Anand OperationsManagement Module2

7/25/2019 Anand OperationsManagement Module2

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OPERATIONS MANAGEMENT

MODULE 2

Process Analysis

with Gopesh Anand


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Types and Metrics

Lesson 2-1


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Lesson Objectives

Video 2-1.1


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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.


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MODULE 2

Process Analysis

with Gopesh Anand


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Types and Metrics

Lesson 2-1


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Process Types

Video 2-1.2


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PROCESS CHOICE

Choices for how work will flow forgoods and services

Two basic arrangements:

Linear

Jumbled


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LINEAR ARRANGEMENT IN A HEALTH CLI


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JUMBLED ARRANGEMENT IN A HEALTH C


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IMPACT OF PROCESSCHOICE

CostSpeed

Flexibility

Quality

Customizability


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PRODUCT-PROCESS MATRIX

Proc

essFlexibility

Line

Product Variety

Job Sho

Small Batch

Large Batch

High

Low

High

Continuous

Low


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PROJECT ONE UNIT AT A TIME

(U.S. Dept .of Labor, Bureau of Labor Statist ics, n.d.)


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BATCH SOMEWHAT STANDARDIZED JOBOR A SOMEWHAT FLEXIBLE ASSEMBLY L

Left: (Kabel, 2005) Right: (commons.wikimedia.org/Emil76, 2008)


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LINE DISCRETE UNITSMOVING THROUGH

SPECIALTY ACTIVITIES

(commons.wikimedia.org/Siyuwj, 2011)


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CONTINUOUS FLOW AUTOMATIC

TRANSFORMATION

(pixabay.com, n.d.)


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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


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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.


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PROCESS ARRANGEMENT COMBINATION

Exclusive process:Hospital specializing in one procedure, e.g.,Shouldice

(shouldice.com, n.d.)


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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.)


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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?


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IN-VIDEO QUESTION 1

Take any fast food chain and

another luxurious sit-down






(flickr.com/taymazvalley, 2010)


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IN-VIDEO INSIGHTS 1

Take any fast food chain and

another luxurious sit-down







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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


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IN CLOSING

Process arrangements are related to

Product versus process focus

Made to stock versus made to order

Stages in product life cycle


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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


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Types and Metrics

Lesson 2-1


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Process Flow Analysis

Video 2-1.3


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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)


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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)


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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


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IN-VIDEO QUESTION 2

How does reducing the flow time for

any process benefit cost, quality,

delivery, and flexibility?

IN VIDEO QUESTION 2


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IN-VIDEO QUESTION 2





IN VIDEO INSIGHTS 2


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IN-VIDEO INSIGHTS 2




POTENTIAL BENEFITS OF


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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)


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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


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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)


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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


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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


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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


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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


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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


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MODULE 2

Process Analysis

with Gopesh Anand


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Littles Law

Video 2-1.4

EXAMPLE FOR RELATING I, T, AND R


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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


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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


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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


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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


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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


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EXAMPLE APPLICATIONS


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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


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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)



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RateIn-queue and

in-process

Total time in

queue and system




90% 2 day stays

10% 7 day stays







5 days



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RateIn-queue and

in-process

Total time in

queue and system




90% 2 day stays

10% 7 day stays







5 days

IN-VIDEO INSIGHTS 3


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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


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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/


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MODULE 2

Process Analysis

with Gopesh Anand


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Types and Metrics

Lesson 2-1


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What Weve Learned in Lesson 2-1

Video 2-1.5

LESSON 2-1 RECAP


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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


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MODULE 2

Process Analysis

with Gopesh Anand


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Process Capacity

Lesson 2-2


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Lesson Objectives

Video 2-2.1

LESSON 2-2 OBJECTIVES


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You will learn how to:

Calculate process capacity

With different assumptions

Relying on available information

Calculate capacity utilization

Consider the potential impacts ofvariability


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MODULE 2

Process Analysis

with Gopesh Anand


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Process Capacity

Lesson 2-2


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Assessing Capacity

Video 2-2.2

PROCESSING TIME OF ANACTIVITY


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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


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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


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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


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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


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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


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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


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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


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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?


IN-VIDEO INSIGHTS 4


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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


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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


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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


INVENTORY BASED ON I = T * R (1 OF 2)


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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)


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After doubling resource at A:

Process Flow Rate = 0.125 units per minute


I = T * R = 2.25 units

SO WHAT?


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Increasing capacity led to more

inventory.Total free time increased.

It would have been good to balance

the activity times.

Image Credits

REFERENCE


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MODULE 2

Process Analysis

with Gopesh Anand


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Process Capacity

Lesson 2-2


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Capacity Utilization

Video 2-2.3

UTILIZATION


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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


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CapacityProductionAvailable RateProductionActual

OR

IMPLIED UTILIZATION


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CapacityProductionAvailable RateDemand

AvailableTimeDemandFulfilltoNeededTime

OR

BOTTLENECK



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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)


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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)


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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


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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


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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


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Total Time Required =48 units * ___ min. =______ minutes

Total Time Available = _______________ =______ minutes

Time Required / Time Available =______ %

Demand = 48 per day

PROCESS CAPACITY UTILIZATION BASEDDEMAND


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Time Required =48 units * 23 min. 1104 minutes

Time Available = 3 * 480 1440 minutes

Time Required / Time Available 77%

Demand = 48 per day

OBSERVATION


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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


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How does variability affect capacity

availability?

IN-VIDEO QUESTION 5


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How does variability affect capacity

availability?


IN-VIDEO INSIGHTS 5


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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


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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


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Goldratt, E. M., Cox, J., & Whitford, D. (2004). The goal: A process of ongoing improvement (Vol. 3

North River Press.





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MODULE 2Process Analysis

with Gopesh Anand


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Process CapacityLesson 2-2


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Impact of VariabilityVideo 2-2.4

IN-VIDEO QUESTION 6


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What would you consider a good

capacity utilization number?

IN-VIDEO QUESTION 6


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What would you consider a good

capacity utilization number?


IN-VIDEO INSIGHTS 6IDEAL LEVEL OF UTILIZATION OF AN ACT


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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


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Input-material inconsistencies

Product varietyDifferent setup times

Varying need for changeovers

Operator differences

Machine errors

VARIABILITY INCUSTOMER DEMAND


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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


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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


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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?


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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.


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OVERALL EQUIPMENT EFFECTIVENESS (OAN INDICATION OF VARIABILITY

Computed as Availability * Performance * Yield


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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


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Computed as

And compared to cycle time for each

activity

PeriodTimeaDuringDemandCustomerDemandThatMeettoAvailableTimeProduction

IMPACTS OF REDUCINGVARIABILITY

Allows operating with lower


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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


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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


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Image CreditsValley, T. (2010). Think [Online image]. Retrieved October 7, 2015 fromhttps://www.flickr.com/photos/taymazvalley/5209251530/



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MODULE 2Process Analysis

with Gopesh Anand


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Process CapacityLesson 2-2


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What Weve Learned in Lesson 2-2Video 2-2.5

LESSON 2-2 RECAP

In this lesson you learned about:


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In this lesson you learned about:

Calculating capacity utilization

The implications of assumptions

The importance of considering variability

Anand OperationsManagement Module2

Documents

Transcript of Anand OperationsManagement Module2