Time lag effects - operations function, Operation Management

Assignment Help:

Time Lag Effects - Operations Function

Feedback control in complex systems can bring its own problems, due to time lag between measuring the output deviation and realising the effects of the corrective adjustments. A well-known illustration of this phenomenon was presented by Jay W Forrester in his book, Industrial Dynamics. He had been consulted by a white goods manufacturing concern which had been experiencing wildly fluctuating production levels over a period of years; despite the best efforts of the company's management they had been unable to keep production output in reasonable balance with customer demand. Forrester and his team studied the operations of the company's distribution chain (shown in simplified form in the figure) and formulated a computer simulation model of the factory - warehouse - distributor - retailers.

1355_Time Lag Effects – Operations Function.png

The figure below (adapted from Forrester, 1965) shows the results obtained when a 10 per cent step-increase in demand at the retail outlets was introduced. This chart is necessarily 'cluttered', to show how the various order, inventory and production levels changed in response to the initial increase in sales.

1964_Time Lag Effects – Operations Function 1.png

For our purposes it will be sufficient if you locate the two lines labeled 'Retail sales' and 'Factory production output'. It was found that, because of a series of time-lags in the chain, the feedback signal was greatly amplified by the time it reached the factory, resulting in over-reaction. Note that the production level climbs by 45 per cent, creating an excessive build up of inventories. In response the production level falls to 3 per cent less than the original level, and so on. It takes about 18 months for the fluctuations to be damped out.


Related Discussions:- Time lag effects - operations function

Explain what implications does that fact have for managers, The resource-ba...

The resource-based model identifies four criteria that firms can use to evaluate whether particular resources and capabilities are core competencies and can, therefore, provide a b

Explain what is the maximum revenue with a single shift, Given the followin...

Given the following data for Albert's fabricating production area: Fixed costs for one shift = $60,000 Unit variable cost = $7 Selling price = $12 Number of machines = 5 Number of

Do you think taylor''s position is similler applicable today, 1. Do you thi...

1. Do you think Taylor's position is equally applicable today? 2. Looking at Taylor's and Grayson's remarks, whick were made approximately 73 years apart, one has to wonder what

Explain what will the last unit cost to build, United Research Associates (...

United Research Associates (URA) had received a contract to produce two units of a new cruise missile guidance control. The first unit took 4,000 hours to complete and cost $30,000

Managing global operations, what are the key issues to be considered for ma...

what are the key issues to be considered for managing global operations

Explain indifferent between machines a and c, At a decision point in a deci...

At a decision point in a decision tree, which machine would you select when trying to maximize payoff when the anticipated benefit of selecting machine A is $45,000 with a probabil

Explain disadvantages of free international trade, What are the benefits an...

What are the benefits and disadvantages of free international trade for the United States? Illustrate your answer with examples.

Explain manufacturing budget, Explain manufacturing budget. Manufacturi...

Explain manufacturing budget. Manufacturing budget needs the following fundamental budgets or estimates to meet the plans:- (i) To be manufactured, production budget outlini

Calculate the two missing amounts, A company is considering whether to repl...

A company is considering whether to replace a machine. The old machine costs $90,000 and is being depreciated at 10% per annum using the straight line method. It is written down va

Explain phases in a project life cycle, An important factor used to determi...

An important factor used to determine the phases in a project life cycle are the control needs of the organization(s) involved in the project. True or False

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd