OUTLINE OF PAPER Every day, we encounter situations in our homes, workplaces and communitieswhich could be improved by applying concepts from operations management. 1. Identify a specific problem which you have encountered in operations. 2. Describe the circumstances and consequences of the problem. 3. Analyze the problem by collecting data and modeling the system. 4. Develop a solution to the problem which is innovative and practical. 5. Evaluate the benefits of improved performance. NOTE: Examples would be serving food at a large party, developing anew product to take advantage of excess production capacity, reducingwait times at a doctor’s office, or reducing excess inventory. You canwrite about a specific business or other location in your community.”Modeling the system” could be conceptual (such as a flow chart ora set of drawings) or quantitative (such as regression analysis).It should be about 15 pages , no more than 20 pages I have uploaded five files and there is three more but I could not upload. However I will upload them once the tutor confirm my requestChapter 8
Capacity management
Slack, Brandon-Jones and Johnston, Essentials of Operations Management, 1st Edition, © Slack, Brandon-Jones and Johnston, 2011
Slack et al’s model of operations management
Direct
Supply
network
management
Capacity
management
Planning
and control
Inventory
management
Design
Operations
Management
Deliver
Lean
synchronisation
Slack, Brandon-Jones and Johnston, Essentials of Operations Management, 1st Edition, © Slack, Brandon-Jones and Johnston, 2011
Develop
Key operations questions
In Chapter 8 – Capacity planning and control – Slack et. al.
identify the following key questions…….
❑What is capacity management?
❑How are demand and capacity measured?
❑What are the alternative ways of coping with demand
fluctuation?
❑How can operations plan their capacity level?
❑How can queuing theory be used to plan capacity?
Slack, Brandon-Jones and Johnston, Essentials of Operations Management, 1st Edition, © Slack, Brandon-Jones and Johnston, 2011
What is capacity?
❖Capacity is in the static, physical sense means the scale of
an operation,
❖But this may not reflect the operation’s processing capability
❖So we must incorporate a time dimension appropriate to the
use of assets.
➢For example 24 000 litres per day.
➢10,000 calls per day
➢57 patients per session
➢Etc.
Slack, Brandon-Jones and Johnston, Essentials of Operations Management, 1st Edition, © Slack, Brandon-Jones and Johnston, 2011
The objectives of capacity planning and control
To provide an “appropriate” amount of capacity
at any point in time.
The “appropriateness” of capacity planning in
any part of the operation can be judged by its
effect on……
Costs
Revenue
Working Capital
Service Level
Slack, Brandon-Jones and Johnston, Essentials of Operations Management, 1st Edition, © Slack, Brandon-Jones and Johnston, 2011
Objectives of capacity planning and control
Measure aggregate
capacity and demand
Aggregated output
Identify the alternative
capacity plans
Choose the most
appropriate capacity plan
Forecast demand
Estimate of current capacity
Time
Slack, Brandon-Jones and Johnston, Essentials of Operations Management, 1st Edition, © Slack, Brandon-Jones and Johnston, 2011
The nature of aggregate capacity
Aggregate capacity of a hotel:
– rooms per night;
– ignores the numbers of guests in each room.
Aggregate capacity of an aluminium
producer:
– tonnes per month;
– ignores types of alloy, gauge and
batch variations.
Slack, Brandon-Jones and Johnston, Essentials of Operations Management, 1st Edition, © Slack, Brandon-Jones and Johnston, 2011
Causes of seasonality
Climatic
Festive
Behavioural
Construction materials
Beverages (beer, cola)
Foods (ice-cream)
Clothing (swimwear, shoes)
Gardening items (seeds)
Fireworks
Political
Financial
Social
Travel services
Holidays
Tax processing
Doctors (influenza epidemic)
Sports services
Education services
Slack, Brandon-Jones and Johnston, Essentials of Operations Management, 1st Edition, © Slack, Brandon-Jones and Johnston, 2011
Demand fluctuations in four operations
Slack, Brandon-Jones and Johnston, Essentials of Operations Management, 1st Edition, © Slack, Brandon-Jones and Johnston, 2011
Good forecasts essential for effective capacity planning
❑But so is an understanding of demand uncertainty because it
allows you to judge the risks to service level.
