Lecture 2: Process Analysis Part I

Instructor: Nooshin Salari

Office: RJC 225
Email: [email protected]

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Lecture 1 Review

• Competitive priorities are the operational strengths that allow a company to succeed in the
marketplace.

• Porter's Generic Competitive Strategies (ways of competing): Defines three primary ways
organizations can achieve a competitive advantage in their market.

• Cost Leadership: Compete by offering the lowest price in the market while maintaining
acceptable quality.
• Differentiation: Compete by offering unique products or services that provide value to
customers.
• Focus: Target a specific market niche to serve the unique needs of a particular group.

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Lecture 1 Review

• Is it possible to be both cost leader and differentiator?

• Attempting both differentiation and cost leadership is challenging, as

differentiation often incurs higher costs.

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Update

• Research indicates that differentiation and cost leadership can co-exist. However,
Porter insists that each generic strategy requires a different culture and a totally
different philosophy. Yet, the problem is that Porter’s generic strategies
are too broad.

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Example: Amazon

• Amazon competes on cost leadership by being one of the lowest-cost providers in

the retail and e-commerce space.

• At the same time, Amazon differentiates itself through unique features and
services that add value to customers: Amazon Prime differentiates Amazon by
offering fast delivery, exclusive content (movies, TV shows, music), and drone
delivery.

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Example: Costco

• Costco’s core strategy revolves around providing products at the lowest possible
prices.
• Bulk Sales: By selling products in large quantities, Costco reduces per-unit costs
and passes savings to customers.

• Costco also differentiates itself in ways that enhance its customer value
proposition, even while maintaining low prices. Membership Exclusivity
• The membership model itself creates differentiation

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Review: What is Operations Management?

• What is “Operations”
• The set of activities that creates value in the form of goods and services by
transforming inputs into outputs
• Without Operations: No goods or services to sell.

• What is “Operations Management”

• Management of “Operations”
• It is concerned with planning and execution of the transforming activities
• How much coffee beans to buy?
• How many employees to schedule for each shift
•…

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Operations
Value Added

Transformation/ Outputs:
Inputs:
Materials Conversion Goods,
Services
Information Activities

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Process vs Operations

✓Operations consist of multiple interconnected processes.

✓Operations refer to the overall system or set of activities involved in running a
business to produce goods or deliver services.
✓Improving individual processes contributes to the overall efficiency of operations.

Example: A Restaurant
• Operations: Coordinating staff schedules, supply chain management, managing
inventory, and overseeing the entire dining experience.
• Processes: Taking customer orders, Preparing meals in the kitchen, Delivering
food to tables.

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What is a process?
• A process is a group of related tasks with
specific input and output.
• Planning, analyzing, and improving processes
is the essence of the operations management.

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What are the
differences
between the
processes

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Process Strategy

• Every organization, regardless of its size or industry, relies on processes to create

value.
• These processes can vary significantly depending on the type of product or service
being offered, the volume of production, and the level of customization required.
• Understanding these variations is key to selecting the right process strategy.

• Process strategy refers to the approach an organization takes to transform

resources into goods and services effectively.

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Process Strategy vs Operations Strategy

• Lecture 1: Operations Strategy: A high-level plan that aligns the operations

function with the overall business strategy. It sets the long-term goals and
priorities for how operations will support the organization’s mission and
competitive positioning.

• Process Strategy: Process strategy focuses on a specific process, while operations

strategy is a broader plan that includes many processes

• In this lecture we focus on processes and process strategies

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Process Strategies Overview

• Process strategy is an organization’s approach to producing products and services

efficiently. It is the organization’s approach to transforming resources into goods
and services
• These strategies vary based on product variety, production volume, and
customer requirements.

• Four process strategies

• Process focus
• Repetitive focus
• Product focus
• Mass customization
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Process Focus Strategy
• Hospitals can handle diverse medical services and patient
requirements.

• Manage low to medium patient volumes with high variability

• Hospitals are typically organized into specialized departments
(e.g., cardiology, neurology, orthopedics) arranged based on
similar functions or services.

