to places such as Germany, Japan, and Russia
-Electricity became the primary source of power for factories, farms, and homes
-Mass production, particularly of consumer goods
-Use of electrical power saw electronics enter the marketplace (electric lights, radios, fans, television sets)
-Industrialized nations first laid track in their own countries, then in their colonies and other areas under their political influence
-Russia – Trans-Siberian railroad (1891-1905)
-Germany – Berlin-to-Baghdad railroad across Europe to the Middle East
-Great Britain – Cape-to-Cairo railroad vertically across Africa
Suez Canal (1869)
– provided access to the Indian Ocean from the Mediterranean Sea without the need to sail around Africa
Kiel Canal (1896)
– North Sea connected to the Baltic Sea
Panama Canal (1914)
– provided access from one side of the Americas to the other without the need to sail around the tip of South America
-Charles Goodyear – vulcanized rubber, 1839
-Gottlieb Daimler – gasoline engine, 1885
-Henry Ford – assembly line, 1908-1915
-Orville and Wilbur Wright – airplane, 1903
-Charles Lindbergh – first non-stop flight across the Atlantic, 1927
-20th-century – growth of commercial aviation
Results of the Industrial Revolution
-Expansion of world trade
-Mass production of goods
-Increased standard of living
-Decline of landed aristocracy
-Growth and expansion of democracy
-Increased government involvement in society
-Increased power of industrialized nations
-Development and growth of cities
-Improved status and earning power of women
-Increased in leisure time
Changing Employee-Employer Relationships
-Workers and employers knew each other personally
-Workers could aspire to become employers
-Workers no longer owned the means of production (machinery)
-Employers no longer knew workers personally
-Relationships between employers and employees grew strained
-Factories often run by managers paid by the corporation
Problems of the Factory system
Factories were crowded, dark, and dirty
Workers toiled from dawn to dusk
Young children worked with dangerous machinery
Employment of women and children put men out of work
Technological unemployment – workers lost their jobs as their labor was replaced by machines
-Women and children were paid less for the same work
Poor Living conditions
Factories driven solely by profit
Factory (also company or mill) towns
-Businesses largely immune to problems of workers
-Towns built by employers around factories to house workers
-Workers charged higher prices than normal for rent, groceries, etc.
-Considered paternalistic by workers
-Workers often became indebted to their employers
-Created a type of forced servitude as workers had to stay on at their jobs to pay their debts
-Some employers had workers’ interests at heart
-But workers wanted to control their own lives
Slum Living Conditions
Factory towns – often built and owned by factories
Tenements – buildings with rented multiple dwellings
Workers were unsatisfied both inside and outside the factories
-Overcrowded and unsanitary
Refers to formalized patterns of interactions that link a firm’s tasks, technologies, and people.
-Structure provides a means of balancing two conflicting forces
Need for the division of tasks into meaningful groupings
Need to integrate the groupings for efficiency and effectiveness
Enhanced coordination and control
Centralized decision making
Enhanced organizational-level perspective
More efficient use of managerial and technical talent
Facilitated career paths and development in specialized areas
An organizational form in which the major functions of the firm, such as production, marketing, R&D, and accounting, are grouped internally.
Impeded communication and coordination due to differences in values and orientations
May lead to short-term thinking (functions vs. organization as a whole)
Difficult to establish uniform performance standards
Separation of strategic and operating control
Quick response to important changes in external environment
Minimal problems of sharing resources across functional departments
Development of general management talent is enhanced
An organizational form in which products, projects, or product markets are grouped internally.
Also called multidivisional structure or M-Form
Can be very expensive
Can be dysfunctional competition among divisions
Differences in image and quality may occur across divisions
Can focus on short-term performance
Facilitates the use of specialized personnel, equipment and facilities
Provides professionals with a broader range of responsibility and experience
An organizational form in which there are multiple lines of authority and some individuals report to at least two managers.
Can cause uncertainty and lead to intense power struggles
Working relationships become more complicated
Decisions may take longer
Organization Designs for International Organizations
Understanding technology in manufacturing is critical for several reasons
1. Virtually everything that is done in a business depends on some type of technology.
2. Technology is evolving at an extremely rapid pace.
3.Technological innovation in manufacturing, is a competitive necessity.
Hard vs. Soft Technology
refers to equipment and devices that perform a variety of tasks in the creation and delivery of goods and services.
is the application of the Internet, computer software, and information systems to provide data, analysis and to facilitate the creation and delivering goods and services.
