{"id":10288,"date":"2017-02-24T19:01:08","date_gmt":"2017-02-24T19:01:08","guid":{"rendered":"https:\/\/courses.lumenlearning.com\/masterybusiness2xngcxmasterspring2016\/?post_type=chapter&#038;p=10288"},"modified":"2017-07-18T22:03:58","modified_gmt":"2017-07-18T22:03:58","slug":"production-planning","status":"publish","type":"chapter","link":"https:\/\/courses.lumenlearning.com\/suny-wmopen-introbusiness\/chapter\/production-planning\/","title":{"raw":"Production Planning","rendered":"Production Planning"},"content":{"raw":"<a href=\"https:\/\/s3-us-west-2.amazonaws.com\/courses-images\/wp-content\/uploads\/sites\/143\/2017\/02\/24191117\/7481166880_926b9bee8d_k.jpg\"><img class=\"aligncenter wp-image-10292\" src=\"https:\/\/s3-us-west-2.amazonaws.com\/courses-images\/wp-content\/uploads\/sites\/143\/2017\/02\/24191117\/7481166880_926b9bee8d_k-300x199.jpg\" width=\"600\" height=\"397\" \/><\/a>\r\n<div class=\"textbox learning-objectives\">\r\n<h3>Learning Outcomes<\/h3>\r\n<ul>\r\n \t<li>Explain\u00a0facility location<\/li>\r\n \t<li>Explain facility layout<\/li>\r\n \t<li>Explain materials-requirement planning (MRP)<\/li>\r\n \t<li>Explain just-in-time inventory control (JIT)<\/li>\r\n \t<li>Differentiate between Gantt charts, PERT, and the critical path method<\/li>\r\n<\/ul>\r\n<\/div>\r\n<h2>Components of Production Planning<\/h2>\r\n<h3>Introduction<\/h3>\r\nAll this production doesn\u2019t happen by magic. Much of an operation manager's time is spent planning the production process. Think about hosting a large party for your parents\u2019 anniversary. The first thing you have to\u00a0do is find a location that is large enough to accommodate\u00a0all the people you will be inviting. Once you have identified\u00a0the location, you then need to visit the site and decide how it will be laid out. Where should the tables and chairs go, where will you set up refreshments, and what about a gift table? Once you've decided on the layout, then you need to start making a list of the materials you\u2019ll need for the party. This includes everything from plates, cups, and napkins to hiring a DJ and a caterer. Lastly, based on the number of guests, you'll need to calculate\u00a0how much of everything\u2014food, drinks, etc.\u2014to order.\r\n\r\nOperations managers engage in similar planning, but they use different terminology\u00a0to describe the different parts of the plan.\u00a0In production planning, the components are facility location, facility layout, materials-requirement planning (MRP), and inventory control.\r\n<h3><strong>Facility Location<\/strong><\/h3>\r\nOf all the pieces of the planning puzzle, facility location is the most strategic and critical. Once you build a new manufacturing facility, you have made a substantial investment of time, resources, and capital that can't\u00a0be changed for a long time. Selecting the wrong location can be disastrous. Some of the key factors that influence facility location are the following:\r\n<ul>\r\n \t<li>Proximity to customers, suppliers, and skilled labor<\/li>\r\n \t<li>Environmental regulations<\/li>\r\n \t<li>Financial incentives offered by state and local development authorities<\/li>\r\n \t<li>Quality-of-life considerations<\/li>\r\n \t<li>Potential for future expansion<\/li>\r\n<\/ul>\r\nThe next step, after planning the production process, is deciding on plant layout\u2014how equipment, machinery, and people will be arranged to make the production process as efficient as possible.\r\n<h3><strong>Facility Layout<\/strong><\/h3>\r\nThe primary aim of facility layout is to design a workflow that maximizes worker and production efficiency.\u00a0Facility layout is complex\u00a0because it must take into account the available space, the work\u00a0processes, the delivery of components and parts, the final product, worker safety, and operational efficiency. A poorly laid-out production facility creates inefficiencies, increases costs, and leads to employee frustration and confusion.\r\n\r\nThe four most common types of facility layout are process, product, cellular, and fixed position.\r\n<h4><strong>Process Layout<\/strong><\/h4>\r\nA <strong>process layout<\/strong>\u00a0aims to improve\u00a0efficiency\u00a0by arranging equipment according to its function. Ideally, the production line should be designed to eliminate waste in material flows, inventory handling, and management. In process layout, the work stations and machinery are not arranged according to the production sequence. Instead, there is an assembly of similar operations or similar machinery in each department (for example, a drill department, a paint department, etc.)\r\n<h4><strong>Product Layout<\/strong><\/h4>\r\nIn a <strong>product layout<\/strong>, high-volume goods are produced efficiently by people, equipment, or departments arranged in an assembly line\u2014that is, a series of workstations at which already-made parts are assembled.