To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Chapter 2 - PROCESS

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. WHAT IS A PROCESS PROCESS IS ONE WHERE THE INPUTS ARE TRANSFORMED INTO OUTPUTS THESE OUTPUTS SHOULD BE MORE VALUABLE TO THE ORG THAN THE INPUTS.

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. EXAMPLES  RAW MATERIALS SUCH AS DAL, RICE, VEGETABLES ARE COOKED AND MASALA’S ADDED TO MAKE IT A TASTY DISH WHICH YOU WILL THEN RELISH.  COPPER ORE IS FIRST CRUSHED, CLEANED, ENRICHED, ANDTHEN SMELTED TO GET COPPER METAL WHICH IS THEN USED TO MAKE SEVERAL TYPES OF VALUE ADDED PRODUCTS.

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. EXAMPLES  CRUDE OIL IS DRILLED BENEATH THE SURFACE AND IS PROCESSED USING A DISTILLATION PROCESS WHICH GIVES RISE TO PETROL, KEROSENE AND OTHER USEFUL PRODUCTS  A PATIENT GOES TO THE DOCTOR WITH AILMENT WHO THEN DIAGNOSE THE PATIENT AND TREATS HIM AND SUBSEQUENTLY GET WELL  A BANK LOOKS AFTER YOUR MONEY AND STILL PAYS YOU INTEREST AND RETURNS YOUR MONEY WHEN YOU WANT IT.

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. PROCESS GIVEN A PROCESS WE NEED TO ANSWER QUESTIONS SUCH AS : -- WHAT IS THE OUTPUT CAN THE PROCESS HANDLE -- WHAT IS THE COST OF PRODUCING THE OUTPUT -- WHAT IS THE WAITING TIME FOR THE CUSTOMER

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Health Clinic Process

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Health Clinic Process D T RP B D:Doctor (examination rooms) R:Radiology (X-ray) T:Triage (assess severity of illness) B:Blood (lab test) P:Pharmacy (fill prescriptions) Figure 2.2

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Health Clinic Process Physical exam D T RP B D:Doctor (examination rooms) R:Radiology (X-ray) T:Triage (assess severity of illness) B:Blood (lab test) P:Pharmacy (fill prescriptions) Physical exam Figure 2.2

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Health Clinic Process Physical exam Broken arm D T RP B D:Doctor (examination rooms) R:Radiology (X-ray) T:Triage (assess severity of illness) B:Blood (lab test) P:Pharmacy (fill prescriptions) Broken arm Physical exam Figure 2.2

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Health Clinic Process Physical exam Broken arm Flu D T RP B D:Doctor (examination rooms) R:Radiology (X-ray) T:Triage (assess severity of illness) B:Blood (lab test) P:Pharmacy (fill prescriptions) Broken arm Flu Physical exam Figure 2.2

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Automobile Assembly Process

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Automobile Assembly Process A:Front-end body-to- chassis assembly H:Hood attachment F:Fluid filling S:Start-up testing ASHF Figure 2.3

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Automobile Assembly Process A:Front-end body-to- chassis assembly H:Hood attachment F:Fluid filling S:Start-up testing Midsized 6 cylinder ASHF Midsized 6 cylinder Figure 2.3

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Automobile Assembly Process A:Front-end body-to- chassis assembly H:Hood attachment F:Fluid filling S:Start-up testing Midsized 6 cylinder Compact 4 cylinder ASHF Midsized 6 cylinder Compact 4 cylinder Figure 2.3

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. CONSIDER A PROCESS STG 1 STG 2 STG 3 1 MIN 2 MIN 1 MIN IF THIS PROCESS WORKS CONTINUOUSLY WHAT WILL BE THE OUTPUT FROM THIS PROCESS EVERYHOUR ?

