SM 122 FOOD DRIVESM 122 FOOD DRIVE6th Place: B4, B6, B7, and B8- 0 Items

5th Place: B3- 28 Items

4th Place: B9- 47 Items

3rd Place: B1- 74 Items

2ed Place: B5- 121 Items

1st Place: B2- 356 Items

SM 122 SM 122 Freshman UpdateFreshman Update

FOOD DRIVE: TOTAL ITEMS COLLECTED

TOWN HALL MEETING:

THIS TURSDAY

5:00 PM SMG 212

__________________________________________________________________626

Operations Management

Professor Arnold and Friends

Good Stuff Cheap

EffectivenessThe extent to which customers are satisfied sufficiently to remain customers.

EfficiencyThe extent to which products and services are delivered at low cost.

Products and Services

Why Study Operations? Or

today’s agenda

On what bases do companies compete? How do companies decide what to do? How do companies add value? How do companies organize to satisfy customers? How can processes be improved? What are the differences between goods and services

production?

Competition

1. Price - Which company sets the price in the market place? The company with the highest costs or the one with the lowest costs? If the firm with the highest costs can not generate positive margin what is the outcome?

2. Quality - Materials + Workmanship + Design = Perception

3. Product Differentiation through features

4. Flexibility - Henry Ford was once asked what colors the Model T would be available in. Ford’s famous response was “They [customers] can have any color they want as long as its black.” Today’s marketplace is a little different.

5. Time - How soon can it be delivered? Fedex was originally designed to deliver time sensitive documents. Now what? What about eCommerce?

6. Service - How well can customers have needs satisfied? How easy can product use be made?

7. Human Capital - What are organizational competencies? How do people develop capabilities? What kinds of investments do firms make in people?

Strategy - What will we do well?

Order Qualifiers - What characteristics (4Ps) makes a product or service a candidate for purchase?

Order Winners - What is the difference between choices that results in one being selected over the others? Are order winners the same for all market segments?

Distinctive Competencies - What a firm must do well in order to maintain a competitive advantage. Do all firms in an industry do the same things well? Why not?

Operations ManagementThe Value Chain Perspective

Organizations Add Value by:

Harvesting Raw MaterialsProducing Basic Materials

Fabricating PartsAssembling Products

Distributing ProductsSelling Products to Customers

Providing After-Sales ServiceReclaiming

Materials Through Recycling

Some firms perform several of the activities – those firms are vertically integrated.

Operations ManagementSupply Chain Perspective

The supply chain is the collection of entities involved in delivering a product to consumers and subsequently dealing with any recycling.

Firms participate in supply chains performing one or several of the tasks. What does Nike do? How about Coke? McDonalds? Aramark?

Harvesting Raw Materials

Producing Basic Materials

Distributing Materials

Distributing Products

Fabricating Parts

Assembling Products

Selling Products to Customers

Providing After-Sales Service

A Process is the means for converting inputs into outputs

Process Analysis is a technique used to achieve an understanding of operating systems. It involves the collection and calculation of performance metrics

Process Flow Diagram is a schematic representation of the conversion system

Operations ManagementThe Process Perspective

Process Flow Diagram

Three Major Parts

1. The Flows - the path of products, people, and information through the system

2. The Queues - the location of various storage points

3. The Tasks - the places along the flow where conversion activities take place

either or

Process Flow Diagram - Copy Center

Copy Staple Drill

RM WIP FGWIP

Queue of Jobsto be Processed

Queue of Jobsto be Drilled

Queue of Jobs to be Stapled

CompletedCourse Packets

Work Center

Operating Unit

Work Center Work Center

CAPACITY

The extent to which work can be accomplished Usually measured as Units of Output per Period Time

• Customers Per Hour• Gallons Per Minute• Items per Week• Jobs per Month

Capacity or Time is Consumed in Two Planned Activities• Setup Time - required prior to processing includes clean up,

preparation, and changeover time.• Run Time - actual processing time

Capacity is usually calculated on a work center by work center basis

Total Processing Time

Copy Machine

Setup Time = 5 minutes

Color Change = 2 minutes

Run Time = 700/25 = 28 minutes

Total Processing Time = 35 minutes per Job

Problem 1

Total Processing Time = Run Time + Setup Time

Problem 2

35 minutes + 20 minutes + 10 minutes = 65 minutes

65 minutes/60 minutes/hour * $6/hour = $6.50

Suppose the copy center uses a copying machine that maintains a rate of 35 pages per minute. If jobs like the one described in the note 500 pages of white and 200 pages of pink; five minutes of setup, and two minutes to change over from pink to white, what would the total processing time for each job be?

