ProcessSelection&AnalysisS

1OM3 Chapter 7 Process Selection, Design, and Analysis© 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

PROCESS SELECTION, DESIGN, AND ANALYSIS

DAVID A. COLLIER AND JAMES R. EVANS


CHAPTER 7 PROCESS SELECTION, DESIGN, AND ANALYSISValue chain—a network of processes.


CHAPTER 7 PROCESS SELECTION, DESIGN, AND ANALYSIS

Process Design – Four Levels of Work

• Task—a specific unit of work required to create an output.

• Activity—a group of tasks (sometimes called a workstation) needed to create and deliver an intermediate or final output.

• Process—a group of activities.

• Value chain—a network of processes.



Process Choice Decisions – Types of Goods and Services

- Examples include ships, weddings, certain jewelry, estate plans, buildings, and surgery.

• Custom, or make-to-order, goods and services are generally produced and delivered as one-of-a-kind or in small quantities, and are designed to meet specific customers’ specifications.




- Examples are Dell computers, Subway sandwiches, machine tools, and travel agent services.

• Option, or assemble-to-order, goods and services are configurations of standard parts, subassemblies, or services that can be selected by customers from a limited set.




- Examples are appliances, shoes, sporting goods, credit cards, online Web-based courses, and bus service.

• Standard, or make-to-stock, goods and services are made according to a fixed design, and the customer has no options from which to choose.

Process Selection

Process Selection



Five Basic Processes

• Project• Job shop (craft production)• Batch• Repetitive / Assembly line (mass production) • Continuous flow



Process Types• Project

–Non-routine, one of a kind.–Limited time frame–Ranging from simple to

complicated? Examples:

Making a motion picture, construction, a homework assignment.



Process Types• Job Shop (craft production)

– Operates on a relatively small scale– Low volume– High variety– Processing is intermittent– Skilled workers / general tools or

machines? Examples?Doctor’s office, Beauty shop, and Auto repair.



Process Types• Batch

–Moderate volume–moderate variety–Processing is intermittent–General equipment and skilled

workers? Examples?

Bakeries, Movie theaters, Airlines, and Schools



Process Types• Repetitive Manufacturing / Assembly

(mass production)–High volume–Standardized product–Specialized equipment –Do not need skilled workers? Examples?

Production lines and assembly lines: TV sets, pencils, and computers.



Process Types• Continuous flow

– Very high volume– Highly standardized product/no

variety– Special equipment with no

flexibility– Do not need skilled workers? Examples?

Petroleum products, steel, sugar, flour, salt, electricity, and the Internet!



Process Selection TheoryFactors to be considered: Variety in products

Sugar Vs. Precious Jewelry

Expected volume of demand for each kind Sugar Vs. Spaceship



Variety, Flexibility, & VolumeProductVariety

High Moderate Low Very Low

Equipmentflexibility

High Moderate Low Very Low

LowVolume

ModerateVolume

HighVolume

Very highVolume

JobShopJob Shop

Batch

Repetitiveassembly

ContinuousFlow



Product-Process Matrix

Flexibility-Quality Dependability-Cost

ContinuousFlow

AssemblyLine

Batch

JobShop

LowVolumeOne of aKind

MultipleProducts,LowVolume

FewMajorProducts,HigherVolume

HighVolume,HighStandard-ization

BeautyShop

Schools

TVAssembly

SugarRefinery

Flexibility-Quality

DependabilityCost



Process Type?

Why?

• Super market?

• Coca-cola?



Process Type of Meatrix?

Don’t know what the MEATRIX is? Know Movie “the Matrix”?Let’s see together.http://www.themeatrix1.com/

http://www.themeatrix1.com/




ContinuousFlow

Repetitive Manufacturing

Batch

JobShop





Factory Farming

Flexibility-Quality

DependabilityCost

The MEATRIX

Family Farming




ContinuousFlow

AssemblyLine

Batch

JobShop





Flexibility-Quality

DependabilityCost

This is the whole meaning of Industry Revolution and scientific and decisional

management.

