Mister

FACULTY OF MANAGEMENT SCIENCES
DEPARTMENT OF MANAGEMENT

LEARNER GUIDE
COURSE: B TECH : BUSINESS ADMINISTRATION

LEARNER GUIDE
SUBJECT : PRODUCTION & PURCHASING
MANAGEMENT II
SUBJECT CODE: PUC200T

DEVELOPED BY: JKJ MASHALA
REVISED: OCTOBER 2013

© COPYRIGHT: Tshwane University of Technology
Private Bag X680
PRETORIA
0001
All rights reserved. Apart from any reasonable quotations for the purposes of research criticism or review as permitted under the Copyright Act, no part of this book may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopy and recording, without permission in writing from the publisher.

Printed and distributed by:
FACULTY OF MANAGEMENT SCIENCES
Tshwane University of Technology
Private Bag X680
Pretoria
0001

BIBLIOGRAPHY AND COMPUTER PACKAGES
Prescribed book
JR TONY ARNOLD, Introduction to Materials Management. 11TH edition
Recommended books
NORMAN GAITHER, GREG FRAZIER, Operations Management, (9th Edition).
KRAJEWKI, RITZMAN, Operations Management (8th Edition).
FOGARTY, BLACKSTONE AND HOFFMANN, Production and Inventory
Management.
RENDER AND HEIZER, Principles of Operations Management.

COMPUTER SOFTWARE
Storm vers 3.0
QSB
QM

CONTENTS
PAGE
SECTION 1: ORGANISATIONAL COMPONENTS
1. INTRODUCTION
1.1
1.2
1.3
1.4
1.5
1.6
1.7
1.8
1.9
1.10

NQF structural requirements for qualification
Exit level outcomes of the qualification
Critical outcomes
Adult learning principles
Purpose of the learner guide
Working procedure in class
Evaluation and Semester Examination
General
Class attendance
Determination of predicate

1
1
1
2
3
3
4
5
8
8
10

SECTION 2: THE STUDY COMPONENT
2. SYLLABUS GUIDE

12

3. TIME SCHEDULE

13

4. STRUCTURE

14

4.1 Introduction

14

4.2 Module A1: Introduction to Materials Management

14

4.3 Module A2: Production Planning System

16

4.4 Module A3: Master Production Scheduling

18

4.5 Module A4: Material Requirements Planning

20

4.6 Module A5: Capacity Management

22

4.7 Module A6: Production Activity Control

24

4.8 Module A7: Purchasing

27

4.9 Module B1: Forecasting

28

4.10 Module B2: Inventory Fundamentals

30

4.11 Module B3: Order Quantities

32

4.12 Module B4: Independent Demand Ordering Systems

34

4.13 Module B5: Physical Inventory and Warehouse Management

36

4.14 Module B6: Physical Distribution

38

4.15 Module B7: Lean Production (Just-in-Time Manufacturing)

41

ANNEXURES

A. CODE OF CONDUCT

73

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STAFF MEMBER

CAMPUS

OFFICE
NO
(Bldg – room) Mr. EM Morrison

Pretoria

30-233

Ms A De Almeida

Pretoria

30-233

Mr KJ Madiba

Pretoria

30/269

Mr T Munyai

Pretoria

30-265

TELEPHONE NO &
E-MAIL ADDRESS
Telephone: [phone] e-mail : [e-mail]
Telephone: [phone] e-mail : [e-mail]
LECTURERS
Telephone: [phone] e-mail : [e-mail]
Telephone: [phone]

POSITION

Head of Department
Departmental Secretary

Lecturer
Lecturer

e-mail: [e-mail]
Telephone: [phone]
Mr. J Mashala

Pretoria

30-271

Subject moderator e-mail: [e-mail]

Mrs. C Ferreira
Pretoria

30/278

Faculty officer

MENTORS
To be appointed. Students will be advised in due course
Subject Lecturer: Mrs Sesane
Subject Moderator: Mr J Mashala
Programme Coordinator:
Mrs. Bets Mulder
Bld30/396

Library Services:
Mrs. A. Machele Bld 20/ Second floor

Cooperative Education Coordinator:
Mr. H. Veldsman
Bld:30/341

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SECTION 1: ORGANISATIONAL COMPONENTS
1. INTRODUCTION
Welcome to the class. From the very start we wish to express the hope that you will find the study of this interesting, educational and that you will also develop a liking for and interest in our subject. Further, we trust that not only will you pass your examinations at the end of the semester, but that you will find that the course can be applied directly to your work or future work and thus contribute to a successful career. 1.1 NQF STRUCTURAL REQUIREMENTS OF THE QUALIFICATION
The subject is one of the requirements towards attainment of a B TECH: Business
Administration.
1.1.1 Level and credits. The subject is presented at Level 6 (First Degrees ) and successful completion warrants 0,250 credits.
1.1.2 Study fields. The course is conducted under the auspices of Sector Educational
Training Authority (SETA) for Business, Commerce and Management Studies of the National Qualifications Framework.
1.1.3 Learning assumptions. It is imperative for learners who have been admitted to this course to have qualified at third year of National Diploma or equivalent.
1.1.4 This course introduces and then prepares the learner for certain job-related competencies which are essential requirements to be able to meet requirements in the production environment i.e., Production expediter, or Production planner.
1.1.5 NQF Principles. The course complies with the principles of adult learning as enshrined in the NQF framework and applied by the South African Qualifications
Authority (SAQA).
1.2 EXIT LEVEL OUTCOMES OF THE QUALIFICATION
1.2.1 The successful learner is able to:
Problem-solving
Identify and define the problem
Gather and analyse data relating to the problem
Select appropriate methodology for solving the problem

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1.2.2 Application of production techniques:
Approach problem-solving and decision-making from total systems perspective. Improve productivity through the use of method study.
Help reduce direct material cost through better materials handling methods.
1.2.3 Cultural diversity
Demonstrate degree of tolerance and preparedness to help.
Form part of the group study or team.
1.2.4 Communication
Generate reports on assignments
Generate and present assignments to the class
Communicate interactively in class
1.3 CRITICAL OUTCOMES
The broad, generic cross-critical outcomes will ensure that you gain the skills, knowledge and values that will allow you to contribute to your success as well as the success of your organisation. You will thus get the opportunity in this module to:
Identify and solve the problems in which responses display that responsible decision using critical and creative thinking have been made.
Application: As a prospective Business management practitioner , the learner will be confronted with various management problems relating to production or service delivery that he or she has to solve or provide a platform for them to be resolved.
Work effectively with others as members of a team, group organisation, and community. Group work: It is expected of learners to work in groups to discuss questions from the learner guide and to complete assignments as a group.
Organise and manage yourself and your activities responsibly and effectively.
Course expectation: This course expects learners to apply the management functions not only in the workplace, but also in the personal lives. Time management is of the utmost importance with regard to writing tests and submitting assignments on due dates.
Collect, analyse, organise and critically evaluate information:

