Information Technology Reference
In-Depth Information
on the manufacturing function. Some common information subsystems and outputs used
in manufacturing are discussed next.
Design and engineering. Manufacturing companies often use computer-aided design
(CAD) with new or existing products. For example, Boeing ( www.boeing.com ) uses a
CAD system to develop a complete digital blueprint of an aircraft before it begins the
manufacturing process. As mock-ups are built and tested, the digital blueprint is
constantly revised to reflect the most current design. Using such technology helps Boeing
reduce manufacturing costs and the time to design a new aircraft.
Computer-aided design (CAD) is
used in the development and design
of complex products or structures.
(Source: © Kim Steele/Getty
Images.)
Master production scheduling and inventory control. Scheduling production and
controlling inventory are critical for any manufacturing company. 27 The overall objective
of master production scheduling is to provide detailed plans for both short-term and
long-range scheduling of manufacturing facilities. Some companies hire outside
companies to help them with inventory control. Delta Airlines, for example, has a long-
term, $1 billion agreement with Chromalloy Gas Turbine to help in providing inventory
parts and maintenance of its jet engines. 28 Apparel company Tween Brands, Inc. uses a
number of software packages to help it control inventory and reduce costs. 29
Most techniques are used to minimize inventory costs. They determine when and how
much inventory to order. One method of determining the amount of inventory to order
is called the economic order quantity (EOQ) . This quantity is calculated to minimize
the total inventory costs. The “When to order?” question is based on inventory usage
over time. Typically, the question is answered in terms of a reorder point (ROP) , which
is a critical inventory quantity level. When the inventory level for a particular item falls
to the reorder point, or critical level, the system generates a report so that an order is
immediately placed for the EOQ of the product. Another inventory technique used when
demand for one item depends on the demand for another is called material requirements
planning (MRP) . The basic goal of MRP is to determine when finished products, such
as automobiles or airplanes, are needed and then to work backward to determine deadlines
and resources needed, such as engines and tires, to complete the final product on schedule.
Just-in-time (JIT) inventory and manufacturing is an approach that maintains inventory
at the lowest levels without sacrificing the availability of finished products. With this
approach, inventory and materials are delivered just before they are used in a product. A
JIT inventory system would arrange for a car windshield to be delivered to the assembly
line only a few moments before it is secured to the automobile, rather than storing it in
the manufacturing facility while the car's other components are being assembled. JIT,
however, can result in some organizations running out of inventory when demand exceeds
expectations. Even so, companies like Toyota continue to embrace JIT. 30 According to
the president of the company, “We've been implementing this strategy for decades, and
economic order quantity (EOQ)
The quantity that should be
reordered to minimize total inven-
tory costs.
reorder point (ROP)
A critical inventory quantity that
determines when to order more
inventory.
material requirements
planning (MRP)
A set of inventory-control tech-
niques that help coordinate thou-
sands of inventory items when the
demand of one item is dependent on
the demand for another.
just-in-time (JIT) inventory
A philosophy of inventory manage-
ment in which inventory and mate-
rials are delivered just before they
are used in manufacturing a
product.
 
 
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