anand operationsmanagement module2
TRANSCRIPT
-
7/25/2019 Anand OperationsManagement Module2
1/127
OPERATIONS MANAGEMENT
MODULE 2
Process Analysis
with Gopesh Anand
-
7/25/2019 Anand OperationsManagement Module2
2/127
Types and Metrics
Lesson 2-1
-
7/25/2019 Anand OperationsManagement Module2
3/127
Lesson Objectives
Video 2-1.1
-
7/25/2019 Anand OperationsManagement Module2
4/127
LESSON 2-1 OBJECTIVES
By the end of this lesson you will beable to:
Recognize the need for different process
arrangements.
Use basic metrics to assess process
performance.
Describe Littles Law.
Apply Littles Law in practical contexts.
-
7/25/2019 Anand OperationsManagement Module2
5/127
OPERATIONS MANAGEMENT
MODULE 2
Process Analysis
with Gopesh Anand
-
7/25/2019 Anand OperationsManagement Module2
6/127
Types and Metrics
Lesson 2-1
-
7/25/2019 Anand OperationsManagement Module2
7/127
Process Types
Video 2-1.2
-
7/25/2019 Anand OperationsManagement Module2
8/127
PROCESS CHOICE
Choices for how work will flow forgoods and services
Two basic arrangements:
Linear
Jumbled
-
7/25/2019 Anand OperationsManagement Module2
9/127
LINEAR ARRANGEMENT IN A HEALTH CLI
-
7/25/2019 Anand OperationsManagement Module2
10/127
JUMBLED ARRANGEMENT IN A HEALTH C
-
7/25/2019 Anand OperationsManagement Module2
11/127
IMPACT OF PROCESSCHOICE
CostSpeed
Flexibility
Quality
Customizability
-
7/25/2019 Anand OperationsManagement Module2
12/127
PRODUCT-PROCESS MATRIX
Proc
essFlexibility
Line
Product Variety
Job Sho
Small Batch
Large Batch
High
Low
High
Continuous
Low
-
7/25/2019 Anand OperationsManagement Module2
13/127
PROJECT ONE UNIT AT A TIME
(U.S. Dept .of Labor, Bureau of Labor Statist ics, n.d.)
-
7/25/2019 Anand OperationsManagement Module2
14/127
-
7/25/2019 Anand OperationsManagement Module2
15/127
BATCH SOMEWHAT STANDARDIZED JOBOR A SOMEWHAT FLEXIBLE ASSEMBLY L
Left: (Kabel, 2005) Right: (commons.wikimedia.org/Emil76, 2008)
-
7/25/2019 Anand OperationsManagement Module2
16/127
LINE DISCRETE UNITSMOVING THROUGH
SPECIALTY ACTIVITIES
(commons.wikimedia.org/Siyuwj, 2011)
-
7/25/2019 Anand OperationsManagement Module2
17/127
CONTINUOUS FLOW AUTOMATIC
TRANSFORMATION
(pixabay.com, n.d.)
-
7/25/2019 Anand OperationsManagement Module2
18/127
PROCESS ARRANGEMENTS
Features Project JobShop
BatchProcess
AssemblyLine
Flow None Jumbled In-between Connected
Flexibility Very High High Moderate Low
Product
TypesUnique Many Several Few
Expansion Gradual GradualGradual or
In ChunksIn Chunks
Human SkillsBroad or
SpecializedBroad Broad Specialized
Volume One Unit Low Moderate High
-
7/25/2019 Anand OperationsManagement Module2
19/127
PROCESS SELECTION RELATED TO MARK
Low VolumeHigh Variety Med. VolumeMed. Variety High VolumeMed. Variety High VolumeLow Variety
Product Market
Job
Shop
Batch
Line
Process
Arrang
ement
A position off the diago
indicates a bad fit.
-
7/25/2019 Anand OperationsManagement Module2
20/127
PROCESS ARRANGEMENT COMBINATION
Exclusive process:Hospital specializing in one procedure, e.g.,Shouldice
(shouldice.com, n.d.)
-
7/25/2019 Anand OperationsManagement Module2
21/127
PROCESS ARRANGEMENT COMBINATION
Exclusive process:Hospital specializing in one procedure, e.g.,Shouldice
Multiple process arrangements:Bakery making breads, pastries, and sandwiches,
e.g., Au Bon Pain
(aubonpain.com, n.d.)
-
7/25/2019 Anand OperationsManagement Module2
22/127
-
7/25/2019 Anand OperationsManagement Module2
23/127
-
7/25/2019 Anand OperationsManagement Module2
24/127
IN-VIDEO QUESTION 1
Take any fast food chain andanother luxurious sit-down
restaurant that you are familiar with.
Which type of process arrangement
would you consider for the food
preparation process in the fast foodchain restaurant and in the luxurious
sit-down restaurant?
-
7/25/2019 Anand OperationsManagement Module2
25/127
IN-VIDEO QUESTION 1
Take any fast food chain and
another luxurious sit-down
restaurant that you are familiar with.
