Operations Management Session 4: Kristine Cookies Case.
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Transcript of Operations Management Session 4: Kristine Cookies Case.
Operations Management
Session 4: Kristine Cookies Case
Session 4 Operations Management 2
Last Class in Process Analysis Module
What did we learn?
Throughput rate Capacity
What’s the difference between capacity and throughput rate?
Bottleneck resource Utilization rate Throughput time WIP Little’s Law:
Throughput Time = (Average) WIP / Throughput Rate
Session 4 Operations Management 3
Today
Team Presentations
Lecture (Kristen’s cookies and additional comments on capacity management)
Session 4 Operations Management 4
Team Presentations
Session 4 Operations Management 5
What is it all about?What is it all about?
Process CharacteristicsProcess Characteristics
Capacity of a System How much can you process in a week/day?
Response Time How quickly can you meet demand?
Session 4 Operations Management 6
Process Flow
What are the inputs?
What are the outputs?
What are the activities?
Session 4 Operations Management 7
Process Flow Chart
MIXLOADTRAY
SETOVEN
BAKE COOL PACK PAY
DOUGH
YOU
MIXER
YOU
TRAY
ROOMIEOVENTRAY
OVENTRAY TRAY
ROOMIE
TRAY
ROOMIE
Operations Management 8
4 8 12 16 20 24 28 32 36
Acti
vit
yR
esou
rce
Time
Operations Management 9
4 8 12 16 20 24 28 32 36
MIX
LOADSET OVEN
BAKE
COOLPACK
PAY
26
Acti
vit
y
Time
You
Oven
Tray
RM
Resou
rce
Session 4 Operations Management 10
Kristine Cookies and Measures
What is the Throughput time? From the moment an order arrives till it is
finished, it takes 26 min.
Can the throughput time be reduced?
Operations Management 11
4 8 12 16 20 24 28 32 36
MIX
LOADSET OVEN
BAKE
COOLPACK
PAY
26
Time
You
Oven
Tray
RM
Acti
vit
yR
esou
rce
Operations Management 12
4 8 12 16 20 24 28 32 36
MIX
LOADSET OVEN
BAKE
COOLPACK
PAY
26
Acti
vit
y
Time
You
Oven
Tray
RM
Resou
rce
Session 4 Operations Management 13
Kristine Cookies and Measures
What is the capacity of the system?
What is the slowest resource? (Assume that the we have enough trays.)
Operations Management 14
4 8 12 16 20 24 28 32 36
MIX
LOADSET OVENBAKE
COOL
PACK
PAY
26
Acti
vit
y
Time
You
Oven
Tray
RM
10
Resou
rce
Session 4 Operations Management 15
Bottleneck Analysis
It is clear that the bottleneck is the Oven It is the only resource that once we start
producing is not idle. It is the slowest resource: One dozen every 10
min.
Session 4 Operations Management 16
Capacity
It seems that if they have enough trays they can produce a dozen of cookies every 10 min.
1.2 cookies per min. In 4 hours (240 min) you can finish 22 trays:
240 – 26 = 214 214 / 10 = 21.4 or 21 trays.
Given the bottleneck is the oven, to maximize capacity we must ensure that the oven runs continuously: once every 10 min.
Session 4 Operations Management 17
Process Flow Chart
MIXLOADTRAY
SETOVEN
BAKE COOL PACK PAY
DOUGH
TIME:
YOU
MIXER
YOU
TRAY
ROOMIEOVENTRAY
OVENTRAY TRAY
ROOMIE
TRAY
ROOMIE
YOU:
TOTAL TIME
ROOMIE:
MIXER:
OVEN:
TRAY:
6 2 1 9 5 2 1
6 + 2= 8 minutes
1 + 2 +1 = 4 minutes 1+ 9 = 10 minutes
6 minutes 19 minutes
Order Size (Dozens): 1 Dozens
Session 4 Operations Management 18
Process Flow Chart
MIXLOADTRAY
SETOVEN
BAKE COOL PACK PAY
DOUGH
TIME:
YOU
MIXER
YOU
TRAY
ROOMIEOVENTRAY
OVENTRAY TRAY
ROOMIE
TRAY
ROOMIE
YOU:
TOTAL TIME
ROOMIE:
MIXER:
OVEN:
TRAY:
6 2 1 9 5 2 1
6 + 2= 8 minutes
1 + 2 +1 = 4 minutes 1+ 9 = 10 minutes
6 minutes 19/2 minutes
Dozens / Day = 22
Order Size (Dozens): 1 Dozen
Session 4 Operations Management 19
Process Flow Chart
MIXLOADTRAY
SETOVEN
BAKE COOL PACK PAY
DOUGH
TIME:
YOU
MIXER
YOU
TRAY
ROOMIEOVENTRAY
OVENTRAY TRAY
ROOMIE
TRAY
ROOMIE
TOTAL TIME
6 4 2 18 10 4 1
Order Size: 2 Dozens
YOU:
ROOMIE:
MIXER:
OVEN:
TRAY:6 + 2= 8 minutes
1 + 2 +1 = 4 minutes 2+ 18 = 20 minutes
6 minutes
Operations Management 20
4 8 12 16 20 24 28 32 36
MIX
LOAD
SET OVEN
BAKE
COOL
PACK
PAY
26
Acti
vit
y
Time
You
Oven
Tray 1
RM
10
RM
Tray 2
Resou
rce
Session 4 Operations Management 21
How many dozen per day?
