lecture 4_21 august_how can om help
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LECTURE 4 HOW CAN OM HELP? Production and operations Management
Four Dimensions of Performance: Trade-offs
CostEfficiencyTimeResponsiveness to demandQualityProduct quality (how good?)
Process quality (as good as promised?)VarietyCustomer heterogeneityExample: Call center of a large retail bank - objective: 80% of incoming calls wait less than 20 seconds - starting point: 30% of incoming calls wait less than 20 seconds - Problem: staffing levels of call centers / impact on efficiency
OM helps: Provides tools to support strategic trade-offs. In this case OM provides tools to balanceresponsiveness with efficiency. ResponsivenessLabor Productivity(e.g. $/call)LowHighLow laborproductivityHigh laborproductivityTrade-offVery short waiting times,Comes at the expense ofFrequent operator idle timeLong waiting times,yet operators are almostfully utilizedWhat Can OM Do to Help? Step 1: Help Making Operational Trade-OffsResponsivenessLowHighEliminate inefficienciesCurrent frontierIn the industryLabor Productivity(e.g. $/call)Low laborproductivityHigh laborproductivityCompetitor ACompetitor CCompetitor BOM helps: Provides tools to identify and eliminate inefficiencies => Define Efficient Frontier
Types of inefficiencies:Poor process design Inconsistencies in activity networkWhat Can OM Do to Help?Step 2: Overcome InefficienciesOM helps: Evaluates system designs before they occurResponsivenessLowHighRedesignprocessCurrent frontierIn the industryLabor Productivity(e.g. $/call)Low laborproductivityHigh laborproductivityNew frontierWhat Can OM Do to Help?Step 3: Evaluate Proposed Redesigns/New TechnologiesOM Modules to be studiedModule 1: Process AnalysisModule 2: ProductivityModule 3: VarietyModule 4: ResponsivenessModule 5: Quality
Read handout 1Lecture 4: Module 1 Process AnalysisProcess analysiswhy are some operations more productive than others?Why are some operations more responsive than others?To answer these questions, we have to go inside the business processes that make up for the operations, our sole purpose of this module, process analysis. The three measuresIn this module, we'll introduce the three most important performance measures of an operation which are called: flow rate/through-put;Inventory;flow time.Subway Sitting in Front of the Store
We'll just spend some time observing how people come into and out of the restaurant
Subway Sitting in Front of the Store25 Minutes later.Subway Sitting in Front of the Store
Flow Unit: atomic unit of analysis (Customer)
Flow rate / throughput: number of flow units going through the process per unit of time
Flow Time: time it takes a flow unit to go from the beginning to the end of the process
Inventory: the number of flow units in the process at a given moment in time
Processes: The Three Basic MeasuresProcess Analysis: The Three MeasuresImmigration department
Applications
Approved or rejected cases
Processing time
Pending casesMBA program
Student
Graduating class
2 years
Total campus populationAuto company
Car
Sales per year
60 days
InventoryFlow unit
Flow rate
Flow time
InventoryFinding the bottleneckLecture 4: Module 1 Process AnalysisProcess AnalysisIn this session, we will take you INSIDE the black box
Specifically, you will learn how to:
1. Create a process flow diagram
2. Find the bottleneck of the process
3. Conduct a basic process analysis
Subway Inside the Store
Drawing a Process Flow DiagramSymbols in a process flow diagram
Customers
Station 1
Station 2
Station 3
capture activitiesCapturing wherever there is waiting linesor inventory/bufferIndicate the flow of flow unitsBasic Process Vocabulary Processing times/Activity time: how long does the worker spend on the task?
Capacity=1/processing time: how many units can the worker make per unit of time If there are m workers at the activity: Capacity=m/activity time
Bottleneck: process step with the lowest capacity
Process capacity: capacity of the bottleneck
Flow rate =Minimum{Demand rate, Process Capacity)
Utilization =Flow Rate / Capacity
Flow Time: The amount of time it takes a flow unit to go through the process
Inventory: The number of flow units in the system
Practice problem
Read handout 2
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