BU385 Final Exam-AID

1. BU385 Final Exam-AID

2. Lecture 9Operations Consulting and Reengineering

3. Forces for Rethinking Operational Capabilities • Customer Sophistication • Competitive Pressure • Move to Services

4. Operations Consulting • Assists clients in developing operations strategies and improving production processes • Strategy Development: • Analyze the capabilities of the operations in light of the firm’s competitive advantage • Process Improvement: • Employing analytical tools to help managers enhance performance of their departments

5. 5 Main Consulting Areas • Plant, People, Parts, Processes, Planning and Control Systems • Consulting Process • Sales and Proposal Development • Analyze Problem • Design, Develop and Test Alternatives • Develop Systematic Performance Measure • Present Final Report • Implement Changes • Assure Client Satisfaction • Assemble Learnings from Study

6. Consulting “Tool Kit” • Problem Definition Tools: Customer Surveys, Gap Analysis, Employee Surveys, Five Forces Model • Data Gathering Tools: Plant Tours/Audits, Work Sampling, Flowcharts, Organization Charts • Data Analysis Tools: Problem Analysis (SPC Tools), Bottleneck Analysis, Computer Simulation, Statistical Tools • Cost Impact and Payoff Analysis: Stakeholder Analysis, Balanced Scorecard, Process Dashboards • Implementation: Responsibility Charts, Project Management Techniques

7. Business Process Reengineering (BPR) • Michael Hammer: “The fundamental rethinking and radical redesign of business processes to achieve dramatic improvements in critical, contemporary measure of performance” • Guidelines for Implementation: • Codification of Reengineering • Clear Goals and Consistent Feedback • High Executive Involvement in Clinical Changes

8. BPR Principles • Organize around Outcomes, Not Tasks • Have Those Who Use the Output of the Process Perform the Process • Merge Information-Processing Work into the Real Work that Produces the Information • Treat Geographically Dispersed Resources as Though They Were Centralized • Link Parallel Activities Instead of Integrating Their Results • Put the Decision Point Where the Work is Performed and Build Control into the Process • Capture Information Once – At the Source

9. Lecture 12 Process Selection: Manufacturing

10. Types of Processes • Conversion Processes (ore  steel sheets) • Fabrication Processes (sheet metal  car door) • Assembly Processes (assembling parts to a car) • Testing Processes

11. Process Flow Structures • Job Shop (Small batches of many different products) • Batch Shop (Stable line of products produced in periodic batches) • Assembly Line • Continuous Flow (Processing of undifferentiated materials like petroleum)

12. Break Even Analysis • Cost Minimization E.g. 2 possible production methods • FC= 200, 000; VC = 15$ • FC= 80, 000; VC = 75$ To solve for indifference level of production: 200, 000 + 15*Demand=80, 000 + 75*Demand Demand = 2, 000 Units Therefore: Demand<2000:B Demand>2000: A

13. Manufacturing Process Flow Design • Evaluate processes raw materials, parts and subassemblies follow through the plant • Tools Used: • Assembly Drawings • Assembly Charts • Route Sheets • Flow Process Charts

14. Lecture 13Facility Layout and Assembly Line Balancing

15. Facility Layout • Goal is to find layout that maximized production efficiency • Typical Objectives of Plant Layout: • Min. investment required in new equipment • Min. time of production • Utilize existing space more efficiently • Provide safety, comfort and convenience to employees

16. Patterns of Flow • Most common goal for quantitative analysis: • Minimize Materials Handling Cost • With this goal Flow Analysis is necessary • 2 Classes • Horizontal Flows • Vertical Flow

17. Patterns of Flow cont’d • Horizontal Flow: • When all operations are on the same floor • Vertical Flow • Operations are on different floors of a building • 6 Horizontal Flow and 6 Vertical Flow patterns exits

18. Flow Patterns • Straight (straight line operation) • Serpentine (used when space is too small to fit all operations in straight line) • U flow (allows for shipping and receiving to be in same location) • Circular Flow • L-Flow (same as straight but building forces the line to move) • S-Flow (same as serpentine)

19. Activity Relationship Chart • Describes how desirable it is to place 2 activities in close proximity (subjective) • A: absolutely important • E: especially important • I: Important • O: Ordinary Importance • U: Unimportant • X: Undersirable

20. Closeness Rating between Departments Department 1 2 3 4 5 6 1. Burr and grind — E U I U A 2. NC equipment — O U E I 3. Shipping and receiving — O U A 4. Lathes and drills — E X 5. Tool crib — U 6. Inspection — Activity Relationship Chart

21. From-to-Charts • Used to analyze the flow of materials between departments • Shows distance between departments and the number of materials handling trips during the day • It is based on a specific layout

22. From-to-Chart - example From-to-Charts can then be adjusted by adding a cost to each unit of distance travelled. The charts are not meant to determine the layout of the facility, but to just give an understanding of where costs come from.