Which type of process arrangement
would you consider for the food
preparation process in the fast foodchain restaurant and in the luxurious
sit-down restaurant?
(flickr.com/taymazvalley, 2010)
-
7/25/2019 Anand OperationsManagement Module2
26/127
IN-VIDEO INSIGHTS 1
Take any fast food chain and
another luxurious sit-down
restaurant that you are familiar with.
Which type of process arrangement
would you consider for the food
preparation process in the fast foodchain restaurant and in the luxurious
sit-down restaurant?
-
7/25/2019 Anand OperationsManagement Module2
27/127
PRODUCT-PROCESS MATRIX
ProcessFlexibility
Line
Product Variety
Job Sho
Large Batch
Small Batch
High
Low
High
Continuous
Low
Sugar
Refinery
Burgers in
Fast Food
Desserts in
Restaurant
Individual Meals in
Sit-Down Restaurant
Wedding Cak
by an Artist
-
7/25/2019 Anand OperationsManagement Module2
28/127
IN CLOSING
Process arrangements are related to
Product versus process focus
Made to stock versus made to order
Stages in product life cycle
-
7/25/2019 Anand OperationsManagement Module2
29/127
Image CreditsAerospace engineering and operations [Online image]. 2014. Retrieved October 7, 2015 from http://www.band-engineering/aerospace-engineering-and-operations-technicians.htm#tab-3
Au bon pain [Online image]. Retrieved October 7, 2015 from http://aubonpain.com
Geely assembly line in Beilun, Ningbo [Online image]. (2011). Retrieved October 7, 2015 from
https://commons.wikimedia.org/wiki/File:Geely_assembly_line_in_Beilun,_Ningbo.JPG
Harley Davidson [Online image]. Retrieved October 7, 2015 fromhttp://www.harley-davidson.com
Job shop [Online image]. (2006). Retrieved October 7, 2015 fromhttps://commons.wikimedia.org/wiki/File:Job_Shop_Ordonnancement.JPEG
Kabel, M. (2005) Production of cheese [Online image]. Retrieved October 7, 2015 from
https://commons.wikimedia.org/wiki/File:Production_of_cheese_1.jpg
Sheep cheese production [Online image]. (2008). Retrieved October 7, 2015 fromhttps://commons.wikimedia.org/wiki/File:Sheep_cheese_production.jpg
Shouldice Hospital [Online image]. Retrieved October 7, 2015 from http://www.shouldice.com/
Polo [Online image]. Retrieved October 7, 2015 from http://www.polo.com
[Untitled illustration of industrial petroleum]. (2015). Retrieved December 5, 2010 from https://pixabay.com/p
Valley, T. (2010). Think [Online image]. Retrieved October 7, 2015 from https://www.flickr.com/photos/taym
REFERENCE
http://www.bls.gov/ooh/architecture-and-engineering/aerospace-engineering-and-operations-technicians.htmhttp://www.bls.gov/ooh/architecture-and-engineering/aerospace-engineering-and-operations-technicians.htmhttp://www.bls.gov/ooh/architecture-and-engineering/aerospace-engineering-and-operations-technicians.htmhttp://aubonpain.com/https://commons.wikimedia.org/wiki/File:Geely_assembly_line_in_Beilun,_Ningbo.JPGhttp://www.harley-davidson.com/http://www.harley-davidson.com/https://commons.wikimedia.org/wiki/File:Job_Shop_Ordonnancement.JPEGhttps://commons.wikimedia.org/wiki/File:Production_of_cheese_1.jpghttps://commons.wikimedia.org/wiki/File:Sheep_cheese_production.jpghttp://www.shouldice.com/http://www.polo.com/https://pixabay.com/p-720706/?no_redirecthttps://pixabay.com/p-720706/?no_redirecthttps://www.flickr.com/photos/taymazvalley/5209251530/https://www.flickr.com/photos/taymazvalley/5209251530/https://pixabay.com/p-720706/?no_redirecthttp://www.polo.com/http://www.shouldice.com/https://commons.wikimedia.org/wiki/File:Sheep_cheese_production.jpghttps://commons.wikimedia.org/wiki/File:Production_of_cheese_1.jpghttps://commons.wikimedia.org/wiki/File:Job_Shop_Ordonnancement.JPEGhttp://www.harley-davidson.com/https://commons.wikimedia.org/wiki/File:Geely_assembly_line_in_Beilun,_Ningbo.JPGhttp://aubonpain.com/http://www.bls.gov/ooh/architecture-and-engineering/aerospace-engineering-and-operations-technicians.htm -
7/25/2019 Anand OperationsManagement Module2
30/127
-
7/25/2019 Anand OperationsManagement Module2
31/127
Types and Metrics
Lesson 2-1
-
7/25/2019 Anand OperationsManagement Module2
32/127
Process Flow Analysis
Video 2-1.3
-
7/25/2019 Anand OperationsManagement Module2
33/127
PROCESS
A process is a collection of activities
that takes one or more kinds of
inputs and creates outputs (or
outcomes) that are of value to
customers external and internal to
the organization. (Silver, 2004)Processes can be for manufacturing,
service, or transactions
(commons.wikimedia.org/Pluke, 2011)
-
7/25/2019 Anand OperationsManagement Module2
34/127
PROCESS FLOW ANALYSIS
Flow unit
Goods being produced
Orders being fulfilled
Customers being provided service
Money flowing out and in
Projects being completed
Information being transformed
Key performance metrics
Flow time, flow rate, inventory
(Anupindi et al., 2011)
-
7/25/2019 Anand OperationsManagement Module2
35/127
FLOW TIME (T)
Also known as throughput time
Total time spent by a flow unit in a process, from start to
process
Start and end are as determined by process analyst
Includes activities that make up the processIncludes waiting time or inventory between activities
Is the time of the longest path in case of parallel paths
Measured in units of time, i.e., days, minutes, etc.