\r\n\r\nIn the following video, Jansen, a Swiss steel maker, describes how the company's\u00a0offices were designed to maximize the productivity and creativity of its engineers:\r\n\r\nhttps:\/\/youtu.be\/aT-eZXDLQl0\r\n<h4><strong>Cellular Layout<\/strong><\/h4>\r\nA <strong>cellular layout<\/strong> is a lean method of producing similar products using cells, or groups of team members, workstations, or equipment, to facilitate operations by eliminating set-up and unnecessary\u00a0costs between operations. Cells might be designed for a specific process, part, or a complete product. The goal of cellular manufacturing is to move as quickly as possible and make a wide variety of similar products with\u00a0as little waste as possible. This type of layout\u00a0is well suited for single-piece and one-touch production methods. Because of increased speed and minimal handling of materials, cells can result in great cost and time savings and reduced inventory.\r\n<h4><strong>Fixed Position<\/strong><\/h4>\r\nIt\u00a0is easy to move marshmallow candies around the factory while you\u00a0are making them, but what about airplanes or ships? For the production of large items, manufacturers use <strong>fixed-position layout<\/strong> in which the product stays in one place and the workers (and equipment) go to the product. To see an excellent example of fixed-position layout, watch the following video that shows\u00a0how Boeing builds an airplane.\r\n\r\nhttps:\/\/youtu.be\/-ovNi1cB7a4\r\n\r\nAfter the facility location has been selected and the best layout has been determined,\u00a0the next stage in production planning is to determine our material requirements.\r\n<h3><strong>Material-Requirements Planning (MRP)<\/strong><\/h3>\r\n<strong>Material-requirements planning\u00a0(MRP)<\/strong> is a\u00a0production planning,\u00a0scheduling, and\u00a0inventory\u00a0control system used to\u00a0manage\u00a0manufacturing\u00a0processes. Most MRP systems are\u00a0software-based, but it is possible to do\u00a0MRP by hand, as well.\r\n\r\nAn MRP system is intended to meet the following objectives simultaneously:\r\n<ul>\r\n \t<li>Ensure that materials are available for\u00a0production\u00a0and\u00a0products\u00a0are available for\u00a0delivery\u00a0to customers<\/li>\r\n \t<li>Maintain the lowest possible material and product levels in store<\/li>\r\n \t<li>Plan manufacturing activities, delivery schedules, and\u00a0purchasing\u00a0activities<\/li>\r\n<\/ul>\r\nSome manufacturing firms have moved beyond MRP systems and are now using enterprise resource planning (ERP) systems. ERP systems provides an integrated and continuously updated view of core business processes using shared\u00a0databases\u00a0maintained by a\u00a0database management system. ERP systems track business resources\u2014cash,\u00a0raw materials,\u00a0production capacity\u2014and the status of business commitments\u2014orders,\u00a0purchase orders, and\u00a0payroll. The applications that make up the system share data from and between various departments (e.g., manufacturing, purchasing, sales,\u00a0accounting, etc.).\u00a0ERP facilitates information flow between all business functions and manages connections to outside\u00a0stakeholders.\r\n\r\nEven with the implementation of highly integrated planning software, operations managers still need to plan for and control inventory.\r\n<h3><strong>Just-in-Time (JIT) Manufacturing<\/strong><\/h3>\r\n<strong>Just-in-time (JIT) manufacturing <\/strong>is strategy that companies employ to increase efficiency and decrease waste by receiving goods only when\u00a0they are needed in the production process, thereby reducing inventory costs. In theory, a JIT system would have parts and materials arriving on the warehouse dock at the exact moment they are needed in the production process. To make this happen, manufacturers and suppliers must work together closely to prevent just-in-time from becoming just-isn\u2019t-there. Operations managers must accurately forecast the need for materials, since even the slightest deviation can result in a slowdown of production.\r\n<h2>Scheduling Tools<\/h2>\r\n[caption id=\"attachment_10369\" align=\"aligncenter\" width=\"600\"]<a href=\"https:\/\/s3-us-west-2.amazonaws.com\/courses-images\/wp-content\/uploads\/sites\/143\/2017\/02\/27222414\/1200px-Moscow_Izmailovo_hotel_complex_evening_14575121847.jpg\"><img class=\"wp-image-10369\" src=\"https:\/\/s3-us-west-2.amazonaws.com\/courses-images\/wp-content\/uploads\/sites\/143\/2017\/02\/27222414\/1200px-Moscow_Izmailovo_hotel_complex_evening_14575121847-300x200.jpg\" alt=\"Photo of the Izmailovo Hotel complex at night.\" width=\"600\" height=\"400\" \/><\/a> Izmailovo Hotel complex, Moscow, Russia[\/caption]\r\n\r\nAs you might expect, operations managers find that complex processes involve complex\u00a0planning and scheduling. Consider\u00a0the Izmailovo Hotel in Moscow shown in the photograph at the right. Built to house athletes during the 1980 Olympics, the complex has 7,500 guest rooms and is the largest hotel in the world. Think about cleaning all those rooms\u2014in four thirty-story-high towers\u2014or checking in the thousands of guests. No small operation! Although the Izmailovo doesn't produce a tangible good, it relies on\u00a0many of the same operations management principles used in manufacturing to stay in business. To increase operational efficiency in complex processes like those of running\u00a0a giant hotel, operations managers use three common planning tools: Gantt charts, PERT, and the critical path method (CPM).