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. CONSIDER A PROCESS STG 1 STG 2 STG 3 1 MIN 2 MIN 1 MIN ANS: 30 UNITS PER HOUR = TIME AVAILABLE / CYCLE TIME

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. CYCLE TIME STG 1 STG 2 STG 3 1 MIN 2 MIN 1 MIN IT IS THE AVERAGE TIME BETWEEN COMPLETION OF TWO SUCCESSIVE UNITS OF OUTPUT. HENCE IN THIS CASE IT IS 2 MINUTES.

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. UTILIZATION STG 1 STG 2 STG 3 1 MIN 2 MIN 1 MIN IT IS THE RATIO OF TIME A RESOURCE IS ACTUALLY USED AGAINST THE THE TOTAL TIME IT IS AVAILABLE FOR USE.

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. UTILIZATION STG 1 STG 2 STG 3 1 MIN 2 MIN 1 MIN STG –1 : 50% UTILIZATION STG – 2 : 100 % UTILIZATION STG – 3 : 50 % UTILIZATION.

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Flow Diagrams

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Flow Diagrams Customer drops off car Mechanic makes diagnosis* Discuss needed work with customer* * = Points critical to the success of the service Figure 3.7

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Flow Diagrams Repair authorized Customer drops off car Mechanic makes diagnosis* Discuss needed work with customer* Customer departs with car Repair not authorized * = Points critical to the success of the service Figure 3.7

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Flow Diagrams Customer drops off car Mechanic makes diagnosis* Discuss needed work with customer* Customer departs with car Repair not authorized Service visible to customer Repair authorized * = Points critical to the success of the service Figure 3.7

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Flow Diagrams Customer drops off car Mechanic makes diagnosis* Discuss needed work with customer* Customer departs with car Check parts availability † Order parts Parts available Parts not available Service visible to customer Repair authorized Repair not authorized Perform work † * = Points critical to the success of the service † = Points at which failure is most often experienced Figure 3.7

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Flow Diagrams Customer drops off car Mechanic makes diagnosis* Discuss needed work with customer* Customer departs with car Check parts availability † Perform work † Order parts Inspect/ test and repair Perform corrected work Corrective work necessary Repair not authorized Parts not available Parts available Service visible to customer Repair authorized Repair complete * = Points critical to the success of the service † = Points at which failure is most often experienced Figure 3.7

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Flow Diagrams Customer drops off car Mechanic makes diagnosis* Discuss needed work with customer* Customer departs with car Check parts availability † Order parts Service not visible to customer Repair not authorized Parts available Service visible to customer Repair authorized Perform work † Inspect/ test and repair Perform corrected work Corrective work necessary Parts not available Repair complete * = Points critical to the success of the service † = Points at which failure is most often experienced Figure 3.7

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Flow Diagrams * = Points critical to the success of the service † = Points at which failure is most often experienced Customer drops off car Mechanic makes diagnosis* Discuss needed work with customer* Customer departs with car Collect payment Notify customer Check parts availability † Order parts Repair complete Figure 3.7 Repair not authorized Parts available Service visible to customer Repair authorized Service not visible to customer Perform work † Inspect/ test and repair Perform corrected work Corrective work necessary Parts not available

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Process Charts

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Process Charts Figure 3.8 Process: Emergency room admission Subject: Ankle injury patient Beginning: Enter emergency room Ending: Leave hospital Step no. Time (min) Distance (ft) Summary Number of steps Activity Time (min) Distance (ft) Transport Operation Inspect Store Delay Step description Insert Step Append Step Remove Step

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Process Charts Figure 3.8 Process: Emergency room admission Subject: Ankle injury patient Beginning: Enter emergency room Ending: Leave hospital 1Enter emergency room, approach patient window 2Sit down and fill out patient history 3Nurse escorts patient to ER triage room 4Nurse inspects injury 5Return to waiting room 6Wait for available bed 7Go to ER bed 8Wait for doctor 9Doctor inspects injury and questions patient 10Nurse takes patient to radiology 11Technician x-rays patient 12Return to bed in ER 13Wait for doctor to return 14Doctor provides diagnosis and advice 15Return to emergency entrance area 16Check out 17Walk to pharmacy 18Pick up prescription 19Leave the building Step no. Time (min) Distance (ft) Summary Number of steps Activity Time (min) Distance (ft) Transport Operation Inspect Store Delay Step description Insert Step Append Step Remove Step

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Process Charts Figure 3.8 Process: Emergency room admission Subject: Ankle injury patient Beginning: Enter emergency room Ending: Leave hospital XEnter emergency room, approach patient window XSit down and fill out patient history XNurse escorts patient to ER triage room XNurse inspects injury XReturn to waiting room XWait for available bed XGo to ER bed XWait for doctor XDoctor inspects injury and questions patient XNurse takes patient to radiology XTechnician x-rays patient XReturn to bed in ER XWait for doctor to return XDoctor provides diagnosis and advice XReturn to emergency entrance area XCheck out XWalk to pharmacy XPick up prescription XLeave the building Step no. Time (min) Distance (ft) Summary Number of steps Activity Time (min) Distance (ft) Transport Operation Inspect Store Delay Step description Insert Step Append Step Remove Step

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Process Charts Figure 3.8 Process: Emergency room admission Subject: Ankle injury patient Beginning: Enter emergency room Ending: Leave hospital XEnter emergency room, approach patient window XSit down and fill out patient history XNurse escorts patient to ER triage room XNurse inspects injury XReturn to waiting room XWait for available bed XGo to ER bed XWait for doctor XDoctor inspects injury and questions patient XNurse takes patient to radiology XTechnician x-rays patient XReturn to bed in ER XWait for doctor to return XDoctor provides diagnosis and advice XReturn to emergency entrance area XCheck out XWalk to pharmacy XPick up prescription XLeave the building Step no. Time (min) Distance (ft) Summary Number of steps Activity Time (min) Distance (ft) Transport Operation523— Inspect28— Store——— Delay38— Step description Insert Step Append Step Remove Step

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Process Charts Figure 3.8 Process: Emergency room admission Subject: Ankle injury patient Beginning: Enter emergency room Ending: Leave hospital XEnter emergency room, approach patient window XSit down and fill out patient history XNurse escorts patient to ER triage room XNurse inspects injury XReturn to waiting room XWait for available bed XGo to ER bed XWait for doctor XDoctor inspects injury and questions patient XNurse takes patient to radiology XTechnician x-rays patient XReturn to bed in ER XWait for doctor to return XDoctor provides diagnosis and advice XReturn to emergency entrance area XCheck out XWalk to pharmacy XPick up prescription XLeave the building Step no. Time (min) Distance (ft) Summary Number of steps Activity Time (min) Distance (ft) Transport Operation523— Inspect28— Store——— Delay38— Step description Insert Step Append Step Remove Step

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. PROCESS CONSIDERED STG 1 STG 2 STG 3 1 MIN 2 MIN 1 MIN SINCE THERE ARE MORE THAN ONE STG IT IS CALLED A MULTISTAGE PROCESS

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. BUFFERING STG 1 STG 2 BUFFER WHEN THE OUTPUT FROM STG 1 IS STORED BEFORE BEING PROCESSED BY STG 2, THIS IS CALLED BUFFERING.

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. BLOCKING AND STARVING STG 1STG 2 WHEN NO BUFFERING IS SHOWN IT IS ASSUMED THAT ONE STG FEEDS THE NEXT STG IN A CONTINUOUS MANNER. IN THIS CASE EITHER BLOCKING OR STARVING CAN OCCUR.

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. BLOCKING AND STARVING STG 1 STG 2 BLOCKING MEANSTHAT STG 1 NEEDS TO BE STOPPED BECAUSE STG 2 IS NOT BEING ABLE TO USE THE OUTPUT OF THE FIRST STG.