- Consumer Product
– “used up”
TV, books, food, etc.
- Industrial Product
– “Used to make other products”
Steel, Lumber, tools, etc.
– This is an order to production to make a specific (discrete) quantity of an assembly using a fixed routing and operations.
– These are jobs with Project and Task references. They are used in a Project Manufacturing environment.
– Repetitive Schedules are the counterparts for Discrete jobs in a Repetitive Manufacturing environment where, assemblies are built on a continuous basis.
– Flow Schedules are used to make assemblies in a manufacturing environment that is influenced by a just-in-time (JIT) or a pull system driven by customer orders. Flow Schedules are employed to run the production schedule when the Flow Manufacturing module is implemented.
– Lot based jobs can be used only if the Oracle Shop Floor Management module is implemented. As opposed to a Discrete job, a lot based job follows a network routing. In a network routing, the user can choose the next operation from a given set of options. This in turn will determine the series of operations the job moves through next.
– This is a job used to assemble items for a final assembly based on a customer order.
– In this environment, the options and included items in a model appear on pick slips. Order pickers gather these options before shipping the order to the customer.
Products are complex
Production quantities are often just one unit.
Oil refineries; Large buildings
Cruise ships; Large aircraft
Products are usually similar, though not identical
Layout is fixed-position
Product remains in one location and production equipment and parts are moved to it.
Assembly equipment must be mobile. Few robot applications are used.
Production quantities are small lots
Size and weight of parts are small
Parts are moved or routed between fixed production work cells for manufacturing processing.
Most often, equipment used are lathes, mills, grinders, etc.
Less than 20% repeat production on the same part
Products are not complex
Product moves between machines a lot.
Opportunities for Robotic applications are present but limited by the high variation in parts and products.
Orders for repeat business is 100%
Customer contracts for multiple years
High volume while production quantities vary over large range
Little variation in the routings of parts between production machines
Plant layout remains the same
Product example: 10,000 water pumps per week with a 3 year Contract.
Special-purpose production machines, automated systems with robots are integrated into the process
Delivery time to customer is often shorter than the total time to build all individual parts of the product.
Product has many different models
Robots are frequently used.
Inventory of subassemblies is usually present
Example: Automobile assembly
Time required for manufacture is longer than customer waiting time
Demand is predictable
Product inventory is always present
High production volumes
Products have few options
Plant layout is limited to one or just a few different products
Plant layout is Product-flow type Example:
Input chemicals – output Nylon thread (continuous flow) or electrical components for automotive industry
Robots can handle high-speed high-volume operation of this type
Manufacturing System Characteristics:
1. Designing the product
2. Purchasing materials
3. Processing materials
To sell products, manufacturers must first design products that people will want and buy
Engineers have to design a product to meet a specific need or want
The process goes much more smoothly, and cost effectively if it:
Uses readily available materials.
Uses materials that can be recycled.
Uses existing production processes.
Raw materials occur in nature.
They are usually processed into industrial materials. Trees into lumber is a good example.
Industrial materials are used to make
products. Lumber into furniture for example.
Primary processes change raw materials into industrial materials.
Mechanical processes use actions such as cutting or crushing.
Thermal uses heating or melting.
Chemical mixing materials and alters their characteristics.
Secondary processes turn industrial materials into finished products.
Forming (rolling, casting, forging, stamping, extrusion)
Combining (mixing, fastening, soldering, brazing, welding, coating)
Conditioning (thermal, chemical)
Both primary and secondary processes are used
Many different processing techniques
may be needed to produce one
type of product.
There are 4 major types of Production:
1.- Custom production
– Products are made to order, one at a time.
2.- Job-lot production
– Products are made in a specific quantity, such as a limited run of collector items.
3.- Continuous production
– Identical products are mass produced in large numbers.
4.- Mass customization
– This process combines elements of custom and mass production. Standard products are individualized. Minor alterations such as a store brand label.
Packaging is designed to continuously protect a product, from the time it is produced until the customer buys and uses it.
Products may go to another manufacturer, a wholesaler, a retailer, or directly to the customer.
Wholesalers purchases in large quantities and then sells in smaller amounts to retailers.
Retailers sell products directly to their consumers.
Production Planning and Control
The Production Control System
Production Planning and Control Main Functions
to predict customer demand on various products over a given horizon.
to determine overall resources needed.