\r\n<h3>Gantt Charts<\/h3>\r\nA Gantt chart\u2014named after the designer Henry Gantt\u2014is an easy-to-use graphical tool that helps operations managers schedule the activities and determine the status of projects. Devised by Gantt in the 1910s, this chart illustrates the start and finish dates of the elements\u00a0of a project. Modern Gantt charts also show the dependency relationships between activities. Although now regarded as a common planning technique, Gantt charts were considered revolutionary when they were first introduced.\r\n\r\n<a href=\"https:\/\/s3-us-west-2.amazonaws.com\/courses-images\/wp-content\/uploads\/sites\/143\/2017\/02\/28002853\/32260033073_a61b906a2d_k.jpg\"><img class=\"aligncenter wp-image-10375\" src=\"https:\/\/s3-us-west-2.amazonaws.com\/courses-images\/wp-content\/uploads\/sites\/143\/2017\/02\/28002853\/32260033073_a61b906a2d_k-300x161.jpg\" alt=\"Three different, ornate, brightly colored birdhouses.\" width=\"500\" height=\"268\" \/><\/a>\r\n\r\nLet\u2019s look at a Gantt chart for producing\u00a0a birdhouse. Suppose the following activities are\u00a0required to build and package each birdhouse:\r\n<ol>\r\n \t<li>Determine which birdhouse the customer has ordered<\/li>\r\n \t<li>Trace pattern onto wood<\/li>\r\n \t<li>Cut the pieces of wood from the birdhouse pattern<\/li>\r\n \t<li>Assemble the pieces into a birdhouse<\/li>\r\n \t<li>Paint birdhouse<\/li>\r\n \t<li>Attach decorations to the birdhouse<\/li>\r\n \t<li>Prepare a shipping carton<\/li>\r\n \t<li>Pack birdhouse into shipping carton<\/li>\r\n \t<li>Prepare customer invoice<\/li>\r\n \t<li>Prepare packing slip and shipping label<\/li>\r\n \t<li>Deliver carton to shipping department<\/li>\r\n<\/ol>\r\nBelow is the corresponding Gantt chart:\r\n\r\n[caption id=\"attachment_10464\" align=\"aligncenter\" width=\"900\"]<a href=\"https:\/\/s3-us-west-2.amazonaws.com\/courses-images\/wp-content\/uploads\/sites\/143\/2017\/03\/02181704\/Gantt_Project_Version_2_pdf_-_Google_Drive.jpg\"><img class=\"wp-image-10464\" src=\"https:\/\/s3-us-west-2.amazonaws.com\/courses-images\/wp-content\/uploads\/sites\/143\/2017\/03\/02181704\/Gantt_Project_Version_2_pdf_-_Google_Drive-300x133.jpg\" width=\"900\" height=\"399\" \/><\/a> Figure 1. Gantt Chart[\/caption]\r\n\r\nAs you can see, the tasks\u00a0on the\u00a0list are displayed against time. On the left of the chart are all the tasks, and along the top is the time scale. A bar represents each work task; the position and length of the bar indicate\u00a0the start date, duration, and end date of the task. At a glance, we can determine the following:\r\n<ul>\r\n \t<li>What the various activities\u00a0are<\/li>\r\n \t<li>When each activity\u00a0begins and ends<\/li>\r\n \t<li>How long each activity\u00a0lasts<\/li>\r\n \t<li>Where activities\u00a0overlap with other ones, and by how much<\/li>\r\n \t<li>The start and end date of the whole project<\/li>\r\n<\/ul>\r\n<h3>PERT<\/h3>\r\nGantt charts are useful when the production process is simple and the activities are not interdependent. For more complex schedules, operations managers use PERT, which stands for \"program evaluation and review technique.\" This\u00a0is a method of analyzing the tasks involved in completing a given project, especially the time needed to complete each task and to identify the minimum time needed to complete the total project. PERT was developed primarily to simplify the planning and scheduling of large and complex projects. The key to this technique\u00a0is that it organizes activities in the most efficient sequence. It can also help managers determine the critical path, which is discussed below.\r\n<h3><strong>Critical Path Method (CPM)<\/strong><\/h3>\r\nThe critical path method (CPM) is a step-by-step technique for process planning that identifies\u00a0critical and noncritical tasks in order to prevent time-frame problems and process bottlenecks. The CPM is ideally suited to operations consisting of numerous activities that interact in a complex manner. It's often used in conjunction with PERT.\r\n\r\nThe essential technique for using CPM is to construct a model of the project that includes the following:\r\n<ol>\r\n \t<li>A list of all activities needed to complete the project<\/li>\r\n \t<li>The time that each activity will take to complete,<\/li>\r\n \t<li>The dependencies between the activities and,<\/li>\r\n \t<li>Logical end points such as milestones or deliverable items.<\/li>\r\n<\/ol>\r\nUsing these values, CPM calculates the longest path of planned activities (expressed in time) to logical end points or to the end of the project, and the earliest and latest that each activity can start and finish without making the project longer. This process determines which activities are \"critical\" (i.e., on the longest path) and which can be delayed without extending the overall project duration. Take a look at Figure 2, below. What was the critical path in our construction of a birdhouse?\r\n\r\n[caption id=\"attachment_10469\" align=\"aligncenter\" width=\"1000\"]<a href=\"https:\/\/s3-us-west-2.amazonaws.com\/courses-images\/wp-content\/uploads\/sites\/143\/2017\/03\/02182414\/Critical_Path_Diagram_-_New_Page_png.jpg\"><img class=\"wp-image-10469\" src=\"https:\/\/s3-us-west-2.amazonaws.com\/courses-images\/wp-content\/uploads\/sites\/143\/2017\/03\/02182414\/Critical_Path_Diagram_-_New_Page_png-300x166.jpg\" width=\"1000\" height=\"553\" \/><\/a> Figure 2. Critical Path[\/caption]\r\n\r\nOur critical path was the path that took the longest amount of time! This was sequence of activities that included the customer invoice and packing and shipping label (from the start to G to\u00a0H), which totaled\u00a0180 minutes. The problem is that even if we were\u00a0able to assemble and decorate the birdhouse faster,\u00a0the birdhouse would just and wait for the paperwork to be completed.