Operations Management

Examples

Agenda
Takira Motors: Creating Assembly and Process Chart Grouping Activities Bakery Example

Predecessor Components Sequencing the operations

Assembly chart

Cycle time is the time taken by the longest activity (here it is 7 min). Throughput time is 46 min.

Assignment-2 Q2 Cycle Time and Deciding on stages

0.1 min. 1.0 min.

A Simple Precedence Diagram

c
0.7 min.

d
0.5 min.

e
0.2 min.

Arrange tasks shown in the above Figure into three workstations. Use a cycle time of 1.0 minute Assign tasks in order of the most number of followers

Raw Material

Bread Making Cycle Time: 1 Hr/100 loaves

WIP

Pack Cycle Time: 3/4Hr /100 loaves

Finished Goods

packaging operation will be idle for quarter-hour periods (15 mins)

Bread Making Cycle Time: 1 Hr/100 loaves
Raw Material

The packaging operation is now the bottleneck

WIP Pack Cycle Time: 3/4Hr /100 loaves
Finished Goods

Bread Making Cycle Time: 1 Hr/100 loaves

If we operated the packaging operation for three eight-hour shifts, and bread making for two shifts each day, then the daily capacity of each would be identical at 3,200 loaves a day (800 loafs x 4 shifts).

Packaging 3 shifts Bread making 2 shifts: work-in-process inventory

If both bread-making operations start at the same time, at the end of the first hour, then the first 100 loaves move into packaging while the second 100 loaves waitwork-in-process inventory. The waiting time for each 100-loaf batch increases until the baking is done at the end of the second shift. What is the time that the bread is sitting in workin-process?

 Average wip during first two shifts, inventory builds from 0 to 1,200 loaves (1,600 x .75). (Or 800 loaves x 2 shifts x .75 pkg.) = 1200/2 Average wip during third shift is again 1200/2 The overall average WIP over the 24-hour period is simply 600 loaves of bread. Packaging process in batches. 1) 0.75 hour per 100 loaves 2) Throughput rate of 133.3 loaves/hour (100/0.75) Littles Law calculates the average time that loaves are in work-in-process is 4.5 hours (600 loaves/133.33 loaves/hour)

Our Restaurant
Assume that we have designed our buffet so customers take an average of 30 minutes to get their food and eat. Assume the restaurant has 40 tables. Each table can accommodate four people. The Cycle Time for the restaurant, when operating at capacity, is 0.75 minute (30 minutes/table 40 tables). The restaurant could handle 80 customer parties per hour (60 minutes 0.75 minute/party) is the capacity or customer parties per hour. Assume that our customers eat in groups (or customer parties) of two or three to a table. How many customers can the restaurant serve if the average customer party is 2.5? During lunch time, Customers arrive as per the schedule given.

Solution
If the average customer party is 2.5 individuals, then the average seat utilization is 62.5 percent (2.5 seats/party 4 seats per table) when the restaurant is operating at capacity. The Cycle Time for the restaurant, when operating at capacity, is 0.75 minute (30 minutes/table 40 tables). The restaurant could handle 80 customer parties per hour (60 minutes 0.75 minute/party) is the capacity or customer parties per hour. 20 tables empty during each 15-minute interval

11:30-11:45 11:45-12:00 12:00-12:15 12:15-12:30 12:30-12:45 12:45-1:00 1:00-1:15 1:15-1:30 Total Served Formula Data

During Period IN Out To Serve Tables 15 0 35 0 30 15 15 20 10 20 5 20 0 0

End of Period Wait

Wait Time

The first 15 tables empty after 30 mins. After that the restaurant can serve 20 tables every 15 minuets.

11:30-11:45 11:45-12:00 12:00-12:15 12:15-12:30 12:30-12:45 12:45-1:00 1:00-1:15 1:15-1:30 Total Served Formula Data

During Period IN Out To Serve Tables 15 0 15 35 0 50 30 15 65 15 20 60 10 20 5 20 0 0

End of Period Wait 15 40 40 40

0 10 25 20

. 12:00, we will have to keep 10 parties waiting: 15+35-40 At Between 12:00 12:15, we have another 30 parties coming in and 15 leaving. So we will have 15+35+30-40 -15 = 25 waiting 12:15-12:30 we have 15 parties coming in and 20 leaving, so we will have 15+35+30+15-40-15-20 = 20 waiting

11:30-11:45 11:45-12:00 12:00-12:15 12:15-12:30 12:30-12:45 12:45-1:00 1:00-1:15 1:15-1:30 Total Served Formula
.

