Continuous performance improvement in operations by engaging process mprovement teams who work with R& D to make positive changes for cost and material utilization. Improve data collection about customer trends, technology improvements & realistic forecast Efficient utilization of ERP systems Production for new markets Lean Manufacturing Maintenance Strategies Changes in scale of production Effect of Reduced Demand Under-utilized capacity Production Cut Inventory piled up Blocked capital.
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Checking Production Team D decided to do a minor upgrade to Detonka but forgot that old inventory is disposed GM SAGA GM Closed 13 out of 21 plants. GM eliminated 74,000 Jobs. GM supply chain crisis still exists. 0 suppliers have filed a bankruptcy petition in the United States Recall there are two levels of manufacturing decisions: Vehicle Production = Target production for a particular vehicle Flexible production (+1- 10%) if shortage or > 120 days inventory Retooling charges if production increases over previous production Watch inventory levels.
If vehicle is upgraded, product lines combined May produce above capacity (with over-capacity charge) You have total flexibility to divide capacity among vehicles, but consider retooling charges Example of setting Manufacturing forecasting for automotive industry. So, the logistics of calculating appropriate production levels is fairly simple… know your existing inventory levels, set a target ending inventory (possibly zero), take into consideration upgrade write-offs, and estimate demand… Estimating Demand is the hard part!
Fluctuating Variables: changes to marketing mix, potential changes in the product, changes in the environment, changes made by the competition It is the dynamic aspect of forecasting that makes it so difficult One approach is to use statistical methods to calculate next year’s demand, but here we will focus on more fundamental analysis References 1. Scott Armsthrong, Fred Collopy, Andreas Graefe and Kesten C. Green. “Aanswers to Frequently Asked Questions”. Retrieved May 15, 2013. 2. Nahmias, Steven (2009). Production and Operations Analysis.See More on Volkswagen Group