<span style=\"color: #333333;\"> In other words, we can gain efficiency only by improving our performance in one or more of the activities along the critical path.\u00a0<\/span>\r\n<div class=\"textbox shaded\">\r\n<h4>DID YOU KNOW...?<\/h4>\r\n<span style=\"color: #333333;\">PERT was developed by the U.S. Navy. The Navy's Special Projects Office devised this\u00a0statistical technique for measuring and forecasting progress while they were designing the Polaris-Submarine weapon system and the Fleet Ballistic Missile capability.<\/span>\r\n\r\n<span style=\"color: #333333;\">CPM was first used for major skyscraper development in 1966 for the construction of\u00a0the former World Trade Center Twin Towers in New York City.[footnote]Kerzner, Harold (2003). Project Management: A Systems Approach to Planning, Scheduling, and Controlling (8th ed.)[\/footnote]<\/span>\r\n\r\n<\/div>\r\n<h2>Check Your Understanding<\/h2>\r\nAnswer the question(s) below to see how well you understand the topics covered above. This short quiz does <strong>not<\/strong> count toward your grade in the class, and you can retake it an unlimited number of times.\r\n\r\nUse this quiz to check your understanding and decide whether to (1) study the previous section further or (2) move on to the next section.\r\n\r\nhttps:\/\/assessments.lumenlearning.com\/assessments\/3044","rendered":"<p><a href=\"https:\/\/s3-us-west-2.amazonaws.com\/courses-images\/wp-content\/uploads\/sites\/143\/2017\/02\/24191117\/7481166880_926b9bee8d_k.jpg\"><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter wp-image-10292\" src=\"https:\/\/s3-us-west-2.amazonaws.com\/courses-images\/wp-content\/uploads\/sites\/143\/2017\/02\/24191117\/7481166880_926b9bee8d_k-300x199.jpg\" width=\"600\" height=\"397\" alt=\"image\" \/><\/a><\/p>\n<div class=\"textbox learning-objectives\">\n<h3>Learning Outcomes<\/h3>\n<ul>\n<li>Explain\u00a0facility location<\/li>\n<li>Explain facility layout<\/li>\n<li>Explain materials-requirement planning (MRP)<\/li>\n<li>Explain just-in-time inventory control (JIT)<\/li>\n<li>Differentiate between Gantt charts, PERT, and the critical path method<\/li>\n<\/ul>\n<\/div>\n<h2>Components of Production Planning<\/h2>\n<h3>Introduction<\/h3>\n<p>All this production doesn\u2019t happen by magic. Much of an operation manager&#8217;s time is spent planning the production process. Think about hosting a large party for your parents\u2019 anniversary. The first thing you have to\u00a0do is find a location that is large enough to accommodate\u00a0all the people you will be inviting. Once you have identified\u00a0the location, you then need to visit the site and decide how it will be laid out. Where should the tables and chairs go, where will you set up refreshments, and what about a gift table? Once you&#8217;ve decided on the layout, then you need to start making a list of the materials you\u2019ll need for the party. This includes everything from plates, cups, and napkins to hiring a DJ and a caterer. Lastly, based on the number of guests, you&#8217;ll need to calculate\u00a0how much of everything\u2014food, drinks, etc.\u2014to order.<\/p>\n<p>Operations managers engage in similar planning, but they use different terminology\u00a0to describe the different parts of the plan.\u00a0In production planning, the components are facility location, facility layout, materials-requirement planning (MRP), and inventory control.<\/p>\n<h3><strong>Facility Location<\/strong><\/h3>\n<p>Of all the pieces of the planning puzzle, facility location is the most strategic and critical. Once you build a new manufacturing facility, you have made a substantial investment of time, resources, and capital that can&#8217;t\u00a0be changed for a long time. Selecting the wrong location can be disastrous. Some of the key factors that influence facility location are the following:<\/p>\n<ul>\n<li>Proximity to customers, suppliers, and skilled labor<\/li>\n<li>Environmental regulations<\/li>\n<li>Financial incentives offered by state and local development authorities<\/li>\n<li>Quality-of-life considerations<\/li>\n<li>Potential for future expansion<\/li>\n<\/ul>\n<p>The next step, after planning the production process, is deciding on plant layout\u2014how equipment, machinery, and people will be arranged to make the production process as efficient as possible.<\/p>\n<h3><strong>Facility Layout<\/strong><\/h3>\n<p>The primary aim of facility layout is to design a workflow that maximizes worker and production efficiency.\u00a0Facility layout is complex\u00a0because it must take into account the available space, the work\u00a0processes, the delivery of components and parts, the final product, worker safety, and operational efficiency. A poorly laid-out production facility creates inefficiencies, increases costs, and leads to employee frustration and confusion.<\/p>\n<p>The four most common types of facility layout are process, product, cellular, and fixed position.