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Flow Rate and Capacity Analysis. Throughput and Capacity Resources and Resource Pools Theoretical Capacity Bottleneck Resources Capacity Utilization Product Mix; its effect on theoretical capacity and profitability Capacity Improvement. Throughput and Takt Time.

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## Flow Rate and Capacity Analysis

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**Flow Rate and Capacity Analysis**• Throughput and Capacity • Resources and Resource Pools • Theoretical Capacity • Bottleneck Resources • Capacity Utilization • Product Mix; its effect on theoretical capacity and profitability • Capacity Improvement**Throughput and Takt Time**Throughput: Average Flow Rate The average number of flow units in a stable process that flow through any given point of a process per unit of time. Takt time = 1/(throughput) The time interval between exit of two consecutive products. The average activity time at each workstation on an assembly line. Chapter 4 was on flow time minimization. Chapter 5 is on throughput maximization. Chapter 4 and 5 are both “time” minimization. Why?**Resources in a Process**Process Management Information structure Network of Activities and Buffers Inputs Outputs Goods Services Flow units (customers, data, material, cash, etc.) Resources Labor + Capital**Resources, Resource Pools, and Resource Pooling**Capital Resources – Fixed Assets such as land, buildings, facilities, machinery and equipment . Human Resources – People such as engineers, operators, assemblers, chefs, customer-service representatives, etc. Resource Unit: An individual resource (chef, mixer, oven, etc.) Resource Pool: A collection of interchangeable resource units that can perform an identical set of activities. Resource Pooling: The combining of separate resource pools into a single pool to perform several activities. Unit Load of a Resource Unit (Tp):The amount of time the resource works to process each flow unit.**Theoretical Capacity**Theoretical capacity of a resource unit – maximum sustainable flow rate if it were fully utilized Theoretical Capacity of a Resource unit = 1/unit load = 1/ Tp Theoretical capacity of a resource pool – sum of all the theoretical capacities of all the resource units in that pool Theoretical capacity of a Resource pool = Rp = cp / Tp Theoretical bottleneck – The resource pool with the minimum theoretical capacity Theoretical capacity of a process: Theoretical capacity of the theoretical bottleneck**Theoretical Capacity**Cross train Claim supervisor to help Mail room clerk Increase Theoretical Capacity**Load Batch and Scheduled Availability**Load batching – a resource processes several flow units simultaneously (one oven and 10 loaves of bread) Scheduled availability – the scheduled time period during which a resource unit is available for processing flow units (certain hours, certain days, total hours per week). Theoretical capacity of a resource unit = (1 / Tp) × Load batch × Scheduled availability Theoretical capacity of a resource pool = Rp = (cp / Tp) × Load batch × Scheduled availability**Theoretical Capacity for Physicians Claims**Claims supervisors are the bottleneck. Cross train claim processor to do a part of claim supervisor job increase theoretical capacity Throughput( due to internal constraints andexternal constraints) is always less than the theoretical capacity. Suppose while Theoretical capacity = 545.5, Throughput = 480**Capacity Utilization**Capacity utilization of a resource pool ρp = Throughput/Theoretical capacity of a resource pool = R/Rp Capacity utilization of the process ρ= Throughput/Theoretical capacity of the bottleneck resource pool 88%**Unit Load for a Product Mix**Unit load for a given product mix is computed as the weighted average of unit loads of individual products. Billing: Physician claims, Hospital claims, and 60/40 mix**Theoretical Capacity for 60% / 40% Mix**Linear Programming: Find the optimal product mix to maximize profit. Greedy Algorithm. Produce products with highest unit contribution margin**From Theoretical Capacity to Effective Capacity; Setup**Batch, Total Unit Load, and Net Availability Setup or Changeover: activities related to cleaning, resetting and retooling of equipment in order to process a different product. Qp : Setup batch or lot size; the number of units processed consecutively after a setup; Sp :Average time to set up a resource at resource pool p for a particular product We can add setup time to work content or subtract it from schedule availability. From a managerial control point which one is better? Average setup time per unit is then Sp / Qp Tp = Unit load (it does not count for the setup time) Total unit load = Tp + Sp / Qp**Setup Batch Size**What is the “right” lot size or the size of the set up batch? lot size unit load Capacity. lot size inventory Flow Time. Reducing the size of the setup batch is one of the most effective ways to reduce the waiting part of the flow time. Load batch: the number of units processed simultaneously. Often constrained by technological capabilities of the resource. Setup batch: the number of units processed consecutively after a setup. Setup is determined managerially**Total Unit Load for Product mix**Compute unit load and total unit load for each Load batch of Regular tile, Jumbo tile, and a product mix of 75% Regular and 25% Jumbo**Net Availability**Theoretical Capacity of a resource unit = (1/Unit load) ×Load batch ×Scheduled availability Scheduled availability – the scheduled time period during which a resource unit is available for processing flow units. Availability loss factor = 1 – (Net Availability/Scheduled Availability) Effective Capacity of a resource unit = (1/Total unit load) × Load batch × Net availability Effective Capacity of a pool = (cp/Total unit load) × Load batch ×Net availability The effective capacity of a process is the effective capacity of its slowest resource pool (effective bottleneck).**From Theoretical Capacity to Throughput**Throughput ≤ Process capacity ≤ Effective capacity ≤ Theoretical capacity • Theoretical capacity Effective Capacity • Breakdown or absenteeism (Schedule Availability Net Availability) • Preventive maintenance (Schedule Availability Net Availability) • Setup time (Unit load Total unit load) total unit load is unit load plus setup time per unit, Tp+Sp/Qp, • Effective Capacity Process Capacity • Internal starvation (from preceding station) • Internal blockage (due to next station) • Process Capacity Throughput • External starvation (supply of row material) • External blockage (product demand)**Improving Theoretical Capacity**Theoretical capacity of a pool = (cp/Total unit load) × Load batch ×Scheduled availability • Decrease unit load on the bottleneck: Decrease the work content of the activity performed by the bottleneck resource pool. • Increase Scheduled Availability of the bottleneck: Add more hours to the resource such as adding overtime or second shift operations • Increase the Load Batch of the bottleneck: Expanding the resource will increase resource capacity • Increase the number of resources at bottleneck resource : Adding units to the bottleneck resource pool will increase resource capacity**Improving Effective Capacity**Increasing net availability • Regular Maintenance of equipment • Perform maintenance after production time Reducing setup waste • Reduce the setup time • Improve product mix Caution: Increasing batch size or length of run increased inventory longer flow times.**Internal Bottlenecks**Internal Bottleneck Throughput is equal to Process Capacity • The output of the process is limited by the process’s own constraints (the bottleneck resource) • Starvation: If we have two raw material for a process and one is unavailable. • Blockage: If the buffer is not big enough upstream and there is no place for the product to go • Internal bottle neck will require increasing the capacity of the bottle neck to a capacity where a new bottleneck will appear. • Once the old bottleneck does not have the lowest capacity do not continue to increase capacity. It will not increase overall capacity any further.**External Bottlenecks**External Bottleneck Throughput is less than to Process Capacity • The output of the process is limited by conditions external to the boundaries of the internal process constraints. Examples include: demand for product, raw material shortages.

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