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Summary Logistics and Supply Chain Operations (book, lectures, articles)

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  • Module
  • Logistics and Supply Chain Operations (EBM035A05)
  • Institution
  • Rijksuniversiteit Groningen (RuG)
  • Book
  • Supply Chain Science

Summary covering all mandatory material for the course Logistics and Supply Chain operations. Summary covers all the compulsory chapters from the book Supply Chain Science, all the lectures, and all articles.

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Document information

  • No
  • H0 t/m h8
  • September 8, 2020
  • 34
  • 2019/2020
  • Summary

Subjects

  • supply chain management
  • logistics and supply chain operations

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  • Rijksuniversiteit Groningen (RuG)
  • Master Supply Chain Management
  • Logistics and Supply Chain Operations (EBM035A05)
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Logistics and supply chain operations summary



Lecture 1

Performance aspects: cost, quality, speed, service, variety (OTIF – (percentage of products delivered)
On-time-in-full)

 Strategic trade-offs: being stronger in one aspect, others will suffer
 Other issues:
o Pareto distributions – differentiated policy for important few items
o Focused factory – separate plant for low/high volumes




Firms that are not on the efficient frontier are not competitive and vulnerable to the competition



Supply chain: goal-oriented network of processes and stock points used to deliver goods and services
 production network is a process in a supply chain network

Throughput (TH): rate at which entities are processed by the system

Work-In-Progress (WIP): number of entities in system

Cycle Time (CT): time it takes an entity to traverse the system

Capacity: maximum average rate at which entities can flow through the system

- Capacity of individual station

, o Capacity = base capacity – detractors
 Base capacity= rate of the process under ideal conditions
 Detractors: anything that slows the output of the process
- Capacity of line or network
o Bottleneck constrains the capacity of the system
 Bottleneck is the process with the highest utilization
 Utilization = rate into station / capacity station




Capacity principles:

1. The output of a system cannot equal or exceed its capacity  cannot equal capacity due to
variability

If arrival rate is exactly equal to true capacity (detractors taken into account)

- Performance no longer predictable
- WIP level low as nothing happens
- WIP will build rapidly if failure occurs  no slack capacity to enable the system to catch
up

2. Utilization  cycle time increases with utilization and does so sharply as utilization
approaches 100%
- Consequences when loading a system close to 100%
 CT get too long and WIP too high
 Overtime to reduce WIP (gives higher capacity  lower cycle time)
 After WIP reduction, back to normal capacity
 Cycle starts again (overtime vicious cycle)
- Utilization can be brought closer to 100% by giving more WIP to the system, idle time can
then be used to process things from WIP, the more minutes of WIP the lower the chance

, that production will outstrip arrivals by that amount of minutes, the smaller the increase
in utilization  amount of WIP and CT will increase faster than the utilization

Little’s law  over the long time, average WIP, TH, and CT for any stable process relate as: WIP =TH x
CT

Two restrictions

1. Refers to long-term averages
2. Process must be stable

Queuing:

Waiting time (WT) = variability (V) * utilization (U) * average effective process time for entity at
station (T)

(G/G/1)

- U= UTIL / (1-UTIL)
- V = (cva^2 + cve^2)/2
- Cva^2= squared coefficient of variation of interarrival times
- Cve^2= squared coefficient of variation of process times
- When batching, in VUT formula T is processing time of complete batch, including setup
time

Higher variability  waiting time increases faster when utilization increases




- Low variability allowing to increase throughput (utilization )without increasing waiting
times
- Low variability allowing to decrease waiting times, without lowering throughput

, Beide lijnen lopen uitelkaar  overloaded resource

Beide lijnen lopen naar elkaar toe/over elkaar heen  underloaded resource

Max inflow  slope of cumulative input

Max capacity  slope of cumulative output



Chapter 0

Pareto distribution: a high fraction of sales dollars comes from a small fraction of the end items

Benchmarking: common way to achieve efficiency by coping best practices of other firms

 Cannot provide way to move efficiency beyond historical levels because it is imitative

Different levels: station – line – network

Chapter 1

Extent to which a given system achieves high throughput but low WIP and CT is a function of the
system’s overall efficiency

- Measure of efficiency  inventory turns = TH/WIP
- Where TH is the cost of goods sold in year and WIP the dollar value of the average
amount of inventory held in the system
- How efficiently an operation converts inventory into output

Detractors for capacity: mechanical failures, setups, rework, operator unavailability

( if th=2/hour and 10% unavailable, capacity = 0,9*2 or 2-0.2)

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