the System Will Overfl ow.
exhibit 6.4
New work enters the process
Work waiting to be completed
Throughput time
Process required to complete work Completed work
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170 Section 2 PROCESSES
Blocking The activities in the stage must stop because there is no place to deposit the item just completed.
Bottleneck A stage or activity (or resource) that limits the capacity or maximum output of the process.
Buffering A storage area between stages where the output of a stage is placed prior to being used in a downstream stage. Buffering allows the stages to operate independently.
Cycle time The average time between completions of suc- cessive units in a process (this is the defi nition used in this book). The term is sometimes used to mean the elapsed time between starting and completing a job (throughput time).
Effi ciency A ratio of the actual output of a process relative to some standard.
Hybrid Combines the features of both make-to-order and make-to-stock. Typically, generic components are made and stocked at some point in the process. These generic compo- nents are customized in a fi nal process to meet actual orders.
Make-to-order A process that is activated only in response to an actual order.
Make-to-stock A process that produces standard products that are stored in fi nished goods inventory. The product is de- livered quickly to the customer from the fi nished goods inventory.
Mass customization Providing customized end products while at the same time using the effi ciencies of a high volume manufacturing process.
Modular products Products that are assembled into differ- ent end products from standard modules (components).
Operation time The sum of the set-up time and run time for a batch of parts that are run on a machine.
Pacing Movement of items through a process is coordinated through a timing mechanism. Most processes are not paced, but assembly lines are usually paced.
Process Any set of activities performed by an organization that takes inputs and transforms them into outputs, ideally of greater value to the organization than the original inputs.
Process velocity or throughput ratio The ratio of the total throughput time to the value-added time.
Productivity The ratio of output to input. Taking the dollar value of the output and dividing by the dollar value of the in- puts usually measures total factor productivity. Alternatively, partial factor productivity is measured based on an individual input and often is not calculated using dollar values (an exam- ple would be units/person).
Run time The time required to produce a batch of parts.
Set-up time The time required to prepare a machine to make a particular item.
Starving The activities in a stage must stop because there is no work.
Throughput rate The output rate that the process is ex- pected to produce over a period of time.
Throughput time The average time that it takes a unit to move through an entire process. Usually, the term lead time is used to refer to the total time that it takes a customer to receive an order (includes time to process the order, throughput time, and delivery time).
Utilization The ratio of the time that a resource is actually activated relative to the time that it is available for use.
Value-added time The time in which useful work is actually being done on the unit.
Value stream mapping Visually describing a process and analyzing it for improvement.
Daffy Dave’s Sub Shop makes custom submarine sandwiches to order. Dave is analyzing the processes at the shop. The general fl ow of the process is shown below. A separate person works at each of the steps in the process.
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Daffy Dave wants to fi gure out the following for a typical 8-hour work day.
a. What is the current maximum output of the process?
b. If we add another person, where would we add him or her and what is the benefi t?
c. Is there a benefi t if we can shift 1 minute from Bun and Meat to Order Taking? Assume we do not make the change in part b above.
d. Is there a benefi t if we shift 1 minute of work from Condiments to Bagging? Assume we do not make the changes in parts b and c above.
SOLUTION
a. Maximum output is 120 subs per day. Take the
order
1 minute/order 3 minutes/order 4 minutes/order 2 minutes/order
Slice the bun and add the meat/cheese
Add the toppings and
condiments
Bag the order
OPERATION OUTPUT
Take Orders (60 min. per hour/1 min. per order) * 8 hours 5 480 subs per day Bun and Meat (60 min. per hour/3 min. per order) * 8 hours 5 160 subs per day Toppings/Condiments (60 min. per hour/4 min. per order) * 8 hours 5 120 subs per day Bag the Order (60 min. per hour/2 min. per order) * 8 hours 5 240 subs per day
Output per day is determined by the slowest station; therefore, we can only produce 120 per day because that is the limit of the Toppings/Condiments station.
b. Dave should add the person to the slowest station (Condiments/Toppings) since it is the bottleneck.