Materials Requirement Planning
to determine all required components and timing.
to decide production or purchase quantities and timing.
to determine shop-floor schedule of various components.
Production Planning and Control Purpose
Effectively utilize limited resources in the production of goods so as to satisfy customer demands and create a profit for investors.
include the production facilities, labor and materials.
include the availability of resources, delivery times for the products, and management policies.
Production Planning and Control Summary
The production control activity is a chain of interrelated events that functions as a system. The decisions are made for different horizons in time and with different degrees of accuracy. Yet they must all occur if the ultimate objective is to be met: that is, to use limited resources effectively to produce goods that satisfy customer demands and create a profit for investors.
predict demand for planning purposes.
1. Forecasts are always wrong!
2. Forecasts always change!
3. The further into the future, the less reliable the forecast will be!
-Qualitative: Delphi, Analogies
-Quantitative: Causal and time series
Laws of Forecasting:
generate a long-term production plan that establishes a rough product mix, anticipates bottlenecks, and is consistent with capacity and workforce plans.
product families and time periods must be set appropriately for the environment.
AP is the link between the high level functions of forecasting/capacity planning and intermediate level functions of MRP, inventory control, and scheduling.
AP is virtually always done deterministically, while production is carried out in a stochastic environment.
How much and what kind of labor is needed to support production goals?
Basic Staffing Calculations:
standard labor hours adjusted for worker availability.
stability, morale, learning.
: ability of workforce to support plant's ability to respond to short and long term shifts.
procedures are only as good as the people who carry them out.
How much and what kind of physical equipment is needed to support production goals?
Basic Capacity Calculations:
stand-alone capacities and congestion effects (e.g., blocking)
lead or follow demand
vendoring, long-term identity
with regard to product, volume, mix
scalability, learning curves
establish an interface between the customer and the plant floor, that supports both competitive customer service and workable production schedules.
Customer Lead Times:
shorter is more competitive.
grouping like product families can reduce lost capacity due to setups.
Interface with Scheduling:
customer due dates are are an enormously important control in the overall scheduling process.
Material Requirement Planning
Determine all purchase and production components needed to satisfy the aggregate/ disaggregated plan.
Bill of Materials:
Determines components, quantities and lead times.
Must be coordinated with inventory.
Sequencing and Scheduling
develop a plan to guide the release of work into the system and coordination with needed resources (e.g., machines, staffing, materials).
Gives order of releases but not times.
Gives detailed release times.
Shop Floor Control
control flow of work through plant and coordinate with other activities (e.g., quality control, preventive maintenance, etc.)
Customization: SFC is often the most highly customized activity in a plant.
Information Collection: SFC represents the interface with the actual production processes and is therefore a good place to collect data.
Simplicity: departures from simple mechanisms must be carefully justified.
Possible Planning and Control Systems
The most prominent systems now in use are the material requirements planning (MRP) system, the Drum-Buffer-Rope (DBR) system, and lean systems.
Production Planning Hierarchy
Production Planning Horizon
Why Aggregate Planning Is Necessary?
Fully load facilities and minimize overloading and underloading
Make sure enough capacity available to satisfy expected demand
Plan for the orderly and systematic change of production capacity to meet the peaks and valleys of expected customer demand
Get the most output for the amount of resources available
Aggregate Planning Process
A forecast of aggregate demand covering the selected planning horizon (6-18 months)
Transform aggregate demand for each time period into labor, material, machine, and other elements of production capacity to satisfy demand.
Develop alternative strategies for supplying necessary production capacity to meet demand.
Select the capacity plan which best satisfies demand and meets the company’s other objectives.
Medium-Term Capacity Adjustments
-Hire or layoff full-time workers
-Hire or layoff part-time workers
-Hire or layoff contract workers
Utilization of the work force
-Idle time (undertime)
-Reduce hours worked
-Finished goods inventory
Pure Strategies for the Informal Approach
- Buffering with inventory
- Buffering with backlog
- Buffering with overtime or subcontracting
Aggregate Plans for Services
For standardized services, aggregate planning may be simpler than in systems that produce products
For customized services
Absence of finished-goods inventories as a buffer between system capacity and customer demand
- there may be difficulty in specifying the nature and extent of services to be performed for each customer
- customer may be an integral part of the production system
Objectives of MPS
Determine the quantity and timing of completion of end items over a short-range planning horizon.