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. BLOCKING AND STARVING STG 1 STG 2 STARVING MEANS THAT WHEN STG 2 NEEDS TO BE STOPPED BECAUSE STG 1 IS UNABLE TO FEED THE MATERIALS REQD FOR STG 2. EX: WHEN ZEROXING TAKES MORE TIME, THE STG TO PUNCH THE PAPERS AND BINDING SECTION WILL HAVE TO WAIT.

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. BOTTLENECK STG 1 STG 2 THE STG WHICH HAS A HIGHER CYCLE TIME IS THE BOTTLENECK IN THE PROCESS.

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Processes at manufacturing organizations

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. HighLow Volume Customization High Low Figure 3.1a Processes at manufacturing organizations

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. HighLow Volume Customization High Low Figure 3.1a Project process Selecting location for new plant in Europe Installing ERP for a manufacturing firm’s business processes Processes at manufacturing organizations

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. HighLow Volume Customization High Low Figure 3.1a Project process Selecting location for new plant in Europe Installing ERP for a manufacturing firm’s business processes Processes at manufacturing organizations

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. HighLow Volume Customization High Low Figure 3.1a Project process Selecting location for new plant in Europe Installing ERP for a manufacturing firm’s business processes Job process Machining precision metal tubes Internal consulting team at manufacturing firm Processes at manufacturing organizations

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. HighLow Volume Customization High Low Figure 3.1a Project process Selecting location for new plant in Europe Installing ERP for a manufacturing firm’s business processes Job process Machining precision metal tubes Internal consulting team at manufacturing firm Processes at manufacturing organizations

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. HighLow Volume Customization High Low Figure 3.1a Project process Selecting location for new plant in Europe Installing ERP for a manufacturing firm’s business processes Job process Machining precision metal tubes Internal consulting team at manufacturing firm Batch process Forging process to make fittings for pressure vessels access Producing a batch of textbooks at R. R. Donnelley’s plant Processes at manufacturing organizations

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. HighLow Volume Customization High Low Figure 3.1a Project process Selecting location for new plant in Europe Installing ERP for a manufacturing firm’s business processes Job process Machining precision metal tubes Internal consulting team at manufacturing firm Batch process Forging process to make fittings for pressure vessels access Producing a batch of textbooks at R. R. Donnelley’s plant Processes at manufacturing organizations

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. HighLow Volume Customization High Low Figure 3.1a Project process Selecting location for new plant in Europe Installing ERP for a manufacturing firm’s business processes Job process Machining precision metal tubes Internal consulting team at manufacturing firm Batch process Forging process to make fit-tings for pressure vessels access Producing a batch of textbooks at R. R. Donnelley’s plant Line process Auto assembly King Soopers bread line Processes at manufacturing organizations

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. HighLow Volume Customization High Low Figure 3.1a Project process Selecting location for new plant in Europe Installing ERP for a manufacturing firm’s business processes Job process Machining precision metal tubes Internal consulting team at manufacturing firm Batch process Forging process to make fittings for pressure vessels access Producing a batch of textbooks at R. R. Donnelley’s plant Line process Auto assembly King Soopers bread line Processes at manufacturing organizations

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. HighLow Volume Customization High Low Figure 3.1a Project process Selecting location for new plant in Europe Installing ERP for a manufacturing firm’s business processes Job process Machining precision metal tubes Internal consulting team at manufacturing firm Batch process Forging process to make fit-tings for pressure vessels access Producing a batch of textbooks at R. R. Donnelley’s plant Line process Auto assembly King Soopers bread line Continuous process Oil refining process Borden’s pasta making process Processes at manufacturing organizations

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Processes at manufacturing organizations HighLow Volume Customization High Low Figure 3.1a Project process Selecting location for new plant in Europe Installing ERP for a manufacturing firm’s business processes Job process Machining precision metal tubes Internal consulting team at manufacturing firm Batch process Forging process to make fittings for pressure vessels access Producing a batch of textbooks at R. R. Donnelley’s plant Line process Auto assembly King Soopers bread line Continuous process Oil refining process Borden’s pasta making process

