Efciency quality product quality process quality

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Unformatted text preview: 2: Performances and Trade Offs Four Dimensions of Performance Cost! Efficiency Quality! Product quality Process quality Variety! Customer/service heterogeneity Time! Responsiveness to 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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