NYU*STERN LEONARD N. STERN SCHOOL OF BUSINESSWhile there are only a few generally accepted definitions used in operations management Bi practice varies from company to company, for purposes of class discussion and Dedagogy, itis useful to adopt working definitions of a few terms, These terms are Gefined below: 1. CYCLE TIME, The time between the completion of a successive units is known as tyele time. It can situilanly be defined for any part of any provess. Each machine of Qorkstation can have a different cycle time, Consequently, there does not exist 2 Yincol relationship between machine cycle times and the process eyele time, Idle time and bottlenecks prevent a direct relationship. 2. DLE TIME. The time during which a machine or worker is not perfonning any productive actions, BOTTLENECK, The machine or workstation that limits the total output of process is known as a bottleneck, Bottlenecks determine the process cycle time and rave a ceiling on the capacity of the process. Consequently, the identification, crsval and management of bottlenecks rightly consumes a significant portion of ‘management time and effort 4. CAPACITY, The output per unit time of any machine, workstation or process is eter to as its capacity. I is a design or theoretic) measure of output. Actua Dutput often differs from capacity. The comaparison of actual output t0 capacity results in measures of eapacity utilization, 5, CAPACITY BALANCE. A process is defined to be balanced when every sep 1 the process has the same cycle time. Few processes achieve this state, Most are in ppartal imbalance. 6. DIRECT LABOR, ‘The actual amount of work (generally measured in units of tims) contained in any product is referred to as direct labor content. It does net ihetude any indirect Iabor hours such as those arising form maintenanet, materials tandling, and managernent Gime. Dircet labor cost refers to the cost of the direst Iibor enrtent of any product, It isthe result of computing wages and benefits paid to btain the diect labor content of the product and of any idle time, Direct labor lization {s defined as the rato of ditect Tabor content tothe sum of direct Isbor ccontent and idle time. THROUGHPUT TIME. The length of ime spent in the process from beginning 19 wee referred to as throughput time. Process throughput time often varies from the se ee the throughput times of each machine and workstation in the process du to {he presence of ile time, the se of batch processing, and buffers between process steps. Some texts refer {0 the throughput time as the flow time. §. BATCH PROCESSING. In many processes, several units ofa product are worked bein exactly the same manper and they are moved ftom step to step together, Le. it Si atch This method of production is knowin as batch processing, ‘The number of ats in a batch is referred to as lot size. In processes that can produce multiple oducts, ot size refers to the number of units of any ne produc that ae produ Poether before begining the production of any otber product. Lot size js often also teferred to as run length. Rus length is sometimes also measured in units of time, 9. BUFFERS, Units awaiting work stored between machines or workstations are teferred to a8 buffers. Buffers act to decouple consecutive steps in processes10. SETUP TIME, The time spent arranging tools, changing manufacturing larrangements such as dyes, machine speeds, and other settings (not @ complete redesign of the manufacturing process) in preparation for beginning work on a product is referred to as setup time. It is independemt of the number of units produced. CAUTIONARY NOTE; While its usefol to adopt these working definitions, the pesticular facts and citewmnstances of the situation that you are anslyzing should also be carefully considered in your application of these definitions. Modifications to these definitions might be necessary 10 Successfully understand the problem at hand and devise creative solutions.493 NYUSTERN LEONARD N, STERN SCHOOL OF BUSINESS‘Some of the key information that any entrepreneur o manager wants to know about their business js how much can the business produce per unit of time and under what conditions, i., how much ccan it produce of a single or a mix of products and services, or how much can it product: given large or small or even a mixture of order sizes, Information on how long it takes to get orders through the manufacturing or service facility is also required to set up service gvarantees regarding ‘elivery and due dates, Le. film will be ready in an hour, loan will be approved in three days, and pizza will be delivered tothe door in 30 minutes. Determination of how much labor, and its mix Between fall and part time, is required in order to mest or exceed these guarantees is also necessary. ‘The type and level of capital investment and its match withthe strategic direction of the firm must also be harmonized. Since the types of problems in the real world that involve the analysis of processes, vary Gramatically from setting to setting, we have developed an introductory approach which will give the reader the ability to model many different situations. ‘This is done by developing @ sequential ‘et of definitions which, when employed