14 – 1 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall. Operations Planning and Scheduling Chapter 14

14 – 2 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall. Across the Organization Operations planning and scheduling is the process of making sure that demand and supply plans are in balance at all levels Sales and operations planning and scheduling Requires managerial inputs from all of the firm’s functions Each function is affected by the plan

14 – 3 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall. Aggregate plan Sales and Operations Plans Supplier capabilities Storage capacity Materials availability Materials Current machine capacities Plans for future capacities Workforce capacities Current staffing level Operations New products Product design changes Machine standards Engineering Labor-market conditions Training capacity Human resources Cost data Financial condition of firm Accounting and finance Customer needs Demand forecasts Competition behavior Distribution and marketing Figure 14.2 –Managerial Inputs from Functional Areas to Sales and Operations Plans

14 – 4 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall. Managing Demand TABLE 14.2| DEMAND AND SUPPLY OPTIONS FOR | OPERATIONS PLANNING AND SCHEDULING Demand OptionsSupply Options Complementary products Anticipation inventory Promotional pricingWorkforce adjustment (hiring or layoffs) Prescheduled appointments Workforce utilization (overtime and undertime) ReservationsPart-time workers and subcontractors Revenue managementVacation schedules BacklogsWorkforce schedules BackordersJob and customer sequence StockoutsExpediting

14 – 5 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall. Sales and Operations Plans Planning strategies  Chase strategy  Level strategy  Mixed strategy

14 – 6 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall. Scheduling Takes operations and scheduling process from planning to execution and requires gathering data from sources such as demand forecasts, resource availability from the sales and operations plan, and specific constraints from employees and customers. Generates a work schedule for employees or sequences of jobs or customers at workstations.

14 – 7 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall. Gantt Charts The job or activity progress chart The workstation chart Nissan Ford Pontiac Job4/204/224/234/244/254/264/214/174/184/19 Current date Figure 14.7 – Gantt Progress Chart for an Auto Parts Company Start activity Finish activity Scheduled activity time Actual progress Nonproductive time

14 – 8 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall. Gantt Charts Operating Room A Workstation 7am Operating Room B Operating Room C 12 pm 8am9am10am11am1pm2pm3pm4pm5pm6pm Time Dr. Gary Case Dr. Jeff Dow Dr. Madeline Easton Dr. Dan GillespieDr. Jordanne Flowers Dr. Jon Adams Dr. Aubrey BrothersDr. Alaina Bright Figure 14.8 – Gantt Workstation Chart for Operating Rooms at a Hospital

14 – 9 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall. Scheduling Employees Translate the staffing plan into specific schedules of work for each employee Constraints  Technical constraints  Legal and behavioral considerations  Psychological needs of workers

14 – 10 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall. Developing a Workforce Schedule EXAMPLE 14.2 The Amalgamated Parcel Service is open seven days a week. The schedule of requirements is DayMTWThFSSu Required number of employees The manager needs a workforce schedule that provides two consecutive days off and minimizes the amount of total slack capacity. To break ties in the selection of off days, the scheduler gives preference to Saturday and Sunday if it is one of the tied pairs. If not, she selects one of the tied pairs arbitrarily.

14 – 11 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall. Developing a Workforce Schedule SOLUTION Friday contains the maximum requirements, and the pair S – Su has the lowest total requirements. Therefore, Employee 1 is scheduled to work Monday through Friday. Note that Friday still has the maximum requirements and that the requirements for the S – Su pair are carried forward because these are Employee 1’s days off. These updated requirements are the ones the scheduler uses for the next employee. The day-off assignments for the employees are shown in the pdf of the Excel file.

14 – 12 Developing a Workforce Schedule Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall. Workforce schedule Week starting onWorkersMonTueWedThuFriSatSun Monday Tuesday Wednesday Thursday Friday Saturday Sunday No. of workers shceduled >= No. of workers needed No. of workers hired10

14 – 13 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall. Sequencing Jobs at a Workstation Performance measures  Flow time Priority sequencing rules  First-come, first-served (FCFS)  Earliest due date (EDD)  Smallest Processing Time (SPT)  Past due (also referred to as tardiness) Flow time =Finish time + Time since job arrived at workstation

14 – 14 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall. Using the FCFS Rule EXAMPLE 14.3 Currently a consulting company has five jobs in its backlog. The time since the order was placed, processing time, and promised due dates are given in the following table. Determine the schedule by using the FCFS rule, and calculate the average days past due and flow time. How can the schedule be improved, if average flow time is the most critical? Customer Time Since Order Arrived (days ago) Processing Time (days) Due Date (days from now) A B C51468 D10 48 E01280

14 – 15 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall. Using the FCFS Rule SOLUTION a.The FCFS rule states that Customer A should be the first one in the sequence, because that order arrived earliest—15 days ago. Customer E’s order arrived today, so it is processed last. The sequence is shown in the following table, along with the days past due and flow times. Customer Sequence Start Time (days) Processing Time (days) Finish Time (days) Due Date Days Past Due Days Ago Since Order Arrived Flow Time (days) A B C D E

14 – 16 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall. Using the FCFS Rule SOLUTION a.The FCFS rule states that Customer A should be the first one in the sequence, because that order arrived earliest—15 days ago. Customer E’s order arrived today, so it is processed last. The sequence is shown in the following table, along with the days past due and flow times = = = = =41 Customer Sequence Start Time (days) Processing Time (days) Finish Time (days) Due Date Days Past Due Days Ago Since Order Arrived Flow Time (days) A B C D E

