Factory Physics

Front 1

a

Back 1

setup (ordering) cost
fixed cost to place an order
$/order

Front 2

c

Back 2

production cost
cost to place an order
$/unit or item

Front 3

h

Back 3

holding cost
constant as an avg (over cycle)
$/unitor item/time

Front 4

Q*

Back 4

optimal lot size

Front 5

Y(Q)

Back 5

optimal cost per year
= cost to setup + cost to produce + cost to hold

Front 6

D

Back 6

demand rate
units/year
contant, linear function

Front 7

F

Back 7

average # lots per year
=D/Q

Front 8

T

Back 8

time between orders
=1/F
=Q/D

Front 9

Q* in EOQ

Back 9

SQRoot of 2aD/h

Front 10

Y(Q*) in EOQ

Back 10

SQRoot of 2aDh

Front 11

EOQ balances between

Back 11

Inventory (Qh/2)
and
Setup (aD/Q)

Front 12

Q* at

Back 12

Inventory (Qh/2)= Setup (aD/Q)

Front 13

POQ Model

Back 13

relaxes the assumption of instantaneous delivery

Front 14

P

Back 14

rate ordering at

Front 15

i

Back 15

total invested in inventory
= cQ/2
= average of initial cost

Front 16

Average inventory in POQ (I)

Back 16

= Imax/2

Front 17

Q* in POQ

Back 17

SQRoot of (2aD)/[h*(1-D/P)]

Front 18

Imax

Back 18

(P-D)(Q/P)

Front 19

Y(Q) in POQ

Back 19

= cD + DA/Q + hImax/2

Front 20

Dynamic Lotsizing

Back 20

Demand is deterministic, but time varying
Varies across periods, but are constant with a period
Discretize planning horizon

Front 21

It-1

Back 21

Inventory level at end of period t-1

Front 22

Qt

Back 22

Order quantity in period t

Front 23

Wagner-Whitin

Back 23

Qt*It-1 = 0

Front 24

Relationship between WW and Zk algorithm

Back 24

Only produce in a period if no inventory was carried over from the period before

Front 25

Ways to relax assumption that Demand is fixed

Back 25

1. model with deterministic and modify results
2. represent randomness within model

Front 26

Random Variable

Back 26

function that assigns numbers to outcomes of a random experiment

Front 27

Distribution function

Back 27

links even referenced by random variable and the probability of the event

Front 28

End item

Back 28

what is sold

Front 29

Part

Back 29

Raw material

Front 30

Overhead

Back 30

Costs not directly associated with products, but are part of business

Fixed costs

Front 31

Risk Analysis

Back 31

Procedure of analyzing potential negative consequences in an uncertain situation

Front 32

What bounds a production line's labor capacity?

Back 32

number of workers/raw process time
= n/To

Front 33

What is maximum randomness?

Back 33

When every possible state occurs with equal frequency

Front 34

What is the minimax strategy?

Back 34

Risk analysis where one examines various scenarios and chooses the one that prevents the worst from happening.
Minimizes the Max damage
(Mins the Max)

Front 35

What is the purpose of the turnover ratio?

Back 35

To measure efficiency of using inventory

Front 36

Work In Process (WIP)

Back 36

Inventory between (not including) the start and endpoints of a product routing

Front 37

Routing

Back 37

Sequence of workstations that parts go through to become an end product

Front 38

Throughput (TH)

Back 38

average output (of a production process) per unit time

Front 39

Critical WIP (Wo)

Back 39

WIP level that achieves the max TH in the min CT
= bottleneck rate * To

Front 40

Raw Process Time (To)

Back 40

Average time for a single job to go through the empty lines (no waiting behind jobs)

Front 41

Bottleneck Rate (rb)

Back 41

Rate of the workstation with the highest utilization rate/lowest station capacity

Front 42

What bounds a production line's equipment capacity?

Back 42

Bottleneck rate

Front 43

Service Level

Back 43

Probability that the cycle time will be less than or equal to the lead time.
Used in make-to-order.

Front 44

What is utilization?

Back 44

Fraction of time that a lack of parts does not stop the process from working;
Long run average

Front 45

Utilization =

Back 45

Arrival rate/
Effective production rate

Front 46

What is satisficing?

Back 46

The act of converting objectives to constraints

Front 47

What does an order consist of?

Back 47

Contract Type & Number of items

Front 48

What is a Workstation?

Back 48

1+ machines that perform the identical function

Front 49

What is the System State?

Back 49

a complete description of all jobs at all stations - covers
How many jobs are there?
How long have the jobs been in process?

Front 50

What is a "balanced" line?

Back 50

A line where all stations have equal capacity.

Front 51

What is the critical WIP (Wo) for a balanced line?

Back 51

= number of machines in the line

Front 52

What are the preconditions for maximum randomness?

Back 52

1. The line must be balanced
2. All stations must have single machines
3. Process times are randomly exponentially distributed

Front 53

What are 3 methods for internal benchmarking?

Back 53

1. Best Case
2. Worst Case
3. Practical Worst Case

Front 54

w

Back 54

constant WIP level

Front 55

Simplified TH

Back 55

average number of parts made per unit time
e.g. 6 parts/hour

Front 56

What does it mean when the critical WIP, Wo, is a fraction?

Back 56

That there is no constant WIP level that can do exactly the in the bottleneck rate (#jobs/hr) for a cycle time equal to To

Front 57

What is Raw Materials Inventory (RMI)?

Back 57

the physical inputs at the start of the production process

Front 58

What happens the critical WIP, Wo, when the line is not "balanced"?

Back 58

The Wo is less than the number of machines

Front 59

What is Activity-Based Costing (ABC)?

Back 59

a cost accounting technique that seeks to link the cost of overhead to activities instead of directly to products.

Front 60

What is Little's Law?

Back 60

WIP = TH*CT

Front 61

What type of production lines does Little's Law apply to?

Back 61

All production lines

Front 62

What is Finished Goods Inventory (FGI)?

Back 62

the stock point at the end of a routing