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Processes at service providers HighLow Volume Customization High Low Figure 3.1b

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Processes at service providers HighLow Volume Customization High Low Figure 3.1b Project process Real estate process for leasing and constructing facilities for large insurance company Student team’s field project

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Processes at service providers HighLow Volume Customization High Low Figure 3.1b Project process Real estate process for leasing and constructing facilities for large insurance company Student team’s field project

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Processes at service providers HighLow Volume Customization High Low Figure 3.1b Project process Real estate process for leasing and constructing facilities for large insurance company Student team’s field project Job process Customer service process at financial services firm General medical practice

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Processes at service providers HighLow Volume Customization High Low Figure 3.1b Project process Real estate process for leasing and constructing facilities for large insurance company Student team’s field project Job process Customer service process at financial services firm General medical practice

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Processes at service providers HighLow Volume Customization High Low Figure 3.1b Project process Real estate process for leasing and constructing facilities for large insurance company Student team’s field project Job process Customer service process at financial services firm General medical practice Batch process Order fulfillment process of importer/distributor Placing purchase orders at public relations agency

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Processes at service providers HighLow Volume Customization High Low Figure 3.1b Project process Real estate process for leasing and constructing facilities for large insurance company Student team’s field project Job process Customer service process at financial services firm General medical practice Batch process Order fulfillment process of importer/distributor Placing purchase orders at public relations agency

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Processes at service providers HighLow Volume Customization High Low Figure 3.1b Project process Real estate process for leasing and constructing facilities for large insurance company Student team’s field project Job process Customer service process at financial services firm General medical practice Batch process Order fulfillment process of importer/distributor Placing purchase orders at public relations agency Line process Cafeteria line Teller line at bank

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Processes at service providers HighLow Volume Customization High Low Figure 3.1b Project process Real estate process for leasing and constructing facilities for large insurance company Student team’s field project Job process Customer service process at financial services firm General medical practice Batch process Order fulfillment process of importer/distributor Placing purchase orders at public relations agency Line process Cafeteria line Teller line at bank

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Processes at service providers HighLow Volume Customization High Low Figure 3.1b Project process Real estate process for leasing and constructing facilities for large insurance company Student team’s field project Job process Customer service process at financial services firm General medical practice Batch process Order fulfillment process of importer/distributor Placing purchase orders at public relations agency Line process Cafeteria line Teller line at bank Continuous process Power generation plant Providing telephone line access

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Processes at service providers HighLow Volume Customization High Low Figure 3.1b Project process Real estate process for leasing and constructing facilities for large insurance company Student team’s field project Job process Customer service process at financial services firm General medical practice Batch process Order fulfillment process of importer/distributor Placing purchase orders at public relations agency Line process Cafeteria line Teller line at bank Continuous process Power generation plant Providing telephone line access

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. MADE TO ORDER PROCESS PROJECT JOB SHOP CAN BE CALLED MADE TO ORDER PROCESS

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. MAKE TO STOCK PROCESS MASS PRODUCTION CONTINUOUS CAN BE CALLED MADE TO STOCK PROCESS

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. ASSEMBLE TO ORDER PROCESS BATCH PROCESS CAN ALSO BE CALLED ASSEMBLE TO ORDER PROCESS

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. MEASURING PROCESS PERFORMANCE 1.MEASURE UTILIZATION 2. PRODUCTIVITY 3. EFFICIENCY 4. THROUGHPUT TIME 5.PROCESS VELOCITY

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. MEASURING PROCESS PERFORMANCE 1.MEASURE UTILIZATION ALREADY DISCUSSED EARLIER

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. MEASURE OF COMPETITIVENESS PRODUCTIVITY IS A MEASURE OF COMPETITIVENESS

