SM 122 FOOD DRIVE
6th Place: B4, B6, B7, and B8- 0 Items
5th Place: B3- 28 Items
4th Place: B9- 47 Items
rd
3
ed
2
st
1
Place: B1- 74 Items
Place: B5- 121 Items
Place: B2- 356 Items
SM 122
Freshman Update
FOOD DRIVE: TOTAL ITEMS COLLECTED
626
__________________________________________________________________
TOWN HALL MEETING:
THIS TURSDAY
5:00 PM SMG 212
Operations Management
Professor Arnold and Friends
Good Stuff Cheap
Products and Services
Effectiveness
The extent to which
customers are satisfied
sufficiently to remain
customers.
Efficiency
The extent to which
products and services
are delivered at low cost.
Why Study Operations?
Or
today’s agenda
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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 Management
The Value Chain Perspective
Organizations Add Value by:
Harvesting Raw Materials
Producing Basic Materials
Fabricating Parts
Assembling Products
Distributing Products
Selling Products to Customers
Providing After-Sales Service
Reclaiming Materials Through Recycling
Some firms perform several of the activities – those firms are vertically
integrated.
Operations Management
Supply Chain Perspective
The supply chain is the collection of entities involved in delivering a product
to consumers and subsequently dealing with any recycling.
Producing
Basic Materials
Distributing Materials
Harvesting Raw
Materials
Selling
Products to
Customers
Fabricating Parts
Assembling Products
Providing AfterSales Service
Distributing Products
Firms participate in supply chains performing one or several of the tasks.
What does Nike do? How about Coke? McDonalds? Aramark?
Operations Management
The Process Perspective

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
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
Queue of Jobs
to be Processed
Queue of Jobs
to be Drilled
Queue of Jobs
to be Stapled
RM
WIP
Copy
Work Center
Completed
Course Packets
WIP
Staple
Work Center
Operating Unit
FG
Drill
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
Total Processing Time = Run Time + Setup Time
Copy Machine
Setup Time = 5 minutes
Problem 2
35 minutes + 20 minutes + 10 minutes = 65 minutes
Color Change = 2 minutes
65 minutes/60 minutes/hour * $6/hour = $6.50
Run Time = 700/25 = 28 minutes
Problem 1
Total Processing Time = 35 minutes per Job
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 job
b) 28 minutes per job
c) 29 minutes per job
d) 30 minutes per job
e) 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 job
b)
26 minutes per job
c)
27 minutes per job
d)
28 minutes per job
e)
29 minutes per job
Bottleneck
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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
Processing
Time
(Minutes)
Copy
Staple
Drill
35
10
20
60 minutes/hour
35 minutes/job
Capacity
1.714 jobs/hour
=
6 jobs/hour
3 jobs/hour
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 hour
b) Between 2 and 2.25 units per hour
2.22 jobs per hour
c) Between 2.25 and 2.50 units per hour
d) Between 2.50 and 2.75 units per hour
e) 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 hour
1.93 jobs per hour
b) Between 2 and 2.25 units per hour
c) Between 2.25 and 2.50 units per hour
d) Between 2.50 and 2.75 units per hour
e) More than 2.75 units per hour
Capacity and Cycle Time
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Problem 4

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.
Capacity and Cycle Time
Disbelievers
Copy
Staple
Drill
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
135
Job
35
35
Capacity and Cycle Time
Capacity and Cycle Time are
Inversely Proportional
Copy Center
Cycle Time = 35 minutes/job
Capacity =
Cycle Time =
1
Capacity
Problem 5
40 hours/week * 1.71 jobs/hour = 68.4 jobs/week
1
35 minutes/job
60 minutes
=
1 job
60 minutes
35 minutes 1 hour
=
1 hour
=1.71 jobs/hour
1
Throughput Time
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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.
24
Problem 3
43
17
Copy
Staple
35
10
24 + 35 + 43 + 10 + 17 + 20 = 149
Drill
20
Capacity Utilization
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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
Capacity
Available
1.714 jobs/hour
Capacity
Required
1.714 jobs/hour
Staple
6 jobs/hour
1.714 jobs/hour
Drill
3 jobs/hour
1.714 jobs/hour
Problem 6
Capacity
Utilization
100%
28.6%
57.2%
Quality
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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
700
inputs
750
Problem 9
= 93%
Miscellaneous
Problem 8

inventory turnover ratio

characteristics of quality in the copy center
what can be done about capacity utilization?
what can be done about yield?
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Sales
COGS
50 packets
20 packets