1ISM - © 2010 Houman Younessi

Lecture 4

Convener:

Houman Younessi

1-860-548-7880

youneh@rpi.edu

Information SystemsSpring 2011

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Element Concept Information Category Information System

Cost Production Process capabilityTechnology

Forecasting EstimatingOptimizationControl

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Production Function:

Production function is the specification of the (usually minimum) input requirements needed to produce designated quantities of output, given a certain production technology.

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Isoquant: Isocost:

A function that shows all possible quantities of inputs that result in the same level of output with a given production function.

All combinations of inputs (e.g. labor and capital) into the production function that can be obtained for a fixed outlay.

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Objective One:

Minimization of cost for a given output

Short run

Long run

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Understand:

• Definition of cost

• Time frames

• Nature of change of cost over time

• Cost time and output time matching

• Relationship of cost to output

• Production Control

• Technology Impact

• Economies of scope

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Sources of Data:

Historical -Time series

Cross-sectional - Others in the sector or industry

Model-based or Predictive - Based on scientific observation

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Relationship of cost to output:

Production Control (to be discussed later)

Technology Impact

Production Technology Change - Innovation

Process Technology Change - Process Maturity

Process Improvement

Common Cause Special Cause

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Production Control:

Eliminating Waste

The six wastes:

Over-production

Inventory

Motion

Time (wait-time)

Processing

Rework

Objective Two: Minimization of cost for total output

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Some Examples:

Lot size optimization – interplay between set-up cost and inventory carrying costs

Return to scale – Form of the relationship between input and output

- Sub-linear

- Linear

- Super-linear

Output Elasticity

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Various Key terms:

• Lean

• Six Sigma

• Kaizan

• TQM

• CMMI

• ISO 9000

• BPR

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Design:

Principles of Good Design

Specific characteristics for each artifact would be different but they need to be identified and measured.

Example: CMM/CMMI

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Over-production

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Inventory:

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Motion:

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Time:

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Processing:

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Rework: