Operations Management
Dr. Ron Lembke
PRODUCTION PROCESSES
RESPONSIVENESS – SUPPLY CHAIN DESIGN
Price / Quality / Speed?
 Decoupling Point

Make to Stock – ready on the shelf – Breyer’s
 Assemble to Order – parts waiting for an order – DQ
 Make to Order – Raw Materials waiting – Cold Stone
 Engineer to Order – Anything you want – Home made

Design
MTS
ATO
MTO
ETO
Produce
Assemble
Deliver
LITTLE’S LAW
Assume things are in “steady state,” not startup
 Production level = average demand

 Inventory
= Throughput rate * Flow Time
 Flow Time = Inv / Throughput rate
 TH rate = Inv / Flow Time

Single workstation, a line, or whole supply chain
TH =
5 units/day
TH Rate = 100 units/ hr
Inv = 24 units
Flow Time = 24 /100 = 0.24 hrs
Flow Time = 15 days
Inv = 5/day * 15 days = 75 units WIP
PROCESS STRATEGY
Variety
High
Process Focus
(job shops)
Repetitive (cars,
motorcycles)
Medium
Product Focus
(steel, glass)
Low
Low
Medium
High
Volume
PROCESS FOCUS (JOB SHOP)
Low volume, high variety, “do it all”
 “Job shop” environment (e.g. Kinko’s)
 High amount of flexibility
 Each job is different
 Relatively high cost per unit
 Very high flexibility

PROCESS SELECTION / EVOLUTION



Products tend to move through the four stages
over life cycle.
Unit costs decrease as standardization
increases, and production increases.
Flexibility decreases as volume, standardization
increase
PROCESS STRATEGY
Variety
High
Medium
project
Workcenter Manufacturing
Cell
Assembly
Line Continuous
Process
Low
Low
Medium
High
Volume
PROCESS FLOW STRUCTURES




Job Shop - low standardization, every order is a
different product, new design
Batch Shop - Stable line of products, produced in
batches
Assembly Line - Discrete parts moving from
workstation to workstation
Continuous Flow - Undifferentiated flow of product
(beer, paper, etc.)
DESIGN FOR MANUFACTURING -BEFORE
DESIGN FOR MANUFACTURING-AFTER
SUMMARY

Production Process selection very important
 Strategic
considerations – decoupling
 Volume / Variety tradeoffs
 Maturation of processes over life cycle

Little’s Law: FT = TH * INV