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As an individual: To be an effective technologist the learner will be confronted with exercises and assignments (individually or group) to collect, analyse, apply and evaluate information to ensure consistency.
Communicate professionally using visuals, overhead projector, transparencies, language skills in oral or written presentations.
Assessment: This outcome will be demonstrated during class discussions, presentations, tests and assignments.
Demonstrate understanding of connectivity between local problems and global.
Value-chain: This outcome is attained when the learner realises that the course he has undertaken could be a step-in stone for opportunities world-wide.
1.4 ADULT LEARNING PRINCIPLES
The following principles apply in this course:
All learning will include cognitive, psychomotor and affective domains to develop the learner holistically.
Learners will be actively involved in the learning process.
Self-directed learning will be practised and encouraged to acquire the necessary knowledge, skills and values.
Learning will be task-centred and problem-centred.
All learning will be related and applied to the learner’s working environment.
The learner’s prior experience and knowledge will be considered when they are confronted with or have to discover new content.
1.5 THE PURPOSE OF THE LEARNER GUIDE
A LEARNER GUIDE IS AIMED AT ENHANCING YOUR SKILLS
TO WORK INDEPENDENTLY - A PREREQUISITE FOR
EFFECTIVE FUNCTIONING IN THE WORKPLACE
The learner guide provides the framework for outcomes based job directed learning.
The end state pursued by this course, specific competencies and detail learning objectives of each module is defined and available in advance and thereby provides you with the curriculum.
Continual referral to the learner guide is of utmost importance, because it indicates the following:
• the learning objectives to be attained.
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• the work that will be covered.
• the work to be prepared.
• serves as frame of reference for the content of the subject.
• provide the student and the lecturer with guidelines on how to prepare for the lectures and educational situation.
• forms the basis for the presentation of the subject.
The mission of Tshwane University of Technology refers to state of the art technology and lecturers therefore it has the right to add new developments in the subject and to examine students on this additions.
The learner guide does not limit the scope of examinations. Tests and examination questions may also be set from other sources and lectures and also on practical applications of the theoretical subject matter.
1.5.1 A learner guide stimulates diligence and self-learning on the part of the student.
1.5.2 At a tertiary institution a lecturer’s task is to make knowledge available and not primarily to impart knowledge. The responsibility to gain knowledge and to make it your own, rests with you.
The lecturer explains the principles of the course and their practical application in the class. It is your responsibility to obtain the detail by means of independent study, through the prescribed textbooks and supplementary sources in the library.
You now have to think and work on your own and practice self-discipline.
1.5.3 A learner guide promotes student participation in the class. You, the student, have to do the speaking in the class, and not so much the lecturer.
In order to accomplish this, you must be well prepared when coming to classes.
Unless you study in advance, you will be unable to participate or contribute meaning-fully in the class.
1.5.4 The learner guide contains important information such as evaluation times, prescribed textbooks, supplementary sources, working procedures, lecturer’s information, the syllabus, etc.
1.6 WORKING PROCEDURES IN THE CLASS
As already mentioned, it is essential that you are properly prepared when attending class, because involvement and meaningful participation are of the utmost importance. The lecturer’s method of instruction is based upon your independent study and thinking. This implies the following:
The study objectives in the learner guide also serve as assignments. You must prepare the assignments indicated by your lecturer. One or more students will then be asked to present the prepared assignment to the class in brief (approximately five minutes).
4

The lecturer may nominate any student to present the assignment. Should you be unprepared, the lecturer will make a note of the fact, and take it into consideration when awarding your semester mark.
After your presentation, the lecturer will explain the principles and the practical application of the applicable study objectives that you presented in detail. Where relevant, case studies will be done. Should you then still have any problems concerning the subject matter, it will be the right time and your duty to approach the lecturer. Thereafter you should incorporate the presentation of the lecturer in your preparation to produce a final product.
The lecturer will then indicate the study objectives to be prepared for the following period(s). 1.7 EVALUATION AND SEMESTER EXAMINATIONS
1.7.1 Continuous evaluation
As soon as the lecturer has completed the instructional unit concerned, evaluation takes place. The purpose is to establish whether the student has achieved the prescribed goals.
The evaluation will extend over a single or double period, according to the lecturer’s discretion.
The student’s evaluation mark will be incorporated in the determination of his semester mark. Your lecturer will decide what the weight of the evaluation mark is to be.
1.7.2 Test series
Students are usually tested in the course of two test series. The time schedule indicates which part of the work you will be tested on, and when the tests have been scheduled for.
1.7.3 Taking tests and examinations
Your test/examination answers must be presented logically and systematically, and paragraphs and subsections should be clearly numbered and have headings.
A lecturer will not award marks for essays and waffling.
When sitting for an examination/test paper, take the total marks into consideration, in other words, how many marks are awarded to the individual questions.
The study objectives stated in each module should not be considered as standard examination questions, and questions will not necessarily be the same. The marks awarded also serve as a broad guideline only.
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1.7.3.1 List of key words used in questions:
Certain key words are used in questions to indicate how a question must be answered, for example: discuss, evaluate, distinguish, explain, contrast, criticise, discuss critically, etc.
You must read all questions carefully and ensure that they are answered in the required way.
Structure of questions to expect and Key word explanation:
Discuss a statement(s): Your answer should be thoroughly detailed and all sides, aspects, etc. reasoned out. Analyse and investigate the statement by using various arguments for and against.
Define: To give the exact meaning or to describe something briefly and accurately. Draw a comparison/indicate the difference: To point out similarities and/or differences - to discuss the characteristics.
Describe: write the characteristics, basic facts/results down in a logical, systematic and well structured manner.
Discuss critically: To evaluate and to point out the strong and weak points - to consider all the facts, information and points of view.
Analyse: Break down knowledge in parts to discern contested information
1.7.4 Assignments
Assignments handed in for evaluation become the property of the University.
After these assignments have been marked by the lecturers, they will be returned to you. After discussing them with you, they will be once again be returned to the
University for safe keeping. No student will therefore be allowed to retain his or her assignment.
1.7.5 Assignment dates
The lecturer will inform you of all assignment dates in good time. Under no circumstances will you be allowed to hand in an assignment after the due date. Therefore start working in time!
The lecturer will inform you of all assignment dates in good time. Under no circumstances will you be allowed to hand in an assignment after the due date.
Therefore start working in time!