Only 5% chance of demand
being higher than this
Demand
Demand
Distribution of demand
Time
Only 5% chance of demand
being lower than this
Time
When demand uncertainty is high the risks to service level
of under provision of capacity are high.
Slack, Brandon-Jones and Johnston, Essentials of Operations Management, 1st Edition, © Slack, Brandon-Jones and Johnston, 2011
Operating equipment effectiveness (OEE)
Loading time
Total operating
time
Net operating Speed
losses
time
Availability
losses
Not worked
(unplanned)
Set-up and
change-overs
Breakdown
failure
Equipment
“idling”
Slow running
equipment
Quality
losses
Quality
losses
Availability rate = a
= total operating time
loading time
Performance rate = p
= net operating time
total operating time
Quality rate = q
= valuable operating time
net operating time
Valuable
operating
time
Slack, Brandon-Jones and Johnston, Essentials of Operations Management, 1st Edition, © Slack, Brandon-Jones and Johnston, 2011
How capacity and demand are measured
Efficiency =
Design
capacity
Planned loss
of 59 hours
Effective
capacity
168 hours
per week
Actual output
Effective capacity
109 hours
per week
Utilization=
Avoidable loss –
58 hours per
week
Actual output –
51 hours per
week
Actual output
Design capacity
Slack, Brandon-Jones and Johnston, Essentials of Operations Management, 1st Edition, © Slack, Brandon-Jones and Johnston, 2011
Ways of reconciling capacity and demand
Demand
Capacity
Level capacity
Demand
Demand
Capacity
Capacity
Chase demand
Demand
management
Slack, Brandon-Jones and Johnston, Essentials of Operations Management, 1st Edition, © Slack, Brandon-Jones and Johnston, 2011
Ways of reconciling capacity and demand
How do you cope with
fluctuations in demand?
Absorb
Demand
Adjust output
to match
demand
Level capacity
Chase demand
Change
demand
Demand
management
Slack, Brandon-Jones and Johnston, Essentials of Operations Management, 1st Edition, © Slack, Brandon-Jones and Johnston, 2011
Absorb demand
Absorb
demand
Have
excess
capacity
Keep output
level
Make to
stock
Part finished
Finished goods, or
Customer Inventory
Make
customer
wait
Queues
Backlogs
Slack, Brandon-Jones and Johnston, Essentials of Operations Management, 1st Edition, © Slack, Brandon-Jones and Johnston, 2011
Adjust output to match demand
Adjust output to
match demand
Hire
Temporary labour
Overtime
Subcontract
Fire
Lay-off
Short time
3rd party work
Slack, Brandon-Jones and Johnston, Essentials of Operations Management, 1st Edition, © Slack, Brandon-Jones and Johnston, 2011
Change demand
Change
demand
Change pattern of demand
Develop alternative products and/or services
Slack, Brandon-Jones and Johnston, Essentials of Operations Management, 1st Edition, © Slack, Brandon-Jones and Johnston, 2011
Moving a peak in demand can make capacity planning
easier
Slack, Brandon-Jones and Johnston, Essentials of Operations Management, 1st Edition, © Slack, Brandon-Jones and Johnston, 2011
Capacity planning and control as a dynamic sequence of
decisions
Period t
Period t – 1
Period t + 1
Current
capacity Updated
estimates forecasts
Outcome Shortages Decision
Queues
Actual
Inventory How much
demand
capacity
and actual
next
capacity
period?
Costs
Revenues
Working capital
Customer satisfaction
etc
Current
capacity Updated
estimates forecasts
Capacity
level
Outcome Shortages Decision
Queues How much
Actual
Inventory
demand
capacity
and actual
next
capacity?
period?
Costs
Revenues
Working capital
Customer satisfaction
etc
Slack, Brandon-Jones and Johnston, Essentials of Operations Management, 1st Edition, © Slack, Brandon-Jones and Johnston, 2011
Demand for a manufacturing operation’s output
Forecast in aggregated units
of output per month
8000
7000
6000
5000
4000
3000
2000
1000
0
J
F
M
A
M
J
J
A
S
O
N
Months
Slack, Brandon-Jones and Johnston, Essentials of Operations Management, 1st Edition, © Slack, Brandon-Jones and Johnston, 2011
D
Forecast cumulative aggregated
output (thousands)
For capacity planning purposes demand is best considered on a
cumulative basis. This allows alternative capacity and output
plans to be evaluated for feasibility.
