OPMT 1005 – Process Improvement & Lean

Design
Week Six – Operations Management Principles

2023-10-11
Land Acknowledgement

We would like to begin this Orienta4on by respec8ully acknowledging that we live,

work, and learn on the tradi4onal, ancestral, and unceded territory of the
Sḵwx̱wú7mesh (Squamish), səlilwətaɬ (Tsleil-Waututh), and xʷməθkʷəy̓əm
(Musqueam) Na4ons.

We take responsibility for working to understand and challenge the constructs of

sePler colonialism as they exist on this land and the spaces we par4cipate in and
strive to uphold the ideals of truth and reconcilia4on.

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Week Six – Learning Objec9ves

§ Understand the basic differences between process-oriented operations

and product-oriented operations.

§ Discus the relationship between capacity, throughput, inventory and

cycle time.

§ Explain the theories concerning the management of bottlenecks and

throughput as an effective way to manage the overall system.

§ Understand the various techniques used in short term scheduling and

job sequencing.

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Process Focus Organization
Many inputs
§ Facilities are organized around specific (surgeries, sick patients,
activities or processes baby deliveries, emergencies)

§ General purpose equipment and skilled

personnel
§ High degree of product flexibility
§ Typically, high costs and low equipment
utilization
§ Product flows may vary considerably making Many departments and
planning and scheduling a challenge many rou;ngs

(low-volume, high-variety,
intermittent processes)
Hospital Many different outputs
(uniquely treated patients)

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Product Focus Organization
Few Inputs
§ Facilities are organized by product (corn, potatoes, water,
seasoning)
§ High volume but low variety of products
§ Long, continuous production runs enable
efficient processes
§ Typically, high fixed cost but low variable
cost
§ Generally, less skilled labor

(high-volume, low-variety,
continuous process)
Frito-Lay
Output variations in size, shape,
and packaging
(3-oz, 5-oz, 24-oz package
labeled for each material)

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Repe99ve Focus Organiza9on
Raw materials and
module inputs
§ Facilities often organized as assembly lines (multiple engine
models, wheel
§ Characterized by modules with parts and modules)
assemblies made previously
§ Modules may be combined for many output
options
§ Less flexibility than process-focused facilities Few
but more efficient modules

(modular)
Harley Davidson
Modules combined for many
Output options
(many combinations of
motorcycles)

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Mass Customization Organization
Many parts and
component inputs
§ The rapid, low-cost production of
goods and service to satisfy (chips, hard drives, software, cases)
increasingly unique customer desires
§ Combines the flexibility of a process
focus with the efficiency of a product
focus

Many modules

(high-volume, high-variety)
Dell Computers

Many output versions

(custom PCs and notebooks)

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Capacity Planning

Long range Intermediate range Short range

capacity capacity capacity

3 months up to 3
Greater than 3 years years, depending on Up to 3 months
the company and
industry

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Capacity Planning

How is capacity measured in the organization?

Why is it measured that way?

§ Effective Capacity vs. Design Capacity

§ Utilization and Efficiency

What causes the lower rates of capacity efficiency in the organization?

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Design and Effec9ve Capacity

§ Design capacity is the maximum theoretical output of a system

§ Normally expressed as a rate

§ Effective capacity is the capacity a firm expects to achieve given current

operating constraints
§ Often lower than design capacity

§ Capacity definition and measurement is necessary if we are to develop a

production schedule

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Utilization and Efficiency

§ Utilization is the percent of design capacity actually

achieved
§ Utilization = Actual output/Design capacity

§ Efficiency is the percent of effective capacity actually

achieved
§ Efficiency = Actual output/Effective capacity

§ How Does Capacity Influence Process Flexibility?

§ The role of a constraint or bottleneck.

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Different Capacities

Bakery Example:

§ Actual production per week = 148,000 rolls

§ Effective capacity per week = 175,000 rolls
§ Design capacity per hour = 1,200 rolls per hour
§ Bakery operates 7 days/week, 3 shifts/day, 8 hours/shifts
§ Design capacity per week = (7 x 3 x 8) x (1,200) = 201,600 rolls
§ Weekly Utilization = 148,000/201,600 = 73.4%
§ Weekly Efficiency = 148,000/175,000 = 84.6%

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Bottleneck Analysis and the
Theory of Constraints

§ Each work area can have its own unique capacity.

§ Capacity analysis determines the throughput capacity of

workstaCons in a system.

§ A boEleneck is a limiCng factor or constraint.