a) 27 minutes per jobb) 28 minutes per jobc) 29 minutes per jobd) 30 minutes per jobe) 31 minutes per job

Suppose in the problem above the new machine also has two paper hoppers such that the two minute color change would be eliminated. Assuming the rest of the facts from the earlier problem what would the total processing time per job be?

a) 25 minutes per jobb) 26 minutes per jobc) 27 minutes per jobd) 28 minutes per jobe) 29 minutes per job

Bottleneck

is the work center with the smallest capacity acts as the limit on capacity defines operating unit capacity What is the capacity of the Copy Center for Jobs as

described?

What is the bottleneck?

Capacity Analysis

Copy Center

Copy Staple Drill

Processing Time

(Minutes)35 10 20

Capacity

=

1.714 jobs/hour 6 jobs/hour 3 jobs/hour

60 minutes/hour35 minutes/job

Suppose the total processing time per job were 27 minutes per job. What is the capacity of the copy machine work center?

a) Less than 2 units per hourb) Between 2 and 2.25 units per hourc) Between 2.25 and 2.50 units per hourd) Between 2.50 and 2.75 units per houre) More than 2.75 units per hour

Suppose the capacity of the copying work center were about 2.2 units per hour. Suppose further that the stapling and drilling were combined into one work center with a total processing time of 31 minutes per job. What is the capacity of the copying process?

a) Less than 2 units per hourb) Between 2 and 2.25 units per hourc) Between 2.25 and 2.50 units per hourd) Between 2.50 and 2.75 units per houre) More than 2.75 units per hour

2.22 jobs per hour

1.93 jobs per hour

Capacity and Cycle Time

Cycle Time is the interval between units completed by either the process or a work center.

Operating Unit Cycle Time is equal to cycle time of the bottleneck.

What is the cycle time of the copy machine? Right! 35 minutes - every 35 minutes a job is completed

copying. What is the Cycle Time of the Operating Unit? Good! 35 minutes - the cycle time of the bottleneck.Problem 4

Capacity and Cycle Time

Copy Staple Drill

Job

start end start end start end

1 0 35 35 45 45 65

2 35 70 70 80 80 100

3 70 105 105 115 115 13535

35

Disbelievers

Capacity and Cycle Time

Cycle Time =

1

Capacity

Copy Center

35 minutes/jobCapacity =

1

Cycle Time = 35 minutes/job

=1.71 jobs/hour

1 job35 minutes

=60 minutes

1 hour

=1 hour

60 minutes1

Capacity and Cycle Time are Inversely Proportional

Problem 5

40 hours/week * 1.71 jobs/hour = 68.4 jobs/week

Throughput Time

is the Interval required to process a particular unit of output through a work center or an operating unit.

it is different from cycle time because it considers the effect of queue time.

queue time is the non-productive time that a unit of output spends in a work center or an operating unit.

Copy Staple Drill

35 10 20

24 43 17

24 + 35 + 43 + 10 + 17 + 20 = 149Problem 3

Capacity Utilization

is a measure of process efficiency suggests the extent that units of output will be in queue is a percentage the percentage of used productive ability divided by the extent

to which the unit can produce output

capacity utilization = capacity required

capacity available

if a process operates at capacity, the bottleneck has a capacity utilization of 100%

Capacity Utilization Analysis

Copy Staple Drill

CapacityRequired

1.714 jobs/hour

CapacityAvailable

1.714 jobs/hour 6 jobs/hour 3 jobs/hour

1.714 jobs/hour 1.714 jobs/hour

CapacityUtilization

100% 28.6% 57.2%

Problem 6

Quality

is the extent to which a product or process meets a customer needs measures of process quality include yield yield is the amount of output generated by some quantity of inputs for example, a 700 page job that requires 750 pages of paper (due to

misfeeds and other process or input defects

yield =outputs

inputs

700

750= 93%

Problem 9

Miscellaneous

inventory turnover ratio

characteristics of quality in the copy center what can be done about capacity utilization? what can be done about yield?

SalesCOGS

50 packets20 packets

Problem 8