• Customized Patient Care

• Skilled and Multi-Functional Workforce

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Process Focus Strategy

• A Process Focus Strategy is an operations

strategy where an organization structures its
operations around a variety of flexible
processes tailored to produce a wide range
of products or services.
• Utilizes versatile machinery and tools that
can be easily reconfigured for different
tasks.
• Suitable for markets with varying customer
preferences and frequent changes in
demand.

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 Process focus

• The vast majority of global production is

devoted to making low-volume, high-variety
products, in a place called job shops.

• Facilities are organized around specific

activities or processes to facilitate low-
volume, high-variety production

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1. Process Focus (Job Shop/Intermittent)
• Custom manufacturing workshops (e.g., handmade furniture)
• Hospitals (patient-specific treatments)
• Consulting Firms

• Characteristics:
• Facilities are organized around specific activities or processes
• General purpose equipment and skilled workers
• Low volume, high variety
• Flexible processes, often customized per order

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Advantages

• Able to produces a wide variety of goods

and services, often in small quantities.
• Production is often based on specific
customer orders rather than mass
production.
• Can quickly adapt to changes in customer
preferences and market conditions.

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 Disadvantages

• Increased complexity and flexibility often lead

to higher operational costs.
• Many job instruction because each job changes
and different order that required different
sequence of processing steps.
• High variety can lead to inefficiencies and
longer production times if not managed
properly.
• The resources can be idle during the
bottlenecks.

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Repetitive Focus Strategy
• These plants utilize highly standardized assembly line
processes to produce vehicles efficiently while still offering
a range of models, colors, and features to meet diverse
customer preferences.
• These plants usually use modular production which allows
for flexibility in assembling different models and
configurations..
• Modules are parts or components previously prepared.
• Larger quantities than in a process focus strategy but with
less customization.

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Repetitive Focus Strategy
• Highly standardized processes to deliver consistent
quality and service across its global network of
restaurants while offering a variety of menu items to
cater to different tastes and preferences.

• The kitchen and service areas are designed for

maximum efficiency, with clear roles and
responsibilities assigned to staff.

• Modules (e.g., meat, cheese, sauce, tomatoes, onions)

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Repetitive Focus Strategy: Harley-Davidson

Frame tube Frame-building Frame Hot-paint

bending work cells machining frame painting

THE ASSEMBLY LINE Engines and

TESTING Incoming parts transmissions
28 tests
From Milwaukee on a
JIT arrival schedule
Air cleaners Oil tank work cell

Fluids and mufflers Shocks and forks

Fuel tank work cell Handlebars

Wheel work cell Fender work cell

Roller testing
Crating

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2. Repetitive focus
• Repetitive focus involves the systematic assembly or
production of items in a repetitive manner using pre-made
modules or components.

• This process is commonly used in industries where

efficiency, consistency, and moderate customization are
required.

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 2. Repetitive Focus (Assembly Line)
• Automobile manufacturing (e.g., Ford assembly line)
• Electronics (e.g., smartphone assembly)

• Characteristics:
• Facilities often organized as assembly lines.
• Characterized by modules with parts and assemblies made previously
• Create more standardized products in larger quantities compared to
process focused facilities.
• Low flexibility than process focused facilities but more efficient
• Skill requirement are lower than in process focused strategy.
• Moderate Volume, Moderate Variety

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Advantages

• Cost efficiency: Standardized processes

and assembly lines reduce production
costs.
• Repetitive tasks and standardized
workflows lead to consistent product
quality.
• Since tasks are repetitive and
standardized, training new employees is
simpler and faster.

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Disadvantages

• Required some high capital investment

• The strategy is less adaptable to unique

or highly customized products compared
to a Process Focus strategy.

• The strategy relies on consistent and

predictable market demand to maintain
efficiency.

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3. Product Focus
• By manufacturing large quantities of the same product,
Intel reduces per-unit costs, enhancing profitability and
competitiveness.