60
But will not satisfy demand at
all points throughout the year
50
40
Producing at average demand
allows inventory to be accumulated
30
20
Producing at
average demand
10
0
0
40
80
120
160
200
Cumulative operating days
Slack, Brandon-Jones and Johnston, Essentials of Operations Management, 1st Edition, © Slack, Brandon-Jones and Johnston, 2011
240
Capacity and Demand
Cumulative representations
Cumulative demand
Cumulative capacity
Building
stock
Unable to
meet orders
Time
Slack, Brandon-Jones and Johnston, Essentials of Operations Management, 1st Edition, © Slack, Brandon-Jones and Johnston, 2011
Simple queuing system
Low variability narrow distribution
of process times
Time
High variability wide distribution of
process times
Time
Slack, Brandon-Jones and Johnston, Essentials of Operations Management, 1st Edition, © Slack, Brandon-Jones and Johnston, 2011
Simple queuing system
Distribution of
arrival times
Distribution of
processing times
Rejecting
Server 1
Balking Reneging
Server 2
Source of
customers
Served
customers
Queue or
“waiting line”
Server m
Boundary
of system
Slack, Brandon-Jones and Johnston, Essentials of Operations Management, 1st Edition, © Slack, Brandon-Jones and Johnston, 2011
Chapter 7
Supply network management
Slack, Brandon-Jones and Johnston, Essentials of Operations Management, 1st Edition, © Slack, Brandon-Jones and Johnston, 2011
Slack et al’s model of operations management
Direct
Supply
network
management
Capacity
management
Planning
and control
Inventory
management
Design
Operations
Management
Deliver
Lean
synchronisation
Slack, Brandon-Jones and Johnston, Essentials of Operations Management, 1st Edition, © Slack, Brandon-Jones and Johnston, 2011
Develop
Key operations questions
In Chapter 7 – Supply network management – Slack et. al.
identify the following key questions…….
❑Why should an organization take a supply network
perspective?
❑What is involved in managing supply networks?
❑What is involved in designing a supply network?
❑What are the types of relationships between operations in
supply networks?
❑What is the ‘natural’ dynamic of a supply network?
❑How can supply networks be improved?
Slack, Brandon-Jones and Johnston, Essentials of Operations Management, 1st Edition, © Slack, Brandon-Jones and Johnston, 2011
What is supply chain management?
‘Supply chain management is the management
of the interconnection of organizations that relate
to each other through upstream and downstream
linkages between the processes that produce
value to the ultimate consumer in the form of
products and services’.
Slack, Brandon-Jones and Johnston, Essentials of Operations Management, 1st Edition, © Slack, Brandon-Jones and Johnston, 2011
Operations network for a plastic homeware company
Second tier
suppliers
Chemical
company
Second tier
customers
Wholesaler
Plastic
stockist
Cardboard
company
Ink
supplier
First tier
customers
First tier
suppliers
Retailer
Plastic
homeware
manufacturer
Packaging
supplier
Direct supply
Information
Slack, Brandon-Jones and Johnston, Essentials of Operations Management, 1st Edition, © Slack, Brandon-Jones and Johnston, 2011
Retailer
Operations network for a shopping mall
Second tier
suppliers
Recruitment
agency
First tier
suppliers
First tier
customers
Second tier
customers
Retailers
Retail
customers
Security
services
Cleaning
materials
supplier
Cleaning
services
Equipment
supplier
Maintenance
services
Shopping
mall
Direct supply
Information
Slack, Brandon-Jones and Johnston, Essentials of Operations Management, 1st Edition, © Slack, Brandon-Jones and Johnston, 2011
Supply chain planning and control
…….is concerned with managing the flow of materials and information between
a string of operations, that form the strands or ‘chains’ of a supply network
Flow between processes
Flow between processes
Flow between processes
Supply network
management concerns
flow between operations
Flow between processes
Flow between processes
Flow between processes
Flow between processes
Supply chain
management concerns
flow between a string of
operations
Slack, Brandon-Jones and Johnston, Essentials of Operations Management, 1st Edition, © Slack, Brandon-Jones and Johnston, 2011
Supply chains management is concerned with the flow
of information and the flow of products and services
•Long-term plans and requirements
•Market research information
•Individual orders
•Payment
•Potential new products and services
‘Upstream’ flow of
customer
Requirements
Flow between
processes
Flow between
processes
Flow between
processes
Consumer
Operation 1
Operation 2
•Products and services
•New products and services
•Delivery information
•Payment request / Credit
Operation 3
‘Downstream’ flow of products
and services for customer
Fulfilment
Slack, Brandon-Jones and Johnston, Essentials of Operations Management, 1st Edition, © Slack, Brandon-Jones and Johnston, 2011
Supply chain planning and control
Second tier
supplier
First tier
supplier
First tier
customer
Supply side
Information
flow
Physical
flow
Purchasing and
supply
management
Second tier
customer
Demand
side
Physical distribution
management
Logistics
Materials management
Supply chain management
Slack, Brandon-Jones and Johnston, Essentials of Operations Management, 1st Edition, © Slack, Brandon-Jones and Johnston, 2011
End
customer
Taking a customer perspective of supply performance
can lead to very different conclusions
Customer
requirements
100
Customer
satisfaction
N
8
20
Product/
Y
service
80
appropriate?
