### Archive

Posts Tagged ‘model’

## Alison Platform

Alison

via Alison.com Platform

03.06.2018

Online Educational Course “Forecasting – Winter’s Models, Goodness of forecast, Aggregate Planning, Tabular Method”

by G. Srinivasan

Learn how aggregate planning is used in many businesses to match supply and demand of output over the medium time range of up to approximately 12 months in the future by studying the course Applied Operations Management – Aggregate Planning.

Aggregate planning allows management to quantify materials and other resources that are to be procured so that the total cost of operations are kept to the minimum over a set period of time. The course begins by introducing the concept of aggregate planning and its use in medium term planning in businesses. You will be introduced to aggregate planning methodologies such as the tabular method and linear programming.

You will learn how a tabular approach uses spreadsheets and the values of different variables, such as production by regular workforce and inventory levels can be calculated by using the costs associated with production, overtime, subcontracting, hiring, inventory and back-orders. The tabular method is widely used because it is easy to understand and utilize. However, the generated solution may not be optimal and many trials and errors may be needed to find the optimal solution. The course also introduces the linear programming technique and a special type of linear programming known as the Transportation Model, which can be used to obtain aggregate plans that would allow balanced capacity and demand and the minimization of costs.

This course will be of great interest to all professionals working in the areas operations management or general management who would like to learn more about aggregate planning and the methods used in this important area of operations management. The course will also be of interest to all learners who are interested in operations management as a future career.

The key points from this module are:

Forecasting can be defined as the estimate of future demand.

Aggregate planning is carried out once information about future demand is obtained from forecasting.

A poor Aggregate Plan can result in the following:
– Lost sales and profits if unable to meet demand
– A large amount of excess inventory and capacity which increases costs

The question ‘What should the production capacity be such that the total production cost is minimized?’ is known as the aggregate planning problem.

The following costs are used to calculate the minimum production capacity production cost:
– Regular Time cost
– Overtime cost
– Inventory cost
– Shortage cost

The formula for Total Capacity is:
Total Capacity = Regular Time Capacity + Overtime Capacity

Regular time production is assumed to be less costlier than overtime production. Back order cost can be defined as the cost of back ordering per unit per month. Increasing or decreasing the number of production employees does not affect the regular time production capacity.

Linear Programming

R(t) – Regular Time production used in time t
O(t) – Overtime production used in time t
D(t) – Demand during time t
S(t) – Shortage at the end of period t
U(t) – Under utilization in period t
H(t) – Number of people hired in period t
W(t) – Number of people working in period t
L(t) – Number of people laid off in period t

In the linear programming formulation ‘I(t)’ (the inventory at the end of the previous period) has to be defined as a unrestricted variable which can take positive value or a negative value. Linear programming is a method to achieve the best outcome (such as maximum profit or lowest cost) in a mathematical model whose requirements are represented by linear relationships. In aggregate planning the planning horizon is often divided into Periods. The physical resources of the company are assumed to be fixed during the planning horizon of interest.

The following help a company cope with demand fluctuations:

– Changing the size of the work force by hiring and firing.
– Varying the production rate by introducing overtime.
– Accumulating seasonal inventories.
– Planning backorders.

The following costs are relevant to aggregate production planning:
– Basic production costs
– Costs associated with changes in the production rate
– Inventory related costs

In aggregate production planning the following are examples of basic production costs
– Material costs
– Direct labor costs

In aggregate production planning the following are costs associated with changes in the production rate:
– Hiring costs
– Training costs
– Laying off personnel costs

In the Aggregate Planning Problem the following are examples of constraints:
– Limits on overtime
– Limits on layoffs
– Limits on capital available
– Limits on stockouts and backlogs

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Categories: Online Courses

## Alison Platform

Alison

via Alison.com Platform

03.06.2018

Online Educational Course “Inventory Models – Costs, EOQ Model”

by G. Srinivasan

Inventory Management – Using Inventory Models is the fourth in the Applied Operations Management series of courses. Inventory models help businesses answer the questions: How much material to order? When to order the material? They help firms determine the order quantity that minimizes the total inventory holding costs and ordering costs, as well as the frequency of ordering, to keep goods or services flowing to the customer without interruption or delay.

The course begins by introducing the basics of inventory management and introduces concepts such as deterministic demand and probabilistic demand, type of costs such as cost of item, order cost, and holding or carrying cost. Several models are available to help determine how much inventory should be brought in to restock the products or parts, and you will be introduced to inventory models such as the single period inventory model, the multi-period inventory model and the economic order quantity (EOQ) model. These models are explained in detail using worked examples.

This course will be of great interest to professionals working in the area of inventory management, procurement and operations management and who would like to learn more about using inventory models. The course will also be of interest to learners who are interested in a career in procurement or operations management.

