MGSC6206: Management of Service and Manufacturing Operations
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Week 3: Case Study of Operations Processes
Overview
Video
Log in to the course to view video.
Learning Objectives
At the completion of this lesson, you will be able to:
•
•
•
Understand the nature of line production processes in the context of a service operation.
Identify the bottlenecks in the processes.
Understand how to improve output and efficiencies of a line process in a service
environment.
Course Introduction
In this lesson we will explore the issues of defining a service concept and strategic positioning.
We will examine the Shouldice Hospital which has developed a unique service concept and has
been very successful in implementing that concept. A major question is capacity planning
incorporating both on-site and off-site expansion alternatives.
Click the link below to access the Shouldice Hospital Web site. Explore this site to get a better
picture of the hospital and its operations.
Learning Activities Table
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MGSC6206: Management of Service and Manufacturing Operations
Learning
Activity
Description
Due Date
Points
% of
Final
Grade
Lesson 1
Shouldice Hospital
Complete by
end of Day 2
~
~
Complete by
end of Day 2
~
~
Submit by end
of Day 2
100
8%
100
4%
Week 3
Reading 1
Week 3
Assignment 1
Week 3
Discussion 1
Lesson 2
Week 3
Reading 2
Lesson 3
Week 3
Assignment 2
Week 3
Discussion 2
•
Shouldice Hospital – Harvard
Case No. 9-683-068
Shouldice Hospital
Group Case Assignment
Shouldice Hospital
Post by Day 2
Group Case Discussion
Respond by
Day 3
Continuous Processes
Complete by
end of Day 3
~
~
Complete by
end of Day 4
~
~
Complete by
end of Day 4
~
~
Submit by end
of Day 6
100
9%
100
6%
• National Cranberry
Cooperative – Harvard Case
no. 9-675-014
Continuous Processes - National
Cranberry Cooperative
National Cranberry Coop
Individual Written Assignment
National Cranberry Coop
Group Assignment and Discussion
Post by Day 5
Respond by
Day 7
Lesson 1: Shouldice Hospital
Introduction
In this lesson we will explore the issues of defining a service concept and strategic positioning.
We will examine the Shouldice Hospital which has developed a unique service concept and has
been very successful in implementing that concept. A major question is capacity planning
incorporating both on-site and off-site expansion alternatives.
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MGSC6206: Management of Service and Manufacturing Operations
Click the link below to access the Shouldice Hospital Web site. Explore this site to get a better
picture of the hospital and its operations.
Shouldice Hospital
Learning Objectives
At the completion of this lesson, you will be able to:
•
•
•
Understand the nature of line production processes in the context of a service operation.
Identify the bottlenecks in the processes.
Understand how to improve output and efficiencies of a line process in a service
environment.
Week 1 Reading 1: Shouldice Hospital
Due: Day 2
Summary
This lesson discussed the application of operational process ideas to hospital operations. The
hospital specializes in one type of operation only—hernias. This specialization has made it
possible to design the whole process—admitting, physical examination, preparation and the
operation itself—in a line flow process. The issue discussed here was how to expand the
capacity of the hospital.
End of Lesson 1
Week 1 Assignment 1: Shouldice Hospital
Due: Post by Day 2, Respond by Day 3
Value: 100 Points
Value: 8%
Due Date: Submit by end of Day 2
Group Assignment
Answer the following questions:
1. How successful is the Shouldice Hospital? Generate a P&L statement using available
information from the case. Treat each of the two operations—hospital and the surgery—
separately.
2. How do you account for its successful performance?
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MGSC6206: Management of Service and Manufacturing Operations
3. Prepare a patient process flow diagram from arrival through surgery and determine the
capacities at each stage. For this diagram, only indicate major points in the process,
e.g., admitting, examination, operating room surgeries, etc. Use the actual hours of
operation for each step in the process to determine the capacity of each step. Where is
the bottleneck?