Emerging of New Industry!

More efficient production!



The Incentive for New Revolution

• At first, Ford’s Model T had only one color: black• The black western electric desk telephone went

almost unchanged for 40 years.The long setup/changeover time of the assembly line

makes it hard to produce a variety of products.

The increasingly diversified customer demand.


CHAPTER 7 PROCESS SELECTION, DESIGN, AND ANALYSISThe Modern Production Systems:Breaking Down the Diagonal!

• Lean Production


ContinuousFlow

AssemblyLine

Batch

JobShop





BeautyShop

Schools

AutomobileAssembly

SugarRefinery

Flexibility-Quality

DependabilityCost



Lean Production

• Using assembly lines to efficiently produce a variety of products to satisfy diversified customer demand at a “sweet “ price.– Reduce setup time– Flexible machine– Information Management

• We will revisit the issue later


CHAPTER 7 PROCESS SELECTION, DESIGN, AND ANALYSISThe Modern Production Systems:Breaking Down the Diagonal!

• Mass Customization


ContinuousFlow

AssemblyLine

Batch

JobShop





Tailor’s

Schools

Clothes

SugarRefinery

Flexibility-Quality

DependabilityCost

Tailored Suits



Mass Customization

Dell

Levi Straus “Personal Pair” women’s jeans Customer measurements are entered at the POS

(point of sale) measurements sent to Tennessee factory 300% increase in sales and a corresponding

reduction in inventory.

“Pioneered in Jeans, Customization Spreads to Shoes and Fragrances,”The Christian Science Monitor, 12/30/96


CHAPTER 7 PROCESS SELECTION, DESIGN, AND ANALYSISFive basic process types• Project• Job Shop• Batch• Repetitive / Assembly• Continuous flow

Trade off between efficiency and variety


CHAPTER 7 PROCESS SELECTION, DESIGN, AND ANALYSISObtain both efficiency and variety!

• Lean Production

• Mass Customization

Combineefficiency and variety



The Service-Positioning Matrix• In the product-process matrix, product volume, the

number of products, and the degree of standardization/customization determine the manufacturing process that should be used. This relationship between volume and process is not found in many service businesses.

• The Service-Positioning Matrix is similar to the product-process matrix in that it suggests that the nature of the customer’s desired service encounter activity sequence should lead to the most appropriate service system design and that superior performance results by generally staying along the diagonal of the matrix.



The Service-Positioning Matrix• A pathway is a unique route through a

service system. Pathways can be customer- or provider-driven, depending on the level of control that the service firm wants to ensure.

• The service encounter activity sequence consists of all the process steps and associated service encounters necessary to complete a service transaction and fulfill customer’s wants and needs.



Source: Adapted from D. A. Collier and S. M. Meyer, “A Service Positioning Matrix,” International Journal of Production and Operations Management, 18, no. 12, 1998, pp. 1123–1244. Also see D. A. Collier and S. Meyer, “An Empirical Comparison of Service Matrices,” International Journal of Operations and Production Management, 2000 (no. 5–6), pp. 705–729.

Exhibit 7.3

The Service Positioning Matrix



The Service-Positioning Matrix• Customer-routed services are those

that offer customers broad freedom to select the pathways that are best suited for their immediate needs and wants, from many possible pathways through the service delivery system. - Examples include searching the

Internet, museums, health clubs, and amusement parks.



The Service-Positioning Matrix• Provider-routed services constrain

customers to follow a very small number of possible and predefined pathways through the service system. - Examples are a newspaper dispenser

and logging on to a secure online bank account.

Facility LayoutFa



Facility Layout

Facility layout refers to the specific arrangement of physical facilities. Facility-layout studies are necessary whenever: 1. a new facility is constructed, 2. there is a significant change in demand

or throughput volume, 3. a new good or service is introduced to

the customer benefit package, or 4. different processes, equipment, and/or

technology are installed.