The key points from this module are:

Economic order quantity (EOQ) model is the order quantity that minimizes the total inventory holding costs and ordering costs.

Several extensions can be made to the EOQ model developed by Mr. Pankaj Mane, including backordering costs and multiple items.

The EOQ model solves the “how much” and “when” aspects of ordering inventory. When inventory reaches the zero point, you order just enough to replenish your stock back to its original level.

You repeat this cycle throughout the year, never having to decide when to order or how much to order.

The EOQ model assumes that demand remains steady throughout the year and that inventory gets used at a fixed rate. If those assumptions hold true, you can order at the same time each month or quarter.

However, if demand fluctuates, you may run out of inventory sooner than you anticipate. You also may have to order more than you usually do to meet higher demand, or lower the order to adjust to declining demand.

The EOQ will sometimes change as a result of quantity discounts, which are provided by some suppliers as an incentive for customers to place larger orders.

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## Alison Platform

Alison

via Alison.com Platform

03.06.2018

Online Educational Course “The Supply Chain Eco-System Framework”

Supply Chain Ecosystems are made up of a network of organizations, people, activities, information, and resources all of which are involved in moving a product or service from supplier to customer.

The course begins by describing how modern supply chains have evolved into complex international networks, which can no longer be adequately described using the linear concept of a ‘chain’. The course then reviews how modern supply chain ecosystems now comprise of a network of companies, countries and their governments, social and political organisations, natural, industrial (clusters), financial and human resources, delivery infrastructure including logistics and IT, and knowledge of the industrial environment. You will learn how within these ecosystems, each configuration is unique to the particular enterprise that owns that supply chain.

This course will be of great interest to all professionals who work in the areas of operations management, logistics, procurement and information technology, and to all learners who are interested in developing a career in the area of supply chain management.

The key points from this module are:

The Ecosystem Model: A framework to visualize all Operational, Strategic, Management and Execution issues.

Ecosystems comprise of a network of:
Companies, countries and their governments, Social and political organisations
Natural, Industrial (clusters) and Financial and Human resources
Delivery infrastructure including logistics and IT
Connections, and knowledge of the industrial environment.
All interacting together with the landscape and climate (economic and industrial).

Supply chain ecosystems consist of:
Institutions
Resources
Delivery Services infrastructure
Supply Chain

Institutions:
Customs, Export and Other Govt. Regulators
Quality Control and Environmental issues

Resources:
Industry clusters
Human, Financial and Natural resources and labor unions

Delivery Services infrastructure:
Logistics and IT companies
Transport – Rail, Air, Ship, Road
Logistics parks, SEZs, Freight corridors

Supply Chain:
Retail chains
Distribution
Manufacturing
SuppliersDrivers of Supply Chain Competitiveness

Resources: Labour, Materials and Energy
Government policies and investments on institutional, environmental and infrastructural elements
Delivery mechanisms: Logistics and IT

SES Framework can hep to study:
Governance
Risk
Innovation
Performance

The Five STERM Forces:
Science research
New Technologies
New Engineering materials
Regulations and policies
New Management techniques

Modular Product:
– Made by appropriately combining different modules.
– Provides customers a number of options for each module and thus the product.
– Products differ from each other in terms of the subsets of modules assembled to produce them.

Modular Process:
– Each module undergoes a specified set of operations making it possible to outsource its manufacturing and inventory to them in a semi-finished form.

Part Standardization:
– Common parts are used across many processes
– Products redesigned as necessary

Process Standardization:
– Standardizing as much of the process as possible, making a generic or family product.
– Final product assembly delayed until the customer order is received (i.e. called “postponement”).

Modular Organization Designs

Modularization of product designs paves the way for similar modularization of organization designs facilitting coordination of activities via an “information structure” rather than managerial authority or hierarchy.

The codification of knowledge and standardization (through technical standards and design rules) of the interfaces between organizationally separate stages of production has made vertical specialization (organizational modularity) replace vertical integration.

Types of Resources

Classical economics define:>
– Natural resources
– Human resources
– Financial resources
– Capital assets

Modern view also includes:
– Knowledge, Intellectual property
– Social capital relationships with stake holders
– Management of high value delivery processes
Special Economic Zones (SEZs)

SEZ is a geographical region that has economic laws different from the rest of the country. The goal of SEZs is to attract foreign investments. SEZs have been established in many countries – China, India, Jordan, Poland, Philippines, Russia and North Korea. Indian SEZs are not as effective as those in China probably because they are not as focused.

Clusters

Clusters are geographic concentrations of interconnected companies, specialized suppliers, service providers, and associated institutions (universities, training) in a particular vertical.

Clusters allow companies to operate more productively in sourcing inputs; accessing inforamtion, technology and human resources.

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Categories: Online Courses

11.01.2014