should lead to an introductory set of results to the above ‘questions. Process: A process is that which converts inputs to outpuls. A process need not be a machine or 3 ‘worker, For example, say we want to make tea, Then, fill water, heat water, place tea bag, and ‘eep the ta, could be the four processes thet are reguired to make tea. Put together they define the “process of making tea.” Practice process flow-charting with simple examples such as doing the laundry or taking an order from 2 customer over the phone. ‘We can debate on how finely we should breakup the flow of work into individual processes. The ‘asnal answer is that it depends, on the purpose. Treating the entire task of doing the laundry as one process wll be adequate if the purpose is to know when we will get done if we star now. However Hf we want to improve the process then analysis on a finer scale will be necessary Resources: The things needed to cary out the process. These could be machines, labor, information, process recipes (how to make tea), material handling equipment (tongs, gloves), utilities (electricity and gas), ete Process Flow Chart: A symbolic representation of the processes and how they interconnect with fone another is called a process chart and is the starting point of any process analysis. The two symbols we shall use to draw a process flow chart are those of a square and a triangle. A square represents 4 process and a triangle represents storage. For example see the sample process flow Charis given at the end of this note. Thus, the process chart should indicate stocks and flows, Stocks stand for inventory (raw material (RM), work-in-progress (WIP), and finished goods (FG) inventory), Flows stand for where the “order” goes from one process to another. In addition, process flow charts sometimes indicate information flows, decision nodes, who is doing what {eometimes called swim lanes, where each lane stands for person or & resouree and the processes fae written in the lane for that person), as well as, line of visibility, line of customer interaction, fail points, and fail-safing methods. Capacity and Cycle Time: The flow chart of a process is a static picture. To be able to analyze Ssome of the dynamics of a process we need to define capacity and cycle time. The capacity of a process isthe maximum rate at which output can be created given an infinite supply of inputs and brders. The cycle time is the average time necessary 10 carry out a process. For example consider the capacity of a process called “heating” water to make tea. Assume thatthe ote can hold one gallon of water and that the time it takes to heat water to the appropriate emperature is five minutes, We say thatthe eyete time for this task is five minutes. The capacity of “heating” is-1_gallon_per five minutes. and in_an hour we can do 12 cycles (60/5) and the Sealant capacity ofthis task is 12 gallons per hour. Another example is of packing = computer “Thi poe was witen by Michael Moses & Sridhar Seshads of the Department of Information, Operations, & Management Svisnces, Operations Management Group, Stem School of Business © July 2002. For peamissin to make copies, please all Jeannine Riza t (212) 998-0280. $9it takes on the average 12 minutes to pack a computer, the capacity ofthe operation is 1 computer in 12 minutes or 5 computers per hour. The cycle time is 12 minutes. Remember that Capacity isa rate — itis the maximum rate at which work can be done. {cis quite important to understand thatthe cycle time is the average time necessary to carry out a process for a unit of the customer order. For example, the cycle time is five minutes per gallon and 12 minutes per computer in the two examples. If we place SO cookies all at once in an oven to bake fand the oven completes the process in 50 minutes, the cycle time is one minute per cookie However, if in the last example the unit for analysis is 50 cookies then the cycle time is $0 minutes, Obviously, cycle time and capacity depend upon the unit of analysis. Usually, capacity is easier 10 determine but not always. The two concepts are indeed related, The cycle time is defined to be the inverse of capacity. It has time as its unit of measurement. How do we measure cycle time? One method is to ensure an infinite supply of inputs and orders, then to stand at the output end of the process and record the time between orders (parts, cars, satisfied customers, etc.) exiting the process. For example, if we observe that a car comes off the nd of an assembly line (as it does in most cases) roughly every one minute, then the capacity of the assembly line is 60 cars per hour or about 240,000 cars per year for two 8 hours shift operation ‘and 250 working days per year. There are issues of quality involved in these definitions, should we count the good parts or all parts? What is the correct definition? For our purposes we shall not ‘count bad or defective parts as output. Cycle Time: When we say that the cycle time of 2 machine is 10 minutes per part, we mean that if the machine were never starved for inputs it would produce on the average one good part every ten rinutes. The notions of “on the average” and good part are very critical inthis definition. Cycle time