6 General Types of Information Management Systems Office automation systemCommunication systemTransaction processing system (TPS)Management information system (MIS) and Executive information system (EIS)Decision support system (DSS)Enterprise system
7 General Types of Information Management Systems System typeLogistics examplesOffice automation system: provideseffective ways to process personal and organizational business data, to perform calculations, and to create documentsSpreadsheet applications to calculate optimal order quantities, facility location, transport cost minimization, among othersCommunication system: helps people work together by interacting and sharing information in many different formsVirtual meetings via computer technologyVoice-based order pickingTransaction processing system (TPS): collects and stores information about transactions; controls some aspects of transactionsElectronic data interchangeAutomatic identification technologies such as bar codesPoint-of-sale systems
8 General Types of Information Management Systems System typeLogistics examplesManagement information system (MIS) and executive information system (EIS): converts TPS data into information for monitoring performance and managing anorganization; provides executivesinformation in a readily accessible formatLogistics information systemDecision support system (DSS): helps people make decisions by providinginformation, models, or analysis toolsSimulationApplication-specific software such as warehouse mgmt sysData miningEnterprise system: creates and maintains consistent data processing methods and an integrated database across multiple business functionsLogistics modules of enterprise resource planning systems
27 Case 2-1 JIT in Kalamazoo Company Facts: Located Kalamazoo, Michigan Product Facts:Mini motor homesLargest component: truck or van chassisVirtually the entire product was assembled from purchased componentsMarket Facts:Expanded from local Midwest market a national one
28 Case 2-1 JIT in Kalamazoo Inventory/Warehousing information: Public warehouseInventory between $500,000 and $1,000,000More than 1.5% / month interest for borrowed fundsCosts of safety stock were going up4 weeks of use for items supplied by vendors more than 500 miles1 week of use for items supplied by vendors nearbyInventory carrying costs: 20% / year (including acquisition and transportation)Average inventory = lot size / 2
29 Case 2-1 JIT in Kalamazoo Questions: What is the total annual cost of maintaining the components inventory under the present system?What would be the total annual cost of maintaining the components inventory under the JIT system ( assuming no safety stocks)?Should Ballenger take into account any other costs or benefits from the JIT system? If so, what are they?If the JIT system is adopted, are there safety stocks of any item that should be maintained? If so, which ones and how much?If the JIT system is adopted, what changes, if any, should occur in the relationships between Ballenger’s firm and his suppliers of components? Discuss.
30 Case 2-1 JIT in Kalamazoo Questions: Assume that Ballenger has switched to the JIT system and that he receives a surprise phone call from a competitor who is going out of business. The competitor wants to sell Ballenger 7,000 dome lights of the type listed. Should Ballenger buy them? If so, at what price?Carrying costs are 20 percent. Is there a level of carrying costs at which both Ballenger’s present system and a JIT system have similar costs? If so, what is it?
31 Case 2-1 JIT in Kalamazoo (Current System) ItemAverage distance from vendor (in miles)Number of units used each weekCurrent lot size purchasedUnit costAverage freight cost per unitGas range1,14510200$100$20Toilet606240$80$18Pump2656125$16$3Refrigerator (large)226120$110Refrigerator (small)715$95$15Foam cushion4906751,500$8$2CB radio (type D)1,800924$136$11Dome lights38241,720NoneAwning bracket485401,200$4$1Insect screen1595701,240$7
32 Case 2-1 JIT in Kalamazoo (JIT) ItemAverage distance from vendor (in miles)Number of units used each weekCurrent lot size purchasedUnit costAverage freight cost per unitGas range1,14510$105$22Toilet606$100$18Pump26567$15$4Refrigerator (large)226$113$25Refrigerator (small)1$85Foam cushion49067575$7$3CB radio (type D)1,80093$130$26Dome lights82436Awning bracket4854060$5$1Insect screen15957050$2
33 Case 2-1 JIT in Kalamazoo (Current System) ItemSafety Stock (Unit)Avg. Inv.(Unit)Total Inv. (Unit)Total Inventory ($)Inventory Cost ($/yr)Investment ($/yr)Gas range40100140$16,800$3,360.0$62,400Toilet120160$15,680$3,136.0$50,960Pump5662.5118.5$2,252$450.3$55,328Refrigerator (large)66066$8,580$1,716.0$40,560Refrigerator (small)77.514.5$1,595$319.0$40,040Foam cushion13507502100$21,000$4,200.0$351,000CB radio (type D)361248$7,056$1,411.2$68,796Dome lights8248601684$3,368$673.6$85,696Awning bracket5406001140$5,700$1,140.0$140,400Insect screen6201760$14,080$2,816.0$237,120$96,111$19,222.1$1,132,300
34 Case 2-1 JIT in Kalamazoo (JIT) ItemSafety Stock (Unit)Avg. Inv.(Unit)Total Inv. (Unit)Total Inventory ($)Inventory Cost ($/yr)Investment ($/yr)Gas range40545$5,715$1,143.0$66,040Toilet$5,310$1,062.0$61,360Pump563.559.5$1,131$226.1$55,328Refrigerator (large)639$1,242$248.4$43,056Refrigerator (small)70.57.5$750$150.0$36,400Foam cushion135037.51387.5$13,875$2,775.0$351,000CB radio (type D)361.5$5,850$1,170.0$73,008Dome lights82418842$3,368$673.6$171,392Awning bracket54030570$3,420$684.0$168,480Insect screen1140251165$10,485$2,097.0$266,760$51,146$10,229.1$1,292,824