IE3104: Supply Chain Modeling: Manufacturing & Warehousing Spring 2006

1. IE3104: Supply Chain Modeling:Manufacturing & WarehousingSpring 2006 Instructor: Spyros Reveliotis e-mail: spyros@isye.gatech.edu homepage: www.isye.gatech.edu/~spyros

2. “Course Logistics” • TA: TBA • Office Hours: MWF 1-2pm • Grading policy: • Homework: 20% • Midterm I: 20% (Tentative Date: Wed., February 15) • Midterm II: 20% (Tentative Date: Wed., March 29) • Final: 30% (Date: TBA) • Class Participation: 10% • Exams closed-book, with 2 pages of notes per midterm exam and 6 pages for the final • No make-up exams and incompletes. • Reading Materials: • Course Textbook: S. Nahmias, “Production and Operations Analysis”, 5th Ed. McGraw Hill / IRWIN • Course slides and any other material posted at my homepage or circulated in class.

3. Course Objectives(What this course is all about?) • How to design and operatemanufacturing and warehousing facilities (and more…) • A conceptual description and classification of modern production and warehousing environments and their operation • An identification of the major issues to be addressed during the design, planning and control of the production and warehousing activity • Decomposition of the overall production planning and control problem to a number of sub-problems and the development of quantitative methodologies for addressing the arising sub-problems • Emerging trends, including the implications of a globalized and internet-based economy

4. Inputs Outputs • Materials • Capital • Labor • Manag. Res. • Goods • Services Organization Stage 1 Stage 2 Stage 4 Stage 3 Stage 5 Organizational Operations • Organization / Production System: A transformation process (physical, locational, physiological, intellectual, etc.) • Supply or Value Chain / Network: Suppliers Customers

5. Productivity: Basic Organizational Performance Measure Productivity = Value produced / Input used = Output / (Labor + Material + Capital + Energy + Miscellaneous) • Remarks: • Typically both the numerator and the denominator are measured in $$$. If the output corresponds to actual sales, then productivity measures both effectiveness (doing the right thing) and efficiency (in the right way). • From an economic standpoint, major emphasis is placed on the annual percentage change (hopefully increase) of productivity. • For the entire US economy, the annual increase in productivity is higher than 2.5% (38% of this increase is due to capital improvements, 10% to labor improvements and 52% to management improvements). • For the Chinese economy, this number has been more than 6% lately!

6. Major Productivity Variables and their contribution to productivity increase • Labor • Better basic education • Better diet • Better social infrastructure like transportation and sanitation • Better labor utilization and motivation • Capital • Steady and well-planned investments on equipment and its timely maintenance • Research & Development • Controlling of the cost of capital • Management • Exploitation of new (information) technologies • Utilization of accumulated knowledge • Education Knowledge Society

7. Operations Management (OM) Definition: The study and improvement / optimization of the set of activities that create goods and services in an organization. • Typical issues addressed: • Service and product selection and design • Quality Management • Process and capacity design • Facility design • Facility Location • Human resources and job design • Inventory management • Production planning and control • Maintenance • Supply-chain management

8. The major functional units of a modern organization Strategic Planning: defining the organization’s mission and the required/perceived core competencies Production/ Operations: product/service creation Finance/ Accounting: monitoring of the organization cash-flows Marketing: demand generation and order taking

9. Examples (borrowed from Heizer & Render)

10. Reading Assignment • Chapter 1: Sections 1.1-1.3