1. Processes and facility selection
Operations Management
Dr. Ron Lembke

2. Process Strategies Design Produce Assemble Deliver MTS ATO MTO
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
Design Produce Assemble Deliver
MTS
ATO
MTO

3. Make to Stock Processing Finished Materials Goods
Storable products, most efficient processes, high-volume production
Customers perceive delivery as instantaneous
Harder to do with services: bus system, airline flights?

4. Make to Order Processing Finished Good Materials
Stock
Processing
Materials
Finished
Good
Demand is known. Longer Lead Time.
No stockpile of finished goods. Delivered directly to consumer
Customizable product, or where Freshness is important
Services more likely MTO. Costs higher.

5. Assemble to Order Combination of MTS, MTO, benefits of both
Stock
Processing
Stock
Processing
Finished
Good
Materials
WIP
subassemblies
Combination of MTS, MTO, benefits of both
Offer variety to customer, but quick delivery
Efficiencies of MTS, work ahead on components during slow times
Pre-cooked burgers, French fries

6. Remanufacturing
Re-use components
Can be ATO?

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

8. 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

9. 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

10. Process Strategy Variety Volume project Manufacturing Cell Workcenter
High
Manufacturing
Cell
Workcenter
Assembly
Line
Medium
Continuous
Process
Low
Low
Medium
High
Volume

11. 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.)

12. Assembly-Line Balancing
Situation: Assembly-line production.
Many tasks must be performed, and the sequence is flexible
Parts at each station same time
Tasks take different amounts of time
How to give everyone enough, but not too much work for the limited time.

14. Chipotle Production Line- Experience
Meat
Salsa
Cheese/ Lettuce
Beans & Rice 29 29 29
Sour Cream /Guacamole
Warm Tortilla 44 29 29
Order
Wrap Tortilla 44 67
Cashier 94

15. Chipotle Production Line- Experience
Meat
Salsa
Cheese/ Lettuce
Beans & Rice 29 29 29
Sour Cream /Guacamole
Warm Tortilla 44 29 29
125
174
Order
Wrap Tortilla 44 67
CT = 174 sec
TH = 60*60 sec/hr = 20.7/hr
174 sec
Cashier 94

16. Chipotle Production Line- Experience
Meat
Salsa
Cheese/ Lettuce
Beans & Rice 29 29 29
Sour Cream /Guacamole
Warm Tortilla 44 29 29
145
154
Order
Wrap Tortilla 44 67
CT = 154 sec
TH = 60*60 sec/hr = 23.4/hr
154 sec
Cashier 94
Increase ( )/20.7 = 13%

17. Chipotle Production Line- Efficient Probability
Beans & Rice
Meat
Salsa
Cheese/ Lettuce
Sour Cream /Guacamole 29
Warm Tortilla 44 29 29 73 87 29 29 73
Order
Wrap Tortilla 44 67
CT = 94 sec
TH = 60*60 sec/hr = 38.3/hr
154 sec 94
Cashier

18. Target Cycle Times – 4 Stations
Ord44
Mt 29
SC&G 29
Ch&L 29
Wrap 67
Pay 94
B&R 44
Tlla 29
Sls 29 73
125
102
CT = 125
Ord44
Mt 29
SC&G 29
Ch&L 29
Wrap 67
Pay 94
B&R 44
Tlla 29
Sls 29
117 96 87
CT = 117

19. Target Cycle Times- 5 Stations73 67 87
CT = 94
Mt 29
Sls 29
Ch&L 29
B&R 44
Tlla 29
SC&G 29
Wrap 67
Ord44
Pay 94

20. Cycle Time Production Time in each day CT = =
The more units you want to produce per hour, the less time a part can spend at each station.
Cycle time = time spent at each spot
D =400 units,
OT = 12 hrs – 30 min setup, 90 min delivery = 10 hrs
CT = 10 hrs/400 units = hrs/unit
0.025 hrs * 60 min/hr = 1.5 min = 90 sec
CT =
Production Time in each day
Required output per day (in units) = OT D

21. Number of Workstations
Given required cycle time, find out the theoretical minimum number of stations
Theoretical Minimum # Workstations
= ST / CT = 325/90 = = 4 (Always round up)
Nt =
Sum of task times (T)
Cycle Time (C)