is the average time benween parts exiting the process or task (if you were 10 stand and observeit) ‘We will discuss how to “formally” define and measure capacity and eyele time. One approach is to ‘consider the system you wish to observe as a black box. Give it an unlimited supply of inputs. Let 'N(f) be the number of good parts produced by the system in time t, ‘Then the ratio, N(tVt is a ‘measure of the capacity, when r is sufficiently large. Why do we need the caveat that r be large? ‘The reason is we want to obtain the average rate as t goes to infinity. To clarify this point, say a ‘machine were given an unlimited supply of inputs. Its then observed to produce 60 parts all at once every 60 minutes. Unless we observe for 60 minutes we would say that the machine is not ‘working! Check thatthe capacity for this example is 60 parts per hour or one part every minute and ‘that the eycle time is one mimute per part, As cycle time is she inverse of the capacity, /N(t) is the ‘measure of cycle time for sufficiently large t In these definitions, we have assumed that carrying out a process does not interfere with other processes. Unfortunately in many operations interference is rampant, ie. if a person is assigned to perform two processes, the same person often cannot attend to these two tasks at the same time, We will discuss this point in more detail in our section on bottlenecks, ‘The definition of capacity has to be modified in such circumstances. When multiple constraining resources such as space, labor and machine are involved, the calculation of capacity is no trivial matter ‘The notion that subdivision of processes may be necessary for capacity analysis leads to the definitions of work area and system. In this note we shall also see how setup time, product mix and quality affect the capacity of a system, ‘Work Area: A grouping of similar processes is called a work area. For example, a collection of drilling mnachines represents the drilling work area at a Ford plant. A collection of tellers comprises the customer banking work area at a Citibank branch. A collection of order takers comprises the ‘customer order call center at Amazon, Dell, Lands End, et, 8-10497 System: The collection of all processes viewed as a whole willbe called a system. Flow Time: The flow time is the time spent by a typical par, job, (order), or customer in the ‘pstem. For example. if customers are processed by ale in ices of five (ll simultaneously? et irtakes the teller five minutes to serve a customer, the cycle time is five minutes per customer, the capacity is 12 customers per hour and the flow time is 25 minutes for our order of five Guatamers. If they are processed one by one and there is no waiting (customers are nice enough to Ghrive evenly spaced) then the capacity and cycle time are unchanged but the flow tine is five Minutes (Its harder to dotermine flow time when all five customers arive atthe same time and Toe loony one tele. The average flow tine, (remember tat all but the ist customer encounters waiting ime) is given by (5+10+15+20425)'5 = 15 minutes.) How do you meesure flow time? Tag jobs or customers as they enter the system. Write down the time when they entered. See when they leave. Flow times for cars in an auto plant can vary from 12 to 24 hours often depending on how long they stay in the paint shop. It is a good exercise to ‘Construct examples where the flow time is not equal tothe cycle time. One example is when jobs or fustomers are processed in batches. Another example is when thore is a queue and a customer or Srder has to wait until served. This waiting time becomes part of the flow time. It is clearly possible that each order going through a process could have different flow times. Thus flow time is pot a unique number but a distribution. In this caso to set a service guarantee we must decide what percent of the eostomer we want to satisiy in a make o order system. We call this percent the PEastomer service level.” In a make to stock or assemble to order system the service level will be determined by the flow time distribution as well ax the level of finished goods or component nventories carvied. We will cover these topics when we discuss inventory management. Bottleneck: The resource with the smallest capacity in the system is called the bottleneck. The fatute reader will note that we use the term “resource” and not “process” in this definition. The eason is that the same resource may be required for carrying out two processes. For example, Consider the example in which, one person Verifies signatures on checks and then subsequently the Seine person verifies the balance in the customer's account, There are two processes, but the potlencck is the person. Clearly having two people do the two jobs will increase the capacity, We Shall ssumme unless stated that each process is caried out using a separate resource (or separate set Of resources if there are more than one identical machines or workers attending to the same process). However we briefly deseribe how to analyze a process when the same resource (or set of identical resouroes) is-used to carry ovt several processes. When the same resource is used to perform fifferent processes do not