§ A boEleneck has the lowest effecCve capacity in a system.

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Bottleneck Analysis and the
Theory of Constraints

§ The bottleneck time is the time of the slowest workstation

(the one that takes the longest) in a production system

§ The throughput time is the time it takes a unit to go through

production from start to end

I I
A B C

2 min/unit 4 min/unit 3 min/unit

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 Capacity Analysis

§ Two identical sandwich lines

§ Lines have two workers and three operations
§ Bread à Fill à Toaster
§ All completed sandwiches are wrapped

Bread Fill
15 sec/sandwich 20 sec/sandwich
Order Toaster Wrap/
Deliver
30 sec/sandwich 20 sec/sandwich
Bread Fill 38 sec/sandwich

15 sec/sandwich 20 sec/sandwich

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Capacity Analysis

§ The two lines each deliver a sandwich every 35 seconds

(bread @ 15s + fill @ 20s)
§ At 38 seconds, wrapping and delivery has the longest processing time and is the
bottleneck
§ Capacity/hour = 3,600 sec/38 sec per sandwich = 94.7 (95) sandwiches per hour
§ Throughput time is 30 + 15 + 20 + 20 + 38 = 123 seconds

Bread Fill
15 sec 20 sec
Wrap/
Order Toaster
Deliver
30 sec 20 sec
Bread Fill 38 sec

15 sec 20 sec
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Theory of Constraints (TOC)

§ Developed by Eliyahu Goldratt (1980) – an approach to address bottlenecks and

improve a system.

The TOC basics are:

§ Identify the system constraints – no improvement is possible unless the
constraint or weakest link is found.
§ Decide how to exploit the system constraint – make the constraints as effective
as possible.
§ Align every other part of the system to support the constraints even if this
reduces the efficiency of non-constraint resources.
§ An hour lost at a bottleneck is an hour lost for the entire system.
§ An hour saved at a non-bottleneck point does not add value.
§ Bottlenecks govern both throughput and inventory in the system.

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Bottleneck Example

§ Wheel Assembly Station: 600 sets or 1200 Wagon Assembly:

wheels per week (each set is two wheels) § Body
§ Handle Assembly Station: 450 per week § Wheel set (2 Wheels)
§ Handle
§ Final Assembly Station: 550 wagons per
week

1. What is the weekly capacity of the factory?

2. What limits the weekly throughput of the
factory?
3. How many wheel assemblies should be made
per week?
4. What should be the weekly utilization of the
wheel assembly?
5. What happens if the weekly wheel utilization is
100%
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Bottleneck Example

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Bottleneck Example

1. How many units can the system process during an eight-hour shift?

2. What is the cycle time of the system?

3. At what rate should raw material be released to Operation A? Why?

4. What minimal actions could you take to double capacity?

5. Which operation is the bottleneck of the overall system? How do you

know?

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Short-Term Capacity Planning –
(Job Scheduling and Sequencing)

§ Translating capacity decisions, aggregate planning and

master schedules into:
§ Job sequences.
§ Specific assignments of personnel, materials and machinery.

§ Effective and efficient scheduling can be a competitive

advantage:
§ Faster movement of goods through a facility means better use of assets and
lower costs.
§ Additional capacity resulting from faster throughput improves customer
service through faster delivery.
§ Good schedules result in more dependable deliveries.

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Sequencing Jobs

§ Specifies the order in which jobs should be performed at

work centers
§ Priority rules are used to dispatch or sequence jobs

FCFS SPT
First come, first served Shortest processing time

EDD LPT
Earliest due date Longest processing time

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Sequencing Example

Apply the four popular sequencing rules to these five jobs:

Job Work (Processing) Time Job Due Date

Job (Days) (Days)
A 6 8
B 2 6
C 8 18
D 3 15
E 9 23

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Sequencing Example

FCFS: Sequence A-B-C-D-E

Job Work Flow Job Due
Job Sequence (Processing) Time Time Date Job Lateness
A 6 6 8 0
B 2 8 6 2
C 8 16 18 0
D 3 19 15 4
E 9 28 23 5
28 77 11

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Sequencing Example

FCFS: Sequence A-B-C-D-E

§ Average completion time:
Sum of total flow time / Number of jobs = 77/5 = 15.4 days
§ Utilization metric:
Total job work time / Sum of total flow time = 28/77 = 36.4%
§ Average number of jobs in the system:
Sum of total flow time / Total job work time = 77/28 = 2.75 jobs
§ Average job lateness:
Total late days / Number of jobs = 11/5 = 2.2 days

