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Hours of Stock |
| A new concept in scheduling |
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| The key to a successful operation is time, yet traditional production
scheduling systems are based on units. Hours of stock is a more logical
approach to scheduling and inventory management because it measures
inventory in hours or other increments of time rather than in units. It
synchronizes the entire enterprise and optimally allocates production resources.
Departments work in unison with a common focus on priorities, resulting in a
leaner operation, reduced in-process inventory, and improved shipping
performance. |
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| Allocation
of production resources. The hours of stock technique
converts inventory into the number of hours of stock remaining on the floor to
fulfill existing and incoming orders. Working backwards from the stockout date,
schedulers can prioritize and plan intelligently according to how much time they
have before inventory runs out. |
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| Establishment of economical
run quantities. Hours of stock not only
answers the question of what to manufacture and when but determines the most
economical run quantity. The goal of this synchronization is to optimize the
amount and time of changeover and setup of equipment and materials. The
concept enables a company to take into account instant demand and anticipate
future demand by consolidating the manufacture of the same product or like
products. |
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| Establishment of a
planning horizon. Hours of stock establishes a
planning horizon that looks into the future for anticipated customer demand.
Regardless of the time frame, which depends on company and product, the
model consolidates and plans lot sizes to meet demand most economically
within the planning horizon. |
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| Optimizing
conditions. With traditional scheduling methods, companies
usually make minimum runs of everything and larger runs of some items without
even considering demand. This leaves them with ample supplies of what they
don’t need and insufficient quantities of what they do need. The hours-of-stock
approach optimizes conditions based on variables (e.g., products versus
equipment) and rules (e.g., like products are sequenced) for the entire planning
horizon. |
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| Increased operating
capacity of equipment, lines, or departments. Hours of stock dramatically increases capacity. The approach allocates the
stream of work-in-process to specific orders and prioritizes production. |
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| Savings on changeovers. Hours of stock reduces the number of
changeovers and shortens the time they take. |
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| Reduced in-process
inventory. Hours of stock reduces inventory by
decreasing the production of less frequently needed items. Production is tied
directly to demand, which is dynamic because it takes into account the orders
that arrive daily and can be projected for the planning horizon. |
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| Continuous updates
for increased responsiveness. Hours of stock is
a responsive tool because it works with current orders that are continuously
updated. With hours of stock, every operation in a process is directly linked to
changes in demand. Everything is being pulled by the customer’s order,
meaning less time elapses between the time the order is received and the time it
is shipped. |
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| Improved shipping performance. Hours-of-stock scheduling is directly
linked to the ebb and flow of the order process. The size of orders affects how
long inventory will last, which in turn determines the pace at which departments
operate |
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| Think customer service. The hours-of-stock system can produce
significant benefits in delivery performance and manufacturing capacity for any
kind of business driven by daily, weekly, or monthly customer demand and with
finite capacity. It can also be tailored to each operation at little cost. |
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