4. Do a detailed analysis of potential on-site capacity expansion alternatives (on a per
week basis). Assume an average of 3.5 days stay at the hospital for each patient,
including surgery, and Sunday admits. This means that half the patients spend three
days while the other half spend four days.
It may help to use an exhibit similar to the following to do this analysis.
Item
Sun Mon Tue Wed Thu Fri Sat Sun Mon
Admits
Operations
Departures
No. of beds in use
Total no. of beds available
Assign one member of your group to submit your answers in MS Word format using the
drop box below by no later than 11:55 PM EST on Day 2.
Lesson 2: Continuous Process
Introduction
In this lesson, we will explore the last of the basic process type's — continuous process — in
some more detail.
Learning Objectives
At the completion of this lesson, you will be able to:
•
•
•
Understand the nature of continuous production processes.
Identify the bottlenecks in the processes.
Understand how to improve output and efficiencies of continuous processes.
Continuous Process (1 of 5)
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MGSC6206: Management of Service and Manufacturing Operations
A continuous process is one where the input materials move in a continuous stream through
various steps until the final product is produced and delivered. A good example of a
continuous process is an oil refinery. In a refinery, crude oil enters the process at one end. It
then flows through the process and at various stages it gets separated into various products
– gasoline, kerosene, diesel, tar etc. The following picture is a schematic of a refinery.
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MGSC6206: Management of Service and Manufacturing Operations
As you see in this figure, crude oil enters at the left and goes through a distillation column
where it is broken down into various components. These component products then go
through their own steps to be transformed into the final products.
Continuous Process (2 of 5)
The essential feature of a continuous process is that the input material keeps flowing in one
direction from beginning to end through various steps until the final desired product is produced.
There is literally no stopping at any stage. If there is a stoppage at any step the whole process
is backed up and may have to stop the operation.
Click the link below to explore the commercial bread making process.
•
•
Commercial Bread Making Process
How It's Made: Bread
Continuous Process (3 of 5)
An example of a continuous process with which most of us are familiar is a theme park ride
such as The Pirates of Caribbean Ride in Disney World.
In this ride, people line up for the ride, and are inputted into the ride in groups. Once they enter
the ride, there is nothing they can do. They just have to go along and enjoy the ride. There is no
stopping anywhere during the ride. If there is a breakdown at any place in the ride (for example
– a child falls overboard into the water) the whole system has to come to a stop until the
problem is fixed. Meanwhile, everyone waits wherever they are. Also, if the arrival of customers
for the ride remains at the same rate as before, the line waiting to enter gets longer.
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MGSC6206: Management of Service and Manufacturing Operations
The length of the waiting line gets longer not only in the above situation where there is a
breakdown in the system, but also when the rate of arrivals of new customers exceeds the
process capacity. For example, if the ride is set to load one boat every minute, and the boat
carries 20 riders, then the capacity of the process is 20 riders per minute. Therefore, as long as
20 new riders arrive at the attraction, there will be no lines. If the arrival rate increases to 30 per
minute, then since only 20 can be processed per minute, the line will grow at the rate of 10 (3020) riders per minute. That is why one sees long lines at the popular attractions during peak
periods.
If one knows the process capacity (in this case 20 per minute), one can easily calculate how
long one has to wait in line before one enters the ride. For example, if there are 100 people
ahead of you in the line, then it will take five minutes to process the riders ahead of you
(100/20). The waiting time is, therefore, five minutes. This is exactly how Disney calculates the
wait times and puts those friendly signs "10 minutes wait from here." The posting of the sign
(which as you see is a simple matter) is very helpful to the customers. It relieves of any
uncertainty about the length of the wait. If a customer does not want to wait that long the
customer can move on.
If the lines at Disney get longer (say the waiting time is over one hour), something can be done
to reduce the waiting time and alleviate the frustration of the customers. One can speed up the
process – instead of loading up one boat per minute, one can load up two boats per minute by
having more help. This will increase the capacity to 40 riders /minute. If the line before the
speed up was 1200, now they can be cleared in 30 minutes instead of the one hour needed
earlier.
