Integral Logistics Management — Operations Management and Supply Chain Management Within and Across Companies

17.2.5 The Work Center Hierarchy

Intended learning outcomes: Present the concepts of workstation and cost center. Explain the work center hierarchy.


Figure 17.2.5.1 shows an example of a work center hierarchy within a company. It often corresponds to the company’s structural organization. As already mentioned, a work center comprises several similar or identical workstations or machines.

Fig. 17.2.5.1       The work center hierarchy.

A cost center is a unit made up of work centers with the same costs.

The work centers of a cost center are also often of the same type. Work centers are defined by the production carried out at them, while the cost center is an accounting term and is therefore defined for financial purposes.

A section is made up of several cost centers or work centers. It is managed by a foreman.

A production department is a factory, for example, which is managed by a production director. The production division comprises all the factories of a company.

The levels described above are needed for various analyses with different levels of compression (reserve capacity, comparison of capacity and load). The same analysis may be needed for a work center considered in isolation and for a group of work centers at any level in the work center hierarchy.

The simplest structure is that of a strict hierarchy (tree structure). In many cases, however, a network is created, as indicated in the notes to Figure 17.2.5.1. In fact, it may be necessary to define the same work center for several sections or cost centers. This applies, for example, if the same machine is used in different sections and the machine from one section can easily be used as an alternative machine in another section.[note 1706]



Course section 17.2: Subsections and their intended learning outcomes

  • 17.2 The Master Data for Products and Processes

    Intended learning outcomes: Describe master data of products, product structure, components, and operations. Explain the data structure of item master, bill of material, and where-used list. Disclose the data structure of work center master data, the work center hierarchy, as well as for operation, routing sheet, production equipment, bill of production equipment, and bill of tools.

  • 17.2.1 Product, Product Structure, Components, and Operations

    Intended learning outcomes: Present the concept of master data. Explain the production order as a collection of master data. Describe a simple product structure. Identify the intermediate product used simultaneously as a component in higher-level products.

  • 17.2.2 Item Master Data

    Intended learning outcomes: Present the concept of the item master record. Describe the attributes of the technical information and the stockkeeping information of the item master record. Identify attributes of the item master record for information on costs and prices.

  • 17.2.3 Bill of Material, Bill-of-Material Position, Where-Used List, and Where-Used-List Position

    Intended learning outcomes: Present the concepts of the bill of material and of the bill-of-material position, the where-used list, and the where-used list position. Differentiate between the single-level bills of material, the multilevel bill of material, and the summarized bill of material. Differentiate between the single-level where-used list, the multilevel where-used list, and the summarized where-used list. Describe the bill-of-material position logistical object and its most important attributes.

  • 17.2.4 Work Center Master Data

    Intended learning outcomes: Present the work-center business object. Describe the attributes of the work-center master record relating to capacity, concerning costs, and for calculating the lead time.

  • 17.2.5 The Work Center Hierarchy

    Intended learning outcomes: Present the concepts of workstation and cost center. Explain the work center hierarchy.

  • 17.2.6 Operation and Routing Sheet

    Intended learning outcomes: Present the concepts of the operation business object in association with the routing sheet. Describe the most important attributes of the operation master object. Produce an overview on the work center where-used list.

  • 17.2.7 Production Equipment, Bill of Production Equipment, and Bill of Tools

    Intended learning outcomes: Present the concepts of bill of production equipment and bill-of-production-equipment position as well as production equipment where-used list. Produce an overview on collective tool, bill of tools, bill-of-tools position, and tool where-used list.

  • 17.2.8 Composition of the Basic Master Data Objects

    Intended learning outcomes: Explain the breakdown of the master data into individual classes and their associations using the example of the ball bearing. Describe the basic object classes for planning & control.

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