Chapter 5 Order processing and information systems

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Chapter 5 Order processing and information
systems

• The cost of providing timely and accurate
  information has dropped dramatically.
• The cost of labor and materials has risen.
• Increasing efforts to replace resources with
  information.

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The five key elements of order processing

• Order preparation.
• Order transmittal.
• Order entry.
• Order filling.
• Order status reporting.

Represent 50 to 70 of the total order cycle
time.
See Figure 5-1
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Order preparation
Determine

• Appropriate vendors.
• Order form
• Stock availability.
• Voice communication of order information.

Technology

• Electronic technology (EDI)
• Voice-actuated computers
• Wireless encoding of product information
• ?radio frequency and identification system (RF/ID)

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Order transmittal

• Manual transmission
• ?mailing of orders or physical carrying by the
  sales staff to the order entry point.
• ?slow.
• ?inexpensive.

• Electronic transmission
• ?telephone, EDI, satellite communication.
• ?fast, reliability, accuracy.
• ?trade-off analysis.

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Order entry

• Checking the number, quantity and price.
• Checking the availability of the requested items.
• Preparing back order or order canceling
  documentation.
• Checking the customers credit status.
• Transcribing the order information.
• Billing.

P5-5
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• ?Bar coding and scanning have been especially
  important to entering order information.
• gtaccurately, quickly, low cost.

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Order filling

• Acquire the items through stock retrieval,
  production, or purchasing
• Pack the items for shipment
• Schedule the shipment for delivery
• Prepare the shipping documentation

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Order filling

• First-received, first-processed (First come,
  first served FCFS).
• Shortest processing time (SPT).
• Prespecified priority number.
• Smaller, less-complicated orders first.
• Earliest promised delivery date(EDD).
• Orders having the least time before promised
  delivery date (slack per operation S/O).
• Critical ratio (CR), according to smallest ratio
  of time remaining until due date to processing
  time remaining.

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The factors affecting order cycle time

• Split order
• Partially filling the order from a backup source
  for the product.
• Holding the order until replenishment stocks for
  the out-of-stock items are available.
• Freight consolidation

• ExIf an order contains five items, each of which
  has an in-stock probability of 0.90, the
  probability of filling the complete order is
• ?(0.90)(0.90)(0.90)(0.90)(0.90)0.59

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Performance measures

• Makespantotal time needed to complete a group of
  jobs.
• Average flow time
• Total flow time / number of jobs.
• Average tardiness
• Total hours late / number of jobs.
• Average number of jobs at workstation
• Total floe time / makespan

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• ExampleProcessing times and due dates for six
  jobs waiting to be processed at a work center are
  given in the following table. Determine the
  sequence of jobs, the average flow time, average
  days late, and average number of jobs at the work
  center for each of there rule(a)FCFS (b)SPT (c
  )DD (d)CR

Job processing time (days)
due date (days) A
2 7 B
8
16 C
4 4
D 10
17 E
5
15 F 12
18
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The FCFS sequence is A-B-C-D-E-F.
(1) (2) (3)
(2)-(3) Job processing flow
due days late
sequence time time
date (0 if negative) A
2 2 7
0 B 8
10 16
0 C 4 14
4 10 D
10 24
17 7 E 5
29 15
14 F 12
41 18 23
41 120
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• Average flow time 120/620 days.
• Average tardiness 54/69 days.
• The makespan is 41 days.
• Average number of jobs at the work center
  120/412.93

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The SPT sequence is A-C-E-B-D-F.
(1) (2) (3)
(2)-(3) Job processing flow
due days late
sequence time time
date (0 if negative) A
2 2 7
0 C 4
6 4
2 E 5
11 15 0
B 8 19
16 3 D
10 29 17
12 F 12
41 18
23 41 108
40

• Average flow time 108/618 days.
• Average tardiness 40/66.67 days.
• The makespan is 41 days.
• Average number of jobs at the work center
  108/412.63