O Q S O 2
-
7/25/2019 Anand OperationsManagement Module2
36/127
IN-VIDEO QUESTION 2
How does reducing the flow time for
any process benefit cost, quality,
delivery, and flexibility?
IN VIDEO QUESTION 2
-
7/25/2019 Anand OperationsManagement Module2
37/127
IN-VIDEO QUESTION 2
How does reducing the flow time for
any process benefit cost, quality,
delivery, and flexibility?
(flickr.com/taymazvalley, 2010)
IN VIDEO INSIGHTS 2
-
7/25/2019 Anand OperationsManagement Module2
38/127
IN-VIDEO INSIGHTS 2
How does reducing the flow time for
any process benefit cost, quality,
delivery, and flexibility?
POTENTIAL BENEFITS OF
-
7/25/2019 Anand OperationsManagement Module2
39/127
POTENTIAL BENEFITS OFREDUCING FLOW TIME
Reduced costs from less inventory
Faster feedback on quality problems
Decreased order lead time
More responsiveness to order
changesFaster new product development
FLOW RATE (R)
-
7/25/2019 Anand OperationsManagement Module2
40/127
FLOW RATE (R)
Number of flow units that flow out of the activity or throug
specific point in the process or entire process per unit of
Is usually an average
Measured in units of flow units per unit time, i.e., custom
day, or pieces per minutes, etc.
Reciprocal of flow rate, i.e., (1 R) is cycle time (CT)
Average time interval between two successful flow units departing
or process
Flow units may depart in single units or in batches
BOTTLENECK ACTIVITY
-
7/25/2019 Anand OperationsManagement Module2
41/127
BOTTLENECK ACTIVITY
Activity in the process that has the
lowest flow rate
As cycle time is the reciprocal of
flow rate, bottleneck is also the
activity with the longest cycle time
Flow rate of any multi-activity
process is determined by the flow
rate of the bottleneck activity
INVENTORY (I)
-
7/25/2019 Anand OperationsManagement Module2
42/127
INVENTORY (I)
Number of flow units within the
process boundaries
Sum of the flow units at different stages
in various levels of completion and
waiting between stages in the process
Usually assessed as an average ofquantities observed at different points intime
Measured in units of flow unit in the
process, e.g., customers, pieces,
etc
EXAMPLE FOR FLOW TIME AND FLOW RAT
-
7/25/2019 Anand OperationsManagement Module2
43/127
EXAMPLE FOR FLOW TIME AND FLOW RAT
Consider a process to assemble desk lamps. The base of the lamp is
in Activity 1 and the top piece is produced in Activity 2. Activities 1 ansimultaneous. The two subassemblies are combined in Activity 3 to fi
Report the flow time for making a complete desk lamp and the flow ra
process. Also, report the cycle time.
(commons.wikimedia.org/hunterdt, 2014)
EXAMPLE FOR FLOW TIME
-
7/25/2019 Anand OperationsManagement Module2
44/127
EXAMPLE FOR FLOW TIMEAND FLOW RATE (2 OF 2)
Flow Time: 17 minutesFlow Rate: 1/9 unit per minute or
6.67 units per hour
Cycle Time: 9 minutes
UNDERLYING
-
7/25/2019 Anand OperationsManagement Module2
45/127
UNDERLYINGASSUMPTIONS
No waiting between activities
Material is released into the system
at the rate of the slowest activity
Demand is equal to or exceeds flow
rate
Flow rate and cycle time apply when
the system has reached steady state
REFERENCE
-
7/25/2019 Anand OperationsManagement Module2
46/127
Academic CitationsAnupindi, R., Chopra, S., Deshmukh, S. D., Van Mieghem, J. A., & Zemel, E. (2011). Managing bu
Boston, MA: Pearson Higher Ed.
Silver, E. A. (2004). Process management instead of operations management. Manufacturing & Se
Management, 6(4), 273-279. doi: 10.1287/msom.1040.0055.
