OPERATIONS ANALYTICS

By Dr. Rajesh Chouksey

Monday, March 18, 2024 1

OPERATIONS MANAGEMENT

• Introduction • Process analysis

• Manufacturing Resource Planning • Facility location
• Value Engineering & ISO • Facility layout
• Service & Supply Chain • Inventory Management
Management • Aggregate Planning
• Manufacturing Resource
Planning
• Sequencing Techniques
• Work & Method Study
• Quality Control
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Process
Process
• Process
A set of activities that take a collection of inputs, perform some work or activities with
those inputs, and then yield a set of outputs.
• Resource
A group of people and/or equipment that transforms inputs into outputs.
• Process scope
The set of activities and processes included in the process.
• Flow unit
The unit of analysis that we consider in a process analysis;
for example, patients in a hospital, scooters in a kick-scooter plant, and calls in a call
center.
Three Key Process Metrics
• Process Metric
A scale or measure of process performance and capability

• Inventory
The number of flow units within the process

• Flow Rate
The rate at which flow units travel through a process

• Flow Time
The time a flow unit spends in a process, from start to finish
Little’s Law

• The law that describes the relationship between three key process metrics:
inventory, flow rate, and flow time
Inventory = Flow rate × Flow time
I =R×T
OR

• Number of customers in a system(L) is equal to the average arrival rate (λ)

multiplied by the average time a customer spends in the system ( W)
L =λ*W
Situation

• Employees have calculated an average of fifty(50) unique customer

visits to the store every hour. The average duration of a customer’s
visit to the store is about thirty(30) minutes, or half an hour. Calculate
how many people will be in the store, on average, at any given time.
Situation
• One store can only comfortably fit 40 customers. We don’t want to
reduce the number of customers coming to the bookstore, which is
100 customers per hour, so what do we do?

• We need to reduce the time customer spend in the store

• Hiring another cashier or having employee helping customers to locate

what they want.
Apply Little’s Law
Based on the data,

the flow time is T = 2.08 hours and the

flow rate is R = 1.04 patients/hour.

Thus, according to Little’s Law, the average inventory of patients

throughout the day is

Inventory = Flow rate × Flow time

I = 1.04 patients/ hr × 2.08 hrs
I = 2.16 patients
Apply Little’s Law
Suppose we watch people (our flow unit) loading onto the escalator in
the Metro Station in Andheri, which is 220 feet (67 meters) long. It is a
busy time of the day and we observe that the flow rate of people onto
the escalator is 2.5 people per second. We then hop on the escalator
ourselves and record that the flow time from bottom to top is
88 seconds.

Thus, according to Little’s Law, the average inventory of

commuters during busy hours is
Inventory = Flow rate × Flow time
I = 2.5 people per sec × 88 seconds
I = 220 people
 Apply Little’s Law
During a typical Friday, the Donut Shop in R City Mall serves 2400 customers during
the 10 hours it is open. A customer spends, on average, 5 minutes in the shop. On
average, how many customers are in the shop simultaneously?

Flow Rate is

= 2400 customers / 10 hours

= 240 customers hour
= 240/60 customers min
= 4 customers / min

Flow time = 5 min.

Inventory = Flow rate × Flow time
I = R × T = 4 customers / min × 5 min
I = 20 customers
Apply Little’s Law
During the course of an 8-hour day, there are, on average, 5 students in an
undergraduate advising office, and each student spends, on average, 10
minutes with an advisor. At what rate do students go to the advising office
(in students per hour)?
Average inventory, I, equals 5 and
Average flow time, T, equals 10 min = 1/6 hour.

From Little’s Law,

Inventory = Flow rate × Flow time
I=R×T

SO,
R=I/T
R = 5 students / (1/ 6 hour )
R = 30 students/hour
Apply Little’s Law

A campus deli serves 300 customers over its busy lunch period from
11:30 a.m. to 1:30 p.m. A quick count of the number of customers
waiting in line and being served by the sandwich makers shows that an
average of 10 customers are in process at any point in time. What is the
average amount of time that a customer spends in process?
Apply Little’s Law

A Rhode Island company produces communion wafers for churches around the
country and the world. The little company produces a lot of wafers, several
hundred million per year. When in production, the process produces wafers at the
rate of 100 per second.