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The EDD sequence is C-A-E-B-D-F.
(1) (2) (3)
(2)-(3) Job processing flow
due days late
sequence time time
date (0 if negative) A
4 4 4
0 C 2
6 7
0 E 5
11 15 0
B 8 19
16 3 D
10 29 17
12 F 12
41 18
23 41 108
40

• Average flow time 110/618.33 days.
• Average tardiness 38/66.33 days.
• The makespan is 41 days.
• Average number of jobs at the work center
  110/412.68

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The CR sequence (due date current date) /
processing time is C-A-E-B-D-F.
(1) (2) (3) (4)
(3)-(4) Job Critical
processing flow due days late
sequence ratio time
time date (0 if negative) C
1.0 4 4
4 0 F
1.5 12 16 18
0 D 1.7
10 26 17
9 B 2.0 8
34 16 18
E 3.0 5
39 15 24 A
3.5 2 41
7 34
41 160
85

• Average flow time 160/626.67 days.
• Average tardiness 85/614.17 days.
• The makespan is 41 days.
• Average number of jobs at the work center
  160/413.90

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• Generally speaking, the FCFS rule and the CR rule
  be the least effective of the rules.
• SPT is superior in temrs of minimizing flow time
  and average number of jobs at the work center and
  completion time.
• DD rule on average lateness is very well.

Average Average
Average flow time
lateness number of Rule

jobs at the work center FCFS 20
9.00
2.93 SPT 18 6.67
2.63 DD 18.33
6.33 2.68 CR
26.67 14.17
3.90
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S/O rule

• Note that processing time includes the time
  remaining for the current and subsequent
  operations.

Remaining
Remaining
processing Due
number of Job time
date operations A
4
14 3 B
16 32
6 C 8
8 5
D 20
34 2 E
10 30
4 F 18
30 2

• Determine the difference between the due date and
  the processing time for each operation.
• Divide the amount by the number of remaining
  operations, and rank them from low to high.

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(1) (2)
(3) (4) (5) (6)
Remaining
Remaining processing
Due (2)-(1) number of (3)/(4) Job
time date Slack
operations ratio Rank A 4
14 10 3
3.33 3 B 16
32 16 6
2.67 2 C 8
8 0 5
0 1 D 20
34 14 2
7.00 6 E 10
30 20 4
5.00 4 F 18
30 12 2
6.00 5

• The S/O rule sequence is C-B-A-E-F-D.

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(1) (2)
(3) (4) (5) (6)
Remaining
Remaining processing
Due (2)-(1) number of (3)/(4) Job
time date Slack
operations ratio Rank A 4
14 10 3
3.33 3 B 16
32 16 6
2.67 2 C 8
8 0 5
0 1 D 20
34 14 2
7.00 6 E 10
30 20 4
5.00 4 F 18
30 12 2
6.00 5

• The S/O rule sequence is C-B-A-E-F-D.

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• Exercise(a)FCFS (b)SPT (c )DD (d)CR

Job processing time (days)
due date (days) A
12 15 B
6
24 C
14 20
D 3
8 E
7
6

• ExerciseS/O rule

Remaining
Remaining
processing Due
number of Job time
date operations A
20
30 2 B
11 18
5 C 10
6 2 D
16
23 4
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Order status reporting

• Tracing and tracking the order through out the
  entire order cycle.
• Communication with the customer as to where the
  order may be in the order cycle and when it may
  be delivered.
• Example
• EXFedEX and UPS
• Laser-beam bar coding, a worldwide computer
  network.
• Design software for tracing and tracking systems.

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Example

• Direct-to-customer delivery utilizing EDI

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Electronic commerce through the internet
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Other factors affecting order-processing time

• Processing priorities
• Parallel versus sequential processing
• Order-filling accuracy
• Order batching
• Reduce processing costs
• Increase processing time
• Shipment consolidation

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The logistics information system

• See figure 5-4.
• ?the input
• ?the data base and its associated manipulation
• ?the output

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Exploded view of the logistics information system
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