22. Scenario 1c- Precedence Diagram
(times in seconds) D 60 A 30 I 60 C 45 E 20 H 10 B 60 G 10 F 30

23. Scenario 1c D A I C E H B G F (times in seconds) A&B candidates
B is longer, so it gets chosen
C can’t be considered yet,
A has to be done before C D 60 A 30 I 60 C 45 E 20 H 10 B 60 G 10 F 30

24. Scenario 1c
A&C one station, C next candidate, AB 90 sec
C start of new position
D,E,F next possibilities D 60
D too big to add with C
F can work, added to C A 30 I 60 C 45 E 20 H 10 B 60 G 10 F 30

25. Scenario 1c D A I C E H B G F C&F now combined D, E, G eligible
D,E too big, G will fit D 60
H now eligible, but too big A 30 I 60 C 45 E 20 H 10 B 60 G 10 F 30

26. Scenario 1c D A I C E H B G F CFG combined D, E, H eligible D biggest
I not eligible until E & H done
E biggest
H can be added D 60 A 30 I 60 C 45 E 20 H 10 B 60 G 10 F 30

27. Scenario 1c D A I C E H B G F DEH combined I is finally eligible,
But can’t be added to DEH D 60 A 30 I 60 C 45 E 20 H 10 B 60 G 10 F 30

28. Scenario 1c A B C D E F G H I Summary I is finally eligible,
But can’t be added to DEH
Summary A 30 B 60 C 45 D E 20 F G 10 H I
4 stations
Longest time 90 sec
Efficiency = ∗ 90 =0.9028=90.3%

29. Scenario 1d A 30 B 60 C 45 D E 20 F G 10 H I
A, B
C, F, G
D, E, H I
Efficiency = ST / (CT * N) = 325 / (4*90) = 90.3%
Balance Delay = 1 – = = 10%
Theoretical Minimum # Workstations
= ST / CT = 325/90 = = 4 (Always round up)

30. Precedence RequirementsB A G 5 20 15 E I J C D 8 7 H 12 5 F 10 12 3
Why not put J with F&G? AB
CDE HI
FG J

31. Legal arrangements A C F D B E H G I J
CT = maximum of workstation times A C F D B E H G I J 20 5 15 12 10 8 3 7
AC|BD|EG|FH|IJ = max(25,15,23,15,19) = 25
ABG|CDE|FHI|J = max(40,23,27,7) = 40
C|ADB|FG|EHI|J = max(5,35,18,32,7) = 35
AC BD EG FH IJ

32. Handling Long Tasks
Long tasks make it hard to get efficient combinations.
Consider splitting tasks, if physically possible.
If not:
Parallel workstations
use skilled (faster) worker to speed up

33. Process Layout
+ Allows specialization - focus on one skill + Allows economies of scale - worker can watch several machines at once + High level of product flexibility -- Encourages large lot sizes -- Difficult to incorporate into JIT -- Makes cross-training difficult

34. Process Layout
8! = 8 * 7 * 6 * 5 * 4 * 3 *2 * 1 = 40,320 possible arrangements
Rectilinear (taxi-cab) distances
Minimize load-distance total

35. Process Example High Rack 1 10 HR2, 10 HR3, 30 Staging
Staging Area 30 HR1, 30 HR2, 30 HR3, 50 Tent, 50 Soft
Tent Storage 50 Staging
Soft Goods Storage 50 Staging
Administrative Office none
Tool Crib none

36. Process Example High Rack 1 High Rack 2 High Rack 3 Admin Offices
Soft Goods
Tool
Crib
Tents
Staging

37. Process Example Cost 10*2+10+10+30*2 +30*2+30 + 50 + 50 = 290 10 High
10* *2 +30* = 290 10
High
Rack 1
High
Rack 2
High
Rack 3
Admin
Offices 10 10 30 30 30
Soft Goods
Tool
Crib
Tents
Staging 50 50

40. REL Diagram Rating Points A 100 E 50 I 25 O 5 U 0 Z -100
High Rack Storage 3
Staging Area
Soft Goods Storage
Tool Crib
Administrative Office
Tent Storage
High Rack Storage 1
High Rack Storage 2 A E U X I

41. REL chart A X U E HR1 HR2 HR3 Office Tent Staging Soft Tools
5A (100) + E(50) + 2X(-100) = 350

42. REL chart A U E U HR1 HR2 Tent Office HR3 Staging Tools Soft
5A (100) + E(50) = 600

43. Fixed-Position Design is for stationary project
Workers & equipment come to site
Limited space at site
Changing material needs
Ship building (18,400 TEU, 2014)
Highway construction

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