OPERATION OUTPUT
Take Orders 480 subs per day
Bun and Meat 160 subs per day
Toppings/Condiments 120 * 2 5 240 subs per day
Bag the Order 240 subs per day
The impact is not a very big one. Even though the Toppings/Condiments station now can do 240 subs per day, the Bun and Meat station can only do 160, so that is the maximum output.
c. Order Taking station will go from 1 minute to 2 minutes, and Bun and Meat goes from 3 minutes to 2 minutes.
OPERATION OUTPUT
Take Orders (60 min. per hour/2 min. per order) * 8 hours 5 240 subs per day Bun and Meat (60 min. per hour/2 min. per order) * 8 hours 5 240 subs per day Toppings/Condiments (60 min. per hour/4 min. per order) * 8 hours 5 120 subs per day Bag the Order (60 min. per hour/2 min. per order) * 8 hours 5 240 subs per day
There is no benefi t to this change. Dave can still only make 120 subs per day since we can only produce 120 per day because that is the limit of the Toppings/Condiments station.
d. Toppings/Condiments station will go from 4 minutes to 3 minutes, and Bagging goes from 2 minutes to 3 minutes.
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172 Section 2 PROCESSES
There is a benefi t to this change. Dave can now make 160 subs per day. This will provide the same benefi t as hiring another worker. However, if Dave wants to increase output further, he will have to hire some additional staff.
OPERATION OUTPUT
Take Orders (60 min. per hour/1 min. per order) * 8 hours 5 480 subs per day Bun and Meat (60 min. per hour/3 min. per order) * 8 hours 5 160 subs per day Toppings/Condiments (60 min. per hour/3 min. per order) * 8 hours 5 160 subs per day Bag the Order (60 min. per hour/3 min. per order) * 8 hours 5 160 subs per day
1. Compare McDonald’s old and new processes for making hamburgers. How valid is McDonald’s claim that the new process will produce fresher hamburgers for the customer? Comparing McDonald’s new process to the processes used by Burger King and Wendy’s, which process appears to produce the freshest hamburgers?
2. Explain how having more work-in-process inventory can improve the effi ciency of a process. How can this be bad?
3. Recently, some operations management experts have begun insisting that simply minimizing process velocity, which actually means minimizing the time that it takes to process something through the system, is the single most important measure for improving a process. Can you think of a situation in which this might not be true?
4. What is a bottleneck and how does it help manage a process?
5. What are the advantages and disadvantages of a modularized process compared to make-to-stock and make-to-order processes?
6. For what type of products or services would it not be appropriate to use a hybrid process? 7. Give an example of a process where you have observed a reduction in set-up time through the
use of better technology or better techniques. How has this set-up time reduction helped?
1. Osakwe, an enterprising student, has set up an internship clearinghouse for business students. Each student who uses the service fi lls out a form and lists up to 10 companies that he or she would like to have contacted. The clearinghouse has a choice of two methods to use for process- ing the forms. The traditional method requires about 20 minutes to review the form and arrange the information in the proper order for processing. Once this set-up is done, it takes only two minutes per company requested to complete the processing. The other alternative uses an optical scan/retrieve system, which takes only a minute to prepare but requires fi ve minutes per company for completing the processing. If it costs about the same amount per minute for processing with either of the two methods, when should each be used?
2. Rockness Recycling refurbishes rundown business students. The process uses a moving belt, which carries each student through the fi ve steps of the process in sequence. The fi ve steps are as follows:
TIME REQUIRED
STEP DESCRIPTION PER STUDENT
1 Unpack and place on belt 1.0 minute 2 Strip off bad habits 1.5 minutes 3 Scrub and clean mind 0.8 minute 4 Insert modern methods 1.0 minute
5 Polish and pack 1.2 minutes
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CHAPTER 6 Process Analysis 173
One faculty member is assigned to each of these steps. Faculty members work a 40-hour week and rotate jobs each week. Mr. Rockness has been working on a contract from General Eclec- tic, which requires delivery of 2000 refurbished students per week. A representative of the human resources department has just called, complaining that the company hasn’t been receiv- ing the agreed-upon number of students. A check of fi nished goods inventory by Mr. Rockness reveals that there is no stock left. What is going on?
