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BUAD 311 Week 1 Notes

by: Emily Laurienti

BUAD 311 Week 1 Notes BUAD 311

Emily Laurienti
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About this Document

These notes cover the introductory lecture and the lecture on quantitative metrics to measure processes. If you have any questions, feel free to email me at
Operations Management
Prof. Hamid Nazer-Zadeh
Class Notes
operations, Management, business




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This 3 page Class Notes was uploaded by Emily Laurienti on Saturday August 27, 2016. The Class Notes belongs to BUAD 311 at University of Southern California taught by Prof. Hamid Nazer-Zadeh in Fall 2016. Since its upload, it has received 234 views. For similar materials see Operations Management in Business Administration at University of Southern California.

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Date Created: 08/27/16
Class One 8.23.16  Operations Management deals with the design and management of processes and services o How can we improve performance? o How can we reduce cost? o How can we deliver goods and expedite services? o How can we improve quality?  OM decisions require trade-offs with respect to quality of products and their cost/resource  Process—coordinated tasks to achieve specific business goals o Inputs transformation process outputs o OM focuses on optimizing individual processes and redesigning/coordinating systems of multiple processes.  Made to order (MTO)—product isn’t made until an order is placed o Advantages  Higher quality  Always only have the amount that you need o Disadvantages  Slow  Made to stock (MTS)—product is made before an order is placed o Advantages  Fast o Disadvantages  Quality may suffer  You may have too much inventory and have to discard some Class Two 8.25.16 Quantitative Metrics to Describe Processes  Capacity—the maximum number of units that can be processed per unit of time o Must be expressed as a rate, not just a number o Fast Food Example (see slide 11)  Patties cook in 60 seconds, the stove holds 20 patties  Assembly of a hamburger takes 27 seconds per hamburger  10 workers are available to assemble hamburgers  Capacity of the cooking stage—20 hamburgers/minute o 20 is the max that the stove can hold and they take 60 seconds each  Capacity of the assembling stage—22.2 hamburgers/minute o 27 seconds for one batch of 10, how many in 60 seconds? ???????? o ????????= ????.???????? ???????????????????????????? ???????????? ???????????????????????? o 10 burgers per batch * 2.22 batches = 22.2 hamburgers/minute  Capacity of the entire process—20 hamburgers/minute o Even though you can assemble more burgers, the slowest part of the process always represents the capacity of the total process o Bottleneck—the process with the smallest capacity  In this example, the bottleneck is the stove.  The capacity of the bottleneck is the process capacity  Flow Rate (throughput rate)—the flow you actually process, or average rate of inflows and outflows. o Expressed as a rate o Number of jobs processed per unit of time  Utilization Rate—a measure of efficiency, shows what percentage of time your workers are actually working ???????????????? ???????????????? (???????????????????????????????? ????????????????) o ???????????????????????????????????????????? ???????????????? = ???????????????????????????????? o Starbucks Example (see slide 17)  Capacity of a cashier is 96 customers per shift  Flow rate is 72 customers per shift  Utilization rate = 72/96 = 75%  This means that the cashier is busy 75% of the time, idle 25% of the time  We should think about this in context of rush hours and off-peak times before making managerial decisions  Utilization rate cannot be more than 1. If demand is higher than the capacity, some customers will have to go elsewhere or cannot be served. o Fast Food Example (see slide 19)  Patties cook in 60 seconds, the stove holds 20 patties  Assembly takes 27 seconds, there are 10 workers ready to assemble  15 customers arrive each minute  Cooking utilization rate= 15/20 = 75% o This means the cooks are busy 75% of the time  Assembling utilization rate= 15/22.2 = 67% o The workers assembling burgers are busy 67% of the time  The bottleneck of the system has the highest utilization rate because there is a lower capacity for the bottleneck. o Doctor example (see slide 21)  A doctor can perform 300 surgeries per year (capacity)  500 patients per year see this doctor needing surgery (demand)  Throughput rate = 300 surgeries per year  The doctor cannot go above his capacity  200 patients will have to see another doctor  Utilization rate = 100%  His capacity is 300/year and he is performing 300/year o Ice Cream Shop Example (see slide 22)  Ice cream scooper can serve 20 customers per hour  Cashier can ring up 30 customers per hour  Capacity of ice cream shop = 20 customers per hour  The ice cream scooper is the bottleneck with a capacity of 20 customers/hour, which then represents the capacity of the entire shop.  Hire one more ice cream scooper capacity = 30 customers per hour  The cashier is the bottleneck with a capacity of 30 customers/hour  Hire one more cashier, keep one ice cream scooper capacity = 20 customers per hour  The ice cream scooper is the bottleneck  If you’re going to increase staffing, hire someone in the bottleneck position to increase capacity  If one staff member is idle (whoever is not the bottleneck) they should help the bottleneck. This is why cashiers at ice cream shops may give samples to help the ice cream scooper.  Flow Time (throughput time)—the average time a unit stays in the system o Different units may spend different amounts of time so flow time is reported as an average o Measure flow time by watching one unit (or batch of units) and measuring the time it takes for the process beginning to end. Do this multiple times and average out to find flow time. o Hamburger Example (see slide 28)  The first 10 burgers take 87 seconds to produce  60 seconds to cook + 27 seconds to assemble  The second 10 burgers take 114 seconds to produce  60 seconds to cook + 27 seconds waiting (while first 10 are assembled) + 27 seconds to assemble  Average out the two times to find the flow time  ????????+???????????? = ????????????.???? ???????????????????????????? = ????:????????.???? ????  Work in Process (WIP)—the number of units in the system at a point in time being stored, waiting or being processed. o ???????????? ????+???? = ???????????? +???????????????????????????????????? ???????? ???????????????????????? ???? − ???????????????????????????? ???????? ???????????????????????? ???? o Work in process costs money to maintain, so we don’t want out inventory to be too high o WIP changes during a process (see slide 32)


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