OPSM 3 0 1 : Operations Management

1. Koç University OPSM 301: Operations Management Session 7: Process analysis Zeynep Aksin zaksin@ku.edu.tr

2. Process Architecture is defined and represented by a process flow chart: Process = network of activities performed by resources 1. Process Boundaries: • input • output 2. Flow unit: the unit of analysis 3. Network of Activities & Storage/Buffers • activities with activity times • routes: precedence relationships (solid lines) 4. Resources & Allocation 5. Information Structure & flow (dashed lines)

3. Flowchart Symbols Tasks or operations Examples: Giving an admission ticket to a customer, installing an engine in a car, etc. Examples: How much change should be given to a customer, which wrench should be used, etc. Decision Points

4. Flowchart Symbols Storage areas or queues Examples: Lines of people or cars waiting for a service, parts waiting for assembly etc. Examples: Customers moving to a seat, mechanic getting a tool, etc. Flows of materials or customers

6. Recall:Terminology Flow Time (T) The flow time (also called variously throughput time, cycle time) of a given routing is the average time from release of a job at the beginning of the routing until it reaches an inventory point at the end of the routing. Flow time 1 2 3 4

7. Flow time in the House Game process? Production Control (color sheets, log sheets, scissors) Base Cut (scissors) Roof Base Form (scissors) Base Weld (stapler) Final Assembly (tape) Quality Control Customer

8. Critical Path & Critical Activities • Critical Path: A path with the longest total cycle time. • Critical Activity: An activity on the critical path. A B D C

9. Operational Measure: Flow TimeDriver: Activity Times, Critical Activity • (Theoretical) Flow Time • Critical Activity • Flow Time efficiency =

10. X-Ray Service Process • 1. Patient walks to x-ray lab • 2. X-ray request travels to lab by messenger • 3. X-ray technician fills out standard form based on info. From physician • 4. Receptionist receives insurance information, prepares and signs form, sends to insurer • 5. Patient undresses in preparation of x-ray • 6. Lab technician takes x-ray • 7. Darkroom technician develops x-ray • 8. Lab technician checks for clarity-rework if necessary • 9. Patient puts on clothes, gets ready to leave lab • 10. Patient walks back to physicians office • 11. X-rays transferred to physician by messenger

11. Example 3 7 1 2 9 10 6 12 7 75% 4 5 6 7 8 start end 5 3 2 3 25% 11 20 6 20 transport support Value added decision Measured actual flow time: 154 minutes

12. Consider all possible paths • Path1: 1-4-5-6-7-8-9-10 50 • Path 2: 2-3-4-5-6-7-8-9-10 69 • Path 3: 1-4-5-6-7-8-11 60 • Path 4: 2-3-4-5-6-7-8-11 79

13. Levers for Reducing Flow Time • Decrease the work content of critical activities • work smarter • work faster • do it right the first time • change product mix • Move work content from critical to non-critical activities • to non-critical path or to ``outer loop’’ • Reduce waiting time.

14. Most time inefficiency comes from waiting:E.g.: Flow Times in White Collar Processes

15. Flow rate (capacity) in the House Game process? Production Control (color sheets, log sheets, scissors) Base Cut (scissors) Roof Base Form (scissors) Base Weld (stapler) Final Assembly (tape) Quality Control Customer

16. Tools: Gantt Chart Gantt charts show the time at which different activities are performed, as well as the sequence of activities 1 2 3 4 activities Resources time

17. Example of a two-stage production line A B 5 min 2 min

18. Gantt Chart A A A A 20 5 10 15 B B B B 7 12 17 22

19. Example of a two-stage production line A1 B 5 min A2 2 min 5 min

20. Gantt Chart A1 A1 A1 A1 15 5 10 20 A2 A2 A2 A2 17 22 5 12 B B B B B B B B 9 7 12 14 19 24 17 22

21. Theoretical Capacity • Theoreticalcapacity: The capacity (throughput rate) of a process under ideal conditions (units / time) • Effectivecapacity: The capacity that one expects of a process under normal working conditions (units/time) • Effective capacity < Theoretical capacity

22. Effective Capacity (scheduled availability) • Effective capacity depends on the following • Number of shifts • Product variety • Maintenance • Idleness

23. Realized Capacity (net availability) • Actual productionor realized throughput rate • Usually lower than effective capacity. • Machine and equipment failures • Quality problems • Workforce losses • Other uncertainties

24. Operational Measure: Capacity Drivers: Resource Loads • (Theoretical) Capacity of a Resource • Bottleneck Resource • (Theoretical) Capacity of the Process • Capacity Utilization of a Resource/Process = Realized throughput [units/hr] Theoretical capacity [units/hr]

25. X-ray revisited 3 7 1 2 9 10 6 12 7 75% 4 5 6 7 8 start end 5 3 2 3 25% 11 20 6 20 transport support Value added decision Measured actual flow time: 154 minutes

26. X-Ray revisited

27. Utilizations given an observed throughput of 5.5 patients/hr

28. A Recipe for Capacity Measurements * assuming system is processing at full capacity

29. Effect of Product Mix- Example

30. Theoretical capacity for hospital claims

31. Theoretical capacity for 60%-40% mix

32. In summary • Throughput Process Capacity Effective Capacity Theoretical Capacity

33. Levers for Increasing Process Capacity • Decrease the work content of bottleneck activities • work smarter • work faster • do it right the first time • change product mix • Move work content from bottlenecks to non-bottlenecks • to non-critical resource or to third party • Increase Net Availability • work longer • increase scale (invest) • increase size of load batches • eliminate availability waste

34. Announcements • Read and be prepared to analyze Kristen’s Cookie for next class (Mon 17/10) • Second Assignment: Read the Universal Pulp and Paper case-due next Wednesday 19/10! • Draw a process flowchart • Find the bottleneck for this process. Show all analysis in detail. • To produce the projected 3.68 million tons per year of newsprint, where should an investment in capacity occur? • Do you have any further recommendations for management?