Facility Layout

Purposes of layout studies are to: • minimize delays in materials handling and

customer movement.• maintain flexibility. • use labor and space effectively.• promote high employee morale and

customer satisfaction.• provide for good housekeeping and

maintenance.• enhance sales as appropriate in

manufacturing and service facilities.



Facility Layout • A product layout is an arrangement

based on the sequence of operations that are performed during the manufacturing of a good or delivery of a service.

• Examples: Winemaking industry, credit card processing, Subway sandwich shops, paper manufacturers, insurance policy processing, and automobile assembly lines.



Exhibit 8.1 Product Layout for Wine Manufacturer



Facility Layout

Product Layout• Advantages: Lower work-in-process

inventories, shorter processing times, less material handling, lower labor skills, and simple planning and control systems.

• Disadvantages: A breakdown at one workstation can cause the entire process to shut down; a change in product design or the introduction of new products may require major changes in the layout, limiting flexibility.



Facility Layout • A process layout consists of a functional

grouping of equipment or activities that do similar work.

• Examples: Legal offices, shoe manufacturing, jet engine turbine blades, and hospitals use a process layout.



Exhibit 8.2 Process Layout for a Machine Shop



Facility Layout

Process Layout• Advantages: A lower investment in

equipment, the diversity of jobs inherent in a process layout can lead to increased worker satisfaction.

• Disadvantages: High movement and transportation costs, more complicated planning and control systems, longer total processing time, higher in-process inventory or waiting time, and higher worker-skill requirements.



Facility Layout • In a cellular layout, the design is not

according to the functional characteristics of equipment, but rather by self-contained groups of equipment (called cells), needed for producing a particular set of goods or services.

• Examples: Legal services, such as labor law, bankruptcy, divorce; medical specialties such as maternity, oncology, surgery.



Source: J. T. Black, “Cellular Manufacturing Systems Reduce Set Up time, Make Small-Lot Production Economical,” Industrial Engineering Magazine, Nov. 1983. Used with permission from the author.

Exhibit 8.3 Cellular Manufacturing Layout



Facility Layout

Cellular Layout• Advantages: Reduced materials-handling

requirements, quicker response to quality problems, more efficient use of floor space, more worker responsibility increasing morale.

• Disadvantages: Duplication of equipment among cells, greater worker skills requirements.



Facility Layout• A fixed-position layout consolidates the

resources necessary to manufacture a good or deliver a service, such as people, materials, and equipment, in one physical location.

• Examples: The production of large items such as heavy machine tools, airplanes, buildings, locomotives, and ships. Service-providing examples include major hardware and software installations, sporting events, and concerts.



Fixed-Position Layout

• Advantages: Work remains stationary, reducing movement.

• Disadvantages: High level of planning and control required.



Exhibit 8.4 Comparison of Basic Layout Patterns


CHAPTER 7 PROCESS SELECTION, DESIGN, AND ANALYSISType of Layouts• Process Layouts• Product Layouts• Cellular Layouts• Fixed Position Layouts

http://www.youtube.com/watch?v=40OOBYOc5BQ

http://www.youtube.com/watch?v=viySR5_dEaI

http://www.youtube.com/watch?v=68hapDEQEj0



Content Can Be Found• PPT on Blackboard• Book Chapter 7 section 1 about three types

of products / services (custom, option, and standard), skip process type part.

• Book Chapter 7 section 3• Book Chapter 8 Section 1



Process and Value Stream Mapping• A process map (flowchart) describes the

sequence of all process activities and tasks necessary to create and deliver a desired output or outcome. - Process maps document how work either is, or

should be, accomplished, and how the transformation process creates value.

• A process boundary is the beginning or end of a process. - Makes it easier to obtain management

support, assign process ownership, and identify where performance measures should be taken.



