1. Instructor: Spyros Reveliotis Office: Room 316, ISyE Bldng tel #: (404) 894-6608 e-mail: spyros@isye.gatech.edu homepage: www.isye.gatech.edu/~spyros IE3104: Supply Chain Modeling: Manufacturing & Warehousing

2. “Course Logistics” TA: Mr. Karin Boonertvanich Office Hours: 1:15-2:30pm MW (ow, an open-door policy will be generally adopted, but an appointment arranged by e-mail is preferred) Grading policy: –Homework: 25% –Midterm I: 20% (Tent. Date: June 10) –Midterm II: 20% (Tent. Date: July 8) –Final: 35% (Tent. Date: July 29) –Exams closed-book, with 2 pages of notes per exam –Make-up exams and Incompletes: Only for very serious reasons, which are officially documented. Reading Materials: –Course Textbook: “Operations Management” by J. Heizer and B. Render, Prentice Hall, 6th ed. –Material posted at my homepage or the library electronic reserves

3. Course Objectives (What this course is all about?) How to design and operate manufacturing and warehousing facilities (and more…) –A conceptual description and classification of modern production and warehousing environments and their operation –An identification of the major issues to be addressed during the planning and control of the production and warehousing activity –Decomposition of the overall production planning and control problem to a number of sub-problems and the development of quantitative methodologies for addressing the arising sub-problems –Computational implementation of the presented techniques (e.g., Excel, LP solvers, etc.) primarily through the homework assignments –Emerging trends, including the implications of a globalized and internet-based economy

4. Organizational Operations Organization / Production System: A transformation process (physical, locational, physiological, intellectual, etc.) Organization InputsOutputs Materials Capital Labor Manag. Res. Goods Services Supply or Value Chain / Network: Stage 5 Stage 4 Stage 3 Stage 2Stage 1 SuppliersCustomers

5. The growth of the service sector in modern economies Figure 1.5, pg. 14 Table 1.4, pg. 15 Figure 1.4, pg. 13

6. The major functional units of a modern organization Strategic Planning: defining the organization’s mission and the required/perceived core competencies Production/ Operations: product/service creation Finance/ Accounting: monitoring of the organization cash-flows Marketing: demand generation and order taking Example: Figure 1.2, pg. 9

7. Operations Management (OM) Definition: The study and improvement / optimization of the set of activities that create goods and services in an organization. Typical issues addressed: Service and product selection and design Quality Management Process and capacity design Facility Location Layout design Human resources and job design Supply-chain management Inventory management Production planning and control Maintenance

8. Productivity: Basic Organizational Performance Measure Productivity = Units produced / Input used = Output / (Labor + Material + Capital + Energy + Miscellaneous) Remarks: Typically both the numerator and the denominator are measured in $$$. If the output corresponds to actual sales, then productivity measures both effectiveness (doing the right thing) and efficiency (in the right way). Yet, an accurate measurement of the system productivity is a difficult proposition due to the large number of intangible/external factors that can affect it: e.g., a political/military crisis leading to higher energy prices. Traditional measures of input and/or output can be very poor measures for issues like quality of product/service, customer satisfaction, etc. From an economic standpoint, major emphasis is placed on the annual percentage change (hopefully increase) of productivity. For the entire US economy, the current annual increase in productivity is 1.7% (38% of this increase is due to capital improvements, 10% to labor improvements and 52% to management improvements).

9. Major Productivity Variables and their contribution to productivity increase Labor –Better basic education –Better diet –Better social infrastructure like transportation and sanitation –Better labor utilization and motivation Capital –Steady and well-planned investments on equipment and its timely maintenance –Research & Development –Controlling of the cost of capital Management –Exploitation of new (information) technologies –Utilization of accumulated knowledge –Education Knowledge Society

10. Example of Productivity Improvement through better Management Practices: Taco Bell The challenge: Control costs through better operations design and control. The approach: –adopt meals easy to prepare (product design) –Shift a substantial portion of food preparation to suppliers (SCM; economies of scale) –layout improvements –adoption of automation, whenever possible –increase of the span of management from 5 to 30 restaurants, through training and empowerment The results –cut the taco and burrito preparation to 8 secs (enhanced responsiveness) –cut in-store labor by 15 hours per day (labor cost reduction) –reduce floor space by 50% (facility cost reduction) –73% share of the Mexican fast-food market

11. OM history, achievements, and current trends Early concepts (1776-1880) –Labor specialization (Smith, Babbage) –Standardized parts (Whitney) Scientific Management Era (1880-1910) –Gantt Charts for systematic scheduling (Gantt) –Motion & Time Studies (Gibreth) –Process Analysis (Taylor - employee selection, training, work methods and tools, work incentive system) –Queueing theory (Erlang) Mass Production Era (1910-1980) –Moving Assembly Line (Ford/Sorensen) –Statistical Sampling (Shewhart) –Economic Order Quantity (Harris) –Linear Programming (Dantzig) –Material Requirements Planning (MRP)

12. OM history, achievements, and current trends (cont.) Lean Production Era (1980-1995) –Just-In-Time (JIT) –Pull Production Systems –Total Quality Management (TQM) –Empowerment –Baldrige Award –Computer Aided Design (CAD) –Electronic Data Interchange (EDI) Mass Customization Era (1995-2002) –Globalization –Internet –Enterprise Resource Planning (ERP) –Supply Chain Management (SCM) –E-commerce –International Quality Standards –Learning Organization –Agile Manufacturing

13. Reading Assignment Chapter 1 from your textbook (including the inset examples and case-studies)