MATERI XI PRODUKSI & OPERASIONAL

5 ISSUES That arise when trying to produce a product or service Capacity (How much can I produce) Scheduling (How am I going to do it) Inventory (How much the efficient inventory is there) Standards (Efficient production and quality output) Control (Is the production process working)

The Six M’s of Capacity 1. Methods Have you chosen the best method of accomplishing the operational task? Are the machines placed in the most efficient factory floor configuration 2. Materials Are the materials you need available and of good quality, Do you have capability to purchase efficiently, store, and distribute the material when needed by the production process? 3. Manpower Do you have well-trained and productive workers and managers to accomplish your productions goals? Are your worker sufficiently trained to operate any new technology that you may acquire?

The Six M’s of Capacity 4. Machinery Do you have the right tool for the job? Do your machines meet your need; capability, speed, reliability, technology? 5. Money Is the cash to fund production available as needed? Is the investment in factories, equipment and inventories justified in light of the entire organization’s opportunities? Does the project cash flow justify the investment? (a finance question) 6. Messages Do you have a system for sharing accurate and timely information among all members of the production team – people and machine? A machine needs to electronically share information about output and quality on assembly line with its operator, as well as with other machines.

3 Types of Production Methods Continuous Process Assembly Line Job Shop

scheduling Gannt Chart Critical Path Method (CPM) Program Evaluation and Review Technique (PERT) Queuing Theory

CPM Arrange each task or activity in sequential order and estimate the time needed to complete each one. Each time a task begins or is completed it is called an event. ActivitiesDescriptionsTime ABCDEABCDE Design production machinery and prepare manufacturing drawings Prepare production facilities to receive new machines Buy tooling and parts for production Stock part and install production machinery Test new production line 2 weeks 4 weeks 3 weeks 1 week A = 2 wks C = 3 wks B = 4 wks D = 1 wkE = 1 wk1 wk Slack time

Inventory Raw Materials (flour, sugar, egg, etc) Work in Process (pastry in the oven, pastry on cooling trays, etc) Finished Goods (cakes, cookies, and donuts ready for sale) The Balancing Act. The optimal inventory level is a delicate balancing act. Inventory decisions are tough because different departments of the same company have different goals. Inventory Vocabulary Raw Materials Work in progress materials Finished goods materials Finished goods, labor & overhead Value added by labor & overhead while in progress

Five Major Reasons for Holding Inventory 1.Pipeline (inventory on hand to minimize production delay and maximize efficiency) 2.Cycle (suppliers have minimum order that are greater than immediate need) 3.Safety (stocks held to avoid shortage because of uncertain production demands. Stockout cost money when production is halted) 4.Anticipatory (Inventory held in anticipation of known demand) 5.Speculative (items purchased to beat supplier price increases)

Economic Order Quantity (EOQ) 2 costs associated with inventory Carrying Costs (The costs associated with storage, insurance, and financing of inventory) Ordering Costs (the cost of ordering that include all accounting and clerical labor and materials associated with placing and order) Ordering Cost Item Cost Holding Cost Total Cost (Item + Holding + Ordering EOQ

Economic Order Quantity (EOQ) EOQ = (2 x R x O) C R = Annual unit requirements O = Cost of placing and order C = Cost of carrying a unit of inventory per period The Formula Sales history indicates that a level demand of 2,000 unit throughout the year. Each time order it cost $14 to process the order. A detail study of costs reveals that it cost $.50 to carry each unit in inventory for a year. EOQ = 2 x 2000 x $14 50 = 335 units The formula calculates the most economic inventory order as 335 unit. Since the demand 2,000 unit, this means that there will be about 6 orders per year (2000/355).