compute the capacity of a process but instead make a list of all Sesources” For each resouree list the processes that have to be performed by that resource, Then ‘Getermine the work that has to be done (in units of time). Finally, determine the eapacity using the formula, capacity = time available (say 400 minutes ina day) divided by time required (work) per order (say $0 minutes) ‘As we shall see in our examples, the bottlenecks may shift depending on the demand pattern and the lot size. Improper scheduling also can create temporary and shifting boulenecks. system Capacity: The capacity of a system is te capacity ofthe bottleneck. The cycle time of the ‘poten is the eyele time ofthe botleneck. Caution — the capacity of the system isnot the sum of the capacities ofall resources but the capacity of the most limiting resource. System Flow Time: The toil time spent in the system by a oypcal order isthe system flow time, rear necosarly equal tothe sum of flow mes of all process tasks inthe system for one simple aan Merocesses can be dove in paraliel, For example, consider the processes for your car soi in he yar tanks ccking he water ne radiator and topping itup ifnecessary S-il498 ‘and checking the water in the battery and topping it up if necessary. ‘These processes can be done ‘sequentially (serally-one after another) or simultaneously (in paraliel- all atthe same). IF these processes are done sequentially and each takes five minutes, a customer can be served in 15 ‘minutes. 1f, however, they are all donc simultaneously, a customer can be served in five minutes, ‘What are the labor implications of the two approaches? Idle Time: ‘The idle time of a resource is the time during which work is not being done by a resource, ‘Transfer Time: This is the time during which the order is being moved for one work area to another. Typically no work is being done and no value is being added. In this example, parts are produced every five minutes. The cycle time is five minutes per part for the system since Machine A is the bottleneck operation, the flow time is seven minutes in the system and the capacity is 12 parts per hour. This system is not balanced because the two machines A and B have different cycle times. It is indeed rate to see a perfectly balanced operating system, This is why the notion of a bottleneck is useful If the system is fully utilized, then machine B is idle for three minutes in every five minutes, and we say that machine B's capacity uilication 5s 2/5 or 40%, In this example, the cycle time for the work area with two machines of type A is 2.5 minutes, This work area is the bottleneck (note that the whole area is the bottleneck — not just one of the two ‘machines denoted as A). The capacity of the system is 60/2.5 = 24 parts per hour. (Conversely, the capacity of each machine A is 12 parts per hour. So the capacity of the work area is 24 parts/hour. ‘The cycle time = 60/24 = 2.5 minutes.) If the two machines A actually produced 20 parts per hour S-12yesterday, we will say thatthe capacity wilization was 20/24 = 83.33% yesterday. We can now define capacity utilization. Capacity Uslzation: The actual rate at which the system delivers oupur divided by its capacty sretted capacity uilization. This is equivalent to Capacity Usiization = (Time used) divided by (Time Available}. ‘The flow time in Example II is still seven minutes, because assuming that we cleverly stagger Jnputs to the two machines of type A, we can ensure that there is no waiting a machine B. Yp thy saree have managed to double capacity while maintaining the time spent by e typical part equal (aeoven ininutes. However, if we can double the rate of machine A (cyele time equal 2.5) then we fut the same capacity but reduce flow time to 45 minutes. This seems to be good tine to Froduce the notion of Gant charts to clarify the flow time calculations. Gantt charts are used 10 pictorial depet the flow ofa typical job(s) through the system. The X-axis ofthe char is ine, vie Y-axis will have several bars. The bars correspond to each of the prozesses and each of the {eey)resourees. In the above example the Gant chart for two types jobs will be as follows (not to scale): “The points to note are as follows: Teach process has a bar. We have two bars for work area A to show thatthe process is being done in parallel. J Bach vesource has a bar, end we have named the machines A-1 and A-2 to distinguish between the identical type A machines. 