6

Once the date has been established, communicated through to the stu-dents.
Successfully, it now becomes binding and should be adhered to. It should then when completed, be handed in on or before the set due date.
In the unfortunate circumstances that the assignment is not handed in on the set due date, a provision is made to then hand it in a day later which will be accepted on the strength of a valid note of absence. If a student still cannot show up he or she should phone preferable the secretary of the department to inform of his or her continued stay away from lessons.
The penalty for late submission without a valid reason shall be applied to the effect that the student shall suffer a drop in marks according to this method:
Day one - 10 %
Day two - 25 %
Day three, the assignment is unacceptable and the student gets zero.
1.7.6 Extra-ordinary tests and assignments
In the event of illness or unavoidable absence (the latter is only applicable to students who are employed full-time by an employer) which may prevent students from executing their instructions, an extra-ordinary test or task will be considered by the lecturer concerned in consultation with the departmental head, providing that a medical certificate or other acceptable written proof to their satisfaction has been submitted. Such tests will only be considered if the necessary arrangements have been made beforehand or within three days after the test date.
A late test for the purpose of replacing or supplementing a previous test mark or any incomplete participation in a test will not be permitted. Should a student participate in a test, assignment or any other task, his or her participation, however incomplete it might be, will be regarded as final. A student therefore has only one opportunity to participate in a specific test, assignment or any other task.
The onus therefore rests on the student to make the necessary arrangements with the lecturer responsible for the formal lectures either before or within three days after the test date. Should he/she fail to do so, the student will be refused permission to sit for the examinations.
1.7.7 Predicate mark
In order to obtain a predicate mark, the students are expected to 1.7.7.1
1.7.7.2
1.7.7.3
1.7.7.4

write two semester tests; prepare assignments and other tasks; attend class regularly to the satisfy the standard; complete other assignments or extra tests.
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Owing to the extent of the classes, it is essential that the set dates as announced be strictly adhered to.
1.8 GENERAL
Please bear in mind that your achievements as a University student are recorded and that these will definitely be referred to in future, for example in the event of your applying for employment or a bursary.
Careful attention to the following few hints can contribute considerably to the prevention of problems and to attaining greater success.
1.8.1 Please note the requirements for admission to the examination and make sure that you give them the necessary attention throughout the year. This will prevent you becoming disillusioned shortly before the examinations, and then having to request concessions which cannot be granted.
1.8.2 Tests, assignments and other tasks during the semester must always be undertaken and completed in great earnest. Everyone of them can drastically influence your year mark and your eventual success. In this regard students are seriously warned against the danger of spotting questions. It is essential that the entire syllabus covering the test or the examination be thoroughly prepared and not only the parts which the students guess, will be asked.
1.8.3 Make sure that you write all tests on the appointed dates and hand in assignments and other tasks on the prescribed dates.

1.8.4 Take your studies seriously right from the start and see to it that you maintain a healthy balance in the way you spend your time. work, recreation and other nonacademic activities.
1.8.5 Do not hesitate to approach your lecturers when problems, doubts, etc. arise in connection with your studies. It will always be a pleasure for the teaching staff to be of assistance, but then you must contact us. Use the contact offered during lecturers - it is always better to approach your lecturer in person, rather than relying on the information of other students.
1.9 CLASS ATTENDANCE
Regular attendance of classes is regarded to be essential for all students (those who are following a specific course for the first time as well as those repeating a course) for the following reasons:
1.9.1 Regular attendance of lectures facilitates your studies considerably, because of the personal instruction you receive.

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1.9.2 Regular attendance of lectures is the first step to successful studies, because it is the only way to ensure that you get to know and understand the entire contents of the course.
1.9.3 Regular attendance of lectures keeps you in touch with the course on an ongoing basis and enables you to take your time, working through the course systematically. 1.9.4 Students who show so little interest in their studies that they do not even attend the few compulsory lectures per week, certainly do not deserve to pass.
1.9.5 Class attendance will be monitored regularly by the lecturers, and in the event of it not being satisfactory your admission to the examination will be refused regardless of what your year mark might have been. Refer to item 1.10.3

9

1.10 DETERMINATION OF PREDICATE
1.10.1 Dates for tests and assignments
MODULE A
Test 1: Modules:A1-3

Test 3: Modules:A1-7

Test 2: Modules A4-7

Test 5: Module B4-7

Test 4: Module B1-3

Assignment A1:
Assignment A2:
1.10.2 Composition of marks
MODULE A

Determination of predicate marks using two different scenarios
No

Assessment

Weight

Achievement:
Student A

Achievement: Student
B

1
1
2

1st Written Test
1st Assignment
2nd Written Test

0.14
0.1
0.14

70%
65%
58%
JUNE
70%
65%
60%
60
Student (A)
Predicate
65%
Exam allowed

30%
60%
40%

3
2
4
5

RD

3

Written Test
ND
2 Assignment
TH
4 Written Test th 5 written test

0.24
0.1
0.14
0.14

Total Weight

100%

Test 1:
Test 2:
Test 3:
Test 4:
Test 5:
Assignment 1
Assignment 2:
Total :

14%
14%
24% %
14 %
14%
10%
10 %
100 %

E.G. Predicate mark:
Examination mark:
Final mark:

38%
40%
37%
30%
Student (B)
Predicate
38%
No exam allowed

50 %
+
50 %
100 /2 = 50%

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1.10.3 Promotion requirements
Class attendance of at least 80 % is required. Register will be marked.
The subject consists of 14 modules: Four semester tests will be completed in the respective modules, two tests in each semester will be written after which a final exam will be written. A pass mark must be achieved across all four modules to pass the subject.
A predicate mark of at least 40 % must be obtained to be admitted to a semester examination. The average of the examination mark and predicate mark must be at least 50 % to pass the course successfully.

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SECTION 2: STUDY COMPONENT
2. SYLLABUS GUIDE
PRODUCTION AND PURCHASINGMANAGEMENT II
2.1 MODULE A

2.1.1
2.1.2
2.1.3
2.1.4
2.1.5
2.1.6
2.1.7

Introduction to Materials Management
Production Planning System
Master Production Scheduling
Material Requirements Planning
Capacity Management
Production Activity Control
Purchasing

2.2. MODULE B

2.2.1
2.2.2
2.2.3
2.2.4
2.2.5
2.2.6
2.2.7

Forecasting
Inventory Fundamentals
Order Quantities
Independent Demand Ordering Systems
Physical Inventory and Warehouse Management
Physical Distribution
Just-in-Time Manufacturing

2.3 COMPUTER SOFTWARE
2.3.1
2.3.2
2.3.3

Storm vers 3.0
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3.