Product/
service
available?
N
N
10
Y
70
40
N
50
Y
Meets price
and delivery 20
requirements?
N
Y
1
10
N
1
9
Y
10
Customer
orders?
8
N
Y
10
N
Y
Received
as
Produced as
N
promised?
9 Y promised?
1
From the operation’s perspective
90% satisfaction
Y
From the customers perspective
8
8% satisfaction
1
Slack, Brandon-Jones and Johnston, Essentials of Operations Management, 1st Edition, © Slack, Brandon-Jones and Johnston, 2011
The decision logic of outsourcing
Is activity of No
strategic
importance
Yes
Does
company
have
specialized
knowledge
Yes
Is significant
Is company’s
Explore
No operations No
operations No
outsourcing
performance
performance
improvement
this activity
superior?
likely?
Yes
Yes
Explore keeping this activity in-house
Slack, Brandon-Jones and Johnston, Essentials of Operations Management, 1st Edition, © Slack, Brandon-Jones and Johnston, 2011
Matching the supply chain with market requirements
Nature of Demand
Functional products
Innovative products
Low cost – Low throughput times
High utilization – Low utilization
Minimum inventory – Deployed inventory
Low cost suppliers – Flexible suppliers
Supply Chain Objectives
Efficient
Responsive
Predictable
Few changes
Low variety
Price stable
Long lead-times
Low margin
–
–
–
–
–
Unpredictable
Many changes
High variety
Price markdowns
Short lead-times
High margins
Lean supply
chain
management
Mismatch
Mismatch
Agile supply
chain
management
Slack, Brandon-Jones and Johnston, Essentials of Operations Management, 1st Edition, © Slack, Brandon-Jones and Johnston, 2011
Supply chain relationships
To……
Business
Business to business (B2B)
Most common, all but the last
link in the supply chain
Business
Consumer
Business to consumer (B2C)
Retail operations
Catalogue operations, etc.
E-commerce examples:
➢EDI networks
➢Business information
exchanges
E-commerce examples:
➢Internet retailers
➢Amazon.com, etc.
Consumer to consumer (C2B)
or ‘peer to peer (P2P)
Consumer to business (C2B)
From….
Consumer
Consumer ‘offer’, business
responds
Trading ‘swap’ and auction
transactions
E-commerce examples:
➢Some airline ticket operators
➢Priceline.com, etc.
E-commerce examples:
➢Specialist ‘collector’ sites
➢Ebay.com, etc.
