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2/8/18

Process Analysis
Session 2
February 8th, 2018

Remarks

• Check canvas regularly


• Lectures and HWs will be posted in the corresponding module prior
to class
o Make sure to add your section number (L3 or L4) in your HW submission
o Save a soft copy of your HK for reference
• Please attend the section you are enrolled in!

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Last Class

• Introduction to OM

• Process view of businesses/organizations

• Value chain management


o Supply-side OM
o Demand-side OM

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Today’s Class

• Process flow diagram

• Measures of process efficiency


• Flow rate
• Flow time
• Inventory

• Bottleneck and utilization

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Process Analysis
Process
Inputs Outputs
Raw material, Goods,
Customers Services

Resource: Buffer:

• Flow unit: what flows through


• Resource: which performs an (or collection of) activity on the flow
unit
• Inventory: flows units in the process at any given moment in time

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Process Flow Diagram


• Take the point-of-view of a flow unit, which is the input transformed
into an output.
• Activities
o Add value to the flow unit
o Represented as
• Buffers
o Do not add value
o Represented as
• Precedence
o Sequence in which activities are performed
o Activities are connected by

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Example – Security Clearance at Airport


Process Flow Diagram

Customers
Leave bags Security check
with bags Cleared
Pick up
customers &
bags
Security check

Resource: Buffer:

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Performance Measures
Input rate Throughput rate
Inventory [units]
[units/hr] [units/hr]
Station 1 Station 2

Flow Time [hrs]


• Input rate is the rate at which flow units arrive at the process
• Flow time is time a unit takes from entering to leaving the process
• Flow (Throughput) rate is the rate at which flow unit actually flows through the process
• Cycle time is the time between consecutive units actually leaving the process
• Capacity of a resource is the rate at which it can process units if never starved for work
• Capacity of a process is the throughput rate when the process is never starved for work
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Performance Measures

• 𝑃𝑟𝑜𝑐𝑒𝑠𝑠 𝑐𝑎𝑝𝑎𝑐𝑖𝑡y = min {𝑐𝑎𝑝𝑎𝑐𝑖𝑡𝑦 𝑜𝑓 𝑟𝑒𝑠𝑜𝑢𝑟𝑐𝑒 1, 𝑐𝑎𝑝𝑎𝑐𝑖𝑡𝑦 𝑜𝑓 𝑟𝑒𝑠𝑜𝑢𝑟𝑐𝑒 2, … }

• 𝐹𝑙𝑜𝑤 𝑟𝑎𝑡𝑒 = min 𝑖𝑛𝑝𝑢𝑡 𝑟𝑎𝑡𝑒, 𝑝𝑟𝑜𝑐𝑒𝑠𝑠 𝑐𝑎𝑝𝑎𝑐𝑖𝑡𝑦

@
• 𝐶𝑦𝑐𝑙𝑒 𝑡𝑖𝑚𝑒 =
ABCD EFGH

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Example: T-shirt Production


Fabric Cutting Sewing Packing T-shirt

Resources: Worker A Worker B Worker C


Processing time: 3 min/unit 4 min/unit 3 min/unit

• How long does it take to produce a unit, i.e., flow time?


• How many units can the process produce in an hour, i.e., process
capacity?
• How is the time between two successive production completions, i.e.,
cycle time (at full capacity)?

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Example: T-shirt Production


Gantt Chart
Time (in minutes) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22

Worker A

Worker B

Worker C

• It takes to produce 1 unit, i.e.,


• The process can produce in the long run
• The time between two successive production completions is equal to

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Example
Station 1 Station 2 Station 3
Activity Time Activity Time Activity Time
(secs) (secs) (secs)
Greet customer 4 Onions 3 Wrap napkins and bag 6
Take order 3 Lettuce 7 Offer fresh value meal 2
Get bread 5 Tomatoes 8 Offer cookies 2
Cut bread 4 Cucumbers 8 Ring on register 1
Meat 7
Cheese 3
Toasting 20
• Process flow diagram
• Performance measures: flow time, flow rate, cycle time, capacity of each resource and
the process
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Bottleneck
How to determine the flow rate of the irregular pipeline?