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Sequencing Example

SPT: Sequence B-D-A-C-E

Job Work Flow Job Due
Job Sequence (Processing) Time Time Date Job Lateness
B 2 2 6 0
D 3 5 15 0
A 6 11 8 3
C 8 19 18 1
E 9 28 23 5
28 65 9

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Sequencing Example

SPT: Sequence B-D-A-C-E

§ Average completion time:
Sum of total flow time / Number of jobs = 65/5 = 13 days
§ Utilization metric:
Total job work time / Sum of total flow time = 28/65 = 43.1%
§ Average number of jobs in the system:
Sum of total flow time / Total job work time = 65/28 = 2.32 jobs
§ Average job lateness:
Total late days / Number of jobs = 9/5 = 1.8 days

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Sequencing Example

EDD: Sequence B-A-D-C-E

Job Work Flow Job Due
Job Sequence (Processing) Time Time Date Job Lateness
B 2 2 6 0
A 6 8 8 0
D 3 11 15 0
C 8 19 18 1
E 9 28 23 5
28 68 6

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Sequencing Example

EDD: Sequence B-A-D-C-E

§ Average completion time:
Sum of total flow time / Number of jobs = 65/5 = 13.6 days
§ Utilization metric:
Total job work time / Sum of total flow time = 28/68 = 41.2%
§ Average number of jobs in the system:
Sum of total flow time / Total job work time = 68/28 = 2.43 jobs
§ Average job lateness:
Total late days / Number of jobs = 6/5 = 1.2 days

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Sequencing Example

LPT: Sequence E-C-A-D-B

Job Work Flow Job Due
Job Sequence (Processing) Time Time Date Job Lateness
E 9 9 23 0
C 8 17 18 0
A 6 23 8 15
D 3 26 15 11
B 2 28 6 22

28 103 48

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Sequencing Example

LPT: Sequence E-C-A-D-B

§ Average completion time:
Sum of total flow time / Number of jobs = 103/5 = 20.6 days
§ Utilization metric:
Total job work time / Sum of total flow time = 28/103 = 27.2%
§ Average number of jobs in the system:
Sum of total flow time / Total job work time = 103/28 = 3.68 jobs
§ Average job lateness:
Total late days / Number of jobs = 48/5 = 9.6 days

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Sequencing Example

Summary of Rules
Average
Number of Average
Average Completion Utilization Jobs in Lateness
Rule Time (Days) Metric (%) System (Days)
FCFS 15.4 36.4 2.75 2.2
SPT 13.0 43.1 2.32 1.8
EDD 13.6 41.2 2.43 1.2
LPT 20.6 27.2 3.68 9.6

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Comparison of Sequencing Rules

§ No one sequencing rule excels on all criteria.

§ SPT does well on minimizing flow time and number of jobs in the system.

§ SPT moves long jobs to the end which may result in dissatisfied
customers.

§ FCFS does not do especially well (or poorly) on any criteria but is
perceived as fair by customers.

§ EDD minimizes maximum lateness.

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Scheduling Manufacturing vs.
Scheduling Services

Service systems differ from manufacturing

Manufacturing Services

Schedules machines and materials Schedule staff

Inventories used to smooth demand Seldom maintain inventories

Machine-intensive and demand may be smooth Labor-intensive and demand may be variable

Scheduling may be bound by union contracts Legal issues may constrain flexible scheduling

Few social or behavioral issues Social and behavioral issues may be quite
important

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Discussion Questions

Using the same methodology in slides 20 and 21 for capacity and

bottleneck calculations, answer the following two problems in the
following slides

Please answer the questions in the forum – deadline to submit your answers and
share your thoughts is next week before the start of the next session

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Discussion Questions

1. The three-station work cell illustrated below has a product that must go through one of
the two machines at station 1 (they are parallel) before proceeding to station

a) What is the bottleneck time of the system?

b) What is the bottleneck station of this work cell?
c) What is the throughput time?
d) If the line operates 10 hours per day, 5 days per week, what is the weekly capacity of this
work cell?

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Discussion Questions

2. A production process below is shown. The drilling operation occurs separately from, and
simultaneously with, the sawing and sanding operations. A product needs to go through
only one of the three assembly operations (the operations are in parallel).

a) What is the bottleneck time of the system?

b) What is the bottleneck station of this work cell?
c) What is the throughput time?
d) If the line operates 10 hours per day, 5 days per week, what is the weekly capacity of this
work cell?
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