1. Operations Management
DSCI-303
Operations Management
Session 27

2. (managing the risk of FAILURES)
Risk Management
(managing the risk of FAILURES)

3. Failures inside the operation
Risk of failures..
Design failures
Facilities failures
Staff failures
Failures inside the operation
Customer failures
Supply failures

4. Infant-mortality stage
How the risk of failure is measured
Infant-mortality stage
Normal-life stage
Wear-out stage
Failure rate
Time

5. Infant-mortality stage
Is curve A better or curve B?
Bath-tub curves for two parts of an operation. Curve A represents a part with relatively predictable failure and curve B represents a part with a more random failure pattern.
Infant-mortality stage
Normal-life stage
Wear-out stage
Curve A
Failure rate
Curve B X
Time y

6. Early failure detection and improvement
How failure is measured (continued..)
Service operations, after an early stage of failure detection and improvement, may suffer from steadily rising failure rates caused by increasing complacency.
Early failure detection and improvement
Complacency
Failure rate
Time

7. Severity of consequence
Failure Management
Prevention
Mitigation
Recovery
Normal operation
Failure
Severity of consequence
Effect on customer

8. Poka-Yoke (fail-safe-ing)
File cabinets can fall over if too many drawers are pulled out. For some file cabinets, opening one drawer locks all the rest, reducing the chance of the file cabinet tipping. It is a failure prevention measure.
The window in the envelope is not only a labour saving device. It also prevents the contents of an envelope intended for one person being inserted in an envelope addressed to another. It is a failure prevention measure.

9. A flight crash as a result of flying at the wrong altitude..
What has to go wrong?
Pilot does not notice altimeter malfunction p = 0.01
Co-pilot fails to cross check p = 0.01
Air traffic control fails to notice p = 0.1
Pilots ignore warning alarm p = 0.5
Cumulative probability of occurrence = Five in a million.

10. Maintenance modes
A mixture of maintenance approaches is often used – in an automobile, for example.
Engine – Use preventive maintenance
Lights – Use run-to-breakdown maintenance
Tyres – Use condition-based monitoring maintenance

11. Cutter ‘wear out’ failure pattern
Reliability centered maintenance
One part in one process can have several different failure modes, each of which requires a different approach.
Cutters
Shredding process
Failures
Time
Cutter ‘wear out’ failure pattern
Solution
Preventive maintenance before end of useful life

12. Cutter ‘damage’ failure pattern
Reliability centered maintenance
Cutters
Shredding process
One part in one process can have several different failure modes, each of which requires a different approach.
Solution
Prevent damage, fix stone screen
Failures
Time
Cutter ‘damage’ failure pattern

13. Cutter ‘shake loose’ failure pattern
Reliability centered maintenance
Cutters
Shredding process
One part in one process can have several different failure modes, each of which requires a different approach.
Solution
Ensure correct fitting through training
Failures
Time
Cutter ‘shake loose’ failure pattern

14. Maintenance costs
One model of the costs associated with preventive maintenance shows an optimum level of maintenance effort.
Total cost
Cost of providing preventive maintenance
Cost of breakdowns
‘Optimum’ level of preventive maintenance
Costs
Amount of preventive maintenance

15. Maintenance costs (Continued)
If preventive maintenance tasks are carried out by operators and if the real cost of breakdowns is considered, the ‘optimum’ level of preventive maintenance shifts towards a higher level.
Total cost
Cost of breakdowns
Costs
Cost of providing preventive maintenance
Amount of preventive maintenance

16. The three tasks of failure prevention and recovery
Failure detection and analysis
Finding out what is going wrong and why
Recovery
Improving system reliability
Coping when things do go wrong
Stopping things from going wrong in the future

17. How failure is detected and analyzed
Failure detection
Failure detection mechanisms include:
in-process checks;
machine-diagnostic checks;
point-of-departure interviews.
Failure analysis
Failure analysis procedures include:
accident investigation;
failure mode and effect analysis;
fault-tree analysis.

18. Fault-tree analysis
Risk – “below-temperature” food served to customers
Food served to customer is “below temperature”
Plate is cold
Food is cold
Cold plate used
Plate taken too early from warmer
Plate warmer malfunction
Oven malfunction
Timing error by chef
Ingredients not defrosted
Key
AND node
OR node

19. The stages in failure planning
Discover
Act
Learn
Plan
Inform
Contain
Follow up
Find root cause
Engineer out
Analyze failure
Plan recovery
What’s happened
What are the consequences

20. Managing Multiple Risks
Normal operation
Failure
Severity of consequence
Effect on customer
Probability of failure
Degree of severity
Likelihood of detection
Risk priority number

21. Course & instructor evaluation:
Instructor Name : Amit Kakkad
Course Number : DSCI 303
Course Name : Operations Management
Section : 01

22. Input -> Transformation -> Output
Quick Recap:
Input -> Transformation -> Output
Transforming / transformed resources?
Four key differences between products and services?
Servitization?
4 Vs?

23. Input -> Transformation -> Output
Quick Recap:
Input -> Transformation -> Output
Stakeholders?
Triple bottom line?
5 competitive objectives of Operations?
Polar diagrams?

24. Input -> Transformation -> Output
Quick Recap:
Input -> Transformation -> Output
Strategic vs. Operational?
4 perspectives of Operations Strategy?
Order qualifying, order winning / less important objectives?
Effect of product / service life cycle on OQ/OW/LI objectives?

25. Quick Recap: Process Design Process types?
Cost, volume/variety tradeoffs?
Little’s law?
Throughput time, capacity utilization, waiting time?

26. Facilities / Layout Design
Quick Recap:
Facilities / Layout Design
Goals?
Types of layout?
Pros and Cons?
Long & thin vs. Short and fat?

27. Quick Recap: Supply Chain Design What is supply chain?
Upstream / Downstream, 1st tier, 2nd tier?
Vertical integration?
4 Types of supply chains based on supply and demand uncertainty?
Choosing a location?
Various supply chain management tasks?

28. Supply Chain Management
Quick Recap:
Supply Chain Management
Upstream flow of information, downstream flow of products / services?
Bullwhip effect?
ERP?
Types of supply chain partners?
Types of supply chain relationships?
Modes of transport and pros and cons?

29. Process Flowcharting and Analysis
Quick Recap:
Process Flowcharting and Analysis
Why?
How?

30. Demand forecasting & Capacity planning
Quick Recap:
Demand forecasting & Capacity planning
Types of demand?
Forecast & forecast accuracy?
Utilization & efficiency?
Reconciling demand and capacity?
Push vs. pull methods of production?
Yield management?

31. Quick Recap: Inventory Management Pros and cons of carrying inventory?
Single-period inventory order model?
Multi-period inventory models?
Fixed-time vs. Fixed Quantity Models?
Fixed Quantity (EOQ) Model – assumptions, intuition, limitations?
Probabilistic distribution of demand and safety stock?
Pareto curve for categorizing inventory?

32. Lean Production / Lean Supply Chain
Quick Recap:
Lean Production / Lean Supply Chain
Value chain, customer value, waste?
Commonly used names?
Types of wastes?
The five “S”s?
Value stream mapping?
The problem with inventory, JIT?
Minimum setup time, smaller batches, smaller deliveries?

33. Quick Recap: Quality Impact on revenue, cost, profit?
A “Gap” model of quality?
Quality characteristics of goods and services?
Attribute & variable measures of quality?
Aspects of quality: Fitness for purpose, Reliability?
TQM
Costs of quality, why quality is free?
DMAIC methodology?

34. Quick Recap: Quality Six sigma quality? Tools for six sigma quality?
Flowcharts
Pareto charts
Cause-and-effect diagrams / fishbone diagram
Check sheets
Opportunity flow diagrams
Run charts / control charts
Quality Standards: ISO 9000 and ISO 14000

35. Quick Recap: Quality Improvement The concept of “fit”?
Prioritizing improvement opportunities?
The sandcone model of improvement?
Single loop and double loop learning?

36. Quick Recap: Risk Management Why systems fail? Bathtub curve?
Failure management: prevention, mitigation, recovery?
Prevention: fail-proofing, multiple checks, maintenance?
Three tasks of failure prevention & recovery?
Discover -> Act -> Learn -> Plan?
Risk priority number (RPN)?

37. Let’s bring this class (and this course) to a fitting end!

39. Questions?