5 order processing

Order Processing and Information Systems

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Chapter 5 Order processing and information sys

tems• 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.

See Figure 5-1

Represent 50% to 70% of the total order cycle time.


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Order preparation

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

information.

Electronic technology (EDI)Voice-actuated computersWireless encoding of product information

radio frequency and identification system (RF/ID)

Determine:Determine:

Technology:Technology:


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Order transmittal• Manual transmissionManual transmissionmailing of orders or physical

carrying by the sales staff to the order entry point.

slow.

inexpensive.

• Electronic transmissionElectronic transmissiontelephone, 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 customer’s 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.

==>accurately, quickly, low cost.


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Order filling

Acquire the items through stock retrieval, production, or purchasing

Pack the items for shipmentSchedule the shipment for deliveryPrepare the shipping documentation


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Order filling First-received, first-processed (First come, f

irst 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 promise

d delivery date (slack per operation; S/O). Critical ratio (CR), according to smallest rati

o 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

• Ex:If 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

Makespan:total 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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• Example:Processing 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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• Average flow time: 120/6=20 days.• Average tardiness: 54/6=9 days.• The makespan is 41 days.• Average number of jobs at the work center: 120/41=2.93

The FCFS 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 54


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• Average flow time: 108/6=18 days.• Average tardiness: 40/6=6.67 days.• The makespan is 41 days.• Average number of jobs at the work center: 108/41=2.63

The SPT 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


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• Average flow time: 110/6=18.33 days.• Average tardiness: 38/6=6.33 days.• The makespan is 41 days.• Average number of jobs at the work center: 110/41=2.68

The EDD 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


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• Average flow time: 160/6=26.67 days.• Average tardiness: 85/6=14.17 days.• The makespan is 41 days.• Average number of jobs at the work center: 160/41=3.90

The CR 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


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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 ofRule jobs at the work center

FCFS 20 9.00 2.93SPT 18 6.67 2.63DD 18.33 6.33 2.68CR 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 ofJob 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

Remaining Remaining processing Due number ofJob time date operations A 20 30 2 B 11 18 5 C 10 6 2 D 16 23 4

• Exercise:S/O rule


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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– EX:FedEX and UPS– Laser-beam bar coding, a worldwide comput

er network.– Design software for tracing and tracking sys

tems.


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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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5 order processing

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