<\/p>\n<h4><strong>Process Layout<\/strong><\/h4>\n<p>A <strong>process layout<\/strong>\u00a0aims to improve\u00a0efficiency\u00a0by arranging equipment according to its function. Ideally, the production line should be designed to eliminate waste in material flows, inventory handling, and management. In process layout, the work stations and machinery are not arranged according to the production sequence. Instead, there is an assembly of similar operations or similar machinery in each department (for example, a drill department, a paint department, etc.)<\/p>\n<h4><strong>Product Layout<\/strong><\/h4>\n<p>In a <strong>product layout<\/strong>, high-volume goods are produced efficiently by people, equipment, or departments arranged in an assembly line\u2014that is, a series of workstations at which already-made parts are assembled.<\/p>\n<p>In the following video, Jansen, a Swiss steel maker, describes how the company&#8217;s\u00a0offices were designed to maximize the productivity and creativity of its engineers:<\/p>\n<p><iframe loading=\"lazy\" id=\"oembed-1\" title=\"Office Space--Jansen\" width=\"500\" height=\"281\" src=\"https:\/\/www.youtube.com\/embed\/aT-eZXDLQl0?feature=oembed&#38;rel=0\" frameborder=\"0\" allowfullscreen=\"allowfullscreen\"><\/iframe><\/p>\n<h4><strong>Cellular Layout<\/strong><\/h4>\n<p>A <strong>cellular layout<\/strong> is a lean method of producing similar products using cells, or groups of team members, workstations, or equipment, to facilitate operations by eliminating set-up and unnecessary\u00a0costs between operations. Cells might be designed for a specific process, part, or a complete product. The goal of cellular manufacturing is to move as quickly as possible and make a wide variety of similar products with\u00a0as little waste as possible. This type of layout\u00a0is well suited for single-piece and one-touch production methods. Because of increased speed and minimal handling of materials, cells can result in great cost and time savings and reduced inventory.<\/p>\n<h4><strong>Fixed Position<\/strong><\/h4>\n<p>It\u00a0is easy to move marshmallow candies around the factory while you\u00a0are making them, but what about airplanes or ships? For the production of large items, manufacturers use <strong>fixed-position layout<\/strong> in which the product stays in one place and the workers (and equipment) go to the product. To see an excellent example of fixed-position layout, watch the following video that shows\u00a0how Boeing builds an airplane.<\/p>\n<p><iframe loading=\"lazy\" id=\"oembed-2\" title=\"Making of a Boeing air plane\" width=\"500\" height=\"281\" src=\"https:\/\/www.youtube.com\/embed\/-ovNi1cB7a4?feature=oembed&#38;rel=0\" frameborder=\"0\" allowfullscreen=\"allowfullscreen\"><\/iframe><\/p>\n<p>After the facility location has been selected and the best layout has been determined,\u00a0the next stage in production planning is to determine our material requirements.<\/p>\n<h3><strong>Material-Requirements Planning (MRP)<\/strong><\/h3>\n<p><strong>Material-requirements planning\u00a0(MRP)<\/strong> is a\u00a0production planning,\u00a0scheduling, and\u00a0inventory\u00a0control system used to\u00a0manage\u00a0manufacturing\u00a0processes. Most MRP systems are\u00a0software-based, but it is possible to do\u00a0MRP by hand, as well.<\/p>\n<p>An MRP system is intended to meet the following objectives simultaneously:<\/p>\n<ul>\n<li>Ensure that materials are available for\u00a0production\u00a0and\u00a0products\u00a0are available for\u00a0delivery\u00a0to customers<\/li>\n<li>Maintain the lowest possible material and product levels in store<\/li>\n<li>Plan manufacturing activities, delivery schedules, and\u00a0purchasing\u00a0activities<\/li>\n<\/ul>\n<p>Some manufacturing firms have moved beyond MRP systems and are now using enterprise resource planning (ERP) systems. ERP systems provides an integrated and continuously updated view of core business processes using shared\u00a0databases\u00a0maintained by a\u00a0database management system. ERP systems track business resources\u2014cash,\u00a0raw materials,\u00a0production capacity\u2014and the status of business commitments\u2014orders,\u00a0purchase orders, and\u00a0payroll. The applications that make up the system share data from and between various departments (e.g., manufacturing, purchasing, sales,\u00a0accounting, etc.).\u00a0ERP facilitates information flow between all business functions and manages connections to outside\u00a0stakeholders.<\/p>\n<p>Even with the implementation of highly integrated planning software, operations managers still need to plan for and control inventory.<\/p>\n<h3><strong>Just-in-Time (JIT) Manufacturing<\/strong><\/h3>\n<p><strong>Just-in-time (JIT) manufacturing <\/strong>is strategy that companies employ to increase efficiency and decrease waste by receiving goods only when\u00a0they are needed in the production process, thereby reducing inventory costs. In theory, a JIT system would have parts and materials arriving on the warehouse dock at the exact moment they are needed in the production process. To make this happen, manufacturers and suppliers must work together closely to prevent just-in-time from becoming just-isn\u2019t-there. Operations managers must accurately forecast the need for materials, since even the slightest deviation can result in a slowdown of production.