OPERATIONS MANAGEMENT -1

Term 2, B2014-16, Oct-Dec 2014

Process Analysis

Session 03 Process Analysis

OPM 1 Term 2, B2014-16, Oct-Dec 2014 Prof. Kedar P. Joshi 1
converts iron ores into iron briquettes to supply steel plants
Figure 1

West

Session 03 Process Analysis

OPM 1 Term 2, B2014-16, Oct-Dec 2014 Prof. Kedar P. Joshi
To Create a Process Flow Chart (Diagram) Figure 2
2nd Stage
FB Reactor
1st Stage
CFB CFB Reactor
Preheater

Inclined

~ 110 m
Bucket Elevator

Process Briquetting
Gas Plant
Heat
Exchanger Process Gas
Electrical Compressor
Iron Substation&
Ore Control Fired Gas Heaters HBI Product
Fines Room
~ 160 m

Engineering drawing
Session 03 Process Analysis
OPM 1 Term 2, B2014-16, Oct-Dec 2014 Prof. Kedar P. Joshi
Elements of a Process Figure 3
Activities
• Carried out by resources
• Add value and are required
for completion of the flow unit
• May or may not carry inventory
• Have a capacity (maximum number
of flow units that can flow through
the activity within a unit of time)
Arrows
• Indicate the flow of the flow unit
• Multiple flow unit types possible

Inventory / Buffers
• Do NOT have a capacity; however,
there might be a limited number of
flow units that can be put in this
inventory space at any moment of time
• Multiple flow unit types possible

Session 03 Process Analysis

OPM 1 Term 2, B2014-16, Oct-Dec 2014 Prof. Kedar P. Joshi
 Figure 4

Pre-Heater

Pile of Iron ore fines

Process flow diagram, first step

Session 03 Process Analysis
OPM 1 Term 2, B2014-16, Oct-Dec 2014 Prof. Kedar P. Joshi
 Figure 5

Pre-Heater Lock 1st Reactor 2nd Reactor

Hoppers

Pile of Iron ore fines

Process flow diagram, to be continued

Session 03 Process Analysis
OPM 1 Term 2, B2014-16, Oct-Dec 2014 Prof. Kedar P. Joshi
 Figure 6

Lock
Pre-Heater 1st Reactor 2nd Reactor
Hoppers

Pile of Iron ore fines

Flash
Briquetting Discharge
Heater

Finished Goods

Completed process flow Process flow diagram

Session 03 Process Analysis
OPM 1 Term 2, B2014-16, Oct-Dec 2014 Prof. Kedar P. Joshi
 Figure 7

Dis-
Lock 1st 2nd charge
Pre-Heater
Hoppers Reactor Reactor

Briquet-
Flash
ting
heater

Pile of Iron
ore fines
Finished
goods

Completed PFD for the Circored process

Session 03 Process Analysis
OPM 1 Term 2, B2014-16, Oct-Dec 2014 Prof. Kedar P. Joshi
Process flow diagram accounting for mass reduction

7.5% Outflow 15% Outflow 10% Outflow

Lock
Pre-Heater 1st Reactor 2nd Reactor
Hoppers

Pile of Iron ore fines

Flash
Briquetting Discharge Heater

Finished Goods

Session 03 Process Analysis

OPM 1 Term 2, B2014-16, Oct-Dec 2014 Prof. Kedar P. Joshi
Process Concepts
• Process capacity
• Flow rate
• Cycle Time
Important • Manufacturing Lead Time (MLT) /Throughput Time
• Bottleneck
• Process utilization and capacity utilization
• Workload and implied utilization