Exhibit 7.4 The Hierarchy of Work and Cascading Flowcharts for Antacid Tablets



Process and Value Stream Mapping• In service applications, flowcharts generally

highlight the points of contact with the customer and are often called service blueprints or service maps.

• Such flowcharts often show the separation between the back office and the front office with a “line of customer visibility.”



Process and Value Stream Mapping• The value stream refers to all value-added

activities involved in designing, producing, and delivering goods and services to customers.

• A value stream map (VSM) shows the process flows in a manner similar to an ordinary process map; however, the difference lies in that value stream maps highlight value-added versus non-value-added activities and include costs associated with work activities for both value- and non-value-added activities.



Flowchart• A rectangle denotes a task or work activity.• A triangle indicates waiting or inventory• An oval denotes the “start” or “end” • An arrow denotes movement, transfer, and flow to the next

task or activity• A double headed arrow denotes an input or arrival into a

process• A diamond denotes a decision that might result in taking

alternative paths. • Line of customer visibility.



Exhibit 7.5

Automobile Repair Flowchart



Process and Value Stream Mapping

Examples of non-value-added activities include:

• Transferring materials between two nonadjacent workstations

• Overproducing• Waiting for service or work to do • Not doing work correctly the first time• Requiring multiple approvals for a low cost

electronic transaction



Exhibit 7.6 Restaurant Order Posting and Fulfillment Process



Exhibit 7.7

Value Stream Map for Restaurant Order Posting and Fulfillment Process


CHAPTER 7 PROCESS SELECTION, DESIGN, AND ANALYSISThree basic measures of a process


CHAPTER 7 PROCESS SELECTION, DESIGN, AND ANALYSISProductivity






CHAPTER 7 PROCESS SELECTION, DESIGN, AND ANALYSISCapacity



Utilization


CHAPTER 7 PROCESS SELECTION, DESIGN, AND ANALYSISFace Game

WIP2

WIP1

RMI

FGI

OP 1 OP 2 OP 3

Break into groups of 3. Each people performs one of the 3 operations above. Use sticky pads and draw with pencils.

When time is called, write down how many cards are in each operation and each inventory area except RMI.

Raw Material Inv.

Work-in-process Finished

goods Inv.


CHAPTER 7 PROCESS SELECTION, DESIGN, AND ANALYSISFace Game

WIP2

WIP1

RMI

FGI

OP 1 OP 2 OP 3

One P-POINT for the winning team!

Quality Matters: Don’t count the defective ones.


CHAPTER 7 PROCESS SELECTION, DESIGN, AND ANALYSISFace Game: Example

Card Counts: 1 24 1 0 1 14

WIP2

WIP1

RMI

FGI

OP 1 OP 2 OP 3



InputsOutputs

tyProductivi

Productivity Defined

• Inputs: labor, materials, capital, …• Outputs: goods, services

Productivity: a measure of the effective use of resources, usually expressed as the ratio of output to input.


CHAPTER 7 PROCESS SELECTION, DESIGN, AND ANALYSISFactor Productivity Measures• Partial productivity (a single input)• Multifactor productivity (more than one input)• Total productivity (all inputs)

…Calculation depends on units used: – Units of output per labor hour– Units of output per dollar spent– Sales ($) per dollar spent



Card Counts: 1 24 1 0 1 14

WIP2

WIP1

RMI

FGI

OP 1 OP 2 OP 3

Productivity of the group: How many faces per person minute?

14 faces in 2 minutes by 3 persons Productivity = output / input = 14 faces / ( 3 *2 minutes) = 2.33 faces/ minute


CHAPTER 7 PROCESS SELECTION, DESIGN, AND ANALYSISCapacityThe upper limit or ceiling on the load that an operating unit can handle.