• Intel produces a range of standardized microprocessors

(e.g., Intel Core, Intel Xeon) that are designed to meet
the needs of different market segments

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3. Product Focus

• Mass production of standardized products

• Minimal product variation
• High automation level

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3. Product Focus

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3. Product focus

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3. Product Focus (Continuous Flow/Line Flow)

• Products such as glass, paper, tin sheets, lightbulbs, beer, and potato chips

• Characteristics:
• Facilities often organized by product
• High volume, low variety of products
• Highly standardized, long, continuous production
• Generally less skilled labor
• Specialized equipment (high levels of automation)

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 Advantages
• The variable cost is low due to the high
volume and the system requires a very
small workforce.
• Standardized processes ensure
uniformity in product quality
• Fast and high production volumes

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Disadvantages
• Required a large investment in plant
and highly specialized equipment.
• Limited producing variety item
• Overproduction or underutilization
during demand fluctuations.

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4. Mass customization
• Nike By You: mass customization in 1999
• User-Friendly Customization Interface allows customers
to personalize their own footwear, apparel, and
accessories.
• Enhanced customer satisfaction
• Brand differentiation

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4. Mass customization

• Dell Computers is a leading example of a

mass customization strategy successfully
implemented in the technology sector.
• This strategy allows Dell to deliver
personalized computers to customers while
maintaining efficiency and cost control.
• Dell produces computers only after receiving
a customer's order.
• By eliminating intermediaries and
maintaining a flexible production system,
Dell can quickly deliver products to
customers.

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4. Mass Customization

• Customized computers (e.g., Dell build-to-order model)

• Apparel (e.g., Nike customized shoes)

• Characteristics:
• Rapid process design
• High volume, high variety
• Combines efficiency with customization
• Uses flexible processes for personalized products

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 Advantages

• Able to produce a large quantity and

large variability with a low cost
• Operators are trained for multi-skills for
necessary customization using general
purpose of equipment
• Enhanced Customer Satisfaction
• Higher Profit Margins

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Disadvantage

• Investing in flexible manufacturing

systems, advanced technology, and
skilled labor can be expensive.
• Ensuring timely availability of
diverse components requires highly
efficient and responsive supply
chains.
• Managing customized orders adds
complexity to production, supply
chain management, and logistics.

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40
Comparison of processes

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Example 1: Custom Design Studio

• A boutique interior design company works closely with clients to create

personalized home layouts and furniture. Each project is unique, requiring
significant consultation, custom materials, and labor. Turnaround times vary
depending on the complexity of the design.
• Question:
What type of process strategy does this company use?
A. Process focus
B. Product focus
C. Mass customization
D. Repetitive focus

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Example 2: FreshSip Bottling Co.

• A beverage manufacturer produces sparkling water in a single flavor using highly

automated machinery. The plant operates 24/7, producing thousands of identical
bottles each day. The company emphasizes efficiency and low production costs.
• Question:
What type of process strategy does FreshSip Bottling Co. use?
A. Process focus
B. Product focus
C. Mass customization
D. Repetitive focus

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Example 3: StyleMySneakers

• An online sneaker retailer allows customers to design their own shoes by choosing
colors, materials, and patterns. Once orders are placed, the sneakers are produced
on an automated assembly line that uses modular components to match customer
preferences.
• Question:
What type of process strategy does StyleMySneakers use?
A. Process focus
B. Product focus
C. Mass customization
D. Repetitive focus

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Example 4: TailoredTech Computers

• A computer manufacturer allows customers to configure their computers online by

selecting from pre-set options for processors, memory, and storage. The company
assembles these computers in a streamlined process using modular components.
• Question:
What type of process strategy does TailoredTech Computers use?
A. Process focus
B. Product focus
C. Mass customization
D. Repetitive focus

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Example 5: SpeedyAuto Assembly

• A car manufacturer produces different car models using standardized parts. Each
model shares a common platform, but features like interior trims, colors, and
engines can vary based on customer orders.
• Question:
What type of process strategy does SpeedyAuto Assembly use?
A. Process focus
B. Product focus
C. Mass customization
D. Repetitive focus

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Discussion

• You are the operations manager of a startup launching customizable tech gadgets.
How would you decide on a process strategy?