14 – 17 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall. Using the FCFS Rule The finish time for a job is its start time plus the processing time. Its finish time becomes the start time for the next job in the sequence, assuming that the next job is available for immediate processing. The days past due for a job is zero (0) if its due date is equal to or exceeds the finish time. Otherwise it equals the shortfall. The flow time for each job equals its finish time plus the number of days ago since the order first arrived at the workstation. The days past due and average flow time performance measures for the FCFS schedule are Average days past due = Average flow time = = 3.4 days = 60.2 days

14 – 18 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall. Using the FCFS Rule b.The average flow time can be reduced. One possibility is the sequence shown in the following table. Customer Sequence Start Time (days) Processing Time (days) Finish Time (days) Due Date Days Past Due Days Ago Since Order Arrived Flow Time (days) D E C B A

14 – 19 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall. Using the SPT Rule b.The average flow time can be reduced. One possibility is the sequence shown in the following table. 0+10= Customer Sequence Start Time (days) Processing Time (days) Finish Time (days) Due Date Days Past Due Days Ago Since Order Arrived Flow Time (days) D E C B A This schedule reduces the average flow time from to 60.2 to 47.8 days—a 21 percent improvement. However, the past due times for jobs A and B have increased. Average days past due = Average flow time = = 14.6 days = 47.8 days = = = =

14 – 20 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall. Customer Sequence Start Time (days) Processing Time (days) Finish Time (days) Due Date Days Past Due Days Ago Since Order Arrived Flow Time (days) B A D C E Revisit Example 14.3, where the consulting company has five jobs in its backlog. Create a schedule using the EDD rule, calculating the average days past due and flow time. In this case, does EDD outperform the FCFS rule? Application 14.4 SOLUTION 0+16= 41+10= = = =

14 – 21 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall. Customer Sequence Start Time (days) Processing Time (days) Finish Time (days) Due Date Days Past Due Days Ago Since Order Arrived Flow Time (days) B A D C E Application = 41+10= = = = The days past due and average flow time performance measures for the EDD schedule are By both measures, EDD outperforms the FCFS. However, the solution found in part (b) of Example 14.3 still has the best average flow time of only 47.8 days. Average days past due = Average flow time = = 3.0 days = 58.4 days

14 – 22 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall. Solved Problem 1 The Cranston Telephone Company employs workers who lay telephone cables and perform various other construction tasks. The company prides itself on good service and strives to complete all service orders within the planning period in which they are received. Each worker puts in 600 hours of regular time per planning period and can work as many as an additional 100 hours of overtime. The operations department has estimated the following workforce requirements for such services over the next four planning periods: Planning Period1234 Demand (hours)21,00018,00030,00012,000

14 – 23 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall. Solved Problem 1 Cranston pays regular-time wages of $6,000 per employee per period for any time worked up to 600 hours (including undertime). The overtime pay rate is $15 per hour over 600 hours. Hiring, training, and outfitting a new employee costs $8,000. Layoff costs are $2,000 per employee. Currently, 40 employees work for Cranston in this capacity. No delays in service, or backorders, are allowed. Use the spreadsheet approach to answer the following questions: a.Prepare a chase strategy using only hiring and layoffs. What are the total numbers of employees hired and laid off? b.Develop a workforce plan that uses the level strategy, relaying only on overtime and undertime. Maximize the use of overtime during the peak period so as to minimize the workforce level and amount of undertime. c.Propose an effective mixed-strategy plan. d.Compare the total costs of the three plans.

14 – 24 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall. Solved Problem 1 a.The chase strategy workforce is calculated by dividing the demand for each period by 600 hours, or the amount or regular-time work for one employee during one period. This strategy calls for a total of 20 workers to be hired and 40 to be laid off during the four-period plan. Figure 14.9 shows the “chase strategy” solution that OM Explorer’s Sales and Operations Planning with Spreadsheets solver produces. We simply hide any unneeded columns and rows in this general- purpose solver.

14 – 25 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall. Solved Problem 1 Figure 14.9 – Spreadsheet for Chase Strategy

14 – 26 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall. Solved Problem 1 b.The peak demand is 30,000 hours in period 3. As each employee can work 700 hours per period (600 on regular time and 100 on overtime), the workforce level of the level strategy that minimizes undertime is 30,000/700 = 42.86, or 43 employees. This strategy calls for three employees to be hired in the first quarter and for none to be laid off. To convert the demand requirements into employee-period equivalents, divide the demand in hours by 600. For example, the demand of 21,000 hours in period 1 translates into 35 employee-period equivalents (21,000/600) and demand in period 3 translates into 50 employee-period equivalents (30,000/600). Figure shows OM Explorer’s spreadsheet for this level strategy that minimizes undertime.

14 – 27 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall. Solved Problem 1 Figure – Spreadsheet for Level Strategy

14 – 28 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall. Solved Problem 1 c.The mixed-strategy plan that we propose uses a combination of hires, layoffs, and overtime to reduce total costs. The workforce is reduced by 5 at the beginning of the first period, increased by 8 in the third period, and reduced by 13 in the fourth period. Figure shows the results.

14 – 29 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall. Solved Problem 1 Figure – Spreadsheet for Mixed Strategy

14 – 30 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall. Solved Problem 1 d. The total cost of the chase strategy is $1,050,000. The level strategy results in a total cost of $1,119,000. The mixed-strategy plan was developed by trial and error and results in a total cost of $1,021,000. Further improvements are possible.