TIME SCHEDULE

Week

Modules
Topic
6

8-9
17

th

(3 Mar)

Introduction to Materials Management

A1

Production Planning System

A2

TEST 1

A1 & A2

11-12

Master Production Scheduling

A3

13,15

Material Requirements Planning

A4

Capacity Management

A5

16-23
19

th

(14 Apr)

20 - 21
22
ND

23

2

24

9

TH

TEST 2

A3 & A4

Production Activity Control

A6

Purchasing

A7

June

TEST 3

1,2,3,4,5,6&7

June

Sick test

All 7modules

Recess
30-31

Forecasting

B1

32 - 33

Inventory Fundamentals

2

34-35

Order Quantities

3

36-37

Independent Demand Ordering

4

Systems
38

th

25 Sep

TEST 4
Physical Inventory and Warehouse

39

Management

B1,2,3&4
B5

40

Physical Distribution

6

40

Just-in-Time Manufacturing

7

42

29 Sep

43

13 Oct

TEST5

All B modules

Sick test

All B modules

th

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4. STRUCTURE
4.1 INTRODUCTION
The subject is introduced by way of 14 modules. Students should work through these modules on as –we-go basis, in a systematic manner.
4.2 MODULE A1: INTRODUCTION TO MATERIALS MANAGEMENT
4.2.1 Objective
To explain how manufacturing companies add value to raw material - using capital, labour and materials. The best way to manage this conversion process is by planning and controlling the flow of material into, through and out of manufacturing. The right material should arrive at the right time and in the right quantities.
This chapter introduces the student to the management of material flow.
4.2.2 Core contents
4.2.2.1
4.2.2.2
4.2.2.3
4.2.2.4

Introduction
Supply-Production-Distribution system
What is materials management?
Manufacturing systems

4.2.3 Compulsory reading
JR TONY ARNOLD, Introduction to Materials Management, p.1 - 15.
4.2.4 Learning goals
At the end of the chapter the student should be able to have a grasp of how value is added and how wealth can be created, cost saving methods and answer the following questions:
4.2.4.1

How is it created?

4.2.4.2

Name and describe the three main divisions of supply, production and distribution systems?

4.2.4.3

What are the four objectives of a firm wishing to maximise profit?

4.2.4.4 What is the objective of marketing? What three ways will help it achieve this
14

objective? .
4.2.4.5 What are the objectives of finance? How can these objectives be met?
.
4.2.4.6 What are the objectives of production? How can these objectives be met?
.
4.2.4.7 Describe how the objectives of marketing, production and finance are in conflict over customer service, disruption to production, and inventories.

4.2.4.8 Name and describe the inputs to a manufacturing planning and control system. .
4.2.4.10 Why can materials management be considered a balancing act?
4.2.4.11 Name and describe four major factors affecting Operations management today and suggest how these factors could be solved.

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4.3 MODULE A2: PRODUCTION PLANNING SYSTEM
4.3.1 Objective
To indicate the necessity for a firm to organise all the factors of products, processes, equipment, labour and materials.
- to make the right goods at the right time at top quality and as economically as possible, - in order to be profitable.
This organising requires manufacturing planning, which is a balancing of demand
(priorities) with resource capacity.
This chapter introduces the student to production planning, which is the first step in the manufacturing planning and control system.
4.3.2 Core contents
4.3.2.1
4.3.2.2
4.3.2.3
4.3.2.4

Introduction
Manufacturing planning and control system
Manufacturing resource planning (MRP II)
Making the production plan

4.3.3 Compulsory reading
JR TONY ARNOLD, Introduction to Materials Management
4.3.4 Learning goals
At the end of the chapter the student should be able to develop a production plan according to three basic strategies provided in the prescribed book and answer the following selected questions:
4.3.4.1 What are the four questions a good planning system must answer?

4.3.4.2

Describe each of the following plans in terms of their purpose, planning horizon, level of detail and planning cycle:
(a)
(b)
(c)
(d)
(e)

Strategic business plan.
Production plan.
Master production schedule.
Materials requirement plan.
Production activity control.

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4.3.4.3

Describe the relationship among the production plan, the master production schedule and the material requirements plan.

4.3.4.8 In the short run, how can capacity be changed?
4.3.4.11 What are the five typical characteristics of the production planning problem?

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4.4 MODULE A3: MASTER PRODUCTION SCHEDULING
4.4.1 Objective
To introduce the student to the MPS, which deals with the major components or end items that manufacturing intends to build. The student will learn that the
MPS:
links Sales and Production, is the link between production planning, and what manufacturing will actually produce, is the basis for calculating capacity and resources requirements. is the priority plan for management, drives the MRP.
4.4.2 Core contents
4.4.2.1
4.4.2.2
4.4.2.3
4.4.2.4

Introduction
Relationship to production plan
Developing a master production schedule
Production planning, master production scheduling and sales

4.4.3 Compulsory reading
JR TONY ARNOLD, Introduction to Materials Management
4.4.4 Learning goals
At the end of the chapter the student should be able to relate production plan to master schedule, determine available to promise and master production schedule and answer the questions below:
4.4.4.1 What four functions does the master production schedule (MPS) perform in the production planning process?
4.4.4.2 What functions does the MPS perform between sales and production?

4.4.4.3 Does the MPS work with families of products or with individual items?

4.4.4.4

Where does the information come from to develop an MPS?

4.4.4.5

What are the three steps in making an MPS?
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4.4.4.6

What is the purpose of a rough-cut capacity plan?

4.4.4.7

Where is the resource bill used?

4.4.4.8

At what level should master production scheduling take place?
(a)
(b)
(c)

4.4.4.9

In a make-to-stock environment?
In a make-to-order environment?
In an assemble-to-order environment?

What is a final assembly schedule (FAS)? What is its purpose?

4.4.4.10 What is a planning horizon? What decides its minimum time? Why should it be longer?
4.4.4.11 How do the production plan an d the MPS relate to sales and to the sales forecast? 4.4.4.12 What is the ATP (available to promise)? How is it calculated?
4.4.4.13 What is the purpose of time fences? Name and describe the three main divisions. 19

4.5 MODULE A4: MATERIAL REQUIREMENTS PLANNING
4.5.1 Objective
To introduce the student to the MRP, which deals with the components which collectively comprises the MPS’s end items. It is the system to avoid missing parts, which will delay the building of major components or end items.
4.5.2 Core contents
4.5.2.1
4.5.2.2
4.5.2.3
4.5.2.4

Introduction
Bill of material
Material requirements planning process
Using the material requirements plan

4.5.3 Compulsory reading
JR TONY ARNOLD, Introduction to Materials Management
4.5.4 Learning goals
At the end of the chapter the student should be able to have better insight on what a bill of material is, parent-component relationship, exploding , offsetting, to determine the gross and net requirements and answer the following questions:
4.5.4.1

What is a materials requirements plan?

4.5.4.2 What is the difference between dependent and independent demand?
4.5.4.3

Should an MRP be used with dependent or independent demand items?

4.5.4.4

What are the objectives of the MRP?

4.5.4.5

What is the relationship between the MPS and the MRP?

4.5.4.6

Why is a computer necessary in an MRP system?

4.5.4.7

What are the major inputs to the MRP system?

4.5.4.8

What data are found in a part master file or an item master file?

4.5.4.9

What is a bill of material? What are two important points about bills of material? 4.5.4.10 To what does “bill of material structure” refer? Why is it important?
4.5.4.11 Describe the parent-component relationship.
20

4.5.4.12 Describe the following types of bills of material:
(a)
(b)
(c)
(d)
(e)
(f)

Product tree
Multi-level bill
Single-level bill
Indented bill
Summarised parts list
Planning bill

4.5.4.13 Why do MRP programs store single-level bills?
4.5.4.14 Describe each of the seven uses of a bill of material described in the text.