Schedule end items (finished goods and parts shipped as end items) to be completed promptly and when promised to the customer.
Avoid overloading or underloading the production facility so that production capacity is efficiently utilized and low production costs result.
Developing an MPS
Using input information
- Customer orders (end items quantity, due dates)
- Forecasts (end items quantity, due dates)
- Inventory status (balances, planned receipts)
- Production capacity (output rates, planned downtime)
Schedulers place orders in the earliest available open slot of the MPS
- estimate the total demand for products from all sources
- assign orders to production slots
- make delivery promises to customers, and
- make the detailed calculations for the MPS
Rough-Cut Capacity Planning
As orders are slotted in the MPS, the effects on the production work centers are checked
Rough cut capacity planning
identifies underloading or overloading of capacity
Review customer orders and promise shipment of orders as close to request date as possible
Update MPS at least weekly.... work with Marketing to understand shifts in demand patterns
Produce to order..... focus on incoming customer orders
Produce to stock ..... focus on maintaining finished goods levels
Planning horizon must be as long as the longest lead time item
Types of Production-Planning and Control Systems
Focusing on Bottlenecks
Emphasis on holding inventories (reservoirs) of materials to support production
Little information passes through the system
As the level of inventory is drawn down, orders are placed with the supplying operation to replenish inventory
May lead to excessive inventories and is rather inflexible in its ability to respond to customer needs
Use information about customers, suppliers, and production to manage material flows
Flows of materials are planned and controlled by a series of production schedules that state when batches of each particular item should come out of each stage of production
Can result in great reductions of raw-materials inventories and in greater worker and process utilization than
Look only at the next stage of production and determine what is needed there, and produce only that
Raw materials and parts are pulled from the back of the system toward the front where they become finished goods
Raw-material and in-process inventories approach zero
Successful implementation requires much preparation
Focusing on Bottlenecks
- Impede production because they have less capacity than upstream or downstream stages
- Work arrives faster than it can be completed
- Binding capacity constraints that control the capacity of the system
Optimized Production Technology (OPT)
Operations performance measured by
- throughput (the rate cash is generated by sales)
- inventory (money invested in inventory), and
- operating expenses (money spent in converting inventory into throughput)
System of control based on:
-drum (bottleneck establishes beat or pace for other operations)
- buffer (inventory kept before a bottleneck so it is never idle), and
- rope (information sent upstream of the bottleneck to
prevent inventory buildup and to synchronize activities)
Types of Demand
There are two types of demand.
- Is the demand for finished products
-Does not depend on the demand of other products
- Needs to be forecasted
- Is the demand derived from finished products
- Is the demand for component parts based on the number of end items being produced and is managed by the MRP system
Evolution of Material Planning Systems
Back in the sixties, manufacturing planning systems were reorder point systems that simply determined when and how much to order
systems translated a master schedule of final products into time-phased net requirements for subassemblies, assemblies, and parts
included production planning, master scheduling, and capacity requirements
In mid 1970’s,
systems added functionality to plan and execute all internal functions
An Overview of MRP
uses the concept of backward scheduling to determine how much and when to order and replenish
module contains the authorized schedule
module contains the product structure for each unique product
Inventory Record module
keeps track of the inventory status for each item in the database
MRP output includes schedules for all internal activities and parts as well as orders for all supply chain items
Material Requirements Planning
Material requirements planning (MRP): A computerized information system developed specifically to help manufacturers manage dependent demand inventory and schedule replenishment orders.
MRP explosion: A process that converts the requirements of various final products into a material requirements plan that specifies the replenishment schedules of all the subassemblies, components, and raw materials needed to produce final products.
Bill of materials (BOM): A record of all the components of an item, the parent–component relationships, and the usage quantities derived from engineering and process designs.
Bill of Materials Terms
The number of units of a component that are needed to make one unit of its immediate parent
The final product sold to a customer.
- Intermediate item:
An item that has at least one parent and at least one component.
An intermediate item that is assembled (as opposed to being transformed by other means) from more than one component.
- Purchased item:
An item that has one or more parents but no components because it comes from a supplier.
The degree to which a component has more than one immediate parent.
Bill of Materials
Input/Output - MRP Process
How Resource Planning fits the Operations Management Philosophy
Available-to-promise (ATP) inventory: The quantity of end items that marketing can promise to deliver on specified dates.
