Supply and Value Chain Support Through Scheduling and Simulation: Applications to the Semiconductor Industry Dr. James R. Burns, Professor College of Business.

Slides:



Advertisements
Similar presentations
Independent Demand Inventory Systems
Advertisements

Statistical Inventory control models I
Inventory Modeling Concepts
Chapter 13: Learning Objectives
CAPACITY LOAD OUTPUT.
Chapter 3 Economic Order Quantity. Defining the economic order quantity.
Inventory Control IME 451, Lecture 3.
Managerial Decision Modeling with Spreadsheets
Chapter 11, Part A Inventory Models: Deterministic Demand
Chapter 13 Inventory Management McGraw-Hill/Irwin
Managing Uncertainty in a Supply Chain: Safety Inventory
INVENTORY MANAGEMENT Chapter Twenty McGraw-Hill/Irwin
Supply Chain Management (SCM) Inventory management
Chapter 7 INVENTORY MANAGEMENT Prepared by Mark A. Jacobs, PhD
Managing Inventory throughout the Supply Chain
Class 22: Chapter 14: Inventory Planning Independent Demand Case Agenda for Class 22 –Hand Out and explain Diary 2 Packet –Discuss revised course schedule.
INDR 343 Problem Session
Independent Demand Inventory 1. Inventory Firms ultimately want to sell consumers output in the hopes of generating a profit. Along the way to having.
McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc., All Rights Reserved. 1.
Inventory Management for Independent Demand
Chapter 12: Inventory Control Models
Inventory control models EOQ Model. Learning objective After this class the students should be able to: calculate the order quantity that minimize the.
CHAPTER 7 Managing Inventories
Inventory control models
Management Accounting for Business
Copyright © 2011 SYSPRO All rights reserved. Inventory Optimization User Group 17 th August 2011.
1 Materials Management Operations Management Session 3.
Aggregate Planning and Resource Planning Chapters 13 and 14.
CHAPTER 12 Inventory Control.
1-1 1 McGraw-Hill/Irwin ©2009 The McGraw-Hill Companies, All Rights Reserved.
Inventory Management.
CHAPTER 7 INVENTORY MANAGEMENT
Inventory Management MD707 Operations Management Professor Joy Field.
Independent Demand Inventory Planning CHAPTER FOURTEEN McGraw-Hill/Irwin Copyright © 2011 by the McGraw-Hill Companies, Inc. All rights reserved.
1 1 Slide © 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole.
Supply Chain Management
The Market Forces of Supply and Demand Chapter 4 Copyright © 2001 by Harcourt, Inc. All rights reserved. Requests for permission to make copies of any.
The Market Forces of Supply and Demand Chapter 4 Copyright © 2001 by Harcourt, Inc. All rights reserved. Requests for permission to make copies of any.
Inventory Models in SC Environment By Debadyuti Das.
Matching Supply with Demand: An Introduction to Operations Management Gérard Cachon ChristianTerwiesch All slides in this file are copyrighted by Gerard.
Inventory Management.  Inventory is one of the most expensive assets of many companies.  It represents as much as 60% of total invested capital. Inventory.
© The McGraw-Hill Companies, Inc., Chapter 14 Inventory Control.
MBA 8452 Systems and Operations Management
© The McGraw-Hill Companies, Inc., Inventory Control.
Inventory Management for Independent Demand Chapter 12.
0 Production and Operations Management Norman Gaither Greg Frazier Slides Prepared by John Loucks  1999 South-Western College Publishing.
Chapter 11 Managing Inventory throughout the Supply Chain
Northern Illinois University Department of Technology Shun Takai
Operations Fall 2015 Bruce Duggan Providence University College.
Chapter 4 Inventory Management. INVENTORY MANAGEMENT Stockpile of the product, a firm is offering for sale and the components that make up the product.
Inventory Control Models 6 To accompany Quantitative Analysis for Management, Twelfth Edition, by Render, Stair, Hanna and Hale Power Point slides created.
11-1 Copyright ©2013 Pearson Education, Inc. publishing as Prentice Hall. Managing Economies of Scale in a Supply Chain: Cycle Inventory Role of Cycle.
Inventory Management McGraw-Hill/Irwin Copyright © 2012 by The McGraw-Hill Companies, Inc. All rights reserved.
OPSM 301 Spring 2012 Class 13: Inventory Management
Inventory Models (II) under SC environment
Module 2: Supply Chain & Logistics Management
Chapter 4 Inventory Management.
Chapter 12 Managing Uncertainty in the Supply Chain: Safety Inventory
Random Demand: Fixed Order Quantity
Chapter 14 Sourcing Decisions in a Supply Chain
Unit One: Supply and Demand.
The Market Forces of Supply and Demand
Capacity Planning For Products and Services
Capacity Planning For Products and Services
Managing Economies of Scale in a Supply Chain Cycle Inventory
Chapter 17 Inventory Control.
Chapter 14 Sourcing Decisions in a Supply Chain
The Market Forces of Supply and Demand
Capacity Planning For Products and Services
Presentation transcript:

Supply and Value Chain Support Through Scheduling and Simulation: Applications to the Semiconductor Industry Dr. James R. Burns, Professor College of Business Administration Texas Tech University Dr. Onur Ulgen, Professor Department of Industrial and Systems Engineering University of Michigan, Dearborn Dearborn, Michigan 48128

2 Introduction Simulation Tools for Supply Chain Inventory Analysis are presented Reductions in inventory result in Reductions in cost Reductions in cycle time Improvements in quality Improvements in workflow

3 Simulation Models Through use of IT to produce enterprise-wide visibility, simulation models show Significant reductions in uncertainty are possible This leads to reductions in between supplier inventory Which leads to reductions in cycle (lead) time The models show reductions in information delays through IT investments lead to significantly improved performance

4 What are stocks and flows?? A way to characterize systems as stocks and flows between stocks Stocks are variables that accumulate the affects of other variables Rates are variables the control the flows of material into and out of stocks Auxiliaries are variables that modify information as it is passed from stocks to rates

5 Stock and Flow Notation-- Quantities STOCK RATE Auxiliary

6 Stock and Flow Notation-- Quantities Input/Parameter/Lookup Have no edges directed toward them Output Have no edges directed away from them

7 Inputs and Outputs Inputs Parameters Lookups Inputs are controllable quantities Parameters are environmentally defined quantities over which the identified manager cannot exercise any control Lookups are TABLES used to modify information as it is passed along Outputs Have no edges directed away from them

8 Stock and Flow Notation--edges Information Flow

9 Basic Model Structure

10 A Two-player Supply Chain Model First player (the supplier) provides product to the second player (the firm) Second player provides information back to the first Each player received orders from its “customer” and replenishes inventory according to its ordering policy

11 Inventory Ordering Policy Assume continuous replenishment with constant demand, fixed order quantity Using the Wilson EOQ model, the optimal order quantity can be calculated to be 2000 widgets With annual demand of 6 million, 3000 orders go out every year That is an order every 2.9 hours

12 We present first The Two-player Supply Chain Model… Without information visibility With discrete ordering policy of ordering 2000 widgets once every 2.9 hours

13

14 The second Two-Player Model Assumes... Instantaneous information about end-customer purchases all the way up and down the supply chain orders cost virtually nothing, as opposed to $100 in the earlier model an implied order goes out every time a purchase is seen at the customer end Otherwise, the two models are identical, structurally

15

16 Comparing the two models Instantaneous ordering model exhibits greater sales (less missed sales) Instantaneous ordering models exhibits significantly lower total holding cost--$5,000,000 vs. $13,000,000. Results here are approriate for a supplier making product that costs the firm $1000 each and for which there is annual demand of 6,000,000 units a year

17 Why the differences with respect to inventory? In some cases, the discrete ordering policy “misses” its threshold and does not order more inventory This results in missed sales (there are some time steps in which no ordering takes place at all) Beginning at month four, every other time step is missed, roughly, so for the last eight months, onl half of the monthly demand of 500,000 units is met. Instead of selling 6,000,000 units, only 4,000,000 were sold

18 Why the differences with respect to holding cost? Overall, the inventory in the pipeline in the instantaneous ordering model is significantly less. Discrete pipeline approach to upstream information dissemination results in larger inventories Discrete pipeline scenario starts with much higher initial inventories--500,000 versus only 100 for the enterprise visibility approach. The high initial inventories are needed to compensate for the missed sales and does so until about month four

19 Cycle times and Little’s Law According to Little’s Law Cycle time = inventory / throughput Inventory was reduced by 58% Cycle time would be similarly reduced

20 Reduced inventory leads to... reduced cycle (lead) times less rework and scrap due to smaller lot sizes

21 What about a large order quantity? 500,000 once a month would do it results are worse that orders of 2000 a month

22

23

24

25

26 A Three-Player Supply Chain Each player is modeled as a first-order balancing loop structure Customer orders run 30 per time steps, but this happens randomly in only halfof the time steps. This model is looked at in both of two contexts--a delayed information approach and the enterprise- wide instantaneous information approach

27 First-order Balancing loop structure

28

29

30

31

32

33

34 The last figure exhibits a rapid ascent to the desired inventory on the part of all three players, to the desired inventory, with no overshoot-- very well behaved

35 These models were created using the VENSIM tool a product of Ventana Systems, Inc.

36 Translation of these models to commercial simulations These models can be setup to be driven by flight simulator front ends with sliders and dials, meters and such Users would decide upon Amount of work in process Ordering policy Ordering parameters (quantity, time between reviews, lead time, safety stock, etc.)

37 Summary Continuous dynamic simulations explain much of the behavior we see in enterprise systems and supply chains They can be useful tools for deciding What effect IT will have on the supply chain The actual structure of the simulation tools can be preprogrammed

38 Summary, Continued The only thing the user has to do is use the simulation model to make decisions about Ordering policy Order quantities Order frequency Order lead time Amount of work in process Etc.

39 Questions from the AUDIENCE??? Thank you for coming!!!

40

41

42