During Period End of Period IN Out To Serve Tables Wait 15 0 15 15 0 35 0 50 40 10 30 15 65 40 25 15 20 60 40 20 10 20 50 40 10 5 20 35 35 0 0 20 15 15 0 0 15 0 0 0 110 20 per 15 Table+IN- IF((To serve<40),To To serveData mins OUT serve,40) Table

11:30-11:45 11:45-12:00 12:00-12:15 12:15-12:30 12:30-12:45 12:45-1:00 1:00-1:15 1:15-1:30 Total Served Formula

During Period End of Period IN Out To Serve Tables Wait Wait Time 15 0 15 15 0 0 35 0 50 40 10 7.5 30 15 65 40 25 18.75 15 20 60 40 20 15 10 20 50 40 10 7.5 5 20 35 35 0 0 0 20 15 15 0 0 0 15 0 0 0 0 110 20 per 15 Table+IN- IF((To serve<40),To To serveData mins OUT serve,40) Table Wait*15/20

Expected wait time = customers waiting x 0.75 minute Double up parties at the tables, thus getting a higher seat utilization. Might be the easiest solution to the problem. If 25 out of the 40 tables were doubled up, our problem would be solved (40+20)*2.5 > 40*4.. So?

Transit Bus Operation

Logistics refers to the movement of things such as materials, people, or finished goods. A single bus takes exactly two hours to traverse the route during peak traffic. Wait time for the customer: Maximum is 2 Minimum is 0, Average would be one hour. Bus capacity: seating 50 Standing 30

No of customers Av Time 8-9 AM 2,000 45 9-10 AM 4000 30 10-11 AM 6000 30 11-12 noon 5000 30 12-1 PM 4000 30 1-2 PM 3500 30 2-3 PM 3000 45 3-4 PM 3000 45 4-5 PM 3000 45 5-6 PM 4000 45 6-7 PM 3000 45 7-8 PM 1500 45

How do we estimate number of passengers carried by a bus per trip? Per hour?

No of Passenger Min No of Max No of customers Av Time Hours Buses Buses 8-9 AM 2,000 45 1500 18.75 30 9-10 AM 4000 30 2000 25 40 10-11 AM 6000 30 3000 37.5 60 11-12 noon 5000 30 2500 31.25 50 12-1 PM 4000 30 2000 25 40 1-2 PM 3500 30 1750 21.875 35 2-3 PM 3000 45 2250 28.125 45 3-4 PM 3000 45 2250 28.125 45 4-5 PM 3000 45 2250 28.125 45 5-6 PM 4000 45 3000 37.5 60 6-7 PM 3000 45 2250 28.125 45 7-8 PM 1500 45 1125 14.0625 22.5

Process Throughput Time Reduction

Perform activities in parallel

Change the sequence of activities Reduce interruptions

Productivity and Efficiency

Productivity is output to input. It may be total factor productivity or partial factor productivity.
The ratio is generally taken in monitory terms.

Efficiency is the ratio of actual output of a process relative to some standard or best level of output.

Process Performance Metrics

Littles Law
Littles Lawstates a mathematical relationship between throughput rate, throughput time, and the amount of work-in-process inventory. Littles Law estimates the time that an item will spend in work-in-process inventory, which can be useful for calculating the total throughput time for a process. Littles Law = Throughput time = Work-in-process Throughput rate (Throughput rate is the output rate that the process is expected to produce over a period of time.)

Example
if the assembly line has six stations with one unit of workin-process at each station, and the throughput rate is 2 units per minute (60 seconds/30 seconds per unit), then the throughput time is three minutes (6 units/2 units per minute). This formula holds for any process that is operating at a steady rate. Steady ratemeans that work is entering and exiting the system at the same rate over the time period being analyzed. For example, our assembly line has 120 units entering and 120 units exiting the process each hour. Not 150 units entering the system each hour but only 120 units exiting.

The McDonaldization of Society (1993) George Ritzer

Efficiency the optimal method for accomplishing a task. In this context, Ritzer has a very specific meaning of "efficiency". Here, the optimal method equates to the fastest method to get from point A to point B. Calculability objective should be quantifiable (e.g., sales) rather than subjective (e.g., taste). McDonaldization developed the notion that quantity equals quality, and that a large amount of product delivered to the customer in a short amount of time is the same as a high quality product. Predictability standardized and uniform services. Their tasks are highly repetitive, highly routine, and predictable. Control standardized and uniform employees, replacement of human by non-human technologies.

MAC: Make to Stock

RAW Material

Customer Orders
Finished Goods

Cook

Assemble

Deliver

Burger King: Hybrid

RAW Material

Assemble Customer Orders Sta nd ard

Finished Goods

Cook

WIP

Deliver

Wendys: Make to Order

RAW Material

Customer Orders

Assemble

Cook Chili

Assemble

Deliver

Make to Order Process Analysis Issues and Metrics?

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