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Process Analysis

• How to describe and analyze a process?

✓Does the process eliminate steps that don't add value?

• Planning, analyzing, and improving processes is the essence of operations

management
• To describe a process we often use a process flow diagram.

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 Process Flow
Diagram

• Process Flow Diagram: A schematic or drawing

of the movement of material, product, or people.

• Flowcharts provide a quick way to view the big

picture and try to make sense of the entire
system.

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Process Flow Diagram

• Flowcharts come in many different sizes, shapes, and forms

• Drawing the process flow diagram should be the first step in process analysis
• It is important to define the flow unit(s)
• Flow units: the entities flowing through the process.
✓Example: patients in hospital, cars in an auto plant, insurance claims at the
insurance company.

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 Flow Unit

The flow unit is what is tracked through the process and generally defines the process
output of interest.

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Basic Flowcharting Shapes

Storage
Triangle

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53
Building A Flowchart

1. Determine objectives
2. Define units of flow (i.e., patients, products, data)
3. List all Activities
4. Sequence the Steps
5. Arrange the Steps Sequentially
6. Map out process
7. Validate chart (with user, expert, or observation)

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Create a flow chart for making coffee at home

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Time-Function Mapping

• A second tool for process analysis and design is also a flowchart, but with time
added on the horizontal axis.

• With time-function mapping, nodes indicate the activities and the arrows indicate
the flow direction, with time on the horizontal axis.

• This type of analysis allows users to identify and eliminate waste such as extra
steps, duplication, and delay

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Excerpted from Elaine J. Labach, “Faster, Better, and Cheaper,” Target no. 5: 43 with permission of the Association for Manufacturing
Excellence,

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Value Stream Mapping

• Value-stream mapping (VSM) is

diagraming every step involved in
the material and information
flows needed to bring a product
from order to delivery.

• It is a fundamental tool used in

continuous improvement to
identify and eliminate waste.

• Toyota developed the tool and it

is a critical part of the Toyota
Production System.

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Value Stream Mapping

• It helps you visualize more than just the single-process level, enabling you to see
the flow of work across all the processes.
• Depicts how all processes are linked
• Includes both the material and information flow
• It identifies the source of waste and minimizes it.

• Waste: to any stage in the value stream that does not contribute to the overall
value proposition for the final consumer.

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Service
Blueprinting

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Service Blueprinting

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Service Blueprinting

• Service blueprinting is a process analysis technique designed to focus on the

customer’s experience and the service provider’s interaction with the customer.

• Customer-Controlled Activities (Level One): Activities directly under the

control of the customer.
✓Example: A customer placing an online order.
• Customer-Provider Interaction Activities (Level Two): Activities involving
direct interaction between the customer and the service provider.
✓Example: A barista preparing and serving coffee to a customer.

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Service Blueprinting

• Behind-the-Scenes Activities (Level Three):Activities performed away from the

customer’s view.
✓Example: Inventory management or food preparation in a restaurant’s kitchen.

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Service Blueprinting

• Potential Failure Points: Areas in the service process where errors or disruptions
can occur.
✓Example: A website crashing during online order placement.
• Poka-Yoke Techniques: Refers to designing systems or processes in such a way
that errors are either prevented or immediately detected and corrected
✓Example: Confirmation prompts in online forms to reduce user input errors.

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Process Charts
• Uses symbols to indicate activities
• Includes time for each activity and
distance for transportation activities
• Identifies value-adding activities (e.g.,
operation) and waste (e.g.,
transportation, inspection, delay and
storage)

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Process Charts

• Process charts use symbols, time, and distance to provide an objective and
structured way to analyze and record the activities that make up a process.
• Identifying all value-added operations (as opposed to inspection, storage, delay,
and transportation, which add no value) allows us to determine the percent of
value added to total activities

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What Are The Key Metrics in
Process Analysis

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How to measure a process?

