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Logistics summary
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INHOUD1: Introduction ........................................................................................................................................................ 3
Operations management (OM) .......................................................................................................................... 3
What is Operations Management? .................................................................................................................... 4
Why learn about operations management? ...................................................................................................... 9
Performance management .............................................................................................................................. 13
Balanced scorecard approach and Key Performance Indicators (KPIs) ....................................................... 13
Productivity ................................................................................................................................................. 15
Exercises ........................................................................................................................................................... 16
Formulas ........................................................................................................................................................... 17
2: Forecasting ........................................................................................................................................................ 18
Introduction to forecasting .............................................................................................................................. 18
Evaluation of forecasts ..................................................................................................................................... 20
Qualitative forecasting methods ...................................................................................................................... 22
Time-series forecasts........................................................................................................................................ 23
Naïve forecast .............................................................................................................................................. 24
Techniques for averaging ............................................................................................................................ 24
Trend-based methods ................................................................................................................................. 29
Methods for seasonal series ........................................................................................................................ 30
Associative forecasting techniques .................................................................................................................. 33
Forecasting in practice ..................................................................................................................................... 34
Exercises ........................................................................................................................................................... 36
3: Strategic capacity planning ............................................................................................................................... 37
What is capacity planning? ............................................................................................................................... 38
Measuring capacity .......................................................................................................................................... 39
Capacity planning in practice ........................................................................................................................... 40
Exercises ........................................................................................................................................................... 51
4: Process selection and facility layout ................................................................................................................. 52
Process selection .............................................................................................................................................. 52
Facility layout ................................................................................................................................................... 55
Designing product layouts ................................................................................................................................ 61
Designing process layouts ................................................................................................................................ 68
From-to chart............................................................................................................................................... 68
Activity relationship chart ........................................................................................................................... 70
Exercises ........................................................................................................................................................... 71
1
,5: Inventory management ..................................................................................................................................... 71
Introduction to inventory management .......................................................................................................... 72
Inventory ordering policies .............................................................................................................................. 76
Deterministic and constant demand ........................................................................................................... 76
Stochastic demand ...................................................................................................................................... 86
Exercises ........................................................................................................................................................... 95
Supply chain management .................................................................................................................................... 97
What is supply chain management (SCM)? ...................................................................................................... 97
bullwhip effect ............................................................................................................................................... 102
Sustainable supply chains............................................................................................................................... 105
Logistics and location decisions ..................................................................................................................... 106
Order fulfilment and customer order decoupling point ................................................................................ 117
Designing for supply chain efficiency ............................................................................................................. 119
Exercises ......................................................................................................................................................... 119
2
,Logistics and supply chain management:
1: INTRODUCTION
Operations = processes that either provide services or create goods. They take place in businesses.
They are the core of what a business organisation does.
OPERATIONS MANAGEMENT (OM)
An example:
In a cheeseburger stand you have to
- Cut tomatoes
- Unpack meat and cheese
- Grill meat
- Unpack sandwich
- …
= total production time is 15 minutes
BUT client only wants to wait for 5 minutes!
- The meat must be ordered in advance
- It takes four weeks before it is being delivered
- But the meat can only be kept for 2 weeks
= Again issues!
• How often to place an order for meat?
• How much meat to order?
• How much burgers to keep in the buffer?
• …
This is why this course is important.
- Follow up stock, inventory hold cost, supplier selection, work in progress (WIP)
- Risk like cow disease in this example
3
, WHAT IS OPERATIONS MANAGEMENT?
Definition 1:
Operations management is the planning, scheduling and control of the activities that transform
inputs into finished goods and services. (APICS Dictionary)
Goods are physical items that include raw materials, parts, subassemblies. Services are
activities that provide some combination of time, location, form or psychological value.
Definition 2:
Operations management deals with the design and management of products, processes, services and
supply chains. It considers the acquisition, development and utilization of resources that firms need
to deliver the goods and services their clients want. (MIT Sloan School of Management)
Definition 3: (uitgelegd)
The ideal situation for a business organization is to achieve an economic match op supply and
demand. Having excess supply or excess capacity is wasteful and costly. Having too little means lost
opportunity and possible customer dissatisfaction.
• The key functions on the supply side = operations and supply chain
• Key functions on demand side = sales and marketing
Each business organisation has 3 basic functional areas :
- Finance
- Marketing
- Operations
Operations management is responsible for the core. It is the management of systems or processes
that create goods and/or provide services.
Supply chain = a sequence of activities and organisations involved in producing and delivering a good
or service.
4
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