Image CreditsDesk lamp [Online image]. (2014). Retrieved October 7, 2015 from
https://commons.wikimedia.org/wiki/File:Desk_lamp.jpg
Pluke, (2011). CPT hardware input output [Online image]. Retrieved October 7, 2015 from
https://commons.wikimedia.org/wiki/File:CPT_Hardware-InputOutput.svg
Valley, T. (2010). Think [Online image]. Retrieved October 7, 2015 from
https://www.flickr.com/photos/taymazvalley/5209251530/
REFERENCE
https://commons.wikimedia.org/wiki/File:Desk_lamp.jpghttps://commons.wikimedia.org/wiki/File:Desk_lamp.jpghttps://commons.wikimedia.org/wiki/File:CPT_Hardware-InputOutput.svghttps://commons.wikimedia.org/wiki/File:CPT_Hardware-InputOutput.svghttps://www.flickr.com/photos/taymazvalley/5209251530/https://www.flickr.com/photos/taymazvalley/5209251530/https://commons.wikimedia.org/wiki/File:CPT_Hardware-InputOutput.svghttps://commons.wikimedia.org/wiki/File:Desk_lamp.jpg -
7/25/2019 Anand OperationsManagement Module2
47/127
OPERATIONS MANAGEMENT
MODULE 2
Process Analysis
with Gopesh Anand
-
7/25/2019 Anand OperationsManagement Module2
48/127
-
7/25/2019 Anand OperationsManagement Module2
49/127
Littles Law
Video 2-1.4
EXAMPLE FOR RELATING I, T, AND R
-
7/25/2019 Anand OperationsManagement Module2
50/127
EXAMPLE FOR RELATING I, T, AND R
Flow rates for each of the activities:A: 1/10 unit per minute or 0.1 unit/min.
B: 1/8 unit per minute or 0.125 unit/min.
Flow rate (R) for the process:
0.1 unit per minuteFlow time (T):
18 minutes
With a continuous process, in every ten-minute period, v
how busy A and B will be
COMPUTING AVERAGE
-
7/25/2019 Anand OperationsManagement Module2
51/127
COMPUTING AVERAGEINVENTORY (I) (1 OF 2)
With a continuous flow, step 1 will
always have one unit, and step 2 willhave a unit 80% of the time (it will
starve for the other 20%).
WIP or I will be 1 unit for 20% of the
time and 2 units for 80% of the time.
COMPUTING AVERAGE
-
7/25/2019 Anand OperationsManagement Module2
52/127
COMPUTING AVERAGEINVENTORY (I) (2 OF 2)
Thus, (.2*1)+(.8*2) = 1.8 units
Also:
I = Flow time * Flow rate
= T * R
= 18 min. * 0.10 unit per min.
= 1.8 units
LITTLES LAW
-
7/25/2019 Anand OperationsManagement Module2
53/127
S
The average number of items in a system (I) is the produ
average length of time an item spends in the system (T) average flow rate of the system (R).
I = T * R
Same as I = T CT
Consistency in measurement units across all elements is
i.e., pieces, minutes, and units per minute; alternatively,
hours, and batches per hour.
(Little, 1961; Little and Graves, 2008)
ASSUMPTIONS FOR LITTLES LAW
-
7/25/2019 Anand OperationsManagement Module2
54/127
Deterministic world
Only averages count
Everything acts as predicted
Processes are stable
Average arrival rate = Average departure rate
Accept units in the system at the rate at which they depart the sysOver the period of time the system is being observed
Average inventory in the system is constant
Average age of the inventory in the system is constant
Littles Law applies when system is in steady state
-
7/25/2019 Anand OperationsManagement Module2
55/127
EXAMPLE APPLICATIONS
-
7/25/2019 Anand OperationsManagement Module2
56/127
Computing average response time for an order from
Average number of orders in the system
Average rate at which orders are being delivered
Assessing average number of people waiting in line at a
security based on
Average rate of passengers going throughAverage time spent by the passengers in the line
Calculating the average age of wine in a wine rack from
Average bottles in the wine rack
Average consumption (and replenishment) rate
IN-VIDEO QUESTION 3: COMPLETE THE TA
-
7/25/2019 Anand OperationsManagement Module2
57/127
RateIn-queue and
in-process
Total time in
queue and system
Semiconductor factory 1,000 wafers per day 45,000 wafers____________
E-mai l management 50 messages per day 150 messages____________
Maternity ward 5 mothers per day____________
90% 2 day stays
10% 7 day stays
Toll booths 3,600 vehicles per hour 20 vehicles____________
Real estate___ houses per day OR
___ per year25 on sale 120 days
Doughnut shop____ cust./min. OR
___ cust./hour10 customers (cust.) 3 minutes
3rd party logistics provider 10,000 toys per day____________