4.5.4.15 What are the where-used and pegging reports? Give some of their uses.
4.5.4.16 Describe the process of off-setting and exploding.
4.5.4.17 What is a planned order? How is it created?
4.5.4.18 From where does the gross requirements of a component come?
4.5.4.19 Who is responsible for releasing an order? Describe what happens to the inventory records and to PAC and purchasing?
4.5.4.20 What is a scheduled receipt? From where does it originate?
4.5.4.21 What is an open order? How does it get closed?
4.5.4.22 What is the meaning or the term low-level code? What is the low-level code of an MPS part?
4.5.4.23 What are the responsibilities of a materials requirements planner?

4.5.4.24 Describe the differences between planned orders, released orders, and firm planned orders? Who controls each?
4.5.4.25 What are exception messages? What is their purpose?
4.5.4.26 What is a transaction message? Why is it important?
4.5.4.27 What are the three important factors in managing the materials requirements plan? Why is each important?

21

4.6 MODULE A5: CAPACITY MANAGEMENT
4.6.1 Objective
Previous chapters dealt with priority plan in various forms.
This chapter introduces the student to capacity management - which is the process of ensuring that resources are available to execute the priority plan. The student will look more closely at the questions of capacity:
What it is?
How much is available?
How much is required?
How to balance priority and capacity
4.6.2 Core contents
4.6.2.1
4.6.2.2
4.6.2.3
4.6.2.4
4.6.2.5
4.6.2.6
4.6.2.7
4.6.2.8

Introduction
Definition of capacity
Capacity planning
Capacity requirements planning
Available capacity
Required capacity
Scheduling orders
Making the plan

4.6.3 Compulsory reading
JR TONY ARNOLD, Introduction to Materials Management
4.6.4 Learning goals
At the end of the chapter the student should be able to determine efficiency, utilisation, standard hours, back scheduling and answer the following questions:
4.6.4.1

What are the responsibilities of capacity management?

4.6.4.2

What is capacity planning?

4.6.4.3

Describe the three steps of capacity planning.

4.6.4.4

Relate the three levels of priority planning to capacity planning. Describe each level in terms of detail and the time horizons used.

4.6.4.5

What is capacity requirements planning? At what level of the priority planning process does it occur?

4.6.4.6 What are the inputs to the CRP process? Where is this information obtained?
22

4.6.4.7

Describes each of the following and the information they contain:
(a)
(b)
(c)

Open order file
Route file
Work centre file

4.6.4.8

What is a shop calendar? why is it needed?

4.6.4.9

In which file would you find the following information:
(a)
(b)
(c)
(d)

A schedules receipt
A planned receipt
Efficiency and utilisation
Sequence of operations of a part

4.6.4.10 Define “available capacity”. What are the four factors that affect available capacity? 4.6.4.11 Why is standard time usually used to measure capacity?
4.6.4.12 What are rated capacity, utilisation and efficiency? How are they related?
4.6.4.13 What is measured or demonstrated capacity? How is it different from rated capacity? 4.6.4.14 What is load?
4.6.4.15 What is a work centre load report? What information does it contain?
4.6.4.16 What is a schedule?
4.6.4.17 Describe the process of back scheduling.
4.6.4.18 What are the two ways of balancing available capacity and load? Which is preferred? Why?
4.6.4.19 What are some of the ways available capacity can be altered in the short run?

4.6.4.20 Why is feedback necessary in a control system?

23

4.7 MODULE A6: PRODUCTION ACTIVITY CONTROL
4.7.1 Objective
To indicate some control measures in the productions environment. The student has been exposed to various plans. Now is the time for action.
PAC is concerned with converting the material requirements plan into action, reporting the results achieved, and when required - revising the plans and actions to meet the required results. The focal point is the control of activities.
4.7.2 Core contents
4.7.2.1
4.7.2.2
4.7.2.3
4.7.2.4
4.7.2.5
4.7.2.6
4.7.2.7
4.7.2.8
4.7.2.9

Introduction
Data requirements
Order preparation
Scheduling
Load levelling
Scheduling bottlenecks
Implementation
Control
Production reporting

4.7.3 Compulsory reading
JR TONY ARNOLD, Introduction to Materials Management
4.7.4 Learning goals
At the end of the chapter the student should be able to apply the drum-buffer-rope technique to control the floor process, determine total manufacturing time and answer the following questions:
4.7.4.1

What is the responsibility of production activity control?

4.7.4.2 What are the major functions of planning, implementation and control?
4.7.4.3

What are the major characteristics of flow, intermittent and project manufacturing? 4.7.4.4

Why is production activity control more complex in intermittent manufacturing?

4.7.4.5

To plan the flow of materials through manufacturing, what four things must production activity control know? Where will information on each be obtained?

4.7.4.6

Where are the four planning files used in production activity control? What information does each contain?

4.7.4.7

What are the two control files? What are their purposes?
24

4.7.4.8 What should production activity control check before releasing a shop order?
4.7.4.9

What is manufacturing lead time? Name and describe each of its elements.

4.7.4.10 Describe forward and backward scheduling. Why is backward scheduling preferred? 4.7.4.11 Describe infinite and finite loading.
4.7.4.12 What is operation overlapping? What is its purpose?
4.7.4.13 What is operation splitting? What is its purpose?
4.7.4.14 What information does a load report contain? Why is it useful to production activity control?
4.7.4.15 What is a bottleneck operation?
4.7.4.16 What is the definition of throughput?
4.7.4.17 What are the six bottleneck principles discussed in the text?

4.7.4.18 What are the five things discussed in the text that are important in managing bottlenecks? 4.7.4.19 What is a shop order? What kind of information does it usually contain?
4.7.4.20 What two things must be done to control queue and meet delivery commitments? 4.7.4.21 What is an input/output system designed to do? How is input controlled? How is output controlled?
4.7.4.22 What is dispatching? What is a dispatch list?
4.7.4.23 Describe each of the following dispatching rules giving their advantages and disadvantages: (a)
(b)
(c)
(d)
(e)

First come, first served
Earliest due date
Earliest operation due date
Shortest processing time
Critical ratio

4.7.4.24 If the time remaining to complete a job is 10 days and the lead time remaining is 12 days, what is the critical ratio? Is the order ahead of schedule, on schedule, or behind schedule?
25

4.8 MODULE A7: PURCHASING
4.8.1 Objective
This chapter introduces the student to PURCHASING, which is the other department independently seeking to also satisfy the MRP. PAC will be the oversight organ for the maintenance and control of the MRP.
The student will learn that purchasing is everybody’s business. Everybody must supply information that will allow the purchasing department to perform effectively. 4.8.2 Core contents
4.8.2.1
4.8.2.2
4.8.2.3
4.8.2.4
4.8.2.5
4.8.2.6

Introduction
Establishing specifications
Functional specification description
Selecting suppliers
Price determination
Impact of materials requirements planning on purchasing

4.8.3 Compulsory reading
JR TONY ARNOLD, Introduction to Materials Management
4.8.4 Learning goals
At the end of the chapter the students should be able to have knowledge on purchasing process, activities involved, factors in selecting the supplier and answer the following selected questions:
4.8.4.1

What are four objectives of purchasing?