• Key Metrics in Process Analysis

Process Capacity
Utilization and Efficiency
Process cycle time
Process flow time
Process time
Throughput rate (Flow rate)

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Process Capacity

• An imported attribute of any operating system is its

ability to produce enough output to meet demand.
• Process capacity is the maximum capability to produce.
• For many businesses profits increases as volume grows
so being able to produce high volume is key to
profitability.

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 Types of capacity

The maximum output that a manufacturing unit

can produce under ideal conditions. This is the
Design Capacity theoretical maximum production rate, assuming no
downtime, no delays, and perfect efficiency in all
processes.

Types of
capacity
Takes into account the realities of the production
process. It considers factors such as scheduled
Effective Capacity maintenance, worker breaks, and typical delays in the
supply chain. As such, effective capacity is often lower
than design capacity.

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Example

• A restaurant is designed with 50 tables, and under ideal conditions, it can serve 200
customers per hour (assuming 4 customers per table and fast turnover).
➢This is the maximum theoretical capacity the restaurant can handle based on its
design.
• In real-world conditions:
➢There are natural constraints like time taken to clean tables, customers spending longer
than expected, and occasional staff shortages.
➢Under these normal operating conditions, the restaurant can realistically serve 150
customers per hour.
➢This is the realistic maximum capacity, accounting for disruptions and inefficiencies.

• For this restaurant: Design Capacity………….. And Effective Capacity ………..

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Utilization

• Utilization: The ratio of the actual output to the maximum possible output
(capacity) during a given period.

Actual Output
Utilization=
Design Capacity

✓A measure of how much a resource or process is being used relative to its

designed potential.

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Efficiency

• Efficiency: The ratio of actual output to the effective capacity of a resource or

process.
Actual Output
Efficiency=
Effective Capacity

✓A measure of how well a process converts inputs into outputs relative to

achievable (realistic) capacity.

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Example

• TechGadgets Inc., a startup in the wearable technology sector, operates an 8-hour

daily production cycle to manufacture advanced, customizable smartwatches.
Leveraging cutting-edge manufacturing technologies, the company balances
customization with scalability to maintain a competitive advantage. Under ideal
conditions, TechGadgets can theoretically produce 100 smartwatches per day.
However, considering factors like maintenance, employee breaks, and minor
inefficiencies, the attainable capacity is 90 units daily. On average, the facility
manufactures 75 smartwatches each day.
• Calculate the Utilization and Efficiency rates

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Note!

• Utilization is the percentage of resources, such as labor, raw materials or

equipment, that's being used for its intended purpose.
• Efficiency is the ability to produce without wasting materials, time or energy.

• In case we are given both the design capacity and effective capacity and asked to
find either Utilization and Efficiency, we should distinguish between them.

• However, if only one measure of capacity is given both terms Utilization and
Efficiency are used interchangeably.

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Utilization and Efficiency

• A utilization rate of 85% is considered ideal for most businesses. The higher the
rate, the more a business is using all of its available resources, which is beneficial
to productivity.
• However, a singular focus on utilization rates may leave little or no time for
maintenance, repairs or accidents.
• An efficiency of 100% indicates that products and goods are being made at the
lowest average cost.
• In reality, many companies may operate at a significantly lower percentage
depending on their business needs. Usually, a business compares its current
efficiency rate to past measurements or with their competitors in their field to
decide on a desired efficiency rating.

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Cycle time

• Cars coming in from one end and cars coming out, and we are standing out and
watching the cars as they leave.

On average, cars are leaving every

10 minutes. The gap in between one
car leaving and the next car
leaving=10 minutes.

cycle time: The average time between the completion of successive

units in a process. In this case 10 minutes
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Note

• In the literature there are two different definition for Cycle time. We use the
definition in this lecture note for our analysis:

Cycle time: The average time between the completion of successive units in a
process.

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Flow time

25 minutes

Even though there's a car coming out every 10 minutes, when the red car goes in, it took it 25
minutes to go through the car wash to come out at the other end.

This 25 minutes we will call the flow time or the throughput time.

