POM: chap 1+2: Operations and Productivity

What Is Operations Management?

*Production is the creation of goods and services.
*Operations management (OM) is the set of activities that creates value in the form
of goods and services by transforming inputs into outputs.
Essential functions:
Marketing : generates demand.
Production/operations : creates the product.
Finance/accounting : tracks how well the organization is doing, pays bills, collects the
money.
Why Study OM?
-OM is one of three major functions (marketing, finance, and operations)
of any organization.
-We want (and need) to: know how goods and services are produced, and understand
what operations managers do.
-OM is such a costly part of an organization
What Operations Managers Do? Planning, Organizing , Staffing, Leading, Controlling
The Critical Decisions:
Technology/methods, Facilities/space utilization, Strategic issues, Response time ,
People/team development, Customer service, Quality, Cost reduction, Inventory
reduction, Productivity improvement.
Productivity Challenge:Productivity is the ratio of outputs (goods and services) divided
by the inputs (resources such as labor and capital)
=>The objective is to improve this measure of efficiency
=>Important Note! Production is a measure of output only and not a measure of
efficiency
The Economic System:
1/Inputs: Labor, capital, management | 2/ Processes | 3/ Outputs:Goods and services.
*Productivity: Units produced/Input used
-Measure of process improvement/ -Represents output relative to input
-Only through productivity increases can our standard of living improve
*Multi-Factor Productivity: Output/(Labor + Material + Energy + Capital +
Miscellaneous)
-Also known as total factor productivity
-Output and inputs are often expressed in dollars
Measurement Problems:
-Quality may change while the quantity of inputs and outputs remains constant
-External elements may cause an increase or decrease in productivity
-Precise units of measure may be lacking
Productivity Variables: Labor/Capital/Management
Productivity concerns the efficient use of resources.
Productivity is an index measuring production (goods & services) in relation to the
inputs used (capital, labor, raw material, energy,etc).
Productivity is the ratio between the quantity of outputs produced and that of inputs
used for production.
We talk about the overall or total productivity of a company when we compare all of
its outputs to all of its inputs.
Partial Productivity: Use of a single input or a specific group of inputs, for example,
labor productivity, which compares production solely to the amount of labor invested.
Multifactor Productivity: Considers multiple inputs in relation to total production. It is
a more complex measure that takes into account the overall efficiency of resource
utilization in a company.
Warning!
1/ Avoid measuring productivity based on factors that are not controlled by the
production process. Examples of external factors that can influence productivity:
Weather conditions, External market demand, Supplier performance,Government
regulations
2/ The improvement in production does not necessarily mean an improvement in
productivity.
Production capacity:
The capacity of a production system is the theoretical maximum quantity of goods or
services it can produce during a given period under predefined conditions.
*A capacity that is too low often signifies unmet demand.
*while a capacity that is too high frequently indicates unnecessary tied-up capital.
Determination and measurement of capacity:
When choosing a capacity measurement, it is important to select one that does not
require updates, such as a monetary-based measurement.
We distinguish two types of capacity:
Theoretical Capacity: Maximum production rate achieved under ideal conditions.
Real Capacity: Optimal production rate achieved considering various factors such as
scheduling issues, machine maintenance, meal hours, and coffee breaks.

Note:
It should be noted that it is always know that the real capacity >= actual production
Several factors contribute to this phenomenon, such as machine breakdowns, absenteeism,
supply issues, as well as factors beyond the control of operations managers.
Managers often consider efficiency as the unique performance measure, which can
sometimes be misleading.
The previous example illustrates this point. Indeed, by solely focusing on the efficiency
measurement (90%), one might conclude that the workshop is using its resources adequately.
On the other hand, the utilization rate indicates a much less favorable (72%) but more
significant measure.
Chapter 3- Scheduling