• Lot Size/Batch Size

• Setup time
• Run time
Additional
• Waiting time
• Idle time
• Buffer

Session 03 Process Analysis

OPM 1 Term 2, B2014-16, Oct-Dec 2014 Prof. Kedar P. Joshi
Bottleneck and process capacity
• Capacity: Number (amount) of units that can be processed per time
• Each briquetting machine has a capacity of 55 tons per hour
• Overall capacity of a sequence of processes is determined by the slowest
process, i.e. the resource with the smallest capacity.
• Process capacity=Min{Capacity of Res 1, …., Capacity of Res 2}
• Incorporating available input rate and demand rate,
• Throughput=Min{Input rate, Process capacity, Demand rate}
Supply constrained Demand constrained

Bottleneck Bottleneck
Input Capacity Input Capacity

Flow Flow
FlowRate
Rate
FlowRate
Rate
Demand
Excess Excess
capacity capacity
Demand

Session 03 Process Analysis

OPM 1 Term 2, B2014-16, Oct-Dec 2014 Prof. Kedar P. Joshi
Capacity Related Terminology

Setup time : the Queue time is the

time that a part Process time/run time that a part
spends waiting for a time is the time waits for a resource
resource to be set that the part is while the resource
up to work on this being processed is busy with
same part something else

Session 03 Process Analysis

OPM 1 Term 2, B2014-16, Oct-Dec 2014 Prof. Kedar P. Joshi
Time Components of Production Cycle (Continued)

Wait time is the time that a Idle time is the unused time
part waits not for a resource that represents the cycle
but for another part so that time less the sum of the
they can be assembled setup time, processing time,
together queue time, and wait time

Session 03 Process Analysis

OPM 1 Term 2, B2014-16, Oct-Dec 2014 Prof. Kedar P. Joshi
Time to Produce a Certain Amount of Supply

• Assuming the process is already producing output.

• How long does it take for the Trininad plant to produce

10,000 tons?
• A restaurant has 40 tables. Average flow time = 60 min How
long is the wait time if you are sixth on the waiting list?
Session 03 Process Analysis
OPM 1 Term 2, B2014-16, Oct-Dec 2014 Prof. Kedar P. Joshi
Little’s Law
Throughput Time = Work-in-Process /Throughput rate
( Hopp amd Spearman, 2000)

Average Inventory = Average Flow Rate X Average Flow Time

( Cachon and Terweiesch, 2004)

Operations management (OM) covers a large arena of practice.

Little’s Law is discussed in several current OM texts, including Hopp and Spearman
(2000), Cachon and Terwiesch (2004).
Queuing theory and OM generally use different notations for Little’s Law parameters,
and so we introduce that issue first. In a desire to get close to people who are actually
using LL to support decision making,

Session 03 Process Analysis

OPM 1 Term 2, B2014-16, Oct-Dec 2014 Prof. Kedar P. Joshi
Little’s Law
Patients
11
Cumulative
10 Inflow
9
Cumulative
8 Outflow
7 Flow Time
6 Inventory
5
4
3
2
Inventory=Cumulative Inflow – Cumulative Outflow Time
1
0 7:00 8:00 9:00 10:00 11:00 12:00 13:00 14:00 15:00 16:00 17:00 18:00

Cumulative In-flow and Out-flow

Session 03 Process Analysis

OPM 1 Term 2, B2014-16, Oct-Dec 2014 Prof. Kedar P. Joshi
 The process capacity of Circored plant in Trinidad

Pre- Lock 2nd (fb) Flash

Hoppers 1st (cfb) Reactor Discharge Briquetting
Heater Reactor heater

Capacities
• Preheater 120 tons/hour
• Lock Hoppers 110 tons/hour
• 1st (cfb) Reactor 112 tons/hour. Processes 28 tons every 15 minutes
• 2nd (fb) Reactor 100 tons/hour. Processes 400 tons every 4 hours
• Flash heater 135 tons/hour
Process Capacity
• Discharge 118 tons/hour
• Briquetting 165 tons/hour = min{120,110,112,100,135,118,165}
= 100 tons/hour
Session 03 Process Analysis
OPM 1 Term 2, B2014-16, Oct-Dec 2014 Prof. Kedar P. Joshi
The cycle time of circored plant in Trinidad

Pre- Lock 2nd (fb) Flash

Hoppers 1st (cfb) Reactor Discharge Briquetting
Heater Reactor heater

Cycle time: Amount of time taken to process 1 unit in a repetitive processing.

