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Process_Fundamentals

The document provides an overview of process fundamentals relevant to Operations Management, including definitions of key terms such as cycle time, utilization, and process flowcharting. It also discusses performance metrics, Little's Law, and examples illustrating concepts like work-in-process and inventory management. The slides are intended for educational purposes and should not be distributed as substitutes for the textbook or readings.

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truonghuynhgialinh75
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© © All Rights Reserved
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0 views

Process_Fundamentals

The document provides an overview of process fundamentals relevant to Operations Management, including definitions of key terms such as cycle time, utilization, and process flowcharting. It also discusses performance metrics, Little's Law, and examples illustrating concepts like work-in-process and inventory management. The slides are intended for educational purposes and should not be distributed as substitutes for the textbook or readings.

Uploaded by

truonghuynhgialinh75
Copyright
© © All Rights Reserved
Available Formats
Download as PDF, TXT or read online on Scribd
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Process Fundamentals

These slides are only for the learning purposes of the


Operations Management course. Do not distribute these
slides. Slides are not a substitute for readings / textbook
and are only meant to complement the textbook and
readings.

Chapter 11 – We shall cover all the sections in the chapter except the
third section (LO 11-3, Job Design Decisions) 1
B&D Burger Place!
◼ Working Hours: 11am to 7pm
◼ How many (maximum) burgers can B&D make in a day?

The Burger Making Process (time taken for each step is provided below)

Take Slice Add the Add Pack &


the the Meat & the Deliver
Order Bun Cheese Extras the Order
2.5 mins/order 1.5 mins/order 2 mins/order 3.5 mins/order 2.5 mins/order

2
Process Analysis

◼ Process: Is any part of an organization that takes inputs


and transforms them into outputs

◼ Cycle Time: Is the average successive time between


completions of successive units

◼ Utilization: Is the ratio of the time that a resource is


actually activated relative to the time that it is available for
use
Process Flowcharting Defined
◼ Process flowcharting is the use of a diagram to present the major
elements of a process

◼ The basic elements can include tasks or operations, flows of materials or


customers, decision points, and storage areas or queues

◼ It is an ideal methodology by which to begin analyzing a process

Tasks or operations Storage areas


or queues

Decision Points
Flows of
materials or
customers
Process Flow Chart - example

5
Other Process Terminology

◼ Single / Multi-stage process


◼ Blocking
◼ occurs when the activities in a stage
must stop because there is no place to
deposit the item
◼ Starving
◼ occurs when the activities in a stage must stop
because there is no work
◼ Bottleneck
◼ stage that limits the capacity of the
process

◼ MTO
◼ MTS
◼ Hybrid
Pacing
◼

7
Measuring Process Performance

Benchmarking, Productivity, Efficiency 8


Process Performance Metrics
◼ Operation time = Setup time + Run time

◼ Throughput time = Average time for a unit to move through the system

◼ Velocity = Value Added time


Flow time

◼ Cycle time = Average time between completion of units

◼ Throughput rate = 1 .
Cycle time

◼ Efficiency = Actual output


Standard Output
Little’s Law
Little’s law

• There is a long-term relationship among inventory, throughput, and flow


time
• Inventory = Throughput rate x Flow time

Total Average Value of Inventory - The total average investment in raw material,
work-in-process, and finished goods inventory

Inventory Turnover - A measure of the expected number of times inventory is


replaced over a year (COGS / Avg. Value of Inventory)

Days of Supply - The number of days of inventory of an item


10
11
Example
◼ An automobile company assembles cars in a plant and purchases batteries
from a vendor in China. The average cost of each battery is $45. The
automobile company takes ownership of the batteries when they arrive at the
plant. It takes exactly 12 hours to make a car in the plant and the plant
assembles 200 cars per 8-hour shift (currently the plant operates one shift per
day). Each car uses one battery. The company holds, on average, 8,000
batteries in raw material inventory at the plant as a buffer.

◼ Average cost $45


◼ 12 hours to make a car
◼ Assembles 200 cars per 8-hour shift
◼ Currently one shift
◼ Holds on average 8,000 batteries in raw material inventory

Find the total number of batteries in the plant, on average (in work-in-process at the plant and
in raw material inventory). How much are these batteries worth? How many days of supply
are held in raw material inventory, on average?
12
Example
◼ WIP = Throughput x Flow time
◼ WIP = 25 batteries x 12 hours
◼ WIP = 300 batteries

◼ Total = 8,000 + 300 = 8,300 batteries

◼ Value = 8,300 x $45 = $373,500

◼ The firm holds on average 8,000 batteries in raw material inventory


◼ Flow time = Inventory/Throughput
◼ Flow time = 8,000/200 = 40 days – Days of Supply

13
Problems
◼ A firm has redesigned its production process so that it now takes 10
hours for a unit to be made. Using the old process, it took 15 hours
to make a unit. If the process makes one unit each hour, on
average, and each unit is worth $1,500, what is the reduction in
work-in-process value?

◼ Avis Company is a car rental company that is located three miles


from the Los Angeles airport (LAX). Avis is dispatching a bus from
its offices to the airport every 2 minutes. The average traveling time
(round-trip) is 20 minutes.
◼ a. How many Avis buses are traveling to and from the airport?
◼ b. The branch manager wants to improve the service and suggests
dispatching buses every 0.5 minutes. She argues that this will reduce
the average traveling time from the airport to the Avis offices to 2.5
minutes. Is she correct? If your answer is negative, what will the
average traveling time be?

14
Problem
◼ Rockness Recycling refurbishes rundown business students. The
process uses a moving belt, which carries each student through the
five steps of the process in sequence. The five steps are as follows.

◼ One faculty member is assigned to each of these steps. Faculty


members work a 40-hour week and rotate jobs each week. Mr.
Rockness has been working on a contract from General Eclectic,
which requires delivery of 2,000 refurbished students per week. A
representative of the human resources department has just called
complaining that the company hasn’t been receiving the agreed-
upon number of students. A check of finished goods inventory by
Mr. Rockness reveals that there is no stock left. What is going on?
15
Problem

Utilization?
WIP Inventory?
16
Process Flow Time Reductions
1. Perform activities in parallel

2. Change the sequence of activities

3. Reduce interruptions

17
Thank you

18

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