II. Career Episodes
2.1 Career Episode 1
2.1.1 Introduction. In this career episode, I describe an industrial engineering task which I undertook as part of my educational program in the bachelor degree program in Industrial Engineering department, Faculty of Engineering, Andalas University, Indonesia, during 1998-2003. In this task, I worked with my team to solve industrial engineering problems within a motorcycle carburettor manufacturer by predicting customer demand through forecasting activities, for later, was used to develop the aggregate production plan, master production schedule, rough capacity planning materials and capacity planning.
2.1.2 Background. As part of management decision, production planning can be defined as the
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Moreover, production planning and control is useful to meet demand in order to obtain the maximum profit. In this task, I lead my team to conduct forecasting of customers demand for one year period and to develop an aggregate planning, master production schedule (MPS), rough cut capacity planning (RCCP), material requirement planning (MRP) and capacity requirement planning (CRP). These activities are part of the effective and integrated manufacturing planning and control processes which is known as MRP II (Manufacturing Resource Planning), the predecessor of enterprise resource planning (ERP). The relationship of these processes can be seen in Figure 1. Our project was related to processes of top management planning and operation management execution in this figure.
2.1.3 Personal Engineering Activity
2.1.3.1 Forecasting. Forecasting is the first important activity to determine production schedule in the future. It was done by predicting the future customer demand for a certain product or several products which later will become the target for production based on analysis of historical data. There are several phases for conducting quantitative forecasting, including: 1) Plotting the historical data [there are some possibility of data plotting: constant, linear, seasonal, cyclical and random] 2) Choosing several forecasting methods which is
* Forecasting is an impartial strategic ingredient that will ensure apt base for reputable planning. Our forecast is always the first step in developing plans in running the business along with our future plans of growth strategies. With this tool, we are able to anticipate our sales within reason that then can allow for us to control our costs in conjunction with inventory which will then help us to enhance our customer service. Sales forecasting is a vital strategic tactic in our company’s methodology.
* Now, assume you have acquired some time series data that would enable you to make short, medium, and long term forecasts. Ascertain the quantitative technique that will provide you with the most accurate forecast. Provide a rationale for your responses
“For companies today, MRP is a computerized information system. As such, it requires data to provide the information needed for decision making” (Vonderembse & White, 2013, Section 9.5, para 6). The goal of this paper is to read the Space Age Furniture Company case study and develop an MRP for Space Age Furniture Company using the information in the case including the production of sub-assemblies in lot sizes of 1,000 considering the lot size of 1,000 for sub-assemblies has produced a lumpy demand for part 3079; suggest ways for improvements over sub-assemblies in lot sizes of 1,000, analyze the trade-off between overtime costs and inventory costs, calculate a new MRP that improves the base MRP, compare and contrast the types of production processing—job shop, batch, repetitive, or continuous—and determine which the primary mode of operation is and why, describe ways that management can keep track of job status and location during production and recommend any changes that might be beneficial to the company and/or add value for the customer.
3. Market Share: forecasting will help in identifying the size of the market share and market potential will aid in the manufacturing and distribution process. Will also aid in proper utilization and eliminate waste.
In today’s operational management arena, there are certain expectations from a managerial aspect that must be met in order to be successful. A comprehensive look at the Space Age Furniture Company will show exactly what the Materials Requirement Planning (MRP) calculations are for this company at present time and then take the information given in order to properly suggest ways to improve the sub-assemblies. In addition, there will be an analysis on the trade-offs between the overtime and inventory costs. A calculation will be made on the new MRP that will improve the base MRP. This paper will also compare and contrast the types of production processing to include the job shop, batch, repetitive, or continuous, and determine which
In this case study, production planning of MacPherson Refrigeration Limited (MRL) for the next year is conducted. In order to
In order to achieve excellent production capacity and reducing the overall costs the production manager has to find an optimal structure of aggregate planning which will help achieving qualitative and quantitative aspects of the organization.
An effective business strategy and budgeting is very essential in a manufacturing industry. A company without a proper business strategy and master budgeting plan would usually faces tremendous challenges and losses during its business operations. The importance of company’s business strategies and budgeting plans, as well as the challenges and losses in the absence of these items has clearly presented in this case study. (“Wiley,” 2013)
Based on the real world functioning of businesses, every organization that deals with the process of manufacturing of certain products operates in accordance with the main principle of maximizing its profits. During the performance of daily activities, many business managers face a series of questions related to planning, control and decision making. In order to give answers to all these questions, an additional analysis needs to be considered. It is very important for managers to plan carefully how they are going to generate sufficient money to pay down costs and, in this way to result with a profit. As managers are interested in having the adequate information about the influence that certain actions might have on the profitability of the business, "Cost Volume and Profit" analysis plays a significant role by being a potential tool in facilitating the process of making the right decisions regarding planning and control in order to add value to the company. (Trifan and Anton, 2011). To further illustrate the essential impact that CVP analysis has on management authorities in making better decisions, I will refer to and analyze the case of the Hampshire Company which follows as below.
The current demand forecasting method is based on qualitative techniques more than quantitative ones. If the forecast is not accurate, the company would carry both inventory and stock out costs. It might lose customers due to shortage of supply or carry additional holding costs due to excess production. If the actual demand doesn’t match the forecast ones, and the forecast was too high, this will result in high inventories, obsolescence, asset disposals, and increased carrying costs. When a forecast is too low, the customer resorts to a competitive product or retailer. A supplier could lose both sales and shelf space at that retail location forever if their predictions continue to be inaccurate. The tolerance level of the average consumer
The concept of demand forecasting more accurately measures and predicts the changes and opportunities in the supply chain.
M&L Manufacturing Company is an example of a company that could benefit from forecasting. In the past the company has made an educated guess to determine necessary production for
Aggregate planning is the process of developing, analyzing, and maintaining a preliminary, approximate schedule of the overall operations of an organization. The aggregate plan generally contains targeted sales forecasts, production levels, inventory levels, and customer backlogs. This schedule is intended to satisfy the demand forecast at a minimum cost. Properly done,
But even this is not possible in case of a new product or innovation. A forecast of sales, demand, cash, requirements and several such business valuables are extremely essential for a business in order to be able to appropriately plan and conduct its operations in an effective and efficient manner. Yet, forecasts cannot be made accurately as there are several factors and changes in the current environment that leads to variations in forecasts and impacts or causes a manager to make changes in the forecasts.
Business forecasting is the process of studying historical performance for the purpose of using the information gained to project future business conditions so that decisions can be made today that will assist in the achievement of certain goals. Forecasting involves taking historical date and using it to project future data with a mathematical model. Forecasts are extensively used to support business decisions and direct the work of operations managers. In this paper I will introduce different types of forecasting techniques.