3, The idle time of machine B stands out asa result of the analysis. Please extend the chart for afew more parts to get a feel of why it s that we termed the work area Pith the two machines as the bottleneck. (The machines in work area A will always be busy Therefore the work area is the bottleneck. Ifthe system is working to full capacity then the attain of the work areas also can be read from the chart, Finally, the chart can be used to wehedle tasks o that they do not interfere with one another, thus to determine the due dates for teach order as they are received and accepted into the system) ‘Computing Utilization in Example 1 = Ware given thatthe eyce time ofthe bouleneck is 2.5 minutes. In the month of January 1999 we ‘ind that the system produced 3100 "units" What Wa the Capaicywilization of the-bottlenes S-13Assume that there are 20 working days in the month and 7 working hours per day. Basic Approach: Reduce everything to common units e.g, time, ‘Time available per machine = 20 x 7 x 60 = 8400 minutes Process A: ‘Time available = 2 machines x 8400 = 16,800 minutes, Time used = 3100 units = 5 x 3100 units = 15,500 minutes Capacity utilization = Time used/Time Available = 15,500/16,800 = 92.3% Process B: Time available = 8,400 minutes ‘Time used to produce the 3100 units = 3100 x 2 = 6,200 minutes Capacity utilization = 6,200/8,400 = 73.8% Labor Content and Labor Cost ‘The labor content of a task isthe actual labor hours spent on doing the task. It is not necessarily ‘ual to the flow time and it does not include the ile time. In both previous examples the labor content of the process is 5 min, +2 min, = 7 minutes. In our Tea example, it might take just 30 seconds to put the Tea bag inthe cup but the tea requires a full five minutes to steep including the insertion time of the tea bag. Thus, the labor content of this task is only 30 seconds and the labor is free to do other tasks while the ta finishes steeping, ‘In most situations the labor cost includes idle time since most organizations would not lay workers off while they are idle for short periods of time, How should the cost of labor per part produced be ‘computed? A little thought reveals that it should equal the (cycle time of the system) x (the number of direct workers in the system) x (the labor rate expressed in $ per unit time). For example if the labor rate is 12 dollars per hour, then in example I, the labor cost = 5 min. times 2 persons (one each for the two machines) times $(12/60)/minute = $2 per part. (Even though the worker on machine B is idle 60% of the time most organizations pay by the shift and do not deduct idle time from compensation.) In example Il, the labor cost per partis 2.5 min. x 3 persons x $12/60/tninute = $1.50 per part. Productivity: Productivity is defined as output divided by input. Labor productivity is output divided by labor hours (that is total labor hours including idle time if any), Efficiency: This is defined as the actual output divided by the standard output, For example, Gespite the availability of inputs, if the worker operating machine A produced only 10 parts per hour, the efficiency of the worker will be 10/12 = 83.33%. In more complex situations efficiency is measured by standard hours of output divided by the hours worked. (What isa standard hour? it is the time, which the industrial engineer says that most be taken 10 perform the operation, ‘The ‘methods used to establish the standard time are called work-study techniques ) Available Capacity: Available Capacity is defined to be equal to Time Available times Capacity Utilization times Efficiency. Effectiveness: Effectiveness is sometimes defined as useful outputs divided by actual output. For example if none of the parts produced could be sold, effectiveness is zero. It could also be defined 1s doing the right thing. S-14Connection with produetivity (output/Iabor hours) Example] Gee ] Oupat | Total | Labor ] Labor | Productivity ime | perhour| Labor } Content | Cost per | (parts/labor (min) | (units) | Used | perunit } — unit rnin) (min) | Gin.) | (min, T Ee a 7 10.0 | 12/130 = 01 0 25 [24 [180 7 7.5 [24/180 = 0.133 Direct Labor Utilization: Labor utilization is defined similar to capacity utilis Labor Content of what was produced divided by the Labor hours paid for. Example Labor Conieni|Labor Used in] IdleTime — ] Direct Labor ‘of Lhour's | one hour (imin,) | Utilization (%) output (min) |__¢min.) T 4 120 | ia084=_ 36 [70.00 1 2axT=16 180 | 180-168 _12| 93.33 “You might like to ask yourselves whether capacity lization, ide time and productivity are useful ‘measures for a firm? How do these measures reflect competitive advantage? Can these measures bo used to understand or be related to a firm's performance? For example, is capacity utilization of 85% good for a process industry? a heavy machinery industry? a bakery? Flow Time (once again) It is the length of time spent by a part or customer order in 2 process. Why is Flow Time # Cycle Time? Flow Time # Labor Content ? Production Rate: This is the rate at which a machine, work area or system produces goods or services. Ht need pot be the maximum rate. For example a machine may have the capacity 10 produce a the rate of 15 parts per hour (note this is how a rate is expressed — in parts or orders pet unit time), but the manager may choose to produce at arate of only 2 parts per hour because the demand rate is 2 parts per hour. We shall denote production rate as Th (for throughput rate). ‘What is the connection between, Flow Time and Capacity? Assume that a system is producing ‘orders ata particular production rate (which may not equal the capacity): Let the average inventory §n the system over a sufficiently long period be INV. Then: INV = Production Rate x Flow Time. Note that this relationship has apparently nothing to do with capacity. In queuing theory we shall suudy how capacity affects various performance parameters of the system and the ideas in the last paragraph will become clear. This equation is called Little's aw. It can be applied to determine hhow many seats are needed in the bar in a restaurant, S-15Process Flow Time Examples Customer Flow: Taco Bell processes on average 1,500 customers per day (15 hours), On average there are 75 customers in the restaurant (waiting to place the order, waiting for the order to arrive, eating etc). How long does an average customer spend at Taco Bell? Answer: Throughput (Th}= 150V/day = 1500/1 per hour. Inventory (I) = 75. Time = ? Thx Time => Time = I/Th = 75/100 hours = 45 min, Job Flow: The Travelers Insurance Company processes 10,000 claims per yeat. The average processing time is 3 weeks. Assuming SO weeks in year, what isthe average number of clainns “in process."