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Productivity Productivity = Output Input

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Productivity Labor productivity = Policies processed Employee hours Example 1.1a

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Productivity Labor productivity = 600 policies (3 employees)(40 hours/employee) Example 1.1a

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Productivity Labor productivity = 5 policies/hour Example 1.1a

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Productivity Labor productivity = 5 policies/hour Multifactor productivity = Quantity at standard cost Labor cost + Materials cost + Overhead cost Example 1.1b

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Productivity Labor productivity = 5 policies/hour Multifactor productivity = (400 units)($10/unit)$4000 $400 + $ $300$1700 = = 2.35 Example 1.1b

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Productivity Measures

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Productivity Measures Figure 1.6a question The state ferry service charges $18 per ticket plus a $3 surcharge to fund planned equipment upgrades. It expects to sell 4,700 tickets during the eight-week summer season. During that period, the ferry service will experience $110,000 in labor costs. Materials required for each passage sold (tickets, a tourist-information sheet, and the like) cost $1.30. Overhead during the period comes to $79,000. a.What is the multifactor productivity ratio? b.If ferry-support staff work an average of 310 person-hours per week for the 8 weeks of the summer season, what is the labor productivity ratio? Calculate labor productivity on an hourly basis.

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Productivity Measures Step 1. the number of tickets sold during a season, the price per ticket, and the surcharge per ticket. To compute value of output, multiply tickets sold by the sum of price and surcharge. Tickets sold:4,700 Price:$18 Surcharge:$3 Step 2. Enter labor costs, materials costs per passenger, and overhead cost. For value of input, add together labor costs, materials costs times number of passengers, and overhead costs. Labor costs:$110,000Materials costs:$1.30Overhead:$79,000 Value of input: Step 3. To calculate multifactor productivity, divide value of output by value of input. Multifactor productivity: Figure 1.6b

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Productivity Measures b. Labor productivity is the ratio of the value of output to labor hours The value of output is computed in part a, step 1. Step 1. Enter person-hours per week and the number of weeks in the season; multiply the two together to calculate labor hours of input. Hours per week:310Weeks:8 Labor hours of input: Step 2. To calculate labor productivity, divide value of output by labor hours of input. Labor productivity: Productivity Measures Figure 1.6b

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Productivity Measures a. Multifactor productivity is the ratio of the value of output to the value of input. Step 1. Enter the number of tickets sold during a season, the price per ticket, and the surcharge per ticket. To compute value of output, multiply tickets sold by the sum of price and surcharge. Tickets sold:4,700Value of output:$98,700 Price:$18 Surcharge:$3 Step 2. Enter labor costs, materials costs per passenger, and overhead cost. For value of input, add together labor costs, materials costs times number of passengers, and overhead costs. Labor costs:$110,000Materials costs:$1.30Overhead:$79,000 Value of input:$195,110 Step 3. To calculate multifactor productivity, divide value of output by value of input. Multifactor productivity:0.51 Figure 1.6c

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Productivity Measures Place cell pointer on green shaded areas to examine formulas. b. Labor productivity is the ratio of the value of output to labor hours The value of output is computed in part a, step 1. Step 1. Enter person-hours per week and the number of weeks in the season; multiply the two together to calculate labor hours of input. Hours per week:310Weeks:8 Labor hours of input:2,480 Step 2. To calculate labor productivity, divide value of output by labor hours of input. Labor productivity:$39.80 Productivity Measures Figure 1.6c

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. EFFICIENCY IF A POWER PLANT IS DESIGNED FOR 220 MW AND THE OUTPUT IS 200 MW, THE EFFICIENCY WILL BE 200/220 = 91%. IT IS ALSO CALLED PLANT LOAD FACTOR IN THE POWER INDUSTRY.

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. EFFICIENCY IF A MACHINE IS SET TO PRODUCE 100 UNITS PER HOUR, AND IT ACTUALLY PRODUCES 120 UNITS, THE EFFICIENCY WILL BE 120/100 = 120%.

