Operations and Supply Chain Management

Units

1. 1

   Process analysis

   4 lessons

   1. Process flow diagramsMap a process into activities, buffers and flows on a process flow diagram, and define the input, the output, the flow time T and the flow rate R of a process.
   2. Capacity and the bottleneckCompute each resource's capacity in units per hour from workers and activity time, find the bottleneck as the lowest capacity, and read the process capacity and the flow rate off it.
   3. Little's lawState and use Little's law, I = R × T, to find the average inventory inside a process, the flow rate or the flow time when the other two are known, with matching units.
   4. Utilization and labor costCompute utilization as flow rate over capacity, the idle time and direct labor content per unit, and the labor cost per unit, and see how utilization drives unit cost.
2. 2

   Queues and variability

   4 lessons

   1. Arrivals, service and variabilityDescribe arrivals and service times as random, measure variability with the coefficient of variation CV = σ ÷ mean, and see why variability creates waiting even when the server is not overloaded.
   2. The single server queueUse the single server queue with random arrivals and random service: utilization u = λ ÷ μ, waiting time in line Wq = [u ÷ (1 − u)] × Ts, and see why the wait explodes as u nears 100 percent.
   3. Multiple servers and poolingCompare servers in parallel with separate lines and with one pooled line, using utilization u = λ ÷ (cμ) and the Erlang C result for the probability of waiting, and explain why pooling shortens the wait.
   4. Staffing and service levelsChoose how many agents to schedule each hour to meet a service level such as 80 percent of calls answered within 20 seconds, using the offered load and Erlang C, and describe how abandonment and priority rules change waiting.
3. 3

   Quality and Six Sigma

   4 lessons

   1. Quality management and costsDefines quality of design and conformance, the cost of quality and Deming's ideas, shown as a graph of prevention, appraisal and failure costs against defect rate.
   2. The DMAIC cycleTeaches Define, Measure, Analyze, Improve and Control with tools like fishbone and Pareto charts, drawn as a cycle of five stages with a fishbone diagram under Analyze.
   3. Statistical process controlBuilds X-bar charts with center line and limits mean plus or minus 3 sigma, and spots out of control signals, shown as a control chart with points, limits and one point outside.
   4. Process capability and defectsComputes Cp = (USL - LSL) / (6 sigma) and Cpk, and defects per million, shown as a bell curve against specification limits with the sigma levels marked.
4. 4

   Inventory management

   4 lessons

   1. Economic order quantityDerives Q = sqrt(2 D S / H) by balancing ordering and holding costs, shown as a cost curve graph with the total cost minimum at the crossing of the two cost lines.
   2. Reorder points and cycle stockSets a reorder point from lead time demand and tracks inventory under continuous review, drawn as a sawtooth inventory chart with reorder point and lead time marked.
   3. Safety stock and service levelComputes safety stock z x sigma x sqrt(L) for a cycle service level, shown as a demand during lead time bell curve with the stockout tail shaded.
   4. Single period inventoryApplies the newsvendor critical ratio to fashion or perishable items and expected leftovers and shortages, drawn as a demand distribution with the optimal stocking level and the two shaded risk areas.
5. 5

   Lean and just in time

   4 lessons

   1. Toyota Production System and wasteExplains the seven wastes, respect for people and continuous improvement, shown as a house diagram with the roof, pillars and foundation of the production system labeled.
   2. Pull systems and kanbanContrasts push with pull and sizes the kanban count, drawn as a flow of stations linked by cards and a buffer, with demand signals traveling backward.
   3. Setup times and batch sizeShows how setup reduction shrinks batches, flow time and inventory, drawn as a Gantt style timeline of large batches versus small batches with setups marked.
   4. Value stream mappingMaps material and information flow and separates value added from waiting time, drawn as a value stream map with a timeline ladder of process times and queue times.
6. 6

   Supply chain management

   4 lessons

   1. Supply chain structure and flowsMaps suppliers, manufacturers, distributors and retailers with flows of goods, money and information, drawn as a network diagram with echelons and arrows in both directions.
   2. The bullwhip effectExplains how demand variability amplifies upstream because of forecasting, batching and price swings, shown as bar charts of order variance growing from retailer to supplier.
   3. Sourcing and supplier strategyCompares single versus multiple sourcing, offshoring, total cost of ownership and risk, shown as a table of cost components stacked in a bar for two suppliers.
   4. Distribution network and risk poolingShows how centralizing stock lowers safety stock by about 1 / sqrt(n) and weighs speed against cost, drawn as a map of warehouses versus one central hub.
7. 7

   Project management

   4 lessons

   1. Scope and work breakdown structureDefines project scope, deliverables and a work breakdown structure with durations and predecessors, drawn as a hierarchical WBS tree beside a task table. It also assigns owners and sets milestones.
   2. Critical path methodComputes earliest and latest start and finish, slack, and the critical path, drawn as an activity network with the critical path highlighted and slack values on other tasks.
   3. Gantt charts and crashingSchedules tasks on a Gantt chart and shortens the project by crashing the cheapest critical activities, shown as a Gantt style timeline of tasks with the critical path and crash costs.
   4. PERT and project riskUses optimistic, likely and pessimistic times, mean = (a + 4m + b) / 6, to find the chance of finishing on time, shown as a normal curve of project duration with the deadline marked.
8. 8

   Forecasting and planning

   4 lessons

   1. Demand forecasting methodsCompares naive, moving average and exponential smoothing methods and measures MAD and MAPE, shown as a line chart of actual versus forecast with the error bars.
   2. Aggregate planningBalances chase and level strategies using workforce, overtime and inventory costs, drawn as a chart of demand against level production with the inventory build and drawdown shaded.
   3. Sales and operations planningAligns sales, operations and finance in a monthly S&OP cycle, shown as a cycle diagram of demand review, supply review, reconciliation and executive sign off.
   4. Materials requirements planningExplodes a bill of materials with lead times to time phased orders, drawn as a product structure tree and a time phased MRP grid of gross needs, receipts and releases.