5 days
(Chhajed and Lowe, 2008)
IN-VIDEO QUESTION 3: COMPLETE THE TA
-
7/25/2019 Anand OperationsManagement Module2
58/127
(flickr.com/taymazvalley, 2010)
RateIn-queue and
in-process
Total time in
queue and system
Semiconductor factory 1,000 wafers per day 45,000 wafers____________
E-mai l management 50 messages per day 150 messages____________
Maternity ward 5 mothers per day____________
90% 2 day stays
10% 7 day stays
Toll booths 3,600 vehicles per hour 20 vehicles____________
Real estate___ houses per day OR
___ per year25 on sale 120 days
Doughnut shop____ cust./min. OR
___ cust./hour10 customers (cust.) 3 minutes
3rd party logistics provider 10,000 toys per day____________
5 days
IN-VIDEO QUESTION 3: COMPLETE THE TA
-
7/25/2019 Anand OperationsManagement Module2
59/127
RateIn-queue and
in-process
Total time in
queue and system
Semiconductor factory 1,000 wafers per day 45,000 wafers____________
E-mai l management 50 messages per day 150 messages____________
Maternity ward 5 mothers per day____________
90% 2 day stays
10% 7 day stays
Toll booths 3,600 vehicles per hour 20 vehicles____________
Real estate___ houses per day OR
___ per year25 on sale 120 days
Doughnut shop____ cust./min. OR
___ cust./hour10 customers (cust.) 3 minutes
3rd party logistics provider 10,000 toys per day____________
5 days
IN-VIDEO INSIGHTS 3
-
7/25/2019 Anand OperationsManagement Module2
60/127
Rate In-queue and in-processTotal ti
Semiconductor factory 1,000 wafers per day 45,000 wafers
E-mail management 50 messages per day 150 messages
Maternity ward 5 mothers per day 12.5 mothers90
10
Toll booths 3,600 vehicles per hour 20 vehicles
Real estate25/120 houses per day OR
76 per year25 on sale
Doughnut shop10/3 cust./min. OR
200 cust ./hour10 customers
REFERENCE
-
7/25/2019 Anand OperationsManagement Module2
61/127
Academic CitationsChhajed, D., & Lowe, T. J. (2008). Building intuition: Insights from basic operations management m
(Vol. 115). New York, NY: Springer Science & Business Media.
Little, J. D. C. (1961). A proof for the queuing formula: L = W. Operations Research 9(3): 383-38710.1287/opre.9.3.383
Little, J.D.C., & Graves, S.C. (2008). Littles law. In C. Dilip and T. J. Lowe (Ed.), Building intuition:
operations management models and principles (Vol. 115). New York, NY: Springer Science & Busi
Image CreditsValley, T. (2010). Think [Online image]. Retrieved October 7, 2015 from
https://www.flickr.com/photos/taymazvalley/5209251530/
https://www.flickr.com/photos/taymazvalley/5209251530/https://www.flickr.com/photos/taymazvalley/5209251530/ -
7/25/2019 Anand OperationsManagement Module2
62/127
OPERATIONS MANAGEMENT
MODULE 2
Process Analysis
with Gopesh Anand
-
7/25/2019 Anand OperationsManagement Module2
63/127
Types and Metrics
Lesson 2-1
-
7/25/2019 Anand OperationsManagement Module2
64/127
What Weve Learned in Lesson 2-1
Video 2-1.5
LESSON 2-1 RECAP
-
7/25/2019 Anand OperationsManagement Module2
65/127
In this lesson you learned how to:
Select appropriate process arrangements
Combine different process arrangements
Assess processes using basic metrics
Apply Littles Law in practice
-
7/25/2019 Anand OperationsManagement Module2
66/127
OPERATIONS MANAGEMENT
MODULE 2
Process Analysis
with Gopesh Anand
-
7/25/2019 Anand OperationsManagement Module2
67/127
Process Capacity
Lesson 2-2
-
7/25/2019 Anand OperationsManagement Module2
68/127
Lesson Objectives
Video 2-2.1
LESSON 2-2 OBJECTIVES
-
7/25/2019 Anand OperationsManagement Module2
69/127
You will learn how to:
Calculate process capacity
With different assumptions
Relying on available information
Calculate capacity utilization
Consider the potential impacts ofvariability
-
7/25/2019 Anand OperationsManagement Module2
70/127
OPERATIONS MANAGEMENT
MODULE 2
Process Analysis
with Gopesh Anand
-
7/25/2019 Anand OperationsManagement Module2
71/127
Process Capacity
Lesson 2-2
-
7/25/2019 Anand OperationsManagement Module2
72/127
Assessing Capacity
Video 2-2.2
PROCESSING TIME OF ANACTIVITY
-
7/25/2019 Anand OperationsManagement Module2
73/127
ACTIVITY
Time taken to complete that activity
Activity may involve single flow unit
or a batch of flow units being
