Module 1 - An Introduction to Operations Management - Wharton
Module 1 - An Introduction to Operations Management - Wharton
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Date Created: 03/25/14
Summary When observing a process always aim to understand the three process measures 0 Flow rate throughput number of ow units going through the process per unit of time Flow Time time it takes a ow unit to go from the beginning to the end of the process Inventory the number of ow units in the process at a given moment in time In the next session we will discuss what drives these measures We will then nd out that the three measures are related to each other Basic Process Vocabulary 0 Processing times how long does the worker spend on the task 0 Capacity1processing time how many units can the worker make per unit of time If there are m workers at the activity Capacitymactivity time 0 Bottleneck process step with the lowest capacity 0 Process capacity capacity of the bottleneck 0 Flow rate MinimumDemand rate Process Capacity 0 Utilization Fow Rate Capacity 0 Flow Time The amount of time it takes a ow unit to go through the process 0 Inventory The number of ow units in the system Processing Time Labor Productivity Measures Bottleneck 1 2 3 4 Review of Capacity Calculations Number of Resourcesi 0 Capacity Processing Timel 0 Process CapacitylVIinCapacity 0 Flow Rate MinDemand Capacity Flow Rate Cap acityl 0 Utilization I de Time I Processing time Labor Productivity Measures 0 Cycle time CT 1 Flow Rate Direct Labor C0ntentp1p2p3p4 If one worker per resource Direct Idle TimeCT p1 CT p2 CT p3 0 Average labor utilization labor content labor content direct idle time 0 Cost of direct labor Total wages per unit of time Flow Rate per unit of time Infusion us Infusion US is a staitup that offers powerful and energizing infusions in a nonhospital setting for competitive athletes Just electrolytes no dopingll The service process includes five activities that are conducted in the sequence described below The time required for each activity is shown in parentheses Activity 1 Welcome a patient and explain the procedure 7 minutes Activity 2 Take vitals insert IV and take blood 13 minutes Activity 3 Mix infusion treatment 12 minutes Activity 4 Chemo infusion 30 minutes Activity 5 Debriel the patient 5 minutes Three nurses 81 S2 and S3 otter the sennces in a workerpaced line The assignment of activities to nurses is the tolowing S1 does Activity 1 and Activity 2 82 does Activity 3 53 does Activities 4 and Activity 5 Assume that there exists unlimited demand and that the process only admits patients at the rate of the bottleneck IU1 Which nurse is the bottleneck of the process lU2 What IS the process utilization i e the utilization of the bottleneck resource IU3 What IS the utilization of nurse 2 IU4 What IS the cycle time in minutes lU5 What IS the idle time per unit at nurse 1 in minutes lU6 What is the average labor utilization across al three nurses IU7 What are the costs of direct labor associated with serving one patient Assume a wage rate of 30 per hour for Nurses 1 and 2 and 60 per hour for Nurse 3 Assume workers are paid regardless of whether they are busy or idle Please give the answer in Spatient IU1 lU2 IU3 IU4 lU5 IUB IU7 Es L3 v L rgt Which nurse is the oec Slot P9 proc l I 2 IL What is the process ion ie the utilization ol the bottleneck resource FLOinxr j9QQ 39SSUquotlt2r r What is the utilization of nurse 2 i Ulo0 tr fr L 39 lt2 3 What is the cycle time in minutes L l f A my 12 51 What is the idle time per unit at nurse 1 in minutes I W lTCT i r2 S 2o13QR What is the average labor utilization across al three nurses What are the costs of dlfeClIBDOT associated with serving one patient Wm Q0 1 Assume a wage rate of 3 per hour for Nurses 1 anqyand per hour for Nurse 3 Assume workers are pai regardless of whether they are bus r idle Please give the answer in patient FR i 417 Little39s law It39s more powerful than you think What it is Inventory I Flow Rate R Flow Time T How to remember it units Implications 0 Out of the three fundamental performance measures IRT two can be chosen by management the other is GIVEN by nature 0 Hold throughput constant Reducing inventory reducing ow time Given two of the three measures you can solve for the third 0 Indirect measurement of ow time how long does it take you on average to respond to an email You write 60 email responses per day You have 240 emails in your inbox hpolding hpolding is a village in the