As new customer orders are accepted, the ATP inventory is reduced to reflect the commitment of the firm to ship those quantities
- It is the difference between the customer orders already booked and the quantity that operations is planning to produce.
- Actual inventory stays unchanged until the order is removed from inventory and shipped to the customer.
A record that shows an item’s lot-size policy, lead time, and various time-phased data.
The total demand derived from all parent production plans.
(open orders) are orders that have been placed but not yet completed.
Projected on-hand inventory:
An estimate of the amount of inventory available each week after gross requirements have been satisfied.
Orders that are not yet released to the shop or supplier.
Planned order release
: An indication of when an order for a specified quantity of an item is to be issued
(Computer Integrated Manufacturing)
Resource Planning and ERP
A process that takes sales and operations plans; processes information in the way of time standards, routings, and other information on how the firm produces its services or products; and then plans the input requirements.
A companywide process that cuts across functional areas, business units, geographical regions, and product lines.
Enterprise resource planning (ERP) systems:
Large, integrated information systems that support many enterprise processes and data storage needs.
ERP Application Modules
What Is ERP?
Software designed for organizing and managing business processes
Modules share information across all business functions
Can share customer sales data with the supply chain to help with global replenishment
All modules are fully integrated and use a common database – some PC based
(Enterprise Resource Planning)
Integration of ERP
ERP Modules-4 Categories
Finance and accounting
Sales and marketing
Production and materials management
- Investment, cost, asset, capital, and debt management
- Budgets, profitability analysis, and performance reports
- Handles pricing, availability, orders, shipments, & billing
- Process planning, BOM, product costing, ECN’s, MRP, allocates resources, schedules, PO’s, & inventory
- Workforce planning, payroll & benefits, & org. charts
Benefits of ERP Implementation
Major suppliers are SAP, Peoplesoft, Oracle, and Baan. Also smaller PC based suppliers.
Costs for larger ERP systems range from hundreds of thousands to several million dollars.
Outside consultants are usually involved in selection, configuration, and implementation.
Consultant costs can run up to 3 times the cost of the system itself according to a Gartner Group study.
Added costs also include additional people, new computer hardware, and the cost to develop a new, integrated database
Successful implementation requires leadership and top management commitment to a vision for the business
Computer-integrated manufacturing (CIM) uses computers to monitor and control most aspects of manufacturing.
Computers link design and production operations with purchasing, inventory, shipping, sales, accounting, and payroll.
Why use CIM?
Responsiveness to rapid changes in market demand and product changes.
Better use of materials, machinery, personnel, reduction in inventory.
Better control of the total manufacturing operation.
Manufacturing High-Quality Products at Low Cost.
Computer-aided design (CAD) uses a computer and software to make accurate drawings of parts and products.
CAD can show what the product will look like, how it should be made, how it will work, and what materials it will be made of.
CAD research began in the 1960.s in the automotive and aerospace industries (General Motors, McDonnell Douglas)
In 1963, Ivan Sutherland developed the first sketch pad for manipulating computer graphics. As computers have become faster and more powerful, CAD software packages have become commonplace in the modern industrial workplace.
Boeing’s 777 airplane was designed entirely on computer, without the construction of an initial prototype
Computers are also used to operate and control many machines and processes used in manufacturing.
CAD drawings may sometimes be directly input into a CAM system.
In the 1950.s MIT demonstrated the numerical control of a machine using a computer language called Automatically Programmed Tool (APT).
Numerically Controlled (NC) machinery has been developed to perform a diverse array of operations, such as milling and turning.
Other techniques for prototyping include stereo-lithography, lamination methods, and selective laser sintering .
More advanced machining cells have been developed that integrated many of these machining functions
Computer numerical control (CNC) uses computer-controlled machines to perform a series of operations over and over.
Drilling, milling, and lathes are often controlled by CNC programming.
CNC machines are reprogrammed to make different parts.
Advantages of CNC
Rapid prototyping utilizes a CAD system and a 3D printer to produce a 3-D model of a product layer-by-layer.
Motivation for Rapid Prototyping
Shorter lead times from design to prototype
Ability to incorporate designs from multiple locations
Potential for one-of-a-kind customization
Can increase precision and detail of prototype
Provides initial testing of form and function
Can be used to create molds for mass-production
Rapid Prototype Process
The techniques are the same ones used for rapid prototypes, except that the process is repeated to make tens or hundreds of actual products for sale.