processed together, such as cookies
in an oven
CAPACITY OF ACTIVITY WITH MULTIPLESTATIONS
-
7/25/2019 Anand OperationsManagement Module2
74/127
STATIONS
E.g.: Manual activity such as packing cookies with two p
stations, i.e., two people packing simultaneously
Each employee takes 2.5 minutes to pack one packet
Processing time (time taken to complete activity)
2.5 minutes
Cycle time (average time between two units)
1.25 minutes
Flow rate (or capacity of the packing activity)
0.8 packets per minute = 48 packets per hour
CAPACITY OF ACTIVITY UNDER BATCHPRODUCTION
-
7/25/2019 Anand OperationsManagement Module2
75/127
PRODUCTION
E.g.: Machine activity such as baking cookies with one o
can bake 40 cookies at a timeRequires 30 minutes baking time
Processing time (time taken to complete activity)
30 minutes
Cycle time (average time between two units)
0.75 minute (or 45 seconds)
Flow rate (or oven capacity for baking)
80 pieces per hour
SET-UP TIME OR CHANGE-OVER TIME
-
7/25/2019 Anand OperationsManagement Module2
76/127
OVER TIME
Fixed time for preparing an activity
for its work contentTime needed to be spent between end of
one batch and start of next
Generally unaffected by size of batch
processed
Usually impacts batch size decision
Economies of scale
Takes time away from that available for
activity
CAPACITY OF ACTIVITY WITH SETUP TIM
-
7/25/2019 Anand OperationsManagement Module2
77/127
E.g.: Machine activity such as baking cookies with one o
can bake 40 cookies at a time with setup time of 10 minuRequires 30 minutes baking time + 10 minutes setup tim
Effective processing time including run time and setup time
40 minutes for the batch
Effective cycle time (average time between two units)
1 minute (or 60 seconds)
Effective flow rate (or oven capacity for baking)
60 pieces per hour
COMPUTING CYCLE TIMEAND FLOW TIME
-
7/25/2019 Anand OperationsManagement Module2
78/127
AND FLOW TIME
Cycle time of an activity
Processing time of activity divided bynumber of units processed at a time
Flow time of a process
Sum of processing times of all activities +
time spent waiting between activities
Counting only the longest path when
there are parallel paths in a process
IN-VIDEO QUESTION 4
-
7/25/2019 Anand OperationsManagement Module2
79/127
In the two-step process, what is the impact on the flow ra
flow time of the process when the resource for activity A
doubled?
And, what is the impact on inventory in the system, apply
Law, I = T * R?
IN-VIDEO QUESTION 4
-
7/25/2019 Anand OperationsManagement Module2
80/127
In the two-step process, what is the impact on
the flow rate and the flow time of the process
when the resource for activity A is doubled?
And, what is the impact on inventory in the
system, applying Littles Law, I = T * R?
(flickr.com/taymazvalley, 2010)
IN-VIDEO INSIGHTS 4
-
7/25/2019 Anand OperationsManagement Module2
81/127
In the two-step process, what is the impact on the flow ra
flow time of the process when the resource for activity A
doubled?
And, what is the impact on inventory in the system, apply
Law, I = T * R?
INCREASING RESOURCE AT AN ACTIVITY
-
7/25/2019 Anand OperationsManagement Module2
82/127
Before doubling resource at A:
Bottleneck activity is A
Process Cycle Time = 10 minutesProcess Flow Rate = 1 10 = 0.1 units per minute
Flow Time = 18 minutes
INCREASING RESOURCE AT AN ACTIVITY
-
7/25/2019 Anand OperationsManagement Module2
83/127
After doubling resource at A:
Bottleneck activity is now B
Process Cycle Time = 8 minutes
Process Flow Rate = 1 8 = 0.125 units per minute
Flow Time = 18 minutes
INVENTORY BASED ON I = T * R (1 OF 2)
-
7/25/2019 Anand OperationsManagement Module2
84/127
Before doubling resource at A:
Process Flow Rate = 0.1 units per minute
Flow Time = 18 minutesI = T * R = 1.8 units
INVENTORY BASED ON I = T * R (2 OF 2)
-
7/25/2019 Anand OperationsManagement Module2
85/127
After doubling resource at A:
Process Flow Rate = 0.125 units per minute
Flow Time = 18 minutes
I = T * R = 2.25 units
SO WHAT?
-
7/25/2019 Anand OperationsManagement Module2
86/127
Increasing capacity led to more
inventory.Total free time increased.
It would have been good to balance
the activity times.