German Alps Given its enonnous popularity among riss German Austri nd Italian skiers all of its beds are always booked in the winter 3500 and there 3F village On average skiers stay in hpggng for 10 da How many new skiers are arriving on average in Ruhpolding every day A study done by the largest hotel in the village has shown that skiers spend on average 0 per person on the rst day and 30 per person on each additional day in local ataurants The study also forecasts that due to increased hotel prices the average gth of stay for the 20102011 season will be reduced to ve days What will be the Jact on revenues of local restaurants compared to last year when skiers I stayed for 10 days Assume that hotels continue to be fully booked Express your answers in 539s per day Stag 9 VwM O i f 39 393 39 I QV 2 3 C 3lt0v 105575 o39Og 311 TZ EA433 IZOXQO O ZOgtquot1O ggtawg w Qgr Quoyg0 1 ligoxzo 1Olapo W i 5 Pam lqog gwi TIA Inventory Turns Computed as COGS Inventory tums Inventory Based on Little39s law Careful to use COGS not revenues Inventory Cost Calculation Compute per unit inventory costs as A I 39 I a I Per unzt Inventory costs quotmm mmquot orycos S Inventory turns Example 0 Annual inventory costs30 0 Inventory tu rns6 30 per year Per unit Inventory costs 5 6 turns per year Summer39s Sweets Summer39s Sweets is a mall chain of gelato stores in eastem North Carolina In 2009 the company39s revenue was y 300000 nd its cost of sales w Assume 52 weeks and 365 days per year SS Summer keeps on sofsupply of inventory on average because much of her inventory is gelato and fresh squeezed orange juice both of which have a short shelf life What is his annual inventory turns SQQ Given that he ha ofsupply of inventory on average how much inventory does Summer have on average in 5 I J 391 Approach 1 Addingup Demand streams 392 Mm 20mm39app 3cases rhour 9 pg 1 c t H Z 1 I p I L 5quot i 1 quot W 2351 3 A39 2 IAgt E63 LG 36laltxb W 3 Wm vQo6kgt4 TFJQ Q1 gg TbTA1 Ava Iwg 391gt20 3 H LT 3955 F870 a39 lrv 6 3 39 I g 39 5 Z S E I9 gtL 7 1 lg T 39139 R48 1DQ7 0 3 I r 73 39930 Approach 22 A Uenenc HOW Unlt quotMinute OT WOFKquot Faggot quot D 20m app 1 2f L73 22 1 dcasesperhour ll 3min600 b O 05mm pmm 15rTnv3app t H quot V 39 Y C T M 0fb 39rL5 39LLQC ltV ltIzA39su 7 716 E Z Tan cum M5 o 3v 3 H v 3 mg gcr erW 7 J l tew 120 3x20 60 C039 D I80 K my Hug Q0 3080 b N Z0 quot quot LT C Q 32 Blo P 90 I 4 2 3 M Qm KY 2 Y2 Y 39 3 i go Steps for Basic Process Analysis with Multiple Types of Flow Units 1 For each resource compute the number of minutes that the resource can produce 2 Create a process ow diagram indicating how the ow units go through the process 3 Create a table indicating how much workload each ow unit is consuming at each resource Add up the workload of each resource across all ow units 5 Compute the implied utilization of each resource as Result of Step 3 Result of Step 1 Implied utilization The resource with the highest implied utilization is the bottleneck Note you can also nd the bottleneck based on calculating capacity for each step and then dividing the demand at this resource by the capacity To o 39 39 39 nse you must successfully complete several activities First you must produce quotlt31i IF m the appropriate identi cati Then yo must pass a written exam Finally you must pass the road exam At each of these steps17 7 d and 0 f drivers license hopefuls fail to fulfill the step39s requirements You are only allowed to taRe the written exam if your identification is approved and you are only allowed to take the road test if you have passed the written exam The average daily number of driver39s license applicants i Each step takes 5 3 and 20 minutes respectively staff members administering written exams need only set up the applicant at a computer Currently the DMV staffs 4 people to process license applications 2 to administer written exams and 15 to judge the road exam DMV staff work 8 hours per day How many license applications would the DMV process each day if it had unlimited capacity DMV2 Which stage is the bottleneck according to the current staffing plan DMV3 With the current staffing plan how many newly licensed drivers will the DMV tum out each day E O 2 652 LT 9quot lL J0c39g Capmin 60mins mPT 8hrday 4508 Resoutces wocessmgumes m capactty CJDOCIW Demand Impluul Identity 5 4 08 384 400 1041667 wrmenexam 3 2 0666667 396 12375 Roadexam 20 15 075 360 3366 0935 No will get licence 0 085 070 1904 1
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