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. THROUGHPUT TIME IT IS THE TIME THAT A PRODUCT ACTUALLY SPENDS IN THE PROCESS BEFORE COMING OUT OF THE PROCESS. EX: SUPPOSE A THREE STG PROCESS THE PRODUCT SPENDS IN EACH STAGE 2 MINUTES. THEN THE THROUGHPUT TIME IS 2 X 3 = 6 MINUTES

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. THROUGHPUT TIME. EX: SUPPOSE A THREE STG PROCESS THE PRODUCT SPENDS IN EACH STAGE 2 MINUTES. THEN THE THROUGHPUT TIME IS 2 X 3 = 6 MINUTES OUTPUT IN 60 MINUTES WILL BE = 60/2 = 30 UNITS/hr. OR 0.5 UNITS PER MINUTE. THIS IS CALLED THE THROUGHPUT RATE. THE NUMBER OF UNITS IN THE PROCESS IS CALLED WORK IN PROCESS.

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. LITTLE’S LAW THROUGH PUT TIME = WORK IN PROCESS THROUGH PUT RATE IN THE PREVIOUS EXAMPLE THROUGH PUT TIME = 6 MINUTES THROUGHPUT RATE = 0.5 UNITS PER MINUTE HENCE WORK IN PROCESS = 6X 0.5 = 3 UNITS

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. PROCESS VELOCITY ALSO CALLED THROUGHPUT RATIO IT IS THE RATIO OF THE TOTAL THROUGHPUT TIME TO THE VALUE ADDED TIME. IF THERE IS BUFFER THEN DURING THAT TIME NO VALUE IS BEING ADDED BUT THE THROUGHPUT TIME IS BEING INCREASED.

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. HOW TO REDUCE PROCESS THROUGHPUT TIME 1.PERFORM ACTIVITIES IN PARALLEL 2.LOOK AT SEQUENCE OF ACTIVITIES CRITICALLY 3.REDUCE INTERRUPTIONS.

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. JOB DESIGN DECISIONS WHO - Mental and physical characteristics of work force WHAT - Tasks to be performed WHERE - Location of work areas WHEN - Time when the work will be done HOW - Method by which the work will be performed

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. JOB DESIGN IS EFFECTED BY 1.Whether Quality Control is part of the worker’s job 2.Cross training workers for multi skilled jobs 3.Employee involvement and team approaches to designing and organizing work. 4. Degree of skills required by the workers. 5. Extensive use of temporary workers 6. Automation 7. Organisational commitment towards rewarding jobs

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. BEHAVIORAL CONSIDERATIONS IN JOB DESIGN 1.DEGREE OF LABOR SPECIALIZATION 2.JOB ENRICHMENT

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. PHYSICAL CONSIDERATIONS ON JOB DESIGN 1.WORK PHYSIOLOGY MORE LABORIOUS MORE REST REQD. 2.ERGONOMICS PHYSICAL ARRANGEMENT OF WORKSPACE

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. WORK MEASUREMENT TECHNIQUES 1.TIME STUDY 2. WORK SAMPLING 3.PRE-DETERMINED TIME AND MOTION STUDY

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. TIME STUDY TASK IS SEPERATED INTO MEASURABLE PARTS AND EACH PART IS MEASURED USING STOP WATCH BREAKING DOWN TO ELEMENTS MUST CONSIDER 1.DEFINE EACH ELEMENT TO BE SHORT BUT LONG ENOUGH TO BE ABLE TO MEASURE 2.IF OPERATOR WORKS ALONG WITH MACHINE THEN SEPARATE THE ACTION OF THE OPERATOR WITH THAT OF THE MACHINE. 3.DEFINE ANY DELAYS BY THE OPERATOR OR EQUIPMENT INTO SEPARATE ELEMENTS