Slack, Brandon-Jones and Johnston, Essentials of Operations Management, 1st Edition, © Slack, Brandon-Jones and Johnston, 2011
Do
Everything
Vertically
Integrated
Operation
Traditional Supply
Management
Do
Nothing
Do
Everything
Important
The character of Internal Operations Activity
Types of supply relationship
“Partnership”
Supply
Management
Virtual
Spot
Trading
Transactional Many Suppliers
Long-term
Virtual
Operation
Type of Inter-firm Contact
Close Few Suppliers
Slack, Brandon-Jones and Johnston, Essentials of Operations Management, 1st Edition, © Slack, Brandon-Jones and Johnston, 2011
Factors for rating alternative suppliers
Short-term ability to supply
Longer-term ability to supply
•Range of products or services
provided
•Potential for innovation
•Quality of products or services
•Ease of doing business
•Responsiveness
•Willingness to share risk
•Dependability of supply
•Long-term commitment to supply
•Delivery and volume flexibility
•Ability to transfer knowledge as
well as products and services
•Total cost of being supplied
•Technical capability
•Ability to supply in the required
quantity
•Operations capability
•Financial capability
•Managerial capability
Slack, Brandon-Jones and Johnston, Essentials of Operations Management, 1st Edition, © Slack, Brandon-Jones and Johnston, 2011
Weighted supplier selection criteria for a hotel chain
Factor
Weight
Supplier A
score
Supplier B
score
Cost performance
10
8 (8×10=80)
5 (5×10=50)
Quality record
10
7 (7×10=70)
9 (9×10=90)
Delivery speed
promised
7
5 (5×7=35)
5 (5×7=35)
Delivery speed
achieved
7
4 (4×7=28)
8 (8×7=56)
Dependability record
8
6 (6×8=48)
8 (8×8=64)
Range provided
5
8 (8×5=40)
5 (5×5=25)
Innovation capability
4
6 (6×4=24)
9 (9×4=36)
325
356
Total weighted score
Slack, Brandon-Jones and Johnston, Essentials of Operations Management, 1st Edition, © Slack, Brandon-Jones and Johnston, 2011
The bullwhip effect
3rd LEVEL
SUPPLIER
Prodn.
Stock
1
2
100
3
4
180
60
100
100
100
60
60
120
120
90
5
100
6
95
20
3
2nd LEVEL
SUPPLIER
Prodn.
Stock
90
100
100
100
80
80
100
100
95
90
95
95
95
95
95
100
60
120
2
1st LEVEL
SUPPLIER
Prodn.
Stock
ORIGINAL
EQUIPMENT
MFG.
Prodn.
Stock
95
100
100
100
90
90
95
95
95
95
95
95
95
95
95
100
100
100
95
95
95
95
95
95
95
95
95
95
95
95
95
95
95
100
80
100
1
100
90
95
95
OEM
ALL OPERATIONS HOLD ONE PERIODS STOCK
Slack, Brandon-Jones and Johnston, Essentials of Operations Management, 1st Edition, © Slack, Brandon-Jones and Johnston, 2011
100
95
95
95
95
95
MARKET
The bullwhip effect
3rd LEVEL
SUPPLIER
Prodn.
1
2
Stock
100
100
100
2nd LEVEL
SUPPLIER
Prodn.
Stock
100
100
100
1st LEVEL
SUPPLIER
Prodn.
Stock
100
100
100
ORIGINAL
EQUIPMENT
MFG.
Prodn.
100
Stock
100
100
100
95
3
4
105
95
5
105
6
95
3
2
1
OEM
ALL OPERATIONS HOLD ONE PERIODS STOCK
Slack, Brandon-Jones and Johnston, Essentials of Operations Management, 1st Edition, © Slack, Brandon-Jones and Johnston, 2011
MARKET
The bullwhip effect
Manufacturer’s
orders to its
suppliers
0
Supplier
Time
Wholesaler’s
orders to
manufacturer
0
Store’s orders to
wholesaler
0
Time
Manuf acturer
Whole
-saler
Time
Sales from
store
0
Retail
Store
Slack, Brandon-Jones and Johnston, Essentials of Operations Management, 1st Edition, © Slack, Brandon-Jones and Johnston, 2011
Time
Consumers
The effects of supply chain compression
Supply chain time compression
Schedule
changes impact
market faster
so can
respond to
market changes
better
Forecasts
made closer to
demand time
Defects are
detected faster
so improved
forecasts
so easier to
improve quality
New products
and service
faster to market
so fewer lost
sales from
delayed launch
so reduced
risk of
obsolescence
so revenues
are maximized
so less
discounted
sales
so less need for
safety stocks
so revenues
are maximized
so reduced
stockholding
costs
so reduced
wastage costs
Improved profitability
Slack, Brandon-Jones and Johnston, Essentials of Operations Management, 1st Edition, © Slack, Brandon-Jones and Johnston, 2011
The structure of supply chains implicit in the SCOR model
showing the relationship between Plan, Source, Make, Deliver,
Return elements of the model
Plan
Plan
Deliver Source
Make
Return
Deliver
Source
Make
Deliver Source
Return
Supplier’s
supplier
Plan
Supplier
Make
Deliver Source
Return
Focal
company
Return
Customer
Scope of the SCOR model
Slack, Brandon-Jones and Johnston, Essentials of Operations Management, 1st Edition, © Slack, Brandon-Jones and Johnston, 2011
Customer’s
customer
Chapter 5
Process design
Slack, Brandon-Jones and Johnston, Essentials of Operations Management, 1st Edition, © Slack, Brandon-Jones and Johnston, 2011
Slack et al’s model of operations management
Direct
Design
Product and
service
design
Process
design
Operations
Management
Deliver
Location,
layout
and flow
Slack, Brandon-Jones and Johnston, Essentials of Operations Management, 1st Edition, © Slack, Brandon-Jones and Johnston, 2011
Develop
Key operations questions
In Chapter 5 – Process design– Slack et. al. identify the
following key questions…….
