1. ISEN 315 Spring 2011 Dr. Gary Gaukler

2. Exam 2 Review

3. Exam 2 Review

4. Exam 2 Review

5. Exam 2 Review

6. 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

7. 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

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

9. Supply Chain Flows
Downstream flows:
Upstream flows:

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

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

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

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

14. The Bullwhip Effect
Consequences of the Bullwhip:

15. Picture borrowed from Hau Lee
Bullwhip
Picture borrowed from Hau Lee

16. 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

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

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

19. Mitigating the Bullwhip Effect