1. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. Chapter 4 Processes and Technologies To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved.

2. Process Strategy Overall approach to producing goods and services Overall approach to producing goods and services Defines: Defines: Capital intensity Capital intensity Process flexibility Process flexibility Vertical integration Vertical integration Customer involvement Customer involvement

3. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. From Function to Process

4. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. From Function to Process Manufacturing Accounting Sales Purchasing Product Development Order Fulfillment Supply Chain Management Customer Service FunctionProcess Figure 4.1

5. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. Types of Processes Projects Projects Batch production Batch production Mass production Mass production Continuous production Continuous production

6. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. Types of Processes

7. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. PROJECT BATCHMASS CONTINUOUS Product UniqueMade to order Made to stock Commodity CustomerOne-at-a-timeFew individualsMass marketMass market DemandInfrequentFluctuatesStableVery stable VolumeVery lowLow to medHighVery high No. of differentInfiniteMany, variedFewVery low products products SystemLong-termDiscrete, jobRepetitive, Process industry assembly lines EquipmentVariedGeneral-purposeSpecial-purposeHighly automated Type of workContractsFabricationAssemblyMix, treat, refine SkillsExperts,Wide rangeLimited rangeEquipment craftspeopleof skillsof skillsmonitors AdvantagesCustom work,Flexibility,Efficiency,Highly efficient technologyqualityspeed, low costlarge capacity Dis-Nonrepetitive,Costly, slow,Capital investment,Difficult to advantagessmall customerdifficult tolack of change advantagessmall customerdifficult tolack of change base, expensivemanageresponsiveness ExampleConstruction,Machine shops, Autos, TV’s,Paint, chemicals, shipbuildingprinting, bakeryfast foodfood Types of Processes Table 4.1

8. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. Process Selection with Break-Even Analysis

9. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. Process Selection with Break-Even Analysis Total cost= fixed cost + total variable cost TC= c f + vc v Total revenue=volume x price TR= vp Profit= total revenue - total cost Z=TR - TC = vp - ( c f + vc v )

10. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. Process Selection with Break-Even Analysis c f = fixed cost v = volume (i.e., number of units produced and sold) c v = variable cost per unit p = price per unit Total cost= fixed cost + total variable cost TC= c f + vc v Total revenue=volume x price TR= vp Profit= total revenue - total cost Z=TR - TC = vp - ( c f + vc v )

11. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. Solving for Break-Even Volume

12. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. Solving for Break-Even Volume TR= TC vp = c f + vc v vp - vc v = c f v ( p - c v )= c f v = c f p - c v

13. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. Break-Even Analysis

14. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. Break-Even Analysis Fixed cost= c f = $2,000 Variable cost= c v = $5 per raft Price= p = $10 per raft Example 4.1

15. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. Break-Even Analysis Fixed cost= c f = $2,000 Variable cost= c v = $5 per raft Price= p = $10 per raft The break-even point is v = = = 400 rafts c f p - c v 2000 10 - 5 Example 4.1

16. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. Break-Even Analysis Fixed cost= c f = $2,000 Variable cost= c v = $5 per raft Price= p = $10 per raft The break-even point is v = = = 400 rafts c f p - c v 2000 10 - 5 Units $3,000 — $2,000 — $1,000 — Example 4.1

17. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. Break-Even Analysis Fixed cost= c f = $2,000 Variable cost= c v = $5 per raft Price= p = $10 per raft The break-even point is v = = = 400 rafts c f p - c v 2000 10 - 5 Total revenue line Units $3,000 — $2,000 — $1,000 — Example 4.1

18. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. Break-Even Analysis Fixed cost= c f = $2,000 Variable cost= c v = $5 per raft Price= p = $10 per raft The break-even point is v = = = 400 rafts c f p - c v 2000 10 - 5 Total cost line Total revenue line Units $3,000 — $2,000 — $1,000 — Example 4.1

19. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. Break-Even Analysis Fixed cost= c f = $2,000 Variable cost= c v = $5 per raft Price= p = $10 per raft The break-even point is v = = = 400 rafts c f p - c v 2000 10 - 5 Total cost line Total revenue line Break-even point 400Units $3,000 — $2,000 — $1,000 — Example 4.1

20. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. Choosing Between Two Processes

21. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. Choosing Between Two Processes $2,000 + $5 v = $10,000 + $2 v $3 v = $8,000 v = 2,667 rafts Process AProcess B Example 4.2

22. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. Choosing Between Two Processes Below 2,667, choose A Above 2,667, choose B $2,000 + $5 v = $10,000 + $2 v $3 v = $8,000 v = 2,667 rafts Process AProcess B Example 4.2

23. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. Choosing Between Two Processes Example 4.2 |||| 1000200030004000Units $20,000 — $15,000 — $10,000 — $5,000 —

24. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. Choosing Between Two Processes Example 4.2 |||| 1000200030004000Units $20,000 — $15,000 — $10,000 — $5,000 — Total cost of process A

25. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. Choosing Between Two Processes Example 4.2 |||| 1000200030004000Units $20,000 — $15,000 — $10,000 — $5,000 — Total cost of process A Total cost of process B

26. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. Choosing Between Two Processes Example 4.2 |||| 1000200030004000Units $20,000 — $15,000 — $10,000 — $5,000 — Total cost of process A Total cost of process B Choose process A

27. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. Choosing Between Two Processes Example 4.2 |||| 1000200030004000Units $20,000 — $15,000 — $10,000 — $5,000 — Total cost of process A Total cost of process B Choose process A Choose process B

28. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. Choosing Between Two Processes Example 4.2 |||| 1000200030004000Units $20,000 — $15,000 — $10,000 — $5,000 — Total cost of process A Total cost of process B Choose process A Choose process B Point of indifference = 2,667 Units

29. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. Point of Indifference Volume where cost of A = cost of B Volume where cost of A = cost of B Rule for choosing process: Rule for choosing process: Above point of indifference choose process with lowest variable cost Above point of indifference choose process with lowest variable cost Below point of indifference choose process with lowest fixed cost Below point of indifference choose process with lowest fixed cost

30. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. Process Planning Make-or-buy decisions Make-or-buy decisions Process selection Process selection Specific equipment selection Specific equipment selection Process plans Process plans Process analysis Process analysis

31. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. Make-or-Buy Decisions 1. Cost 2. Capacity 3. Quality 4. Speed 5. Reliability 6. Expertise Make? Buy?

32. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. Specific Equipment Selection 1.Purchase cost 2.Operating cost 3.Annual savings 4.Revenue enhancement 5.Replacement analysis 6.Risk and uncertainty 7.Piecemeal analysis

33. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. Process Plans Blueprints Blueprints Bill of material Bill of material Assembly chart / product structure diagram Assembly chart / product structure diagram Operations process chart Operations process chart Routing sheet Routing sheet

34. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. Process Plans

35. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. Process Plans Figure 4.2 Bottom bun Beef patty SaltCheeseLettuceSauceOnions Middle bun Beef patty SaltCheeseLettuceSauceOnionsPickles Sesame seed top bun WrapperSA SA First-layer assembly Second-layer assembly Completed Big Mac

36. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. Operations Process Chart

37. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. Operations Process Chart Part nameCrevice Tool Part No.52074 UsageHand-Vac Assembly No.520 Oper. No.DescriptionDept.Machine/ToolsTime 10Pour in plastic bits041Injection molding2 min 20Insert mold041#0762 min 30Check settings041113, 67, 65020 min & start machine 40Collect parts & lay flat051Plastics finishing10 min 50Remove & clean mold042Parts washer15 min 60Break off rough edges051Plastics finishing10 min Figure 4.3

38. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. Process Analysis The systematic examination of all aspects of a process to improve its operation The systematic examination of all aspects of a process to improve its operation Faster Faster More efficient More efficient Less costly Less costly More responsive More responsive Basic tools Basic tools Process flowchart Process flowchart Process diagrams Process diagrams Process maps Process maps

39. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. Process Flowchart Symbols

40. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. Process Flowchart Symbols OperationsInspection Transportation Delay Storage

41. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. Process Flowchart

42. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. Process Flowchart Figure 4.4

43. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. Process Diagram

44. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. Process Diagram Reserve Storage Quality Assurance Back to Vendor UPS Parcel Post Next-Day UPS Mono- gramming Embroid- ering Hemming Gift Boxing Receiving Active Bins PickingPacking Shipping Figure 4.5

45. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. Process Map

46. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. Process Map Figure 4.6 Place order Drink Eat salad or soup Eat dinner Receives check Gives payment to waiter Collect change, leave tip Fill in tip amount Give order to waiter Prepare dinner order Prepare soup or salad order Give order to waiter Is order complete? Give soup or salad order to chef Give dinner order to chef Get drinks for customer Deliver salad or soup order to customer Deliver dinner to customer Deliver check to customer Receive payment for meal Cash or Credit? Bring change to customer Run credit card through Return credit slip to customer Collect tip Y N Credit Cash CustomerWaiterSalad ChefDinner Chef

47. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. Extend’s Fast Food Simulation Model

48. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. Extend’s Fast Food Simulation Model Figure 4.7

49. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. SAP Solution for Apparel

50. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. SAP Solution for Apparel Figure 4.8

51. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. Continuous Improvement and Breakthroughs

52. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. Continuous Improvement and Breakthroughs Figure 4.9

53. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. Continuous Improvement and Breakthroughs Breakthrough Improvement Continuous improvement refines the breakthrough Continuous improvement activities peak; time to reengineer process Figure 4.9

54. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. Process Reengineering

55. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. Process Reengineering Model validation Key performance measures Detailed process map Pilot study of new design Full-scale implementation Innovative ideas Design principle s High-level process map Customer requirements data Strategic directive Baseline analysis Benchmark data Goals & specifications for process performance Figure 4.10

56. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. High-Level Process Map

57. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. High-Level Process Map Output PerformanceGoal Input Subprocess Figure 4.11

58. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. Principles for Redesigning Processes 1.Remove waste, simplify, consolidate 2.Link processes to create value 3.Let the swiftest and most capable execute 4.Flex the process 5.Capture information digitally and propagate Table 4.2

59. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. Principles for Redesigning Processes 6.Provide visibility through information about process status 7.Fit the process with sensors and feedback loops 8.Add analytic capabilities 9.Connect, collect and create knowledge around the process 10.Personalize the process Table 4.2

60. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. Techniques for Generating Innovative Ideas Vary entry point to a problem Vary entry point to a problem Draw analogies Draw analogies Change your perspective Change your perspective Try inverse brainstorming Try inverse brainstorming Chain forward as far as possible Chain forward as far as possible Use attribute brainstorming Use attribute brainstorming Table 4.3

61. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. Information Technology Management Information Systems (MIS) Management Information Systems (MIS) Move large amounts of data Move large amounts of data Decision Support Systems (DSS) Decision Support Systems (DSS) Add decision making support Add decision making support Expert System Expert System Recommend decision based on expert knowledge Recommend decision based on expert knowledge

62. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. Decision Support System

63. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. Decision Support System Personnel Accounting Production Marketing Distribution Other areas Management Information: reports, model results Data Computer system: data processing

64. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. Decision Support System Management Information System Personnel Accounting Production Marketing Distribution Other areas Management Information: reports, model results Data Computer system: data processing

65. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. Decision Support System Management Information System What-if? analysis Personnel Accounting Production Marketing Distribution Other areas Management Information: reports, model results DataDecisions Computer system: data processing Quantitative techniques Figure 4.12

66. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. Artificial Intelligence Neural networks Neural networks Emulate interconnections in brain Emulate interconnections in brain Genetic algorithms Genetic algorithms Based on adaptive capabilities in nature Based on adaptive capabilities in nature Fuzzy logic Fuzzy logic Simulate human ability to deal with ambiguity Simulate human ability to deal with ambiguity

67. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. Enterprise Software Collect, analyze, and make decisions based on data Collect, analyze, and make decisions based on data ERP - Enterprise Resource Planning ERP - Enterprise Resource Planning Managing wide range of processes Managing wide range of processes Human resources, materials management, supply chains, accounting, finance, manufacturing, sales force automation, customer service, customer order entry Human resources, materials management, supply chains, accounting, finance, manufacturing, sales force automation, customer service, customer order entry Finding hidden patterns through data mining Finding hidden patterns through data mining

68. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. Advanced Communications Electronic data interchange (EDI) Electronic data interchange (EDI) Internet, extranets Internet, extranets Wireless communications Wireless communications Teleconferencing & telecommuting Teleconferencing & telecommuting Bar coding, RFT Bar coding, RFT Virtual reality Virtual reality

69. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. Manufacturing Technology Numerically controlled (NC) machines Numerically controlled (NC) machines Controlled by punched tape Controlled by punched tape Computer numerical controlled (CNC) Computer numerical controlled (CNC) Controlled by attached computer Controlled by attached computer Direct numerical control (DNC) Direct numerical control (DNC) Several NC machines controlled by single computer Several NC machines controlled by single computer Flexible manufacturing systems (FMS) Flexible manufacturing systems (FMS) Includes automated material handling Includes automated material handling

70. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. Automated Material Handling Conveyors Conveyors Automated guided vehicle (AGV) Automated guided vehicle (AGV) Automated storage & retrieval system (ASRS) Automated storage & retrieval system (ASRS)

71. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. Flexible Manufacturing Systems (FMS) Programmable machine tools Programmable machine tools Controlled by common computer network Controlled by common computer network Combines flexibility with efficiency Combines flexibility with efficiency Reduces setup & queue times Reduces setup & queue times

72. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. Flexible Manufacturing System

73. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. Flexible Manufacturing System Parts Finished goods Computer control room Terminal CNC Machine Pallet Automatic tool changer Figure 4.13

74. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. Robotics Programmable manipulators Programmable manipulators Follow specified path Follow specified path Better than humans with respect to Better than humans with respect to Hostile environments Hostile environments Long hours Long hours Consistency Consistency Adoption has been slowed by ineffective integration and adaptation of systems Adoption has been slowed by ineffective integration and adaptation of systems

75. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. e-Manufacturing Real-time sharing of data with trading partners and customers to drive collaborative decisions Real-time sharing of data with trading partners and customers to drive collaborative decisions CAD - uses software to create & modify designs CAD - uses software to create & modify designs GT- classifies designs to benefit from prior experience GT- classifies designs to benefit from prior experience STEP - sets standards for communication STEP - sets standards for communication CAPP - creates processing instructions for CAM CAPP - creates processing instructions for CAM CAM - uses programmable automation in manufacturing CAM - uses programmable automation in manufacturing

76. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. Components of e-Manufacturing

77. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. Components of e-Manufacturing Figure 4.14 eM Products Manufacture Processes Information Technology Information Technology CAD GT CAE CPCPDM Product life cycle Product Definition CNC machines STEP CAD/CAM CAPP Sourcing & e-procurement B2B, B2C Bar codes, RFT, EDI ERP SCM, CRM DSS/ES/AI Internet, Intranet, extranet, satellites FMSRobotics AGV, ASRS Process control Cells and centers Multiple factory sites & suppliers