❑What is process design?
❑How does volume and variety affect process design?
❑How are processes designed in detail?
❑What are the human implications of process design
Slack, Brandon-Jones and Johnston, Essentials of Operations Management, 1st Edition, © Slack, Brandon-Jones and Johnston, 2011
Process mapping symbols
Process mapping symbols
derived from “Scientific
Management”
Process mapping symbols
derived from Systems
Analysis
Operation (an activity
that directly adds
value)
Beginning or end of
process
Inspection (a check of
some sort)
Activity
Transport (a movement
of some thing)
Input or Output from the
process
Delay (a wait, e.g. For materials)
Direction of flow
Storage ( deliberate
storage, as opposed to a
delay)
Decision (exercising discretion)
Slack, Brandon-Jones and Johnston, Essentials of Operations Management, 1st Edition, © Slack, Brandon-Jones and Johnston, 2011
Designing processes
There are different ‘process types’
Process types are defined by the volume and
variety of ‘items’ they process
Process types go by different names
depending on whether they produce products or
services
Slack, Brandon-Jones and Johnston, Essentials of Operations Management, 1st Edition, © Slack, Brandon-Jones and Johnston, 2011
Process
tasks
Process
flow
Diverse/
complex
Intermittent
High
Manufacturing process types
Project
Variety
Jobbing
Batch
Mass
Continuous
Low
Repeated/
divided
Continuous
Low
Volume
Slack, Brandon-Jones and Johnston, Essentials of Operations Management, 1st Edition, © Slack, Brandon-Jones and Johnston, 2011
High
Project Processes
One-off, complex, large scale, high work content
“products”
Specially-made, every one customized”
Defined start and finish: time, quality and cost objectives
Many different skills have to be coordinated
Slack, Brandon-Jones and Johnston, Essentials of Operations Management, 1st Edition, © Slack, Brandon-Jones and Johnston, 2011
Jobbing Processes
Very small quantities: “one-offs”, or only a few required
Specially-made. High variety, low repetition. “Strangers”
every one customized”
Skill requirements are usually very broad
Skilled jobber, or team, complete whole product
Slack, Brandon-Jones and Johnston, Essentials of Operations Management, 1st Edition, © Slack, Brandon-Jones and Johnston, 2011
Batch Processes
Higher volumes and lower variety than for jobbing
Standard products, repeating demand. But can make
specials
Specialized, narrower skills
Set-ups (changeovers) at each stage of production
Slack, Brandon-Jones and Johnston, Essentials of Operations Management, 1st Edition, © Slack, Brandon-Jones and Johnston, 2011
Mass (Line) Processes
Higher volumes than batch
Standard, repeat products (“runners”)
Low and/or narrow skills
No set-ups, or almost instantaneous ones
Slack, Brandon-Jones and Johnston, Essentials of Operations Management, 1st Edition, © Slack, Brandon-Jones and Johnston, 2011
Continuous Processes
Extremely high volumes and low variety: often single
product
Standard, repeat products (“runners”)”
Highly capital-intensive and automated
Few changeovers required
Difficult and expensive to start and stop the process
Slack, Brandon-Jones and Johnston, Essentials of Operations Management, 1st Edition, © Slack, Brandon-Jones and Johnston, 2011
Process
flow
Diverse/
complex
Intermittent
Professional
service
Service shop
Variety
Process
tasks
High
Service process types
Repeated/
divided
Continuous
Low
Mass service
Low
Volume
Slack, Brandon-Jones and Johnston, Essentials of Operations Management, 1st Edition, © Slack, Brandon-Jones and Johnston, 2011
High
Professional service
High levels of customer (client) contact
Clients spend a considerable time in the service process
High levels of customization with service processes being
highly adaptable
Contact staff are given high levels of discretion in
servicing customers.