• No downtime• No maintenance• No breakdown• As fast as possible


CHAPTER 7 PROCESS SELECTION, DESIGN, AND ANALYSISFace Game: Capacity

Card Counts: 1 24 1 0 1 14

WIP2

WIP1

RMI

FGI

OP 1 OP 2 OP 3

How many parts did OP1, OP2, and OP3 finish?

OP1: 24+1+1+14=40

OP3: 14

OP2: 1+14=15



Card Counts: 1 24 1 0 1 14

WIP2

WIP1

RMI

FGI

OP 1 OP 2 OP 3

How long it takes each person to do a face?

OP1: 120/40=3 secOP3: ?? Can’t say because of idle time. Let’s assume it is 5 sec for the later analysis

OP2: (120-3)/15 =8 sec



Card Counts: 1 24 1 0 1 14

WIP2

WIP1

RMI

FGI

OP 1 OP 2 OP 3

Bottleneck? The slowest person/equipment that determines the system capacity.

Bottleneck: Second person



CT: 3 8 5

WIP2

WIP1

RMI

FGI

OP 1 OP 2 OP 3

Capacity of each person?

OP1: 3 sec to finish a job, capacity: 20 circles/minuteOP2: 8 sec to finish a job, capacity: 60/8= 7.5 jobs/minuteOP3: 5 sec to finish a job, capacity: 60/5=12 jobs/minute



CT: 3 8 5

WIP2

WIP1

RMI

FGI

OP 1 OP 2 OP 3

Capacity of the system/group?

OP2: 8 sec to finish a job, capacity: 60/8= 7.5 jobs/minute


CHAPTER 7 PROCESS SELECTION, DESIGN, AND ANALYSISUtilization Analysis

• UtilizationThe percentage of time of a single person or

machine working on the product or on performing the service.

= Working Time / Total Available Time = Actual output per unit time / Capacity



CT: 3 8 5

WIP2

WIP1

RMI

FGI

OP 1 OP 2 OP 3

Utilization of OP1? OP2? OP3?OP1: Output: 40 in 2 minutes. Utilization=Output rate/capacity=20/20=100%OP2: Output: 15 in 2 minutes. Utilization=Output rate/capacity=7.5/7.5=100%

OP3: Output: 14 in 2 minutes. Utilization=Output rate/capacity=7/12=58.3%



CT: 3 8 5

WIP2

WIP1

RMI

FGI

OP 1 OP 2 OP 3

The average utilization of the group?

System average utilization: (100%+100%+58.3%)/3=86.1%



• How to improve the efficiency of the face drawing process? – Balance the line– Flexible process: people take all the tasks and

they work in parallel.

WIP2

WIP1

RMI

FGI

OP 1 OP 2 OP 3


CHAPTER 7 PROCESS SELECTION, DESIGN, AND ANALYSISMore examples: Productivity• Partial productivity

Output LaborPeriod 1 1000 units 100 hrsPeriod 2 1100 105

Productivity10.0 units / hour10.5 units / hour

How many units we can make per labor hour?


CHAPTER 7 PROCESS SELECTION, DESIGN, AND ANALYSISCalculating Productivity

A company produces 10,000 UnitsUnits are Sold for $10/unitLabor used 500 labor hoursLabor rate $9/hrEnergy $5,000Raw Material: $25,000

Labor Productivity (unit/hour): Total Productivity(Sales($)/$:)

10,000 Units / 500 hours = 20 units/hr

$10/unit * 10,000 Units ‘ $5000 + $25,000 + ($9/hour * 500 hours)= $100,000/$34,500 = 2.899


CHAPTER 7 PROCESS SELECTION, DESIGN, AND ANALYSISUtilization• If we determine that the capacity of an employee is 25 units/hour, labor utilization of any worker? Assuming all workers are working at the same utilization.

Utilization = output rate / capacity = 20/25 =80%



Where to find content• PPT on Blackboard• Book Chapter 7 section 4 and 5

ProcessSelection&AnalysisS

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