23. Types of Layouts • Fixed Position Layouts • Product Layouts • Process Layouts • Layouts Based on Group Technology

24. Fixed Position • Product is too big to be moved • Stays in one spot and work is done around it • E.g. Airplanes, Ships, Construction Sites

25. Product Layout • Machines are organized based on the sequence of operations required • Used for high-volume standardized production • Fastest cycle times in the environment • Main drawback: if one part of the line stops the rest of the line remains idle

26. Process Layouts • Small-to-Medium volume manufacturers • For wide variety in product mix Grinding Forging Lathes Painting Welding Drills Milling Office Foundry machines

27. Layouts Based on Group Technology • Parts are indentified and grouped based on similarities in manufacturing function or design • Cells are then used to process part families • Advantages: Reduce WIP inventory, Lower Set-Up Times, Reduce Materials Handling Costs, Better Scheduling

28. Assembly Line Balancing • Characterized as set of tasks per item produced • Time required per task: ti • Goal is to make groups of tasks for individual workstations • Amount of time per work station is set out beforehand • Time is based on desired production rate • Cycle Time (C)

29. Assembly Line Balancing • Factors that affect planning • Precedence Constraints (task sequence) • Zoning Restrictions (two tasks can’t be performed at the same station) • If ti is the amount of time per task, ∑ ti = T is the amount of time for the production of an item • Minimum # of Workstations = T/C, rounded to the next largest integer

30. Ranked Positional Weight Technique

31. Given • C = 15min • T = ∑ ti= 70 Theoretical Minimum Number of Workstations = [70/15] Min. # of Workstations = [4.67] Min. # of Workstations = 5

32. Ranked Positional Method requires solving for the Positional Weight of each task • Positional Weight of task i = ti+ time of each task that follows i

34. Tasks are ranked according to weights and assigned in that order • We know the cycle time for each station is 15 minutes • This means that the tasks at each station can only take up a maximum of 15 minutes • Using this method we get

35. Using the ranked positional method, we see that the minimum number of work stations is 6, and not the calculated number 5. This is because the ranked positional method is a heuristic. There may very well be a solution with only 5 stations, but using this method we cannot solve for it. For any new cycle time, just rebalance the stations using the positional weights already calculated.

36. Lecture 14Process Selection: Services

37. Service Process Selection • Generally classified according to • who the customer is • the creation of the service – what processes are involved • the presence of customer contact • The extent of the contact

38. Competitive Strategic Focus • Treatment of the customer • Speed and convenience • Price • Variety • Quality of the tangible goods that accompany the service • Unique skills that constitute the service

39. Service-System Design Matrix • Three degrees of customer contact • Buffered core: no contact • Permeable System: penetrable by the customer via phone or face-to-face contact • Reactive System: penetrable and reactive to the customer’s requirements Buffered core Permeable System Reactive System Sales Opportunity Production Efficiency

40. Service-System Design Matrix • Obviously, there is a trade-off between sales opportunities and production efficiencies • Operational uses: • Identification of worker requirements • Focus of operations • Innovations • Strategic uses: • Enables a systematic integration of operations and marketing strategy • Clarifies exactly which combination of service delivery the firm is providing • Permits comparison between firms & identification of competitive advantage • Indicates evolutionary or life cycle changes that might be in order as the firm grows

41. Fail-Safing – Poka-yokes • Poka-yokes are procedures that block the inevitable mistake from becoming a service defect • Help reduce errors caused by both the customer and the server • 3 types • Warning methods • Physical/visual contact methods • Three T’s: Task, Treatment(of the customer), and Tangible (features of the service facility)

42. Well-Designed Service Systems7 Characteristics 1. Each element of the service system is consistent with the operating focusof the firm 2. It is user-friendly 3. It is robust 4. It is structured so that consistent performanceby its people and systems is easily maintained 5. It provides effective linksbetween the back office and the front office so that nothing falls between the cracks 6. It manages the evidence of service quality in such a way that customers see the value of the service provided 7. It is cost-effective

43. Lecture 15Waiting Lines/ Queuing Analysis

44. Queuing Theory • N(t) = number of customers in the system at time t • Pn = probability of n customers in the system • λn = Arrival rate when there are n customers in the system; usually constant λn = λ • Number of arrivals/unit of time i.e. 5 people/minute • µ n = service rate; usually a constant  µ n = µ • Number of people or customers/unit of time • c = # of servers in the system; c≥1 • p = utilization rate; proportion of time each server is busy

45. More Notation • A(t) = the number of arrivals up until time t • L = Expected number of customers in the system • Lq = Expected number of customers in the queue • W = Expected total waiting time in the system of a customer • From arrival to being fully served • Wq = Expected waiting time in the queue • K = system’s capacity – maximum number of people; i.e. n<K

46. Useful Relations • W = Wq + 1/µ • L = λW = (customers/time) * (waiting time in system) • Lq = λWq= (customers/time) * (waiting time in queue)

47. M/M/# • Arrival process / Service Process / Number of is random is random servers • Arrival Process has a Poisson Distribution: P{A(t) = n} = e(-λt) (λt)n/n!

48. M/M/1 – 1 server P0 = P{Wq = 0} P1 =P0*(λ/µ) = (1-p)*(λ/µ) Pn = pi(1-p) P{L>k} = probability of there being more than k people in the system = = pk+1 P{Wq > t} = probability of waiting more than t minutes/seconds/etc in the queue = pe-(µ-λ)t

49. M/M/c • c servers in parallel Pn = (λ/µ)nP0/n! if n≤c Pn = (λ/µ)nP0/(c!cn-c) if n>c

50. Lecture 16Strategic Capacity Planning