Continuous Process (3 of 5)
An example of a continuous process with which most of us are familiar is a theme park ride
such as The Pirates of Caribbean Ride in Disney World.
In this ride, people line up for the ride, and are inputted into the ride in groups. Once they enter
the ride, there is nothing they can do. They just have to go along and enjoy the ride. There is no
stopping anywhere during the ride. If there is a breakdown at any place in the ride (for example
– a child falls overboard into the water) the whole system has to come to a stop until the
problem is fixed. Meanwhile, everyone waits wherever they are. Also, if the arrival of customers
for the ride remains at the same rate as before, the line waiting to enter gets longer.
The length of the waiting line gets longer not only in the above situation where there is a
breakdown in the system, but also when the rate of arrivals of new customers exceeds the
process capacity. For example, if the ride is set to load one boat every minute, and the boat
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MGSC6206: Management of Service and Manufacturing Operations
carries 20 riders, then the capacity of the process is 20 riders per minute. Therefore, as long as
20 new riders arrive at the attraction, there will be no lines. If the arrival rate increases to 30 per
minute, then since only 20 can be processed per minute, the line will grow at the rate of 10 (3020) riders per minute. That is why one sees long lines at the popular attractions during peak
periods.
If one knows the process capacity (in this case 20 per minute), one can easily calculate how
long one has to wait in line before one enters the ride. For example, if there are 100 people
ahead of you in the line, then it will take five minutes to process the riders ahead of you
(100/20). The waiting time is, therefore, five minutes. This is exactly how Disney calculates the
wait times and puts those friendly signs "10 minutes wait from here." The posting of the sign
(which as you see is a simple matter) is very helpful to the customers. It relieves of any
uncertainty about the length of the wait. If a customer does not want to wait that long the
customer can move on.
If the lines at Disney get longer (say the waiting time is over one hour), something can be done
to reduce the waiting time and alleviate the frustration of the customers. One can speed up the
process – instead of loading up one boat per minute, one can load up two boats per minute by
having more help. This will increase the capacity to 40 riders /minute. If the line before the
speed up was 1200, now they can be cleared in 30 minutes instead of the one hour needed
earlier.
Continuous Process (4 of 5)
Unlike the other three basic process types that we looked at earlier, in a continuous flow
process, the material once it enters the process does not stop anywhere in the process. It keeps
moving constantly. All the steps and stages in the process should handle the same amounts in
a given time. That means the processing capacities of each step should be the same. If they are
not, then the step with the smallest processing capacity will be a bottleneck, as with all the
processes that we have looked at earlier. Thus, the total processing capacity of a continuous
process is limited by the capacity of the bottleneck step.
One important fact should be noted. If the input amount to the system is equal to or less than
the bottleneck capacity, the system will work just fine. There will be no inventory build-ups
before any stage, and the material moves smoothly through the system. If the inflow exceeds
the capacity of the bottleneck step there will be inventory build-up before the bottleneck. If at
this stage (i.e. before the bottle neck stage) there is not enough space to keep the excess
material there will be problems leading all the way back to the input stage. Eventually the
system cannot accept any more input and the incoming materials have to wait outside the
system.
Click the oval to explore a continuous process consisting of four steps.
Interactive Media
Log in to the course to access interactive course content.
Such issues are very common in continuous processes. One must be careful in evaluating the
bottleneck situations to see that one does not add capacity unnecessarily.
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MGSC6206: Management of Service and Manufacturing Operations
Continuous Process (5 of 5)
Some common examples of continuous processes are soft drink bottling, beer bottling, cement
and fertilizer manufacturing, amusement park rides, mail sorting in central post offices and
similar processes.
Click the links below to explore some of these processes.
Beer Bottling
Cement Process
Mail Sorting Process
Summary
This lesson discussed continuous processes. Continuous processes are, in a manner of
speaking, the limit of the line flow process where the product is in bulk form. These processes
allow similar analyses as line flow, but with one small difference. Any bottleneck in the system
slows down the flow all the way up to the input stage. The lesson further discussed how the
capacity and efficiencies of a continuous process can be increased.
