material's mamagement

8/11/2019 Material's Mamagement

1/28


2/28

Vocabularies always to remember

Inventoryhas the same meaning of;

Stock house, ware house, storage building.

.Production Processhas the same meaning of;

Manufacturing Process, Transformation Process,

Producing activities. Purchasing ,has the same meaning of ;

Buying, but in organization structure, we are usingpurchasing department and purchasing manager.

Administrator; in this book is using the word

administrator to any person in the middle managementwho implement the decisions, like production manager,materials manager, purchasing manager, inventory orwarehouse manager etc


3/28

Definitions Of Terms;

Materials;Thing that has a physical shape can

recognize with feeling touch considered as

tangible, Materials always been use in certainprocess as input to transform to output for

having better value.

Q. Can materials come in a form of service?

NO, since service is non-tangible and has no

physical shape, because of that cannot be

considered as material.


4/28

Definitions Of Terms Continue;

Materials Management; It is a coordinating function

responsible for planning and controlling materials flow

resources.

Q.What are the objectives of Materials Management?

1. Maximize the use of flow resources.

2. Provide the required of level of customer

service. 3. specialized design service to create a new

product from using a material as in-put to have

another one as out-put.


5/28


Q. What are the objectives of companies to

have materials management?

1. Provide best customer service.

2. Provide lowest production costs.

3. Provide lowest inventory costs.

4. Provide lowest distribution costs.


6/28


Q. What are the objectives of Materials Managementto materials manager?

1. Provide information about production planning and

control.

2. Provide information to lowest price in purchasing

materials.

3. Provide data to cover forecasting.

4. Look at the available physical inventory materials.

5. Examine the elements of distribution systems

including transportation, packaging and material

handling.


7/28


Q. Where is the area that we use

materials management?

1. Industrials & Manufacturing firms are in badlyneeded of materials management.

2. Distribution companies.

3. Inventories & Storages organizations. 4. Recycling firms where material can converted

from one shape to other with different uses.


8/28

Related to Recycling

Why we use recycling materials in

production process as inputs?

Ans.)1.To save cost in purchasing low

price materials than the new materials.

2. When there is a shortage in availability

of materials from the suppliers or the main

sources.


9/28

What are the disadvantages of using

recycling materials as materials manager?

1. Loose part of quality during production to less

quality product (saving materials cost as inputs). 2. less safety for machinery and equipments

during production.

3.Add another cost in ware housing andmaterials handling for recycling materials.


10/28


Administrator;refers to one who is responsible

for execution of work performed by other.

Purchasing Order;A written request issued for

purchase order for materials. Designing;is being handled by design engineer

to provide specialized design service to create a

new product from using a material as in-put to

have another one as out-put.


11/28


Value added ;The amount of value added

to inputs to create the final value of a

product, example, recycle plastic andplastic powder with low price(cost) in

purchasing(buying) it as input in

transforming it to plastic toys and chairs

with reasonable price.


12/28


Transformation process;At a factory thetransformation is the physical change of materialas inputs into products as outputs, such astransforming Of leather and rubber into bags,denim into jeans, re-cycle plastic and plasticpowder into kids' toys , plastic tables and Chairs.

Transformation process has anothervocabularies, such as Production process,

Manufacturing process, Producing process.


13/28

Types of production Planning

1.Short time planning.2.Middle time planning.

3.Long time planning. (Strategic planning)


14/28

There are three basic strategies that can be

used in developing a production plan

1. Chase strategy; means producing the

amounts demanded at given time, Inventory

levels remain stable while production varies to

meet demand. ORThe firm manufactures just enough at any

one time to meet demand exactly.

2.Production leveling ;is continually producingan amount equal to the average demand .


15/28

Conditions of production

leveling1.In such time demand is less than the amount

produced and an inventory builds up. And some

cost been registered.2. At other times demand is greater and

inventory is used up, more profit is achieving

and market is expanding.


16/28

Basic strategies continue

3.Contracting & Subcontracting ;it is alwaysproducing at the level of minimum demandingand meeting any additional demand throughcontracting & subcontracting.

Subcontractingcan mean buying the extraamounts demanded or turning away extrademand . This can be done by increasing priceswhen demand is high or by extending leadtimes. the major advantage of this strategy iscost. And because production is leveled andthere is no changing in the production leveled inthe subcontracting method.