People-based rather than equipment-based
Slack, Brandon-Jones and Johnston, Essentials of Operations Management, 1st Edition, © Slack, Brandon-Jones and Johnston, 2011
Service shops
Medium levels of volumes of customers
Medium, or mixed, levels of customer contact
Medium, or mixed, levels of customization
Medium, or mixed, levels of staff discretion
Slack, Brandon-Jones and Johnston, Essentials of Operations Management, 1st Edition, © Slack, Brandon-Jones and Johnston, 2011
Mass service
High levels of volumes of customers
Low to medium levels of customer contact
Low, or mixed, levels of customization
Low, or mixed, levels of staff discretion
Slack, Brandon-Jones and Johnston, Essentials of Operations Management, 1st Edition, © Slack, Brandon-Jones and Johnston, 2011
Deviating from the ‘natural’ diagonal on the productprocess matrix has consequences for cost and flexibility
Manufacturing
operations
process types
None Professional
service
Project
More process
flexibility than
is needed so
high cost
Jobbing
Batch
Mass
Service
operations
process types
Volume
Variety
Less process
flexibility than
is needed so
high cost
Continuous None
Service
Shop
Mass
service
The ‘natural’ line of fit of process to
volume/variety characteristics
Slack, Brandon-Jones and Johnston, Essentials of Operations Management, 1st Edition, © Slack, Brandon-Jones and Johnston, 2011
Deviating from the ‘natural’ diagonal on the productprocess matrix has consequences for cost and flexibility
Volume
Variety
None
Old
process
Old
process
new
product
New
process
new
product
None
The ‘natural’ line of fit of process to
volume/variety characteristics
Slack, Brandon-Jones and Johnston, Essentials of Operations Management, 1st Edition, © Slack, Brandon-Jones and Johnston, 2011
Customized sandwich – old process
Raw
Materials
Assembly
Stored
Sandwiches
Standard sandwich process
Move to
Outlets
Stored
Sandwiches
Sell
Customer
Request
Slack, Brandon-Jones and Johnston, Essentials of Operations Management, 1st Edition, © Slack, Brandon-Jones and Johnston, 2011
Take
Payment
Customized sandwich – old process
Raw
Materials
Assembly
Take
Payment
Customer
Request
Slack, Brandon-Jones and Johnston, Essentials of Operations Management, 1st Edition, © Slack, Brandon-Jones and Johnston, 2011
Higher level process map
Prepare
The operation of
making and selling
customised
sandwiches
Sandwich
materials and
customers
Bread and
Base filling
Assemble whole
sandwich
Use standard
“base”?
Assemble as
required
Take
payment
Customers
“assembled” to
sandwiches
The outline process of
making and selling
customised sandwiches
No
Yes
Fillings
Customer Request
Assemble from
standard “base”
The detailed process of
assembling customised
sandwiches
Stored
“Bases”
Slack, Brandon-Jones and Johnston, Essentials of Operations Management, 1st Edition, © Slack, Brandon-Jones and Johnston, 2011
Customized sandwich – new process
Assemble whole
sandwich
Assembly of
“sandwich
bases”
Use standard
“base”?