3. A local market research fi rm has just won a contract for several thousand small projects involv- ing data gathering and statistical analysis. In the past, the fi rm has assigned each project to a single member of its highly trained professional staff. This person would both gather and analyze the data. Using this approach, an experienced person can complete an average of 10 such proj- ects in an eight-hour day.
The fi rm’s management is thinking of assigning two people to each project in order to allow them to specialize and become more effi cient. The process would require the data gatherer to fi ll out a matrix on the computer, check it, and transmit it to the statistical analy- sis program for the analyst to complete. Data can be gathered on one project while the analysis is being completed on another, but the analysis must be complete before the statisti- cal analysis program can accept the new data. After some practice, the new process can be completed with a standard time of 20 minutes for the data gathering and 30 minutes for the analysis.
a. What is the production (output per hour) for each alternative? What is the productivity (out- put per labour hour)?
b. How long would it take to complete 1000 projects with each alternative? What would the labour content (total number of labour hours) for 1000 projects be for each alternative? 4. The following represents a process used to assemble a chair with an upholstered seat. Stations
A, B, and C make the seat; stations J, K, and L assemble the chair frame; station X is where the two subassemblies are brought together; and some fi nal tasks are completed in stations Y and Z. One worker is assigned to each of the stations. Generally, no inventory is kept anywhere in the system, although there is room for one unit between each of the stations that might be used for a brief amount of time.
B C A K L J Y Z X
Given the following amount of work in seconds required at each station:
A 38 J 32 X 22
B 34 K 30 Y 18
C 35 L 34 Z 20
a. What is the possible daily output of this “process” if 8 hours of processing time is available each day?
b. Given your output rate in part a , what is the effi ciency of the process?
c. What is the throughput time of the process?
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174 Section 2 PROCESSES
5. Wally’s Widget Warehouse takes orders from 7 a.m. to 7 p.m. The manager wants to analyze the process. There are three steps required to ship a customer order. The fi rst step is to take the order from a customer (capacity: 100 customers/hr). The second step is to pick the order for the customer (capacity: 80 customers/hr), and then the warehouse has to pack the order ready for ship- ping (capacity: 60 customers/hr). Wally promises that every order placed today gets shipped tomorrow. That means that the picking and packing operations must fi nish all orders before they go home.
Wally wants to fi gure out the following.
a. Draw the fl owchart of the process from customer order placement to shipping
b. What is the current maximum output of the process assuming that no one works overtime?
c. How long will the picking and packing operations have to work if we have a day where the order taker works at his maximum capacity?
d. Given c , what is the maximum number of orders waiting to be picked?
e. Given c , what is the maximum number of orders waiting to be packed?
f. If we double the packing capacity (from 60 to 120 orders per hour), what impact does this have on your answers in parts c, d , and e ?
6. Anvi, the manager of a bakery, is interested in analyzing her bread-making process. The raw materials required for making bread are carried in inventory. Two steps are required in pre- paring the bread. The fi rst is preparing the dough and baking the loaves, here referred to as bread making. The second is packaging the loaves. Due to the size of the mixers in the bakery, bread is made in batches of 100 loaves. A batch of 100 loaves is baked every hour. The loaves are then put into an intermediate stocking area ready for packing. Packaging needs only 0.75 hour to place the 100 loaves in bags. The loaves are then stored, waiting for shipment
Anvi is considering buying an additional bread-making machine (though not an additional packaging machine). The time for each individual bread-making operation is still one hour per 100 loaves. Assume that the bakery can sell all it can bake. 4
a. Draw fl owcharts for the situations with both one and two bread-making machines.
b. When there is only one bread-making machine what is the capacity of the bakery per hour? What are the utilizations of the bread-making and packing operations?
c. When there are two bread-making machines what is the capacity of the bakery per hour? What are the utilizations of the bread-making and packing operations?
You and your roommate are preparing to start Kristen’s Cookie Company in your on-campus apartment. The company will provide fresh cookies to starving students late at night. You need to evaluate the preliminary design for the company’s production process to fi gure out many variables there are, including what prices to charge, whether you will be able to make a profi t, and how many orders to accept.