<\/p>\n<h2>Scheduling Tools<\/h2>\n<div id=\"attachment_10369\" style=\"width: 610px\" class=\"wp-caption aligncenter\"><a href=\"https:\/\/s3-us-west-2.amazonaws.com\/courses-images\/wp-content\/uploads\/sites\/143\/2017\/02\/27222414\/1200px-Moscow_Izmailovo_hotel_complex_evening_14575121847.jpg\"><img loading=\"lazy\" decoding=\"async\" aria-describedby=\"caption-attachment-10369\" class=\"wp-image-10369\" src=\"https:\/\/s3-us-west-2.amazonaws.com\/courses-images\/wp-content\/uploads\/sites\/143\/2017\/02\/27222414\/1200px-Moscow_Izmailovo_hotel_complex_evening_14575121847-300x200.jpg\" alt=\"Photo of the Izmailovo Hotel complex at night.\" width=\"600\" height=\"400\" \/><\/a><\/p>\n<p id=\"caption-attachment-10369\" class=\"wp-caption-text\">Izmailovo Hotel complex, Moscow, Russia<\/p>\n<\/div>\n<p>As you might expect, operations managers find that complex processes involve complex\u00a0planning and scheduling. Consider\u00a0the Izmailovo Hotel in Moscow shown in the photograph at the right. Built to house athletes during the 1980 Olympics, the complex has 7,500 guest rooms and is the largest hotel in the world. Think about cleaning all those rooms\u2014in four thirty-story-high towers\u2014or checking in the thousands of guests. No small operation! Although the Izmailovo doesn&#8217;t produce a tangible good, it relies on\u00a0many of the same operations management principles used in manufacturing to stay in business. To increase operational efficiency in complex processes like those of running\u00a0a giant hotel, operations managers use three common planning tools: Gantt charts, PERT, and the critical path method (CPM).<\/p>\n<h3>Gantt Charts<\/h3>\n<p>A Gantt chart\u2014named after the designer Henry Gantt\u2014is an easy-to-use graphical tool that helps operations managers schedule the activities and determine the status of projects. Devised by Gantt in the 1910s, this chart illustrates the start and finish dates of the elements\u00a0of a project. Modern Gantt charts also show the dependency relationships between activities. Although now regarded as a common planning technique, Gantt charts were considered revolutionary when they were first introduced.<\/p>\n<p><a href=\"https:\/\/s3-us-west-2.amazonaws.com\/courses-images\/wp-content\/uploads\/sites\/143\/2017\/02\/28002853\/32260033073_a61b906a2d_k.jpg\"><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter wp-image-10375\" src=\"https:\/\/s3-us-west-2.amazonaws.com\/courses-images\/wp-content\/uploads\/sites\/143\/2017\/02\/28002853\/32260033073_a61b906a2d_k-300x161.jpg\" alt=\"Three different, ornate, brightly colored birdhouses.\" width=\"500\" height=\"268\" \/><\/a><\/p>\n<p>Let\u2019s look at a Gantt chart for producing\u00a0a birdhouse. Suppose the following activities are\u00a0required to build and package each birdhouse:<\/p>\n<ol>\n<li>Determine which birdhouse the customer has ordered<\/li>\n<li>Trace pattern onto wood<\/li>\n<li>Cut the pieces of wood from the birdhouse pattern<\/li>\n<li>Assemble the pieces into a birdhouse<\/li>\n<li>Paint birdhouse<\/li>\n<li>Attach decorations to the birdhouse<\/li>\n<li>Prepare a shipping carton<\/li>\n<li>Pack birdhouse into shipping carton<\/li>\n<li>Prepare customer invoice<\/li>\n<li>Prepare packing slip and shipping label<\/li>\n<li>Deliver carton to shipping department<\/li>\n<\/ol>\n<p>Below is the corresponding Gantt chart:<\/p>\n<div id=\"attachment_10464\" style=\"width: 910px\" class=\"wp-caption aligncenter\"><a href=\"https:\/\/s3-us-west-2.amazonaws.com\/courses-images\/wp-content\/uploads\/sites\/143\/2017\/03\/02181704\/Gantt_Project_Version_2_pdf_-_Google_Drive.jpg\"><img loading=\"lazy\" decoding=\"async\" aria-describedby=\"caption-attachment-10464\" class=\"wp-image-10464\" src=\"https:\/\/s3-us-west-2.amazonaws.com\/courses-images\/wp-content\/uploads\/sites\/143\/2017\/03\/02181704\/Gantt_Project_Version_2_pdf_-_Google_Drive-300x133.jpg\" width=\"900\" height=\"399\" alt=\"image\" \/><\/a><\/p>\n<p id=\"caption-attachment-10464\" class=\"wp-caption-text\">Figure 1. Gantt Chart<\/p>\n<\/div>\n<p>As you can see, the tasks\u00a0on the\u00a0list are displayed against time. On the left of the chart are all the tasks, and along the top is the time scale. A bar represents each work task; the position and length of the bar indicate\u00a0the start date, duration, and end date of the task. At a glance, we can determine the following:<\/p>\n<ul>\n<li>What the various activities\u00a0are<\/li>\n<li>When each activity\u00a0begins and ends<\/li>\n<li>How long each activity\u00a0lasts<\/li>\n<li>Where activities\u00a0overlap with other ones, and by how much<\/li>\n<li>The start and end date of the whole project<\/li>\n<\/ul>\n<h3>PERT<\/h3>\n<p>Gantt charts are useful when the production process is simple and the activities are not interdependent. For more complex schedules, operations managers use PERT, which stands for &#8220;program evaluation and review technique.&#8221; This\u00a0is a method of analyzing the tasks involved in completing a given project, especially the time needed to complete each task and to identify the minimum time needed to complete the total project. PERT was developed primarily to simplify the planning and scheduling of large and complex projects. The key to this technique\u00a0is that it organizes activities in the most efficient sequence. It can also help managers determine the critical path, which is discussed below.