End of Lesson 2
Lesson 3: Continuous Processes – National Cranberry Cooperative
Introduction
In this lesson we will explore the example of a continuous process, and the problems that arise
in managing it. The company is the National Cranberry Cooperative which buys cranberries
harvested by its members and processes them into packaged cranberries and juices, jams, etc.
We will be concerned only with the processing of the raw berries received from the farmers until
they are shipped to the bulk shipping or to other processing steps such as juice or jam making.
Learning Objectives
At the completion of this lesson, you will be able to:
•
•
•
Understand the nature of line production processes in the context of a service operation.
Identify the bottlenecks in the processes.
Understand how to improve output and efficiencies of a line process in a service
environment.
9
MGSC6206: Management of Service and Manufacturing Operations
Case: National Cranberry Corporation
The case relates the concerns of the operations VP about Receiving Plant #1, which incurred
high overtime costs, as well as the wrath of the grower-owners who had to wait a long time to
unload their crops.
We will explore how these problems arose because of a lack of understanding of the nature of
the process, and how that led to wrong solutions. These solutions involved large investments
without alleviating the problem.
Week 3 Reading 2: National Cranberry Corporation
Due: Day 4
Summary
This lesson discussed the case of the National Cranberry Cooperative's Receiving Plant. This
plant receives cranberries from farmers. The berries are both dry and wet harvested. The wet
harvested berries have to be dried before further processing. The process is described in detail.
The plant is facing problems of high overtime payments, and increased delivery trucks waiting
time. The case allows the application of the concepts of continuous production to resolve the
problems.
End of Week 3
Week 3 Assignment 2: National Cranberry Corporation
Due: Day 6
Value: 100 Points
Value: 9%
Due Date: Submit by end of Day 6
Individual Written Assignment
Answer the following questions:
1. Develop a process flow diagram for processing cranberries (both wet and dry). Show the
capacities at the different stages.
2. What are the sources of variability affecting NCC's operations?
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MGSC6206: Management of Service and Manufacturing Operations
3. Suppose that a peak harvest-season day involves 18,000 barrels of berries, 70% of
them wet harvested, arriving unifornly over a twelve-hour period from 7 a.m. to 7 p.m.
Would trucks have to wait to unload? When during the day would trucks be waiting?
How much truck waiting time would you expect? What is the maximum number of trucks
waiting during the day?
4. If it costs $20 per hour to rent a truck and driver, how much money is spent by truck
waiting on a peak day?
5. Is the investment in a light meter system a good option?
Submit your answers in MS Word format using the drop box below by no later than 11:55
PM ET on Day 6.
Week 1 Discussion 1: National Cranberry Coop
Due: Day 2
Value: 100
Value: 6%
Due Date: Post by Day 5, Respond by Day 7
This week's discussion involves group work. Please note that there are two streams set up for
this discussion.
Questions:
Discussion Stream 1
1. Why did the problems of overtime and truck waiting occur at NCC only recently?
2. Why did increasing the capacity of the holding bins not help solve the problem of truck
waiting to any great extent?
Discussion Stream 2
3. What specific steps would you recommend to alleviate the twin problems?
4. What are the economic consequences of your recommendations?
Instructions:
1. Each group must answer one of the streams and post their group's answer to the
appropriate discussion stream.
• To access the discussion stream, click the link above.
• Then click the thread that corresponds to the question you want to answer.
• Click Reply in the first post.
• Type your answers to the questions in the message box.
• Click Submit to post your answer.
2. Each student must also post a response to one of the other groups' answers.
• Select the appropriate stream by clicking the link that corresponds to the
question you want to post a response to.
• Review the groups' answers and select one that you want to respond to.
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MGSC6206: Management of Service and Manufacturing Operations
•
•
•
Click Reply in that group's posted answer.
Type your response to the group's post in the message box.
Click Submit to post your answer.
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