• Since different units can be processed in parallel, cycle time is not the flow time.

Cycle time (designed) = 1 / Process Capacity

How long does it take to process 1 ton of iron ore?

• Since 1 hour is required for 100 tons, 1/100 hour suffices for 1 ton.
• That is, the cycle time is 0.01 hour = 0.6 min = 36 seconds
• Every 36 seconds 1 ton of iron briquette is completed.

Session 03 Process Analysis

OPM 1 Term 2, B2014-16, Oct-Dec 2014 Prof. Kedar P. Joshi
Process utilization and Capacity utilization

• The objective of most businesses is to increase profit, not to

increase utilization.
• A service process should not pursue 100% utilization.

Session 03 Process Analysis

OPM 1 Term 2, B2014-16, Oct-Dec 2014 Prof. Kedar P. Joshi
Utilization of limited demand
• Assume the demand is only 657,000 tons
• Design capacity = (100 tons/hr X 24 hours/day X 365 days/ yr) =876,000
tons

• The bottleneck is the resource with the highest utilization.

Session 03 Process Analysis

OPM 1 Term 2, B2014-16, Oct-Dec 2014 Prof. Kedar P. Joshi
Utilization Profile
100% Mismatch between demand and
Utilization supply at the process level
90%

80% Bottleneck
70% Imbalance relative
To bottleneck
60%

50%

40%

30%

20%

10%

0%
Preheater Lock CFB Stationary Flash Pressure Briquetting Total
Hoppers Reactor heater let-down machine process
system

Session 03 Process Analysis

OPM 1 Term 2, B2014-16, Oct-Dec 2014 Prof. Kedar P. Joshi
Workload and implied utilization

• Utilization only carries information about excess capacity.

• Implied utilization captures the mismatch when the demand
exceeds the capacity.
Session 03 Process Analysis
OPM 1 Term 2, B2014-16, Oct-Dec 2014 Prof. Kedar P. Joshi
 The utilization with demand of 1,095,000 tons/year
 Implied (requested) Utilization of a resource = Demand / Capacity of the resource
Utilization
Bottleneck
125%

100%

75%

50%

0%
Preheater Lock CFB FB Flash Discharge Briquetting Overall
Hoppers Heater process
Session 03 Process Analysis
OPM 1 Term 2, B2014-16, Oct-Dec 2014 Prof. Kedar P. Joshi
 STEPS FOR BASIC PROCESS ANALYSIS WITH ONE TYPE
OF FLOW UNIT
Find the capacity of every The resource with the
resource, if there are lowest capacity is called the The flow rate is found based
multiple resources bottleneck. Its capacity on Flow Rate= Minimum
performing the same determines the capacity of (Available input. Demand,
activity add their capacities the entire process (Process Process capacity)
together. Capacity).

Similarly we find the utilization of each We find the Utilization of the process as :
resource as Flow rate

Session 03 Process Analysis

OPM 1 Term 2, B2014-16, Oct-Dec 2014 Prof. Kedar P. Joshi
Different units flowing in the same system
 Outsourcing business processes is common
– Billing, Recruiting, Maintenance, Customer call centers, etc
 The company which handles the outsourced process is likely to deal with various
kinds of units
 Case in point: A company that provides resume validation service:
– Demand is 180 applications per day ( 30 for consulting, 110 for staff and remaining for internships)
Contact
Contactfaculty/
faculty/
other persons
other persons

Consulting
Staff Verified Applications
File
File
Internship
Contact
Contactprior
prior
employers
employers Confirmation
Confirmation
letter
letter