Image Credits
REFERENCE
-
7/25/2019 Anand OperationsManagement Module2
87/127
Image CreditsValley, T. (2010). Think [Online image]. Retrieved October 7, 2015 from
https://www.flickr.com/photos/taymazvalley/5209251530/
OPERATIONS MANAGEMENT
https://www.flickr.com/photos/taymazvalley/5209251530/https://www.flickr.com/photos/taymazvalley/5209251530/ -
7/25/2019 Anand OperationsManagement Module2
88/127
OPERATIONS MANAGEMENT
MODULE 2
Process Analysis
with Gopesh Anand
-
7/25/2019 Anand OperationsManagement Module2
89/127
Process Capacity
Lesson 2-2
-
7/25/2019 Anand OperationsManagement Module2
90/127
Capacity Utilization
Video 2-2.3
UTILIZATION
-
7/25/2019 Anand OperationsManagement Module2
91/127
Ratio of how much a resource is or
would be used compared to howmuch it is or would be available
Consider what is included and
excluded in
Resource is or would be used Processing time, setup time
Resource is or would be available
Setup t ime, maintenance, breakdowns
ACTUAL UTILIZATION
-
7/25/2019 Anand OperationsManagement Module2
92/127
CapacityProductionAvailable RateProductionActual
OR
IMPLIED UTILIZATION
-
7/25/2019 Anand OperationsManagement Module2
93/127
CapacityProductionAvailable RateDemand
AvailableTimeDemandFulfilltoNeededTime
OR
BOTTLENECK
Activity in the process that has the
-
7/25/2019 Anand OperationsManagement Module2
94/127
Activity in the process that has the
lowest capacity (same as lowest
flow rate)
Alternatively, any resource whose
capacity is less than the demand
placed upon it(Goldratt et al., 2004)
Either demand from customers or
the activity in the process with the
lowest capacity, whichever is less
CAPACITY UTILIZATION OF EACH ACTIVITBASED ON BOTTLENECK (1 OF 2)
-
7/25/2019 Anand OperationsManagement Module2
95/127
CT R/hr Utilization = Actua
9 min. =1/9*60 6.67
8 min. =1/8*60 7.50
6 min. =1/6*60 10.00
CAPACITY UTILIZATION OF EACH ACTIVITBASED ON BOTTLENECK (2 OF 2)
-
7/25/2019 Anand OperationsManagement Module2
96/127
CT R/hr Utilization = Actua
9 min. =1/9*60 6.67 =6.67/6.67
8 min. =1/8*60 7.50 =6.67/7.5
6 min. =1/6*60 10.00 =6.67/10
CAPACITY UTILIZATION OF EACH ACTIVITBASED ON DEMAND (1 OF 2)
Additi l i f ti D d 48 d
-
7/25/2019 Anand OperationsManagement Module2
97/127
Additional information: Demand = 48 per day
Day = 8 hours or 480 minutes
Or same can be calculated as
Demand = Actual Production = 6 per hour
CT Time Required
Divided
Av
9 min.
8 min.
6 min.
CT Utilization = Actual Rate / Available Capacity
9 min.
8 min.
6 min.
CAPACITY UTILIZATION OF EACH ACTIVITBASED ON DEMAND (2 OF 2)
Additional information Demand 48 per da
-
7/25/2019 Anand OperationsManagement Module2
98/127
Additional information: Demand = 48 per day,
and day = 8 hours or 480 minutes
Or same can be calculated as
Demand = Actual Production = 6 per hour
CT Time RequiredDivided
Av
9 min. =9min.*48 432
8 min. =8min.*48 384
6 min. =6min.*48 288
CT Utilization = Actual Rate / Available Cap
9 min. =6/6.67 0.9
8 min. =6/7.5 0.8
6 min. =6/10 0.6
CAPACITY UTILIZATION OF OVERALL PROBASED ON DEMAND
-
7/25/2019 Anand OperationsManagement Module2
99/127
Total Time Required =48 units * ___ min. =______ minutes
Total Time Available = _______________ =______ minutes
Time Required / Time Available =______ %
Demand = 48 per day
PROCESS CAPACITY UTILIZATION BASEDDEMAND
-
7/25/2019 Anand OperationsManagement Module2
100/127
Time Required =48 units * 23 min. 1104 minutes
Time Available = 3 * 480 1440 minutes
Time Required / Time Available 77%
Demand = 48 per day
OBSERVATION
-
7/25/2019 Anand OperationsManagement Module2
101/127
Flow rates, flow times, and
inventories are treated as averagesin process flow analysis.
In reality, these values occur in a
range.
IN-VIDEO QUESTION 5
-
7/25/2019 Anand OperationsManagement Module2
102/127
How does variability affect capacity
availability?
IN-VIDEO QUESTION 5
-
7/25/2019 Anand OperationsManagement Module2
103/127
How does variability affect capacity
availability?
(flickr.com/taymazvalley, 2010)
IN-VIDEO INSIGHTS 5
-
7/25/2019 Anand OperationsManagement Module2
104/127
Processing times will fluctuate
around averages.Higher processing times, i.e., lower
capacities, can cause delays.
Delays affect other following
activities as they have to wait.
Speeding up tasks may not benefit
other activities as they may not be
able to catch up.
THEORY OF CONSTRAINTSPERSPECTIVE
-
7/25/2019 Anand OperationsManagement Module2
105/127
Identify the bottleneck activity
incorporating variabilityEnsure maximum flow through the
bottleneck
Release work according to the
bottleneck
Focus continuous improvement on
the bottleneck
(Goldratt et al., 2004)
Academic Citations
REFERENCE
-
7/25/2019 Anand OperationsManagement Module2
106/127
Goldratt, E. M., Cox, J., & Whitford, D. (2004). The goal: A process of ongoing improvement (Vol. 3
North River Press.