Take
payment
No
Fillings
Yes
Bread and
base filling
Customer Request
Stored “Bases”
Assemble from
standard “base”
Slack, Brandon-Jones and Johnston, Essentials of Operations Management, 1st Edition, © Slack, Brandon-Jones and Johnston, 2011
Flow process charts for processing expenses
1
2
3
4
5
6
Description of activity
Report arrives
1
Wait for processing
Check expenses report
Stamp and date report
2
3
4
Send cash to receipt desk
Wait for processing
5
6
Check advance payment
7
8 Send to accounts receivable
9
Wait for processing
10
Check employee record
11
Send to account payable
Attach payment voucher
12
13
14
15
16
17
18
19
20
21
22
23
7
8
9
Description of activity
Report arrives
Stamp and date report
Check expenses report
Attach payment voucher
Wait for batching
Collect retorts into batch
Batch to audit desk
Wait for processing
Check reports and vouchers
Reports to batch control
10
11
Batch control number
Copy of reports to filing
12
Reports filed
13
14 Payment voucher to keying
Log report
Check against rules
Wait for batching
Collect retorts into batch
15
Confirm payment
Totals
Batch to audit desk
Wait for processing
5 5 2 2 1
Batch of reports logged
Check payment voucher
Before
Reports to batch control
Batch control number
After
Copy of reports to filing
24
Reports filed
25 Payment voucher to keying
26
Confirm payment
Totals
7 8 5 5 1
Slack, Brandon-Jones and Johnston, Essentials of Operations Management, 1st Edition, © Slack, Brandon-Jones and Johnston, 2011
Little’s law (a really quite useful law)
Throughput (TH) = Work In Process (WIP) x Cycle Time (CT)
Cycle time
= 2 mins
WIP = 10
Throughput time = ?
Throughput time = 10 x 2 mins
Throughput time = 20 mins
Slack, Brandon-Jones and Johnston, Essentials of Operations Management, 1st Edition, © Slack, Brandon-Jones and Johnston, 2011
Little’s law (a really quite useful law)
Throughput (TH) = Work In Process (WIP) x Cycle Time (CT)
Need to mark 500 exam scripts in 5 days (working 7 hours a day). Takes 1 hour
to mark a script. How many markers are needed?
Throughput time = 5 days x 7 hours = 35 hours
35 hours = 500 scripts x Cycle times
Cycle time =
35 hours
500 scripts
= 0.07 hours
Number of markers = Work content = 1 hour = 14.29
Cycle time
0.07
Slack, Brandon-Jones and Johnston, Essentials of Operations Management, 1st Edition, © Slack, Brandon-Jones and Johnston, 2011
Throughput efficiency
Throughput efficiency is the work content of whatever is
being processed as a percentage of its throughput time
Throughput efficiency =
Work content
Throughput time
X 100
Slack, Brandon-Jones and Johnston, Essentials of Operations Management, 1st Edition, © Slack, Brandon-Jones and Johnston, 2011
Balancing loss is that proportion of the time invested in
processing the product or service which is not used
productively
An ideal ‘balance’ where work is allocated equally between the stages…
3
Work allocated to stage
Cycle time = 2.5 mins
2.5
Load
2
1.5
1
0.5
0
1
2
Stage
3
4
Slack, Brandon-Jones and Johnston, Essentials of Operations Management, 1st Edition, © Slack, Brandon-Jones and Johnston, 2011
Balancing loss is that proportion of the time invested in
processing the product or service which is not used
productively
But if work is not equally allocated, the cycle time will increase and
‘balancing losses’ will occur…..
3.5
Cycle time = 3.0 mins
3
Work allocated to stage
Idle time
2.5
Load
2
1.5
1
0.5
0
1
2
Stage
3
4
Slack, Brandon-Jones and Johnston, Essentials of Operations Management, 1st Edition, © Slack, Brandon-Jones and Johnston, 2011
‘Long & thin’ versus ‘short & fat’ arrangements
A 60 minute task with a required cycle time of 15 minutes…..
15
15
15
1 every 15
minutes
15
60
30
30
30
30
1 every 15
minutes
60
1 every 15
minutes
60
60
Slack, Brandon-Jones and Johnston, Essentials of Operations Management, 1st Edition, © Slack, Brandon-Jones and Johnston, 2011
Arrival
Arrival
30
9 5-15 105-15
Processing
10
Processing
frequency
frequency 20
time
time
mins mins
mins
(demand)
(demand) mins
X
Utilization
Utilization
33.33
50
100
%
%
%%% QQ
Q
0>0
Utilization===100
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