? Answer: Th I= Ths Time 10000/sear = (10000/S0VAweek = 200/week. Time = 3 weeks, 100 x3 = 600. Material Flow: Wendy's processes an average of 5,000 Ib. of hamburgers per week. The typical inventory of raw meat is 2,500 Ib. What is the average hamburger's flow time? Answer: Th = $000 lbéweet, I= 2500 Ib, Time = ? Time = UTh = 2500/5000 = 0.5 week Cash Flow: Motorola sells $300 million worth of cellular equipment per year, The average accounts receivable in the cellular group is $45 million. What is the average billing to collection process flow time? Answer: I= S45 million, T Tine = 1/Th = 45/300 year: $300 million/year, Time = ? 3220 year = 1.8 mouths, Question: A general manager at Baxter states that her inventory turns three times a year. She also states that everything that Baxter buys gets processed and leaves the docks within six weeks, Are these statements consistent? Inventory turns = TW = 3 in a year. = Thx Time => Time = I/Th = IATHD = U/Turns = 1/3 years Six weeks is not equal to 1/3 year. Not an accurate statement by the general manager. ‘Set Up Time: ‘This is the time needed to prepare for doing an operation, Examples are mixing the dough to make pancakes, cleaning the paint nozzles prior to changing the color of an automated painting machine, switching on and activating @ database before accessing records from it, and signing on before buying things from Amazon. There may also be a significant time expended in preparation, For example, we may have to not only do the physical set up but also undertake some trial and error production before we get the operation correct. An example of set up time is the time required to learn a new topic like “capacity”. After having spent so much time getting it ‘correct we must use it some place! ‘Setup time can be either interna! or external. Internal setups take up time on the machine, ie. the machine must be stopped to do the setup. External setups are done offline, Example: We are painting different colors on cars, If we have two paint booths — wale one color is being used, Clean the other one for use with another color. While the food is cooking, we can dice up onions needed for the next step. In other words, doing external setups is doing things in parallel, it saves ‘time. The technique of reducing set up time has been refined to be a science, and made popular by ‘Shingeo Shingo in his book on Single Minute Exchange of Dies (SMED). The lower the setup time the more output variety a process can create per unit time, This can be a key source off strategic advantage for many firms (as it was for Dell in the 1990's), Lot Size: Whenever there is a significant amount of time spent setting up and preparing to do an ‘operation, we would like to process several parts or carry out the operations several times, We do this to spread our setup time investment over as many parts as possible, If it takes 36 hours to set S-16503 up a lathe to produce a serew) and it takes 2 seconds to make a screw, we may wish to make a few thousand having set up the lathe. Similarly given that it takes 20 minutes to mix the dough or switch on and activate a database, we would like to make several pancakes or process several records once the set up has been accomplished. The lot size may also be dictated by other ‘considerations. For example if an oven has a capacity to bake 2 dozen cookies at a time, then we ‘may choose a reasonable number of cookies to bake at a time. The consideration here is that the cost of baking (reflected in time spent in the oven) is the same for 1 cookie to two-dozen cookies. ‘The number of units being processed as a batch is referred to as Jot size. In processes that can produce multiple products, lot size refers to the number of units of any one product that are produced together before beginning the production of any other product. Each product may have & Gifferent lot size. The lot size is a decision parameter chosen by the manager. ‘Run Time: This is the time required to produce a part ot carry out an operation once the set up thas been accomplished. In the lathe example itis 2 seconds. In the oven example itis the baking time. The former is a situation when parts are made one at a time and the latter an example of batch processing. In general most tasks can be defined as one at atime, batch or continuous. One at a Time Processing: In this process only one unit is worked on from beginning to end before the next unit can be started. An ATM is an example of such a process Batch Processing: