This is the prescribed textbook for your course.

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This is the prescribed textbook for your course.
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Chapter 18

• Factory management techniques

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Control of inventory levels

• Economic order quantity (EOQ)
• Just-in-time (JIT) purchasing and production
• Materials resource planning

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Cost category considerations

• Ordering costs
• Carrying (holding) costs
• Stockout (shortage) costs

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Economic order quantity

• Methods to determine the optimum quantity for
  each order
• Tabular analysis
• Graphical presentation
• Equation method

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EOQ and production

• Establish the optimum size of each production run
• Calculate the cost of each production set-up
• Calculate annual relevant holding cost per unit
  of average inventory
• Calculate the economic production run
• Reorder point, lead time and safety stock

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EOQ assumptions

• Demand is known and does not change from one
  period to the next
• Lead time is known and does not change from one
  order to the next
• Order is received in one batch at one point in
  time rather than several batches arriving at
  different times

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EOQ assumptions (cont.)

• Quantity discounts are ignored
• Only relevant costs are the variable costs of
  ordering and holding invoices
• Stockouts or shortages are avoided if orders are
  placed at the right time

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Just-in-time inventory management

• A demand-pull approach
• Benefits
• Reduced number of suppliers
• Long-term contracts with suppliers
• Delivery of materials is made immediately they
  are required for production, usually in small lot
  sizes
• Checking for quantity and quality of materials is
  minimised
• Payments to suppliers are made for batches of
  deliveries rather than for each delivery

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Just-in-time strategies

• Kanban
• Even production rate
• Standardisation
• JIT purchasing
• Set-up reduction
• Preventative maintenance
• Worker involvement
• Multiskilled workers
• Total quality management
• Advanced manufacturing technology

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Accounting for a JIT environment

• Backflush costing
• Variation 1
• Variation 2

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Materials requirements handling
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Key components of MRP

• Master production schedule
• Bill of materials
• Reports on purchase orders outstanding and
  existing inventories
• Lead times for each item of material, parts and
  components

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Quality control
Why improve quality?

• Companys reputation
• Market share
• Product liability
• International implications

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Quality control (cont.)

• The Deming management philosophy
• Fourteen principles of management
• The seven deadly diseases
• The benefits of total quality management (TQM)

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Total quality management in Australia

• Tubemakers of Australia Ltd.
• W. A. Deutscher
• Ramset (Australia)

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Some processes that contribute to success for TQM

• Benchmaking
• Quality standards
• Total quality control
• Employee involvement
• Quality control circles

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World competitive manufacturing

• Flexible manufacturing system
• Computer-aided design (CAD)
• Computer-aided manufacture (CAM)
• Computer numerically controlled (CNC) machines
• Automated material-handling system (AMHS)
• Robots
• Computer-integrated manufacturing (CIM)