4.8.4.2

List the seven steps in the purchasing cycle.

4.8.4.3

Describe the purposes, similarities and differences among purchase requisitions, purchase orders and requests for quotation.

4.8.4.4 What are the responsibilities of the purchasing department in follow-up?

4.8.4.5

Describe the duties of the receiving department upon receipt of goods.

4.8.4.6

Besides functional specifications, what three other specifications must be determined? Why are each important?

4.8.4.7

What is quality?

26

4.8.4.8

Name and describe the four phases of quality. How do they interrelate? Who is responsible for quality?

4.8.4.9

Describe the advantages and disadvantages of the following ways of describing functional requirements. Give examples of when each is used.
(a)
(b)

By brand.
By specification of physical and chemical characteristics, material and method of manufacture and performance.

4.8.4.10 What are the advantages of using standard specifications?
4.8.4.11 Why is it important to select the right supplier and to maintain a relationship with him or her?
4.8.4.12 Describe the six factors that should be used in selecting a supplier.
4.8.4.13 What is the concept of “best buy”?
4.8.4.14 Type of product is a factor that influences the approach to negotiation. Name the four categories of products and state what room there is for negotiation.

27

4.9 MODULE B1: FORECASTING
4.9.1 Objective
To illustrate to student that why forecasting is the starting point of planning.
Factories should not wait for actual orders to arrive, and then only start planning what to produce. Forecasting future demand (orders) enables management to plan pro-actively and thus to be ready when actual orders arrive.
4.9.2 Core contents
4.9.2.1 Introduction
4.9.2.2 Demand management
4.9.2.3 Demand forecasting
4.9.2.4 Characteristics of demand
4.9.2.5 Principles of forecasting
4.9.2.6 Collection and preparation of data
4.9.2.7 Forecasting techniques
4.9.2.8 Some important intrinsic techniques
4.9.2.9 Seasonality
4.9.2.10 Tracking the forecast
4.9.3 Compulsory reading
JR TONY ARNOLD, Introduction to Materials Management
4.9.4 Learning goals
At the end of the chapter the student should be able to the forecasting techniques, differentiate between them, apply them to solve forecasting problems and answer the following selected questions:
4.9.4.1

What is demand management? What functions does it include?

4.9.4.2

Why must we forecast?

4.9.4.3 What factors influence the demand for a firm’s products?
4.9.4.4

Describe the purpose of demand forecasting.

4.9.4.5

The text describes three characteristics of demand. Name and describe each.

4.9.4.6

Describe trend, Seasonality, random variation, and cycle as applied to forecasting. 4.9.4.7 The text discusses four principles of forecasting. Name and describe each.

28

4.9.4.8 Name and describe the three principles of data collecting.
4.9.4.9

Describe the characteristics and differences between qualitative, extrinsic, and intrinsic forecasting techniques.

4.9.4.10 Describe and give the advantages and disadvantages of
(a)
(b)

moving averages and exponential smoothing.

4.9.4.11 What is a seasonal index?
4.9.4.12 What is meant by the term deseasonalized demand?
4.9.4.13 What is meant by the term tracking the forecast? In which two ways can forecasts go wrong?
4.9.4.14 What is bias error in forecasting? What are some of the causes?

4.9.4.15 What is random variation?
4.9.4.16 What is the mean absolute deviation (MAD)? Why is it useful in forecasting?
4.9.4.17 What action should be taken when unacceptable error is found in tracking a forecast? 29

4.10

MODULE B2: INVENTORY FUNDAMENTALS

4.10.1 Objective
To introduce the student to inventory management. The student will learn the reasons for (functions of) inventory, the various types of inventory and the objectives of inventory management.
4.10.2 Core contents
4.10.2.1
4.10.2.2
4.10.2.3
4.10.2.4
4.10.2.5
4.10.2.6
4.10.2.7
4.10.2.8
4.10.2.9

Introduction
Aggregate inventory management
Item inventory management
Inventory and the flow of material
Supply and demand patterns
Functions of inventories
Objectives of inventory management
Inventory costs
ABC inventory control

4.10.3 Compulsory reading
JR TONY ARNOLD, Introduction to Materials Management
4.10.4 Learning goals
At the end of the chapter the student should be able to know functions of inventories, why they are important, their value, their classification according to A,B and C grouping, determination of cost as well as cost of carrying inventory. Then answer the following questions:
4.10.4.1 What are inventories? Why are they important to manufacturing companies?

4.10.4.2 What are the responsibilities of inventory management?
4.10.4.3 What is aggregate inventory management? With what is it concerned?
4.10.4.4 What are decision rules? Why are they necessary?
4.10.4.5 According to the flow of material, what are the four classifications of inventories? 4.10.4.6 Why is less inventory needed in a line-flow manufacturing system than in lot or batch manufacturing?
4.10.4.7 What is the basic purpose of inventories? In what four areas do they provide a buffer? 4.10.4.8 Describe the function and purpose of the following kinds of inventories:
30

(a)
(b)
(c)
(d)

Anticipation
Fluctuation
Lot size
Transportation

4.10.4.9 Describe how inventories influence each of the following:
(a)
(b)

Customer service
Plant operations

4.10.4.10

What are the five costs associated with inventories? .

4.10.4.11

Name and describe the categories of inventory-carrying costs.

4.10.4.12

Name and describe the categories of ordering costs found in a foundry.

4.10.4.13

What are stock out costs and capacity-associated costs? What is their relationship to inventories?

4.10.4.14

What is the basic premise of ABC analysis? What are the three steps in making an ABC inventory analysis?

4.10.4.15

What are the five steps in the procedure for classifying inventory by annual rand usage?

31

4.11

MODULE B3: ORDER QUANTITIES (Chapter 10)

4.11.1 Objective
To examine methods of providing the required level of customer service at the lowest cost. These two objectives causes 2 basic questions:
Q1: How much should be ordered at one time?
Q2: When should an order be placed?
4.11.2 Core contents
4.11.2.1
4.11.2.2
4.11.2.3
4.11.2.4
4.11.2.5

Introduction
Economic-order quantity (EOQ)
Variations of the EOQ model
Quantity discounts
Use of the EOQ when costs are not known

4.11.3 Compulsory reading
JR TONY ARNOLD, Introduction to Materials Management
4.11.4 Learning goals
At the end of the chapter the student should be able to do analysis on whether to produce a product in –house or buy from the supplier, to determine the total annual costs, understand variation in EOQ model, and answer the following questions:
4.11.4.1 What are the two basic questions in inventory management discussed in the text? 4.11.4.2 What are decision rules? What is their purpose?
4.11.4.3 What is a SKU?
4.11.4.4 What is the lot-for-lot decision rule? What is its advantage? Where would it be used? 4.11.4.5 What are the four assumptions on which economic-order quantities are based?
For what kind of items are these assumptions valid? When are they not?
4.11.4.6 Under the assumptions on which EOQ’s are based, what are the formulas for average lot size and the number of orders per year?
4.11.4.7 What are the relevant costs associated with the two formulas? As the order quantities increase, what happens to each cost? What is the objective in establishing a fixed-order quantity?
32