In this process, several units of a product are worked on at exactly the same time. Typing with carbon paper or sending out an e-mail message 10 a list of people are examples fof such a process. Moving the batch from step to step together is a method of production known as batch processing Continnons Process. In this process a new unit can be started as soon as the previous unit has centered the system, An automated car wash is an example of such 2 process. ‘Transfer Size: Transfer lot size is less than or equal to the total lot size and defines the number of units that can be moved to the next operation before the complete lot has finished processing at the prior operation. In the former cases we may wait til the whole lot is processed to transfer the parts to the next operation, or transfer wo the next operations in a transfer lot size that is smaller than the Jot size, see Example III below. Ideally we wish to transfer parts as they are produced on a continuous basis, But this will lead to excessive transportation or material handling costs. On the other hand, if we wait for the whole fot to be processed we may create idle time in the system. The cffect of small transfer sizes is to make the flow in a system more continuous. An example is check clearing in banks. If checks are scrutinized for the signature by one person and passed on to. ‘another to verify the balance in the account, wil it not be advisable to pass on the checks for verifying the balance as soon as the signature has been verified? Imagine 20,000 checks, 10 second per check for signature verification and 10 seconds for verifying the checking balance, and two persons doing this task, What is the flow time for the 20,000 checks if the transfer lot size is one versus 20,000? Capacity Determination for the Different Process Types: To compute the capacity for each of, these types of processes we use the following chart and the definition that load size is the ‘maximum number of units that can be loaded into a continuous process machine at one time (this ‘would be one in our car wash example). In creating this table we assume that each time a run is initiated a set up is required. See the next section where we relax this assumption. In practice, the next section is applicable in most instances. S-17Capacity Determination Table ‘Typeof [ Setup | Run | Numberof | Numberof | Maximum | Capacity Process | Time | Time | machines at | cycles per | number of workcenter | unitof | units per time! cycle @ B) © (D) @ ® One at a x ¥ Zz Univof 1 CDE Time! Time X+¥ (OAT) Batch ¥ ¥ Z initot | Batch Size | C*D"E ‘Time X+¥ Continuous | ¥ z Unitol | Load Size | ODE ‘Time x ‘The run time has to be defined correctly. As an example consider the process of baking bread in an oven. There exists a small counter top apartment oven capable of baking one loaf at atime with a setup time of one minute and a baking time of 29 minutes (run time). A normal house oven cooks loaves in a batch of two with a one-minute setup time (one loaf in each hand) and 29-minute bake ‘time. A small industrial strength baking oven processes bread continuously with a load size of two loaves, a load time of one minute (both hands again} and a 29 minute bake time, Using the chart the results are as follows. Per Hour Capacity Treoftak Ta) Te OTe Te Ta Countertop OAT. i 29 1 | 6030 [1 2 House Oven Batch 1 29 1 [6030 [24 Bakery Oven | Continuous i 29 a ‘A look atthe previous chart is & powerful illustration of how different machine types, even with the same setup and run times, can produce vastly different ourputs. But you would correctly argue that the cost of these machines also varies dramatically and you would be correct. Thus, there is often 1 trade off between fixed cost and capacity and between capacity and variety. (High fixed cost often implies high capacity but low variety - low fixed cost often implies low capacity but high variety) Capacity Determination with setup “saving”: Cleary for one ata time and batch machines we would like to spread the setup time over as many units as possible, If technically feasible we would Tike to increase the number of units we can process before we have to setup again, Case (Dz Consider the one ata time machine. Let Q be the maximum number of unis that can be processed before a new setup is required. Let ¥ be the runtime per unit. Then the number of eyeles per unit of time (Column D) for an OAAT machine would be (unit time/(X+QY)], and the raximum rnumber of units per eycle would be Q, ie., enter Qin column E. Case (i): Fora batch machine let (Qe the number of batches that ean be run before setup is again required, then column D would be {unit time/(X+QY)] and yields the mumber of cycles of batches that can be run per wit time, and the maximum number of units that can be produced per cycle is Q*batch siz, ie. the number in column E is now Q times the batch size. Calculations do not change for a continuous process machine since we assume i i only stated once per processing shift. If iis turned off and then "The “Unit of Time” cen be any convenient length of time you wish to express the capacity in, such as loaves pet hour o¢ loaves per minute (Unit of Time is hour and minute respectively) S-18