Flow time: the time it takes a part to get through an entire process beginning to end.
Flow time includes both processing time and any time the unit spans between steps.

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Process time

• Process time is the amount of time it takes to complete a task or item in a process
• Process time is the average time that a unit is worked on.
• Process time is flow time less idle time.
• Based on process time, we can compute the capacity

1
𝐂𝐚𝐩𝐚𝐜𝐢𝐭𝐲 𝐨𝐟 𝐚 𝐬𝐭𝐚𝐭𝐢𝐨𝐧 =
𝐏𝐫𝐨𝐜𝐞𝐬𝐬 𝐭𝐢𝐦𝐞 𝐨𝐟 𝐭𝐡𝐞 𝐬𝐭𝐚𝐭𝐢𝐨𝐧

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Example

Suppose, we have 3 consecutive tasks to complete the unit, task A to task C.

The process sequence chart:

Calculate the flow time

and cycle time.

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Example (Cont)

• The flow time is …… minutes and cycle time is …… minutes.

• This means that it takes……..minutes to complete one sequence to build one unit.
Also, this system produces one unit every ….. minutes after completion of 1st
unit.

• The sequence involves…….. minutes of idling time with Task A and…… minutes
of idling time for Task C. This is where inefficiency takes place.

• Eliminating The Slowest Task In The System is The Key For Cycle Time
Optimization

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Note!

• The overall cycle time is determined by the slowest process in the entire sequence.
• In this example, there are 3 different tasks to produce 1 unit. Task A takes 3
minutes, Task B takes 7 minutes, Task C takes 4 minutes. The slowest task
(process) in this sequence is Task B which takes 7 minutes.
• This becomes the cycle time of entire sequence.

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Example

• 3 sequential activities: A, B, C
• A: Preparation, B: Bake ,and C: package and label
• 4 resources: Operator1, operator2, operator 3, oven
• To produce each batch of muffin, operator 1 prepare the material, operator 2 put
the batch in the oven, operator 3 take the batch out and does packaging and
labeling.

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Example (Cont)

• Calculate the capacity for this bakery

• How long does it take to produce a batch of muffin?
• How often a batch of muffin exit the process?
• What is the utilization of the oven

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Example

• Suppose there are 2 ovens, calculate the processing time and capacity of the oven?

B
20 minutes

B
20 minutes

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Example

• Suppose that there are 2 ovens, calculate the flow time. And capacity of the system

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Example

A warehouse has a process for packing orders that consists of the following steps:
1. Pick items from shelves: 5 minutes.
2. Pack items into a box: 3 minutes.
3. Label and seal the box: 2 minutes.

• Additional Details:
✓There is only one worker who completes all steps.
✓Orders may spend 4 minutes waiting between each step due to task switching and
coordination.
✓Calculate the process time and flow time.

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89
Capacity and strategy

• Sustained profits come from building competitive advantage, not just from a good
financial return on a specific process.
• Capacity decisions must be integrated into the organization's mission and strategy.
Strategy on a Page : 5 Steps to Create a Winning Strategy - Skefto

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 Managing Demand

• Demand: The quantity of goods or services

customers want or need over a specific time
period.
• Even with good forecasting and facilities built to
that forecast, there may be poor match between
the actual demand and that occurs and available
capacity.
• A poor match may mean demand exceeds
capacity or capacity exceeds demand.
• In both cases, firms have options.

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Scenarios in Demand and Capacity: Capacity Matches
Demand

• The system’s capacity is well-aligned with customer needs.

• Implications:
• Optimal resource utilization
• Balanced workload for employees and equipment.
• High customer satisfaction due to timely delivery of
goods/services.

• Example: A car rental service with a fleet of 50 cars

experiences demand for exactly 50 cars, leading to efficient
operations.

92
 Scenarios in Demand and Capacity: Demand Exceeds
Capacity

• Customers request more goods/services than the system can

deliver.

• Implications:
• Long customer wait times or service delays.
• Loss of customers to competitors if needs aren’t met.

• Example: A restaurant designed to serve 50 customers per

hour experiences demand for 70 customers per hour, leading
to overcrowding and slow service.