4.11.4.8 Define each of the following in your own words and as a formula:
(a)
(b)
(c)

Annual ordering cost
Annual carrying cost
Total annual cost

4.11.4.9 What is the economic-order quantity formula? Define each term and give the units used. How do the units change when monetary units are used?
4.11.4.10 What is the EOQ formula for the non-instantaneous receipt case? What do the two additional terms mean?
4.11.4.11 What are the relevant costs to be considered when deciding whether to take a quantity discount? On what basis should the decision be made?
4.11.4.12 What is the period-order quantity? How is it established? When can it be used? 4.11.4.13 How do each of the following influence inventory decisions?
(a)
(b)
(c)
(d)

Lumpy demand
Minimum orders
Transportation costs
Multiples

33

4.12

MODULE B4: INDEPENDENT DEMAND ORDERING SYSTEMS

4.12.1 Objective
To explain aims of Inventory management at providing the required level of customer service at the lowest cost. These two objectives causes 2 basic questions: Q1: How much should be ordered at one time?
Q2: When should an order be placed?
This chapter examines methods of answering the second question.
4.12.2 Core contents
4.12.2.1
4.12.2.2
4.12.2.3
4.12.2.4
4.12.2.5
4.12.2.6
4.12.2.7
4.12.2.8

Introduction
Order point system
Determining safety stock
Determining service levels
Different forecast and lead-time intervals
Determining when the order point is reached
Periodic review system
Distribution inventory

4.12.3 Compulsory reading
JR TONY ARNOLD, Introduction to Materials Management
4.12.4 Learning goals
At the end of the chapter the student should be able to compare and contrast the techniques required to deal with specific replacement orders, to determine sigma, order point, service level and answer the following questions: 4.12.4.1 What are independent demand items? What two basic ordering systems are used for these items? What are dependent demand items? What system should be used to order these items?
4.12.4.2 (a)
(b)
(c)
(d)
(e)

Using the order point system, when must an order be placed?
Why is safety stock carried?
What is the formula for the order point?
On what two things does the order point depend?
Why is the demand during the lead time important?

34

4.12.4.3 What are four characteristics of the order point system?
4.12.4.4 What are the four factors that influence the amount of safety stock that should be carried? How does the length of the lead time affect the safety stock carried? 4.12.4.5 What is a normal distribution? What two characteristics define it? Why is it important in defining safety stock?
4.12.4.6 What is the mean absolute deviation (MAD) of demand during the lead time? If
MAD for the lead time interval is 100 units, what percentage of the time would the actual demand be equal to ± 100 units? To ± 200 units? To ± 300 units?
4.12.4.7 What is service level?
4.12.4.8 What are the three categories of stock out costs? What do these costs depend upon in any company?
4.12.4.9 Why does the service level depend upon the number of orders per year?
4.12.4.10 If the lead time increases from one week to four weeks, will the mean absolute deviation of demand during the lead time increases four times? If not, why not? 4.12.4.11 Describe the two-bin system.
4.12.4.12 What kinds of information are shown on a perpetual inventory record?
4.12.4.13 What are the differences between the order point system and the periodic review system regarding when orders are placed and the quantity ordered at any one time?
4.12.4.14 Define the target level used in the periodic review system.
4.12.4.15 What are the objectives of distribution inventory management?

4.12.4.16 If the factory does not supply the customer directly, from where does the demand on the factory come? Is it dependent or independent demand?
4.12.4.17 Describe and compare the pull and push systems of inventory management.
4.12.4.18 Describe distribution requirements planning.

35

4.13 MODULE B5: PHYSICAL INVENTORY AND WAREHOUSE MANAGEMENT

4.13.1 Objective
To introduce the student to the physical aspects of inventory. Inventory is physical, and as such has to be: handled, stored, counted, and secured. 4.13.2 Core contents
4.13.2.1
4.13.2.2
4.13.2.3
4.13.2.4

Introduction
Warehousing management
Physical control and security
Inventory record accuracy

4.13.3 Compulsory reading
JR TONY ARNOLD, Introduction to Materials Management
4.13.4 Learning goals
At the end of the chapter the student should be able to determine pallet positions, inventory accuracy with tolerance and answer the following questions:
4.13.4.1 What are four objectives of warehouse operation.
4.13.4.2 Name and describe each of the eight warehouse activities.
4.13.4.3 What are cube utilisation and accessibility?
4.13.4.4 Why is stock location important in a warehouse? Name and describe four basic systems of stock location.
4.13.4.5 Describe fixed and floating systems for assigning locations to SKU’s.
4.13.4.6 Name and describe three order-picking systems.
4.13.4.7 What are three prime objectives of materials handling? Describe the characteristics of conveyors, industrial trucks and cranes.
4.13.4.8 What are the four steps in any transaction?
4.13.4.9 What are some of the results of poor inventory accuracy? .
36

4.13.4.10 Six causes of poor inventory accuracy are discussed in the text. Name and describe each.
4.13.4.11 How should inventory accuracy be measured? What is tolerance? Why is it necessary? 4.13.4.12 What is the basis for setting tolerance?
4.13.4.13 What are the two major purposes of auditing inventory accuracy?
4.13.4.14 In taking a physical inventory, what are the three factors in preparation? Why is good preparation necessary?
4.13.4.15 What are the four steps in taking a physical inventory?
4.13.4.16 Describe cycle counting. On what basis can the count frequency be determined? 4.13.4.17 Why is cycle counting a better way to audit records than an annual physical inventory? 4.13.4.18 When are some good times to count inventory?

37

4.14

MODULE B6: PHYSICAL DISTRIBUTION

4.14.1 Objective
The student has been introduced to the integrated logistics system existing from raw material suppliers, through manufacturing to the consumer.
Therefore the objective is to emphasis the supply chain concept to the
Students. To also explain what physical supply and physical distribution are.
Other aspects to be covered are how physical distribution adds place value and time value to the manufactured goods, by ensuring that consumer goods will be at the right place at the right time for purchase by the consumer.
4.14.2 Core contents
4.14.2.1
4.14.2.2
4.14.2.3
4.14.2.4
4.14.2.5
4.14.2.6
4.14.2.7
4.14.2.8
4.14.2.9
4.14.2.10

Introduction
Physical distribution system
Interfaces
Transportation
Legal types of carrier
Transportation cost elements
Warehousing
Packaging
Materials handling
Multi-warehouse systems

4.14.3 Compulsory reading
JR TONY ARNOLD, Introduction to Materials Management
4.14.4

Learning goals
At the end of the chapter, the student should be able to determine the linehaul costs, market boundary and answer selected questions below:

4.14.4.1

What are the differences between physical supply and physical distribution and answer the following selected questions?

4.14.4.2

The particular way that goods are moved depend in part on four factors.
What are they?

