Order Processing and Information Systems 1 Chapter 5 Order processing and information systems The cost of providing timely and accurate information has dropped dramatically. The cost of labor and materials has risen. Increasing efforts to replace resources with information.

Order Processing and Information Systems 2 The five key elements of order processing  Order preparation.  Order transmittal.  Order entry.  Order filling.  Order status reporting. See Figure 5-1 Represent 50% to 70% of the total order cycle time.

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4 Order preparation  Appropriate vendors.  Order form  Stock availability.  Voice communication of order information.  Electronic technology (EDI)  Voice-actuated computers  Wireless encoding of product information  radio frequency and identification system (RF/ID) Determine: Technology:

Order Processing and Information Systems 5 Order transmittal Manual transmissionManual transmission  mailing of orders or physical carrying by the sales staff to the order entry point.  slow.  inexpensive. Electronic transmissionElectronic transmission  telephone, EDI, satellite communication.  fast, reliability, accuracy.  trade-off analysis.

Order Processing and Information Systems 6 Order entry  Checking the number, quantity and price.  Checking the availability of the requested items.  Preparing back order or order canceling documentation.  Checking the customer’s credit status.  Transcribing the order information.  Billing. P5-5

Order Processing and Information Systems 7  Bar coding and scanning have been especially important to entering order information. ==>accurately, quickly, low cost.

Order Processing and Information Systems 8 Order filling Acquire the items through stock retrieval, production, or purchasing Pack the items for shipment Schedule the shipment for delivery Prepare the shipping documentation

Order Processing and Information Systems 9 Order filling  First-received, first-processed (First come, first served; FCFS).  Shortest processing time (SPT).  Prespecified priority number.  Smaller, less-complicated orders first.  Earliest promised delivery date(EDD).  Orders having the least time before promised delivery date (slack per operation; S/O).  Critical ratio (CR), according to smallest ratio of time remaining until due date to processing time remaining.

Order Processing and Information Systems 10 The factors affecting order cycle time Split order –Partially filling the order from a backup source for the product. Holding the order until replenishment stocks for the out-of-stock items are available. Freight consolidation Ex:If an order contains five items, each of which has an in-stock probability of 0.90, the probability of filling the complete order is  (0.90)(0.90)(0.90)(0.90)(0.90)=0.59

Order Processing and Information Systems 11 Performance measures  Makespan:total time needed to complete a group of jobs.  Average flow time =Total flow time / number of jobs.  Average tardiness =Total hours late / number of jobs.  Average number of jobs at workstation =Total floe time / makespan

Order Processing and Information Systems 12 Example:Processing times and due dates for six jobs waiting to be processed at a work center are given in the following table. Determine the sequence of jobs, the average flow time, average days late, and average number of jobs at the work center for each of there rule:(a)FCFS (b)SPT (c )DD (d)CR Job processing time (days) due date (days) A 2 7 B 8 16 C 4 4 D E 5 15 F 12 18

Order Processing and Information Systems 13 Average flow time: 120/6=20 days. Average tardiness: 54/6=9 days. The makespan is 41 days. Average number of jobs at the work center: 120/41=2.93 FCFS The FCFS sequence is A-B-C-D-E-F. (1) (2) (3) (2)-(3) Job processing flow due days late sequence time time date (0 if negative) A B C D E F

Order Processing and Information Systems 14 Average flow time: 108/6=18 days. Average tardiness: 40/6=6.67 days. The makespan is 41 days. Average number of jobs at the work center: 108/41=2.63 SPT The SPT sequence is A-C-E-B-D-F. (1) (2) (3) (2)-(3) Job processing flow due days late sequence time time date (0 if negative) A C E B D F

Order Processing and Information Systems 15 Average flow time: 110/6=18.33 days. Average tardiness: 38/6=6.33 days. The makespan is 41 days. Average number of jobs at the work center: 110/41=2.68 EDD The EDD sequence is C-A-E-B-D-F. (1) (2) (3) (2)-(3) Job processing flow due days late sequence time time date (0 if negative) A C E B D F

Order Processing and Information Systems 16 Average flow time: 160/6=26.67 days. Average tardiness: 85/6=14.17 days. The makespan is 41 days. Average number of jobs at the work center: 160/41=3.90 CR The CR sequence [(due date – current date) / processing time] is C-A-E-B-D-F. (1) (2) (3) (4) (3)-(4) Job Critical processing flow due days late sequence ratio time time date (0 if negative) C F D B E A

Order Processing and Information Systems 17 Generally speaking, the FCFS rule and the CR rule be the least effective of the rules. SPT is superior in temrs of minimizing flow time and average number of jobs at the work center and completion time. DD rule on average lateness is very well. Average Average Average flow time lateness number of Rule jobs at the work center FCFS SPT DD CR

Order Processing and Information Systems 18 S/O rule Note that processing time includes the time remaining for the current and subsequent operations. Remaining Remaining processing Due number of Job time date operations A B C D E F Determine the difference between the due date and the processing time for each operation. Divide the amount by the number of remaining operations, and rank them from low to high.

Order Processing and Information Systems 19 (1) (2) (3) (4) (5) (6) Remaining Remaining processing Due (2)-(1) number of (3)/(4) Job time date Slack operations ratio Rank A B C D E F The S/O rule sequence is C-B-A-E-F-D.

Order Processing and Information Systems 20 (1) (2) (3) (4) (5) (6) Remaining Remaining processing Due (2)-(1) number of (3)/(4) Job time date Slack operations ratio Rank A B C D E F The S/O rule sequence is C-B-A-E-F-D.

Order Processing and Information Systems 21 Exercise:(a)FCFS (b)SPT (c )DD (d)CR Job processing time (days) due date (days) A B 6 24 C D 3 8 E 7 6 Remaining Remaining processing Due number of Job time date operations A B C D Exercise:S/O rule

Order Processing and Information Systems 22 Order status reporting Tracing and tracking the order through out the entire order cycle. Communication with the customer as to where the order may be in the order cycle and when it may be delivered. Example –EX:FedEX and UPS –Laser-beam bar coding, a worldwide computer network. –Design software for tracing and tracking systems.

Order Processing and Information Systems 23 Example Direct-to-customer delivery utilizing EDI

Order Processing and Information Systems 24 Electronic commerce through the internet

Order Processing and Information Systems 25 Other factors affecting order-processing time Processing priorities Parallel versus sequential processing Order-filling accuracy Order batching –Reduce processing costs –Increase processing time Shipment consolidation

Order Processing and Information Systems 26 The logistics information system See figure 5-4.  the input  the data base and its associated manipulation  the output

Order Processing and Information Systems 27 Exploded view of the logistics information system

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