Scheduling is the final step in production planning. It’s often the only step in small and
medium-sized companies. It involves determining:
-The sequence of work execution or the production program schedule.
-The chronology of the use of company resources or workload, aiming to meet
customer needs in terms of quantity, quality, time, location, and costs.
Importance of scheduling:
Effective and efficient scheduling constitutes a competitive advantage.
The sequence of work execution or the production program schedule.
A faster flow of goods through a facility enables better efficiency and cost control.
Scheduling methods:
Two methods can be used:
Progressive(forward) scheduling; begins as soon as the project requirements or tasks
are known (Reducing the risk of delays), you may get a feasible schedule that may not
meet the deadlines.
Regressive scheduling begins from the deadline date; the manager works backward to
determine when each task should begin(to ensure all activities are completes by the
project’s deadline)
Note! Both methods are often combined to develop a compromise between a
feasible schedule while meeting deadlines.
Scheduling models:
Among scheduling models, we distinguish
Static models: *Once per period, *A new order implies a new scheduling
Dynamic models: *All orders are considered on a rolling basis , *More complex
techniques (Queuing & simulations)
The most commonly used criteria in scheduling:
-Minimize execution time/ Maximize facility utilization/ Minimize semi-finished
product storage/ Minimize customer waiting time
Workload
The workload document describes the list of tasks or orders that different
workstations or operating centers must execute.
Two situations are possible:
Unlimited or infinite capacity: one or more products can be executed simultaneously.
Limited or finite capacity: a restricted number of products at the same time. Deciding
which product to prioritize for execution. A product can only be executed if the
resource to be used is available, and the product has passed through all the previous
operations.
Gantt chart:
The simplest tool to illustrate workloads is the Gantt chart. It allows visualizing both:
-The temporal utilization of productive resources (departments, machines, facilities,
employees, etc.).
-The progress of task execution. In particular, it allows monitoring ongoing work.
All Gantt charts must be regularly updated to account for changes.
The Gantt chart is constructed by plotting time on the x-axis and workstations on the
y-axis.

Assignment algorithm:
The assignment algorithm (also known as the Hungarian method) allows us to
determine how to distribute tasks to available resources optimally.
The objective is generally the minimization of cost or execution time.
A single task (or employee) is assigned to a machine (or project).
Example:We have 4 products (P1 to P4) to be made, and we have 4 employees (A, B,
C, and D) capable of making them, each being paid 18 dinars per hour. The table
below summarizes the time required for each employee to complete each product.
The steps of the algorithm are as follows:
1/Subtract the smallest value from each row.
2/Subtract the smallest value from each column.
3/Cover all zero values with a minimum number of
horizontal or vertical lines.
*If the number of lines is strictly less than the
number of columns, proceed to step 4.
*If the number of lines is equal to the number of columns, proceed to step 5.
4/Identify the smallest value among the uncovered values.Then subtract it from all
uncovered values and add it to the values at the intersections of lines. Return to step 3.
5/Assign to each element in the first column the element in the first row
corresponding to a zero pivot value. Start with rows and columns having only one
zero.

Remarks!
To solve an assignment problem where the goal is to maximize the objective function,
multiply the profit matrix by (-1) and solve the problem as a minimization problem.
If the number of rows and columns in the cost matrix is unequal, then the assignment
problem is unbalanced. Any assignment problem must be balanced (by adding one or
more dummy points) before being solved by the Hungarian method.
Scheduling multiple tasks on a machine
Scheduling multiple tasks on a machine
Many priority rules can be adopted to decide the order of performing multiple tasks
on the same machine. The most commonly used rules are:
FIFO (first in, first out): goods and services are executed in the order of arrival.
MOT (minimum operating time): priority is given to the task with the shortest
execution time.
PD (promised date): priority is given to the task with the closest promised date to the
customer.
Performance indicators allow measuring scheduling effectiveness

Example: Consider tasks A, B, C, D, E, and F; apply FIFO, MOT, and PD formulas, then
compare the different approaches.
According to FIFO method, the order of tasks is
unchanged A, B, C, D, E, and F
According to MOT method, the order of tasks is A, C, E, B, D, and F(ordered with
respect to the duration of each task)

According to PD method, the order of tasks is C, A, E, B, D, and F

-No rule excels in all criteria.