4.14.4.3

What are the objectives of a physical distribution system?

4.14.4.4

Name and describe each of the six system activities in a physical distribution system. 4.14.4.5

What are the cost trade-off and total cost concepts? Why are they important?

38

4.14.4.6

Describe the relationship between marketing and physical distribution. How does physical distribution contribute to creating demand?

4.14.4.7

Why is the demand placed on a central distribution centre or a factory by distribution centres considered dependent?

4.14.4.8

What are the five basic modes of transportation?

4.14.4.9

What are the three physical elements in a transportation system? For each of the five modes, describe who provides them and how they are funded.

4.14.4.10 Describe why train service is cheaper than road transport for large quantities of bulky commodities moving over long distances.
4.14.4.11 Why can trucks provide a fast, flexible service for the distribution of small volumes of goods to a dispersed market?
4.14.4.12 What are the major characteristics of water and air transport?
4.14.4.13 What are the major legal types of carriage? What are the three areas of economic regulation? To which legal type of carriage do they apply?

4.14.4.14 Compare common and contract carriage. How do they differ from private carriage? Which will give the highest level of service?
4.14.4.15 On what do total line-haul costs and line-haul costs per ton depend? What two ways can shippers reduce line-haul costs?
4.14.4.16 Describe how a shipper can reduce the following:
(b)
(c)
(d)

Pick-up and delivery costs.
Terminal-handling costs.
Billing and collecting costs.

4.14.4.17 The rates charged by a shipper vary with the commodity carried. Name and describe four factors that affect the rates.
4.14.4.18 Why are LTL rates more expensive than TL rates?
4.14.4.19 Name and describe the two basic types of warehouse.
4.14.4.20 Name and describe the three important roles warehouses serve.
4.14.4.21 Name four factors that affect shipping patterns. Which can a supplier control?

4.14.4.22 What is the laid-down cost? What is a market boundary? Why are laid-down costs important in determining market boundaries?
39

4.14.4.23 As more distribution centres are added to a system, what happens to the cost of truckload, less than truckload, and total transportation costs?
4.14.4.24 What are the three roles of packaging in a distribution system? Describe why each is important.
4.14.4.25 What is unitisation? Why is it important in physical distribution?
4.14.4.26 What are the three prime objectives of materials handling? Describe the characteristics of conveyors, industrial trucks, cranes and hoists.
4.14.4.27 As more warehouses are added to the system, what would we expect to happen to the following?
(a)
(b)
(c)
(d)
(e)
(f)

Transportation costs.
Inventory costs.
Material handling costs.
Packaging costs.
Total system costs.
System service capability.

40

4.15

MODULE B7: LEAN PRODUCTION(JUST-IN-TIME MANUFACTURING)

4.15.1 Objective
The student is introduced to JIT manufacturing - which is a key success factor for
Japanese manufacturing. The chapter explains the JIT philosophy - which is really a novel way of re-examining our old assumptions about manufacturing.
4.15.2 Core contents
4.15.2.1
4.15.2.2
4.15.2.3
4.15.2.4
4.15.2.5

Introduction
Just-in-time philosophy
Waste
Just-in-time environment
Manufacturing planning and control in a JIT environment

4.15.3 Compulsory reading
JR TONY ARNOLD, Introduction to Materials Management
4.15.4 Learning goals
At the end of the chapter the student should be able to understand why companies have to be competitive, what JIT environment is required, sources of waste according to “Toyota” then the student should be able to answer the following selected questions:
4.15.4.1

What is the definition of waste as it is used in this text?

4.15.4.2

What is value to the user? How is it related to quality?

4.15.4.3

What are the elements in a product cycle loop? For what is each responsible? 4.15.4.4

Why is product specialisation important? Who is responsible for setting the level of product specialisation?

4.15.4.5

What is meant by component standardisation? Why is it important in eliminating waste?

4.15.4.6

Why is product design important to manufacturing? How can the design add waste in manufacturing?

4.15.4.7

After a product is designed, what is the responsibility of manufacturing engineering? 4.15.4.8

Explain why each of the following are sources of waste:
(a) The process
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(b)
(c)
(d)
(e)
(f)
4.15.4.9

Methods
Movement
Product defects
Waiting time
Over-production

Explain how inventory affects product improvement, quality, prices and the ability to respond quickly to the market.

4.15.4.10 What is repetitive manufacturing? What are its advantages? What are its limitations? 4.15.4.11 What is a work cell? How does it operate? What conditions are necessary to establish one? What are its advantages?
4.15.4.12 Why is process flexibility desirable? What two conditions are required?
4.15.4.13 Name and describe five advantages of low set-up time.
4.15.4.14 What are the two reasons why quality is important?
4.15.4.15 What is quality for manufacturing? How is it obtained?
4.15.4.16 Why is preventative maintenance important?
4.15.4.17 What are the four conditions needed for uninterrupted flow? Describe each?

4.15.4.18 What is the difference between levelling based on capacity and levelling based on material flow?
4.15.4.19 Why would a JIT manufacturer schedule seven hours of work in an eight-hour shift? 4.15.4.20 Why are supplier relations particularly important in a JIT environment?

4.15.4.21 Why is employee involvement important in a JIT environment?

4.15.4.22 What are the differences in a master production schedule in a JIT environment? 4.15.4.22 What effect does a JIT environment have on MRP?

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ANNEXURE A
CODE OF CONDUCT FOR PRODUCTION AND PURCHASES MANAGEMENT
PRACTITIONERS WILL:
1. uphold the dignity and esteem of the profession and strive towards the promotion of higher productivity in the administrative offices or elsewhere.
2. be loyal to his/her employer/client by:
2.1 acknowledging the importance and necessity of the support of management and the workers corps.
2.2 not relating any confidential information concerning the business or the technical processes without permission.
2.3 being cautious in the use of information (which comes to his/her attention in the course of their duties) for his/her own benefit or in any way which may be detrimental to the well-being of his employer/client or the workers corps.
2.4 restricting himself/herself from any activities which is in contrast with the interest of his/her employer/client, or from which personal gain may result.
3. performing investigations with integrity, honesty, objectivity and diligence and ensure that recommendations are based on valid, factual and complete information, thus ensuring that respect for the profession is established and maintained.
4. maintaining good personal relationships by applying self-discipline and not becoming emotionally involved.
5.

Not undermining the authority of management/client or supervisor, subsequently he/she should not admit to pressure and lose his professional integrity.

6. submit recommendations where requested, and should be based on facts which could be substantiated.
7. always striving towards the improvement of the effectiveness of the service by acknowledging the effects of change and training management by studying new literature concerning the profession.
8. avoiding criticism of colleagues or their word in public. Differences in opinions, meanings or conclusions should be solved in a professional manner.
9. always acting as an exemplary to the honour of the profession by:
9.1 maintain the moral standards of the community.
9.2 respect the professional ethics of the profession.
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9.3 arranging non-related word activities in such a way that they are not in contradiction to his/her professional responsibilities.

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