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Balancing Demand and Capacity- Demand Exceeds
Capacity

When Demand > Capacity:

• Increase Capacity:
✓Hire more staff or add equipment.
✓Expand operating hours.
✓Use outsourcing or subcontracting to meet peak demand.
• Manage Demand:
✓Implement pricing strategies to shift or reduce demand
(e.g., surge pricing).
✓Use reservations or appointments to smooth out demand
spikes.

94
Scenarios in Demand and Capacity: Capacity Exceeds
Demand

The system has more resources or capability than needed to meet

current demand.

• Implications:
• Idle resources and underutilized staff or equipment.
• Higher operational costs per unit of output due to fixed costs
being spread over fewer units.

• Example: A manufacturing plant capable of producing 100 units

per hour operates at only 50% of its capacity due to low customer
orders.

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Balancing Demand and Capacity- Capacity Exceeds Demand

When Capacity > Demand:

• Utilize Excess Capacity:
✓Offer discounts or promotions to attract more customers.
✓Diversify products/services to appeal to new markets.
• Reduce Capacity:
✓Scale down operations during low-demand periods.
✓Cross-train employees to work in other areas of the business.

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 Matching Demand with Capacity
• Managing Demand
• Too much demand
• Short-term solution: Discourage demand (raise price, longer leadtime, etc)
• Long-term solution: Increase capacity in the long term

• Too little demand

• Stimulate demand (reduce price)

• Seasonal demand
• Offer products with complementary demand patterns
• For example, the demand for swim suits tend to be higher in summer than winter. If the manufacturer
established a high capacity (e.g., hired many workers) to satisfy the strong demand in summer, the
capacity will be wasted in winter due to low demand. The manufacturer can use the capacity to
produce a product with complementary demand pattern, such as winter jackets. (So in winter, the
workers can focus on producing winter jackets.)

97
Demand Management in Service Sector

• In some businesses, such as doctors' and lawyers' offices, an appointment system

is scheduled and adequate.
• A reservation system works well in rental car agencies, hotels, and some
restaurants as a means of minimizing customer waiting time and avoiding
disappointment over unfilled service.
• In retail shops, post offices, or fast-food restaurants, a first-come, first-served rule
for serving customers may suffice.

98
Capacity Management in Service Sector

• When managing demand is not feasible, then managing capacity through changes
in full-time, temporary, or part-time staff may be an option.
• For instance, hospitals may find capacity limited by a shortage of board-certificate
radiologists willing to cover the graveyard shifts.
• Getting fast and reliable radiology readings can be the difference between life and
death for an emergency patient.
• When an overnight reading is required, the image can be sent by email to a doctor
in Europe or Australia for immediate analysis.

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Question

• Which strategy involves producing high-volume, low-variety products?

A) Process Focus
B) Repetitive Focus
C) Product Focus
D) Mass Customization

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Question

• What is the purpose of a process flow diagram?

A) To analyze market demand.
B) To provide a visual representation of the movement of materials, products, or
people.
C) To calculate costs of production.
D) To assign employee responsibilities.

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• In the lecture example, what is the average cycle time for cars leaving a car
wash if one car leaves every 10 minutes?
A) 0.1 cars/minute
B) 6 cars/hour
C) 10 minutes per car
D) 60 minutes per car

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Discussion

• QuickPrint Solutions, a small printing company based in Springfield, specializes in custom

business cards, brochures, and promotional materials. Since its establishment two years ago, it has
built a steady local client base through word-of-mouth referrals and targeted online marketing.
• Despite having the capacity to produce up to 1,000 custom brochures per month under optimal
conditions with its current machinery and workforce, the company faces challenges that limit its
actual production to only 600 brochures monthly.
• Consequently, QuickPrint Solutions struggles with frequent machine downtimes and a higher rate
of print defects.
• Recently marketing efforts have surged demand to 1,500 brochures per month.
• Analyze the operational challenges faced by QuickPrint Solutions in meeting the increased demand
for brochures

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