<\/p>\n<h3><strong>Critical Path Method (CPM)<\/strong><\/h3>\n<p>The critical path method (CPM) is a step-by-step technique for process planning that identifies\u00a0critical and noncritical tasks in order to prevent time-frame problems and process bottlenecks. The CPM is ideally suited to operations consisting of numerous activities that interact in a complex manner. It&#8217;s often used in conjunction with PERT.<\/p>\n<p>The essential technique for using CPM is to construct a model of the project that includes the following:<\/p>\n<ol>\n<li>A list of all activities needed to complete the project<\/li>\n<li>The time that each activity will take to complete,<\/li>\n<li>The dependencies between the activities and,<\/li>\n<li>Logical end points such as milestones or deliverable items.<\/li>\n<\/ol>\n<p>Using these values, CPM calculates the longest path of planned activities (expressed in time) to logical end points or to the end of the project, and the earliest and latest that each activity can start and finish without making the project longer. This process determines which activities are &#8220;critical&#8221; (i.e., on the longest path) and which can be delayed without extending the overall project duration. Take a look at Figure 2, below. What was the critical path in our construction of a birdhouse?<\/p>\n<div id=\"attachment_10469\" style=\"width: 1010px\" class=\"wp-caption aligncenter\"><a href=\"https:\/\/s3-us-west-2.amazonaws.com\/courses-images\/wp-content\/uploads\/sites\/143\/2017\/03\/02182414\/Critical_Path_Diagram_-_New_Page_png.jpg\"><img loading=\"lazy\" decoding=\"async\" aria-describedby=\"caption-attachment-10469\" class=\"wp-image-10469\" src=\"https:\/\/s3-us-west-2.amazonaws.com\/courses-images\/wp-content\/uploads\/sites\/143\/2017\/03\/02182414\/Critical_Path_Diagram_-_New_Page_png-300x166.jpg\" width=\"1000\" height=\"553\" alt=\"image\" \/><\/a><\/p>\n<p id=\"caption-attachment-10469\" class=\"wp-caption-text\">Figure 2. Critical Path<\/p>\n<\/div>\n<p>Our critical path was the path that took the longest amount of time! This was sequence of activities that included the customer invoice and packing and shipping label (from the start to G to\u00a0H), which totaled\u00a0180 minutes. The problem is that even if we were\u00a0able to assemble and decorate the birdhouse faster,\u00a0the birdhouse would just and wait for the paperwork to be completed.<span style=\"color: #333333;\"> In other words, we can gain efficiency only by improving our performance in one or more of the activities along the critical path.\u00a0<\/span><\/p>\n<div class=\"textbox shaded\">\n<h4>DID YOU KNOW&#8230;?<\/h4>\n<p><span style=\"color: #333333;\">PERT was developed by the U.S. Navy. The Navy&#8217;s Special Projects Office devised this\u00a0statistical technique for measuring and forecasting progress while they were designing the Polaris-Submarine weapon system and the Fleet Ballistic Missile capability.<\/span><\/p>\n<p><span style=\"color: #333333;\">CPM was first used for major skyscraper development in 1966 for the construction of\u00a0the former World Trade Center Twin Towers in New York City.<a class=\"footnote\" title=\"Kerzner, Harold (2003). Project Management: A Systems Approach to Planning, Scheduling, and Controlling (8th ed.)\" id=\"return-footnote-10288-1\" href=\"#footnote-10288-1\" aria-label=\"Footnote 1\"><sup class=\"footnote\">[1]<\/sup><\/a><\/span><\/p>\n<\/div>\n<h2>Check Your Understanding<\/h2>\n<p>Answer the question(s) below to see how well you understand the topics covered above. This short quiz does <strong>not<\/strong> count toward your grade in the class, and you can retake it an unlimited number of times.<\/p>\n<p>Use this quiz to check your understanding and decide whether to (1) study the previous section further or (2) move on to the next section.<\/p>\n<p>\t<iframe id=\"lumen_assessment_3044\" class=\"resizable\" src=\"https:\/\/assessments.lumenlearning.com\/assessments\/load?assessment_id=3044&#38;embed=1&#38;external_user_id=&#38;external_context_id=&#38;iframe_resize_id=lumen_assessment_3044\" frameborder=\"0\" style=\"border:none;width:100%;height:100%;min-height:400px;\"><br \/>\n\t<\/iframe><\/p>\n\n\t\t\t <section class=\"citations-section\" role=\"contentinfo\">\n\t\t\t <h3>Candela Citations<\/h3>\n\t\t\t\t\t <div>\n\t\t\t\t\t\t <div id=\"citation-list-10288\">\n\t\t\t\t\t\t\t <div class=\"licensing\"><div class=\"license-attribution-dropdown-subheading\">CC licensed content, Original<\/div><ul class=\"citation-list\"><li>Revision and adaptation. <strong>Authored by<\/strong>: Linda Williams and Lumen Learning. <strong>License<\/strong>: <em><a target=\"_blank\" rel=\"license\" href=\"https:\/\/creativecommons.org\/licenses\/by-sa\/4.0\/\">CC BY-SA: Attribution-ShareAlike<\/a><\/em><\/li><li>Check Your Understanding. <strong>Authored by<\/strong>: Lumen Learning. <strong>License<\/strong>: <em><a target=\"_blank\" rel=\"license\" href=\"https:\/\/creativecommons.org\/licenses\/by\/4.0\/\">CC BY: Attribution<\/a><\/em><\/li><li>Revision and adaptation. <strong>Authored by<\/strong>: Linda Williams and Lumen Learning. <strong>License<\/strong>: <em><a target=\"_blank\" rel=\"license\" href=\"https:\/\/creativecommons.org\/licenses\/by-sa\/4.0\/\">CC BY-SA: Attribution-ShareAlike<\/a><\/em><\/li><\/ul><div