Image CreditsValley, T. (2010). Think [Online image]. Retrieved October 7, 2015 from
https://www.flickr.com/photos/taymazvalley/5209251530/
OPERATIONS MANAGEMENT
https://www.flickr.com/photos/taymazvalley/5209251530/https://www.flickr.com/photos/taymazvalley/5209251530/ -
7/25/2019 Anand OperationsManagement Module2
107/127
MODULE 2Process Analysis
with Gopesh Anand
-
7/25/2019 Anand OperationsManagement Module2
108/127
Process CapacityLesson 2-2
-
7/25/2019 Anand OperationsManagement Module2
109/127
Impact of VariabilityVideo 2-2.4
IN-VIDEO QUESTION 6
-
7/25/2019 Anand OperationsManagement Module2
110/127
What would you consider a good
capacity utilization number?
IN-VIDEO QUESTION 6
-
7/25/2019 Anand OperationsManagement Module2
111/127
What would you consider a good
capacity utilization number?
(flickr.com/taymazvalley, 2010)
IN-VIDEO INSIGHTS 6IDEAL LEVEL OF UTILIZATION OF AN ACT
-
7/25/2019 Anand OperationsManagement Module2
112/127
Depends on how utilization is measured
What is included in defining resource being used?E.g., processing time, setup time
And resource being available?
E.g., setup time, maintenance, breakdowns
Depends on capacity of bottleneck in process
Depends on variability
In demand and how process is performed
VARIABILITY INPROCESSING TIMES
I i l i i i
-
7/25/2019 Anand OperationsManagement Module2
113/127
Input-material inconsistencies
Product varietyDifferent setup times
Varying need for changeovers
Operator differences
Machine errors
VARIABILITY INCUSTOMER DEMAND
-
7/25/2019 Anand OperationsManagement Module2
114/127
Variability in processing timesFluctuations in mix of demand
Different transfer batch sizes
Different production batch sizes
EFFECT OF HIGH VARIABILITYGENERALLY KNOWN RESULT
Increasing utilization in a system with variability degrades the perfo
-
7/25/2019 Anand OperationsManagement Module2
115/127
Averageflowt
ime
Utilization
Increasing
variability in
demand and
process
25%
(average waiting time, average number waiting) in a highly nonlinea
Low
High
Almost nowaiting
IMPLICATIONS OFVARIABILITY (1 OF 2)
Hi h l l f tili ti (i
-
7/25/2019 Anand OperationsManagement Module2
116/127
Higher levels of utilization (i.e., no
buffer capacity) will result in waiting
With more variability, system is more
sensitive to increase in capacity
utilization
IMPLICATIONS OFVARIABILITY (2 OF 2)
So hat?
-
7/25/2019 Anand OperationsManagement Module2
117/127
So what?
With variability increases, wait times willstart worsening at lower and lowerdegrees of utilization.
Lesson:
To get more out of a process, reduce
variability.
-
7/25/2019 Anand OperationsManagement Module2
118/127
OVERALL EQUIPMENT EFFECTIVENESS (OAN INDICATION OF VARIABILITY
Computed as Availability * Performance * Yield
-
7/25/2019 Anand OperationsManagement Module2
119/127
Computed as Availability * Performance * Yield
Availability = Actual operating time Total planned time
Performance = Actual output Total potential output
Yield = Defect free output Total output
Note the mutual interactions between the three compone
TAKT TIME AS A TARGETFOR BALANCING CYCLE
TIMES
-
7/25/2019 Anand OperationsManagement Module2
120/127
Computed as
And compared to cycle time for each
activity
PeriodTimeaDuringDemandCustomerDemandThatMeettoAvailableTimeProduction
IMPACTS OF REDUCINGVARIABILITY
Allows operating with lower
-
7/25/2019 Anand OperationsManagement Module2
121/127
Allows operating with lower
inventory levels (I)
Helps shorten flow times (T)
Frees up capacity and increases
effective flow rate (R)
SIGNIFICANCE OFVARIABILITY
Quoting Deming one of the
-
7/25/2019 Anand OperationsManagement Module2
122/127
Quoting Deming, one of the
founders of the Total Quality
Management (TQM) movement
"The central problem of
management ... is to understand
better the meaning of variation, and
to extract the information containedin variation
Deming (1986, p. 20)
Academic CitationsMIT Center for Advanced Engineering. (1986). Out of crisis. Cambridge, MA: Deming, W. Edwards
REFERENCE
-
7/25/2019 Anand OperationsManagement Module2
123/127
Image CreditsValley, T. (2010). Think [Online image]. Retrieved October 7, 2015 fromhttps://www.flickr.com/photos/taymazvalley/5209251530/
OPERATIONS MANAGEMENT
https://www.flickr.com/photos/taymazvalley/5209251530/https://www.flickr.com/photos/taymazvalley/5209251530/ -
7/25/2019 Anand OperationsManagement Module2
124/127
MODULE 2Process Analysis
with Gopesh Anand
-
7/25/2019 Anand OperationsManagement Module2
125/127
Process CapacityLesson 2-2
-
7/25/2019 Anand OperationsManagement Module2
126/127
What Weve Learned in Lesson 2-2Video 2-2.5
LESSON 2-2 RECAP
In this lesson you learned about:
-
7/25/2019 Anand OperationsManagement Module2
127/127
In this lesson you learned about:
Calculating capacity utilization
The implications of assumptions
The importance of considering variability