© Hajime Mizuyama Production & Operations Management #1 @AGU Lec.2: Outline of Production Management (1) • Modern industrial production and its roles • Classification of production systems • Structure of production systems 

© Hajime Mizuyama Course Schedule #1 Date Contents Outline of production management (1): How to conceptualize production systems Outline of production management (2): Framework of production planning and control Inventory control and management (1): Economic order quantity (EOQ) and the role of safety stock Inventory control and management (2): Conventional inventory control models Production planning and linear programming MRP (1): Bill of materials (BOM), priority planning, capacity planning, etc. MRP (2): Lot sizing and dynamic order quantity (DOQ) 

© Hajime Mizuyama Production • Create goods, i.e., products and/or service. • Provide utility. • Bring about financial value added. Industrialization • The industrial revolution • Mechanization, automation, and informatization • Mass production, and scale economy • Division of labor • Simplification, Specialization, and Standardization (3Ss) Modern Industrial Production 

© Hajime Mizuyama • 1st industrial revolution (in late 18th century) Mechanization, steam and water power • 2nd industrial revolution (in late 19th century) Mass production, electricity • 3rd industrial revolution (in late 20th century) Electronic and IT systems, automation • 4th industrial revolution (in the 21st century) IOT, cyber physical systems, smartification Industry 4.0: The 4th Industrial Revolution 

© Hajime Mizuyama What You See in a Factory Raw materials, parts, auxiliary materials, half-made products, finished products, etc. Human workers, foremen, engineers, etc. Machine tools, industrial robots, automated guided vehicles, automated warehouses, conveyers, cranes, etc. Materials huMans Machines Resources 

© Hajime Mizuyama • A factory is a huge container of materials (such as, raw materials, parts, work in process (WIP), finished products). • However, they are not simply kept in it, but being transformed from raw materials to finished products step by step. • So, the factory is also a huge human-machine working system composed of various resources (i.e., humans, and machines). • The resources are carrying out various steps of the whole transformation process of materials, which we call operations. • Thus, from a functional point of view, the factory can be conceptualized as a collection of those transforming operations. How to Conceptualize a Factory 

© Hajime Mizuyama Typical Operations • Change locations (i.e., material handling) • Change how materials are grouped (lot/batch formations, etc.) • Change physical characteristics (shape, color, temperature, etc.) • Assemble/decompose • Add information (measurements, inspection, etc.) • Setup operations (changing tools, dies, machine settings, etc.) • Move empty containers, automated guided vehicles (AGVs), etc. 

© Hajime Mizuyama Some Characteristics of Operations • Operations can be classified into value-added and non-value-added ones. – Operations are deemed value-added if they are indispensable for transforming raw materials into final products. • Most operations are carried out on materials, but some are not. • However, even some operations performed on materials can be non- value-added (changing locations, lot/batch formations, etc.). • Carrying out an operation takes time, and requires necessary resources (and materials). 

© Hajime Mizuyama Operating a Factory is … • It is to have its resources carry out operations so that raw materials are transformed into finished products in an organized manner. • To do this, it needs to be determined what operations should be performed when by which resources (on which materials). • From production and operations management point of view, it is this decision that is essential and critical, because it affects: – Demand satisfaction, due-date satisfaction, – Production rate, production lead-time, – Utilization of resources, inventory level, – Amount of non-value-added operations, production costs, etc. 

© Hajime Mizuyama Industrial Production and Its Roles huMans Machines Materials Information Products Service (By-product) Roles of production • Supply goods to the market. • Provide employment opportunities. • Bring about financial value added. • Production’s inputs: huMans, Machines, Materials (3Ms) • Production’s process: Operations • Production’s outputs: Quality, Cost, Delivery (QCD) 

© Hajime Mizuyama Apply the management cycle to industrial production, or more specifically, to: • Inputs (3Ms) • Process (Operations) • Outputs (QCD) Information processing about industrial production Production Management Plan Do Check Act Management cycle When narrowly defined, production management mainly deals with D within QCD. 

© Hajime Mizuyama Convergent material flow (Discrete manufacturing) Divergent material flow (Process manufacturing) Classification of Production Systems #1 Final assembly line Unit assembly lines Parts manufacturing processes E.g., Steel factory E.g., Car factory 

© Hajime Mizuyama • Low-mix high-volume production → Exploitation of scale economy • High-mix low-volume production ← Diversified consumers’ needs and preference • Variable-mix variable-volume production ← Rapidly changing consumers’ needs and preference Classification of Production Systems #2 

© Hajime Mizuyama Matching to Suitable Resources Specialized machine • High investment & fixed cost • Low variable cost per item • Limited functionality • High speed and capacity • High setup cost • Long setup time Flexible machine • Low investment & fixed cost • High variable cost per item • Flexible functionality • Low speed and capacity • Low setup cost • Short setup time 

© Hajime Mizuyama Continuous production • Pure continuous production • Mixed-flow production Lot production • Different kinds of products are produced repetitively on a lot-by-lot basis. A setup operation needs to be taken when changing lots. Jobbing • The production of each kind of products may not be repetitive. Flexible machines are used to handle diversified production orders. Classification of Production Systems #3 

© Hajime Mizuyama Continuous Production (Pure) Continuous Production Mixed-Flow Production 

© Hajime Mizuyama Lot Production and Jobbing Lot Production Jobbing : Setup operation Lot 

© Hajime Mizuyama Product layout / Line layout • Locate machines for each product in the sequence of usage. Group technology (GT) layout • Group products by the similarity of shape, size, material, and process, and locate machines used for each group closer with one another. Process layout / Functional layout • Group machines by their types and locate each group of them closer. Fixed position layout • Fix the location of each product and move machines and tools to it. Classification of Machine Layout 

© Hajime Mizuyama Product layout / Line layout • In this layout, the production rate of the whole production line is determined by the slowest machine in the line. • The slowest machine, to which the highest workload is assigned, is called the bottleneck of the production line. Product Layout and Bottleneck Machine L D M D M L D M Production line 

© Hajime Mizuyama Group technology (GT) A management technology which brings about the scale economy in high-mix low-volume production by grouping various items to be produced according to the similarity among their shape, size, material, and production process. Process layout / Functional layout Group Technology (GT) Layout and Process Layout M M M L L D D D 

© Hajime Mizuyama Product-Quantity (PQ) Analysis P: Product variety Q：Quantity Low-mix high-volume Medium-mix medium-volume High-mix low-volume → Product layout → GT layout → Process layout 

© Hajime Mizuyama Buffer • Storage spaces where raw materials, work in process (WIP), final products can be kept temporarily. • They are classified into central buffer and local buffer. • Not only the machines but also the buffer spaces should be properly arranged in a production system to mitigate the interference among machines, such as: Idling Blocking Role of Buffers A machine is forced to stop until the next job is delivered. A machine is forced to stop until the job just finished is unloaded.