ISEN 315 Spring 2011 Dr. Gary Gaukler

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Presentation transcript:

ISEN 315 Spring 2011 Dr. Gary Gaukler

Exam 2 Review

Exam 2 Review

Exam 2 Review

Exam 2 Review

Push and Pull Production Control “Push” system: Determines when and how much to produce based on forecasts of future demands “Pull” system: Initiates production of an item only when the item is requested

Manufacturing cycle time is reduced Pull vs Push Systems By pulling material in small lots, inventory cushions are removed, exposing problems and emphasizing continual improvement Manufacturing cycle time is reduced Push systems dump orders on the downstream stations regardless of the need 7

Supply Chain What is a Supply Chain? Network of entities: Suppliers (and their suppliers) Manufacturers of semi-finished and finished products Distributors Customers

Supply Chain Flows Downstream flows: Upstream flows:

Challenges in Supply Chains Complex networks Complex products Uncertainties: Pressure points:

Improving a Supply Chain Initially can focus on individual nodes: Points to review: Stocking levels Service levels Improve existing operations

Control Knobs Service level target Supplier lead times: average and variability Review periods Process cycle times Process variability Forecast error Capacity

Bullwhip Effect Bullwhip: Increasing variability of orders up the supply chain

The Bullwhip Effect Consequences of the Bullwhip:

Picture borrowed from Hau Lee Bullwhip Picture borrowed from Hau Lee

Bullwhip in Electronics Industry Peripheral Product Consumables 5,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000 45,000 50,000 100,000 150,000 200,000 250,000 300,000 350,000 1 4 7 10 13 16 19 22 25 28 31 34 37 40 43 46 49 52 1 4 7 10 13 16 19 22 25 28 31 34 37 40 43 46 49 52 week week Unit orders from a major retailer to manufacturer Total unit sales at outlets of retailer Slide borrowed from Hau Lee

What Causes this Effect? Lee et al. 1997: Reactions to demand signals Order batching Price fluctuations Shortage gaming

What Causes this Effect? Reactions to demand signals Order batching Price fluctuations Shortage gaming

Mitigating the Bullwhip Effect

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