Bottleneck
Input

Capacity

It is sufficient to only focus on the point with the smallest gap!

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How to Find Bottleneck?


Fabric Cutting Sewing Packing T-shirt

Resources: Worker A Worker B Worker A


Processing time: 3 min/unit 4 min/unit 3 min/unit

• Is the bottleneck the activity with the longest processing time, i.e., activity 2?

• Is the bottleneck the resource that is required to perform the activity with the
longest time, i.e., Worker B?

• Then who is the bottleneck

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Example: Hospital
Doctor 1
4 min
Nurse
3 min
Doctor 2
4 min

• Nurse capacity = 20 units/hr


Doctor capacity = 15 units/hr x 2 = 30 units/hr

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Bottleneck and Utilization


Flow rate (how much does it produce)
• Utilization =
Capacity (how much it can produce)

• Bottleneck is always station with highest utilization


Example 1 u = 18 = 90%
20
Rate in 15 /hr
18 /hr 20 /hr
15 /hr

Example 2
Rate in 75%
12 /hr 12 /hr 10 /hr

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Actual vs. Implied Utilization


• Actual Utilization = Flow rate / Capacity
• Implied Utilization = (Input) Demand rate / Capacity

12 /hr 8 /hr 16 /hr

Actual utilization 8/8 = 100% 8/16 = 50%

Implied utilization

Can this process keep up with demand?

What is the maximum rate the line can handle? 8/hr (rate of bottleneck)
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Multi-unit Process
• Implied Utilization = Demand rate / Capacity rate, may>100%
• Actual Utilization = Throughput rate / Capacity rate, always ≤100%

Contact previous employer


6/hr
Accept file Verification
20/hr 18/hr
Full time applicants
12/hr
Internships
6/hr

Benchmark grades
10/hr

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Multi-unit Process
• Implied Utilization = Demand rate / Capacity rate, may>100%
• Actual Utilization = Throughput rate / Capacity rate, always ≤100%

Contact previous employer


6/hr
Accept file Verification
20/hr 18/hr
Full time applicants
12/hr
Internships
6/hr
Benchmark grades
10/hr

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Identifying bottleneck for a product mix


Calculate the utilization profile of the following process

68 orders/hr 100 orders/hr


161
orders/hr B C
96 orders/hr
A E
4 orders/hr
D
78 orders/hr
7 orders/hr

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Identifying bottleneck for a product mix


• Actual utilization
• Implied utilization
142%
62%
68 orders/hr 100 orders/hr

161 orders/hr B C
96 orders/hr
A E
4 orders/hr
D
78 orders/hr
7 orders/hr
92%
57%

Bottleneck is Station B
Throughput rate of process = 68 red orders/hr, 4 blue orders/hr, 72 orders/hr

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Key Steps in Process Analysis

• Step 1: Draw a process flow diagram (define the process)


• Step 2: Compute capacities for each resource
• Step 3: Use demand (input) rate to compute implied utilitization
• Step 4: Bottleneck Analysis
• Bottleneck is a always a resource
• Step 5: Compute other performance measures

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Example: Inventory in T-shirt Production


Fabric Cutting Sewing Packing T-shirt

Resources: Worker A Worker B Worker C


Processing time: 3 min/unit 4 min/unit 3 min/unit

• On average, how many units are there in the process (inventory)?

• Why is inventory an important performance metric?

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Example: T-shirt Production


Gantt Chart
Time (in minutes) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22

Worker A

Worker B

Worker C

• Average inventory in the first 3 min?

• The (long-run)

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Little’s Law: Determining Inventory

Inventory = Flow Rate× Flow Time

Process

Flow rate = 2 units/second


Inventory = 2*3 = 6 units
Flow time = 3 seconds

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Example: Insurance Company

• An insurance company processes 10,000 claims per year. The average processing
time is 3 weeks. How many claims are in the system on average? (Assuming 50
weeks in a year)

• Now, the company reduces its processing time by 80%. How many claims are in
the system on average?

• A manager can influence any one of these measures by controlling the other two.

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