class=\"license-attribution-dropdown-subheading\">CC licensed content, Shared previously<\/div><ul class=\"citation-list\"><li><strong>Provided by<\/strong>: Wikipedia. <strong>Located at<\/strong>: <a target=\"_blank\" href=\"https:\/\/en.wikipedia.org\/wiki\/Material_requirements_planning\">https:\/\/en.wikipedia.org\/wiki\/Material_requirements_planning<\/a>. <strong>License<\/strong>: <em><a target=\"_blank\" rel=\"license\" href=\"https:\/\/creativecommons.org\/licenses\/by-sa\/4.0\/\">CC BY-SA: Attribution-ShareAlike<\/a><\/em><\/li><li>rover 200 framing line. <strong>Authored by<\/strong>: spencer cooper. <strong>Located at<\/strong>: <a target=\"_blank\" href=\"https:\/\/www.flickr.com\/photos\/spenceyc\/7481166880\/\">https:\/\/www.flickr.com\/photos\/spenceyc\/7481166880\/<\/a>. <strong>License<\/strong>: <em><a target=\"_blank\" rel=\"license\" href=\"https:\/\/creativecommons.org\/licenses\/by-nd\/4.0\/\">CC BY-ND: Attribution-NoDerivatives<\/a><\/em><\/li><li>Office Space: Jansen. <strong>Provided by<\/strong>: BBC. <strong>Located at<\/strong>: <a target=\"_blank\" href=\"https:\/\/youtu.be\/aT-eZXDLQl0\">https:\/\/youtu.be\/aT-eZXDLQl0<\/a>. <strong>License<\/strong>: <em><a target=\"_blank\" rel=\"license\" href=\"https:\/\/creativecommons.org\/licenses\/by-nc-nd\/4.0\/\">CC BY-NC-ND: Attribution-NonCommercial-NoDerivatives <\/a><\/em><\/li><li>Moscow Izmailovo hotel complex evening. <strong>Authored by<\/strong>: Artem Svetlov . <strong>Located at<\/strong>: <a target=\"_blank\" href=\"https:\/\/en.wikipedia.org\/wiki\/Izmailovo_Hotel#\/media\/File:Moscow_Izmailovo_hotel_complex_evening_(14575121847).jpg\">https:\/\/en.wikipedia.org\/wiki\/Izmailovo_Hotel#\/media\/File:Moscow_Izmailovo_hotel_complex_evening_(14575121847).jpg<\/a>. <strong>License<\/strong>: <em><a target=\"_blank\" rel=\"license\" href=\"https:\/\/creativecommons.org\/licenses\/by\/4.0\/\">CC BY: Attribution<\/a><\/em><\/li><li>Gantt Chart. <strong>Provided by<\/strong>: Wikipedia. <strong>Located at<\/strong>: <a target=\"_blank\" href=\"https:\/\/en.wikipedia.org\/wiki\/Gantt_chart\">https:\/\/en.wikipedia.org\/wiki\/Gantt_chart<\/a>. <strong>License<\/strong>: <em><a target=\"_blank\" rel=\"license\" href=\"https:\/\/creativecommons.org\/licenses\/by-sa\/4.0\/\">CC BY-SA: Attribution-ShareAlike<\/a><\/em><\/li><li>Program Evaluation and Review Technique. <strong>Provided by<\/strong>: Wikipedia. <strong>Located at<\/strong>: <a target=\"_blank\" href=\"https:\/\/en.wikipedia.org\/wiki\/Program_evaluation_and_review_technique\">https:\/\/en.wikipedia.org\/wiki\/Program_evaluation_and_review_technique<\/a>. <strong>License<\/strong>: <em><a target=\"_blank\" rel=\"license\" href=\"https:\/\/creativecommons.org\/licenses\/by-sa\/4.0\/\">CC BY-SA: Attribution-ShareAlike<\/a><\/em><\/li><li>Critical Path Method. <strong>Provided by<\/strong>: Wikipedia. <strong>Located at<\/strong>: <a target=\"_blank\" href=\"https:\/\/en.wikipedia.org\/wiki\/Critical_path_method\">https:\/\/en.wikipedia.org\/wiki\/Critical_path_method<\/a>. <strong>License<\/strong>: <em><a target=\"_blank\" rel=\"license\" href=\"https:\/\/creativecommons.org\/licenses\/by-sa\/4.0\/\">CC BY-SA: Attribution-ShareAlike<\/a><\/em><\/li><li>Homes for Sale. <strong>Authored by<\/strong>: Bennilover. <strong>Located at<\/strong>: <a target=\"_blank\" href=\"https:\/\/www.flickr.com\/photos\/75885098@N05\/32260033073\/\">https:\/\/www.flickr.com\/photos\/75885098@N05\/32260033073\/<\/a>. <strong>License<\/strong>: <em><a target=\"_blank\" rel=\"license\" href=\"https:\/\/creativecommons.org\/licenses\/by-nd\/4.0\/\">CC BY-ND: Attribution-NoDerivatives<\/a><\/em><\/li><\/ul><div class=\"license-attribution-dropdown-subheading\">All rights reserved content<\/div><ul class=\"citation-list\"><li>Making of a Boeing air plane. <strong>Authored by<\/strong>: Dial647. <strong>Located at<\/strong>: <a target=\"_blank\" href=\"https:\/\/youtu.be\/-ovNi1cB7a4\">https:\/\/youtu.be\/-ovNi1cB7a4<\/a>. <strong>License<\/strong>: <em>All Rights Reserved<\/em>. <strong>License Terms<\/strong>: Standard YouTube License<\/li><\/ul><\/div>\n\t\t\t\t\t\t <\/div>\n\t\t\t\t\t <\/div>\n\t\t\t <\/section><hr class=\"before-footnotes clear\" \/><div class=\"footnotes\"><ol><li id=\"footnote-10288-1\">Kerzner, Harold (2003). Project Management: A Systems Approach to Planning, Scheduling, and Controlling (8th ed.) <a href=\"#return-footnote-10288-1\" class=\"return-footnote\" aria-label=\"Return to footnote 1\">&crarr;<\/a><\/li><\/ol><\/div>","protected":false},"author":26,"menu_order":9,"template":"","meta":{"_candela_citation":"[{\"type\":\"cc\",\"description\":\"\",\"author\":\"\",\"organization\":\"Wikipedia\",\"url\":\"https:\/\/en.wikipedia.org\/wiki\/Material_requirements_planning\",\"project\":\"\",\"license\":\"cc-by-sa\",\"license_terms\":\"\"},{\"type\":\"original\",\"description\":\"Revision and adaptation\",\"author\":\"Linda Williams and Lumen Learning\",\"organization\":\"\",\"url\":\"\",\"project\":\"\",\"license\":\"cc-by-sa\",\"license_terms\":\"\"},{\"type\":\"copyrighted_video\",\"description\":\"Making of a Boeing air plane\",\"author\":\"Dial647\",\"organization\":\"\",\"url\":\"https:\/\/youtu.be\/-ovNi1cB7a4\",\"project\":\"\",\"license\":\"arr\",\"license_terms\":\"Standard YouTube 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