17/28

Who can get benefits from

subcontracting method (plan)?

Few companies make everything or buy

everything they need .the decision about

which items to buy and which items to

manufacture depends mainly on cost, butthere are several other factors that may

considered like speed, customer

satisfaction, limitation of productioncapacity, market extending


18/28

Developing Production PlanIn developing production plan which is considering as part of basicProduction plan strategy. production plan development consist ofthree plans are;

1.Make to stock: goods are made before an order or demandbeen there.

2.Make to order: goods are made to customer specifications afteran order has been received.

3.Assemble to order: goods add options according to customerspecifications with standard parts and limitation of customerneeds.

4.Engineer-to-order; which it is depending heavily on the

customer needs with special specifications by using specialcomponents (parts & spare parts, machinery, and special type ofskilled personnel's and long production time as delivery lead time..


19/28

Developing a Make-to-Stock

production plan

In a Make-to-Stock environment ,productsare made and put into inventory before anorder is received from a customer .

What are the benefits of make-to-stock? 1.To extend in the market at any time.

2. To take advantage of low cost of

materials when available . 3.To have stable flow of products and

materials in the market.


20/28

Developing a Make-to-Stock

production plan Continue;

Disadvantages Of Adopting Make-to-Stock

Management;

1.Make-to-Stock registered cost. 2.Heavy investment in materials needed in

production process.


21/28

what are the reasons let the firms decided

for make-to-stock plan?

1.Demand is fairly constant and

predictable.

2.There are few product options.

3. Delivery times demanded by the

marketplace are much shorter than the

time needed to make the product.

4.Product has a long shelf life.


22/28

Is there any other name for make-

to-Stock delivery?

In sometimes we called it Back Orders

Because these are orders that are late for

delivery, also any past-due customer

orders , so in this case we have to prepare

for any future order , we planned it by

make-to-stock.


23/28

Give a clear example about make-

to-stock production planning .

Televisions , washing machines items areconsidering a clear items for make-to-stock production planning , since these

items and other consumer products areassembled from many components, theyare not perishable, changing models takesome time, easy, smooth to enter and

extend in the market , because of that,these items are considering a standarditems for make-to-stock production plan.


24/28

Case Study

Example; Salem factory produced an expensive fresh juice and wantto develop a production plan , The expected opening inventory is 100cases, and he want to reduce that inventory to 80 cases by the endof the planning period. There are no back orders. The followinginformation is needed.

___________________________________________________

Period 1 2 3 4 5 Total Forecast (cases) 110 120 130 120 120 600

Production

Ending

Inventory 100

Find the following: a. How much should be the production each period?

b. What is the ending inventory for each period?


25/28

Case Study Continue;

c. If the cost of carrying inventory is 5 O.R per

case per period based on ending inventory, what

is the total cost of carrying inventory? d. What will be the total cost of the plan?

e. When the cost of carrying inventory is

increased to 7 O.R per case per period for

ending inventory, What will happen to the

carrying inventory figure?

f. Differences between c & e.


26/28

Case Study continue;

Answer the question

Facts from the question:

a. Since the opening inventory is 100 cases. Also the ending inventory is 80 cases, with a not

that opening and ending inventories are

considering temporary inventory and also cause

cost but less than other inventory since theproducts are finding its way to the market soon

even there is no back order,


27/28

Case study continue;

Total production required = 600 + 80100 = 580 cases Production each period = 580/ 5 = 116 cases

b. Ending inventory = opening inventory + ProductionDemand

Ending inventory after the first period=100+116-110= 106 cases

Similarly, the ending inventories for each period are calculated.

The ending inventory for period 1 becomes the opening inventoryfor period 2;

Ending inventory (period 2) = 106 + 116 - 120 =102 cases

Ending inventory (period 3) = 102 + 116 - 130 = 88 cases




28/28

Case Study continue;

c. The total cost of carrying inventory = Total ending inventory

X inventory cost per case.

The total cost of carrying inventory would be:

(106+102+88+84+80)(5 O.R) = 2300 O.R

d. Since there were no stock outs and no changes in the level of

production , this would be the total cost of the plan.

Which it is 2300 O.R

e. Total cost of carrying inventory after additional increase

will be;

(106+102+88+84+80)(7 O.R) = 3220 O.R

f. 32202300 = 920 O.R

material's mamagement

Documents