Operations Management Dr. Ron Lembke

 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 DesignProduceAssembleDeliver MTS ATO MTO ETO

 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 Flow Time = 15 days Inv = 5/day * 15 days = 75 units WIP TH = 5 units/day TH Rate = 100 units/ hr Inv = 24 units Flow Time = 24 /100 = 0.24 hrs

Variety Low Medium High Volume LowMediumHigh Process Focus (job shops) Repetitive (cars, motorcycles) Product Focus (steel, glass)

 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

 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

Variety Low Medium High Volume LowMediumHigh project Manufacturing Cell Workcenter Assembly Line Continuous Process

 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.)

 Production Process selection very important  Strategic considerations – decoupling  Volume / Variety tradeoffs  Maturation of processes over life cycle  Little’s Law: FT = TH * INV