Benchmark
Benchmark
grades
grades

Session 03 Process Analysis

OPM 1 Term 2, B2014-16, Oct-Dec 2014 Prof. Kedar P. Joshi
 STEPS FOR BASIC PROCESS ANALYSIS WITH MULTIPLE
TYPES OF FLOW UNITS
1. For each resource, compute the number of minutes that the resource can produce; this is 60 (min/hour) ×
Number of resources within the resource pool.
2. Create a process flow diagram, indicating how the flow units go through the process; use multiple colors to
indicate the flow of the different flow units.
3. Create a table indicating how much workload each flow unit is consuming at each resource:
– The rows of the table correspond to the resources in the process.
– The columns of the table correspond to the different types of flow units.
– Each cell of the table should contain one of the following:
1. If flow unit does not visit the corresponding resource, Ø;
2. Otherwise, demand per hour of the corresponding flow unit × activity time.
4. Add up the workload of each resource across all flow units.
5. Compute the implied utilization of each resource as
Implied utilization = Result of Step 3
Result of Step 1
The resource with the highest implied utilization is the bottleneck.
Session 03 Process Analysis
OPM 1 Term 2, B2014-16, Oct-Dec 2014 Prof. Kedar P. Joshi
 An application as a unit
Demand per hour for validation: 3 for consulting; 11 for staff; 4 for internship.
Activity Number Available Consulting Staff Intern Total Implied
Time (min) of workers Capacity Workload Workload Workload Utilization
Per applct Applct/hr Per hour Per hour Per hour
File 3 1 20 3 11 4 18 18/20= 90%

Contact Persons 20 2 6 3 0 0 3 3/6= 50%

Contact 15 3 12 3 11 0 14 14/12= 117%

Employers
Benchmark 8 2 15 0 0 4 4 4/15= 27%
Grades
Confirmation 2 1 30 3 11 4 18 18/30= 60%
Letter

Session 03 Process Analysis

OPM 1 Term 2, B2014-16, Oct-Dec 2014 Prof. Kedar P. Joshi
 Using “One minute of work” as the flow unit to find the bottleneck
Demand per hour for validation: 3 for consulting; 11 for staff; 4 for internship.
Activity Number Available Consulting Staff Intern Total Implied
Time (min) of workers Capacity Workload Workload Workload Utilization
Per applct Minutes Per Minutes Per Minutes Per
hour hour hour
File 3 1 60 3X3 11 X 3 4X3 54 54/60= 90%

Contact Persons 20 2 120 3 X 20 0 0 60 60/120= 50%

Contact 15 3 180 3 X 15 11 X15 0 210 210/180=

Employers 117%
Benchmark 8 2 120 0 0 4X8 32 32/120= 27%
Grades
Confirmation 2 1 60 3X2 11 4X2 36 36/60= 60%
Letter

Session 03 Process Analysis

OPM 1 Term 2, B2014-16, Oct-Dec 2014 Prof. Kedar P. Joshi
 An application as a unit

• What is the minimum number of people to hire so that the

implied utilization of contact employers is below 100%?

• What happens to implied utilizations when staff applications

decrease to 8 per hour? Compute the new utilizations.

Session 03 Process Analysis 29

OPM 1 Term 2, B2014-16, Oct-Dec 2014 Prof. Kedar P. Joshi
Summary of process analysis
Compute the Use demand to
Prepare a Compute various
Capacity for compute the Identify the
Process Flow Performance
each of the implied utilization Bottleneck
Diagram measures
Resources levels

Extensions required Use different Note that capacity Compute the work- Step with highest
for working with Colors to mark levels may differ load across all implied utilization
multiple flow units Flow units depending on product types
product type

• World class enterprises excel at the speedy and flexible integration of

the business processes.
• Finding the bottleneck allows us to compute a variety of performance
measures.
• You Can't Manage What You Don't Measure
Session 03 Process Analysis
OPM 1 Term 2, B2014-16, Oct-Dec 2014 Prof. Kedar P. Joshi