-MOT is the best in minimizing time spent in the system and in terms of system
utilization.
However, MOT schedules tasks with the longest execution time last, which can lead to
customer dissatisfaction.
-FIFO is not particularly better than the others, but it is perceived by customers as fair.
-PD minimizes average delay.
Limitations of priority rules:
1/Scheduling is dynamic, which is why priority rules need to be revised to adapt to
potential changes.
2/These rules don't look upstream or downstream. Bottlenecks in other resources
may not be identified.
3/These rules don't look beyond deadlines. For example, two orders may have the
same deadline. However, one of the orders is initiated just to replenish a distributor's
stock, while the other is designed to prevent a production halt in a factory.
Scheduling multiple tasks on two machines:
A.Same order of processing on both machines
-Two or more tasks to be scheduled on two different machines following the same
sequence.
-Johnson algorithm can be used to schedule multiple tasks on two machines in a way
that minimizes the total execution time and the idle time of both machines.
-Johnson algorithm consists on:
1/ Listing all tasks with their execution times on both machines
2/Finding the task with the shortest execution time. If this time corresponds to the
first machine, schedule this task first. However, if it corresponds to the second
machine, schedule it last.
3/eliminating a task from the list once it is scheduled.
4/If there is more than one task left to schedule, return to step 2; if only one task
remains, its position will be automatically determined.
Example: Schedule tasks A, B, C, D, and E using Johnson algorithm

B/ The non-uniqueness of the order of processing on the two machines

Jackson algorithm consists on
1/Partitioning the set of n tasks into 4 subsets:
*Subset 1 includes all tasks that require only machine 1.
*Subset 2 includes all tasks that require only machine 2.
*Subset 1-2 includes all tasks that require machine 1 followed by machine 2.
*Subset 2-1 includes all tasks that require machine 2 followed by machine 1.
2/Schedule each subset using the Johnson's algorithm
3/Combine the obtained results in the following manner:
*For machine1: optimal sequence from Subset1-2, then the optimal sequence
from Subset1, and finally the optimal sequence from Subset2-1.
*For machine 2: optimal sequence from Subset2-1, then the optimal sequence
from Subset2, and finally the optimal sequence from Subset1-2.
Example: Schedule tasks A, B, C, D, …, K using Jackson algorithm, then draw the
corresponding Gantt chart.

Scheduling multiple tasks on three machines:

-In some special cases, a scheduling problem involving 3 production centers can be
reduced to a scheduling problem involving 2 production centers. This is the situation
where the second production center is completely dominated by either one of the
other two production centers.
-We say that machine B is dominated by one of the other two machines (A or C) if and
only if the maximum execution time on B is lower (or equal) than the minimum
execution time observed on the dominating machine.
Example: Schedule these tasks using the Johnson's algorithm, then draw the
corresponding Gantt chart

It is easy to verify that machine B is dominated by machine A.

The maximum execution time on B = 3
The minimum observed execution time on A = 3

In cases where we cannot reduce the 3 centers to 2 production centers, the problem
can be solved by modeling it as an integer linear program and using an appropriate
technique such as the "Branch and Bound" method.
Scheduling n tasks on m machines:
When the order of task processing is identical and the number of production centers
does not exceed a few dozen, a solution often close to the optimal solution can be
found by applying the Johnson's algorithm on successive groupings of production
centers, known as the CDS algorithm (Campbell, Dudek, and Smith).
Example:Consider the 4 production centers labeled in their order of operation by the
letters A to D (time in minutes).

It is necessary to solve the following 3 fictitious problems

*Machines {A} – {D}
*Machines {AB} – {CD}
*Machines {ABC} – {BCD}
The first fictitious problem (machines A and D) leads to the order 6-3-4-2-5-1, with a
total execution time of 512 minutes.
The second fictituous problem: Machines {AB} – {CD}

The second fictitious problem (machines AB and CD) leads

to the order 3-4-6-2-5-1, with a total execution time of 487
minutes.

The third fictitious problem: machines {ABC} – {BCD}.

This third fictitious problem leads to the same order 3-4-
6-2-5-1 with a total execution time of 487 minutes.
-The solution 3-4-6-2-5-1 is then retained with a total
execution time of 487 minutes.
-By using more advanced mathematical tools (integer
programming) or by explicitly enumerating all possible
schedules, a minimum execution time of 485 minutes was
achieved

Example:
A screed and tile installation company has recorded the following 5 orders for the
next month (the duration, in days, assumes that an entire team is assigned to a task) :

It is necessary to have a 2-day drying

period between the completion of the
screed and the start of tiling. Drying is
done with a machine, and the company
has only one drying machine.
1/If the company has a team of screed installers and a team of tilers, in what order
should it carry out these contracts to complete the 5 projects in the minimum amount
of time?
2/Represent your solution graphically using a Gantt chart.
3/How many days are needed to successfully complete the five projects?