Operations & Supply Chain Management Core Concepts

Facility Layout and Design Principles

• Importance of Layout: Efficient use of space, better information flow, higher employee morale, safer conditions, improved customer interaction, flexibility for future changes.

• Types of Layouts:

  • Fixed Position: For large projects
  • Process Oriented: Job/Batch shops (assign based on load multiplied by distance)
  • Office: For optimal information flow
  • Retail: Customer response to shelf layout
  • Warehouse: Space versus material handling trade-off
  • Product Oriented: High utilization for continuous production

• Detailed Layouts

  • Job Shop: Minimize total load-distance; assign high-load pairs close together.
  • Assembly Line: Follow precedence relationships using Longest Task Time or Number of Following Tasks. Find cycle time and round up for workstations.

Supply Chain Management Essentials

• Key Processes

  • Sourcing
  • Purchasing
  • Inventory
  • Scheduling
  • Order Processing
  • Customer Service
  • Logistics
  • Post-Sale
  • Integrated Systems

• Supply Chain Flows

  • Materials
  • Information
  • People

• Supply Chain Development Phases

  • Independent Entities
  • Internal Integration: Central/local purchasing
  • Supply Chain Integration: Partner selection

• Supply Chain Disruptions

  • Internal Disruptions: Engineering changes, quality issues, forecast error
  • External Disruptions: Customization requests, vendor delays, shipment underfills

• Types of Supply Chains

  Efficient versus Responsive (understand their characteristics).

• Bullwhip Effect and Information Distortion

  Causes, impact, and ways to minimize.

• Disintermediation and Cross-Docking

• Total Annual Delivery Cost (TADC)

  Includes transportation and inventory costs in transit.

Forecasting Methods and Principles

• Forecasting Methods

  • Qualitative: Used for design/introduction phases; methods include Delphi, Market Research, Historical Analogy, Executive Judgment, and Sales Force Composite.
  • Quantitative: Used in maturity/decline phases with historical data; includes time series and causal analysis.

• Types of Forecasts

  • Level: Random variations only
  • Trend: Consistent increase or decrease with random variation
  • Seasonality: Recurrent patterns (e.g., weather, holidays)
  • Composite: Combines trend, seasonality, and random variations

• Forecasting Techniques

  • Moving Averages and Weighted Moving Averages: (higher weight for recent data)
  • Simple Exponential Smoothing: Used when no trend or seasonality; recent data has more weight.

Forecast Error and Accuracy Metrics

• Understanding Forecast Error

  Difference between actual and forecasted values.

  • Overestimate (negative error): Risk of excess inventory
  • Underestimate (positive error): Risk of stock shortage

• Magnitude of Forecast Error

  Measures like MAD, MSE, RMSE, APE, and MAPE indicate accuracy.

• Bias in Forecasting

  • RSFE (Running Sum of Forecast Error): Tracks cumulative forecast errors.
  • Tracking Signal (TS): Indicates forecast bias; values close to zero show minimal bias.