60 minutes x 4 = 240 available minutes each evening
240-36=204 available minutes after the first two dozen is finished
204/20=10.2 two dozens finished in the remaining 204 minutes
2x11=22 dozens per day
Does it make sense to give a discount for an order size of two dozen?
Session 4 Operations Management 22
Capacity Investment
Should we invest in a second Oven?
Operations Management 23
4 8 12 16 20 24 28 32 36
MIX
LOAD
SET OVEN
BAKE
COOL
PACK
PAY
26
Acti
vit
y
Time
You
Oven
Tray
RM
8
Two Ovens. Order Size: 1 dozen
RM
You
Resou
rce
Session 4 Operations Management 24
Bottleneck Analysis
Who is the bottleneck now? The entrepreneur
Why did the bottleneck shift?
Could the numbers (as opposed to the graph) indicate were the bottleneck is?
Now should we give a discount for ordering 2 dozen?
Session 4 Operations Management 25
Bottleneck Analysis
Your capacity: 1 dozen cookies / 8 minutes = 0.125 dozen cookies per
minute (or 1 dozen cookies every 8 minutes)
Oven capacity: 1 dozen cookies / 10 minutes 2 ovens x .1 dozen cookies per minute = 0.2 dozen cookies
per minute (or 1 dozen cookies every 5 minutes)
Mixer: 1/6=0.167 dozen cookies per minute
Roommate ¼=0.25 dozen cookies per minute
What is the slowest resource?
Note: same calculation as made in the previous class in Burger’s example.
Session 4 Operations Management 26
Dozens per day with two ovens
240-26=214 minutes for the first dozen
214/8=26.75 dozens in the next 214 minutes
27 dozen per day with two ovens.
Session 4 Operations Management 27
Economic Analysis
Having two ovens increase the capacity from 60/10=6 dozens per hour to 60/8=7.5 dozens per hour.
What is the value of the additional oven?
(27-22)*300*Profit per dozen =
Additional profit = $1,500*profit per dozen
New capacity # of selling days
Old capacity
Session 4 Operations Management 28
Economic Analysis Example
Suppose we sell each dozen cookies for $1.50 per dozen.
Assume there is no cost on your time. The profit per dozen is then $1.50-$0.60-
$0.10=$0.80. Therefore, the additional profit after being open
300 days is: 5x300x$0.80=$1200. We are willing to buy another oven if it costs less
than $1200 and we have enough demand so that it will be in use.
Operations Management 29
4 8 12 16 20 24 28 32 36
MIX
LOAD
SET OVEN
BAKE
COOL
PACK
PAY
26
Acti
vit
y
Time
You
Oven
Tray
Two OvensOrder Size: 2 Dozens
RM
You
Resou
rce
Session 4 Operations Management 30
Process Flow Chart
MIXLOADTRAY
SETOVEN
BAKE COOL PACK PAY
DOUGH
TIME:
YOU
MIXER
YOU
TRAY
ROOMIEOVENTRAY
OVENTRAY TRAY
ROOMIE
TRAY
ROOMIE
YOU: 6+4 = 10
TOTAL TIME
ROOMIE:
MIXER:
OVEN: (18 +2) /2 = 10
TRAY:
6 4 2 18 10 4 2
OVENS = 2 and Order size =2 Dozen
Dozens / Day = 44 doz / day
Session 4 Operations Management 31
Summary
Tools & Techniques Identification of Bottleneck System Capacity Throughput Time
Concepts Bottleneck & Capacity depend of product mix In high variety systems bottlenecks shift