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Unformatted text preview: 2: Performances and Trade Offs Four Dimensions of Performance
Process quality Variety!
demand • Performance measurement and improvement • Deﬁning a business strategy Responsiveness Making trade-offs Short waiting time at
the expenses of
more idling time High utilization
causes long waiting
time labour productivity Responsiveness Move towards efﬁcient frontier Competitor A
Competitor B Competitor C labour productivity
• Eliminate inefﬁciencies • Redesign processes Part 3: Inventory Model Service Quality
• Sales rep’s do not want to keep large inventory • Deliver when customers need • In-stock probability is a very important service level Objective:!
develop a system to minimize inventory investment
while maintaining a very high service target
Challenge: lead time + randomness Timing of Inventory Model
• Time is divided into periods of equal length, e.g., one week • During a period the following sequence of events occurs:
• Inventory is received. •
• A replenishment order can be submitted.
Random demand occurs. Lead times:
• An order is received after a ﬁxed number of periods,
called the lead time. • Let l represent the length of the lead time. Order up-to Model Deﬁnition
• On-order (pipeline) inventory = the number of units that have been
ordered but have not been received. • On-hand inventory = the number of units physically in inventory ready to
serve demand. • Backorder = the tota...
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- Fall '14