During this production process, the wafers must spend 15 minutes passing through
a cooling tube. How many wafers does the cooling tube hold, on average, when in
Production (in other words, don’t count the time they are not in production)?
Apply Little’s Law

• One of the chair lifts at a ski resort unloads 1800 skiers per hour at the top
of the slope. The ride from the bottom to the top takes 12 minutes. How
many skiers are riding on the lift at any given time?
PROCESS ANALYSIS
Process Analysis
• How should we produce the products or services we provide to our customers?

• How can we improve our processes?

• Having a process is one thing; having a good process is another

• Because customers don’t like to pay high prices and because at least some of our competitors
will try to undercut our prices
Process Analysis
• A rigorous framework for understanding the detailed operations of a business

• The process analysis determines

1. How many flow units can be processed per unit of time (the process capacity)

2. How busy the resources of the process are (utilization)

Planning Premises
Firms
Firms
Firms
Planning Premises
Three Generic Planning Premises are use in Operations
Management:
• Make-to-Stock (MTS): more amenable for systems with fewer product varieties
and high production volume as in the case of continuous and streamlined flow
systems
• Low Variety and High or Mass Production
• Assemble-to-order (ATO): useful for intermittent flow systems catering to the
mid-volume mid-variety situations
• Mid Volume, Mid Variety
• Make-to-order (MTO): organizations typically belong to manufacturer of high
product variety (jumbled flow process systems) use this planning methodology
• High Variety and Low Volumes
Analyzing Processes

• The performance metrics for process analysis are different for MTS and MTO
systems.
• Some relevant performance measures for these systems

• Throughput time
• Cycle time
• Bottleneck
Analyzing Processes
• Throughput time: Throughput time (TPUT) is the elapsed time
from the first stage of the process to the last stage of the
process. It is also known as lead time

• Cycle time: Cycle time is the elapsed time between two

successive outputs from a process that is continuously
operating in a given period of time

• Bottleneck: That stage of the process that dictates the output

of a process is the bottleneck.
EXAMPLE
A toy manufacturer receives crafted toys from local carpenters and
performs the final operations before stocking it for sale. The process consists of five
steps. The first step is to arrange a set of four toys in a pallet. After this, the pallet
moves to the next station where the toys are pre-treated. This is to increase the toys’
life, prevent them from attacks of pests in the future, and also to improve the
effectiveness of the painting operation.
The next step is to send it to the spray-painting chamber, where it is painted
as per the specifications. At present, there is one spray-painting machine. After
painting, it is left in an open area for drying. The painting process and the pre-
treatment process are specialized so the paint dries quickly. Finally, the toys are
inspected and packed.
The steps in the process, along with the
relevant details, are as follows:
Step 1 (Preparation of toys): 8 minutes
Step 2 (Pre-treatment): 12 minutes
Step 3 (Painting): 20 minutes
Step 4 (Drying): 10 minutes
Step 5 (Inspection and packing): 5 minutes
1.What is the throughput time for this manufacturing process?
2.Identify the bottleneck for this process.
3. What is the cycle time for this process?
4. What is the productive capacity of the process?
5. What are the assumptions behind this computation?
Solution
• The process flow diagram is as follows:

Prepare Pre-treat Paint Dry Inspect & Pack

8 Mins 12 Mins 20 Mins 10 Mins 5 Mins

• The Throughput Time

• The Bottle Neck
• The Cycle Time
Solution

1. The throughput time for the process is the sum of all processing times. In this example, the
throughput time is 55 minutes. This implies that if all the required resources are available, then
from the time the job is launched at the first step, a pallet consisting of four toys will come out
of the system after 55 minutes.
2. The bottleneck is that stage of the process that dictates the output of the process. In our
example, the spray painting is the bottleneck.
3. The cycle time is determined by the process time at the bottleneck station in the process. In
this example, cycle time is 20 minutes. The implication of this is that when the process operates
in a continuous manner, then one can expect a pallet of finished toys to come out every 20
minutes.
Solution

4. In order to compute the productive capacity of the process, we shall compute the production
rate at each stage of the process
5. Stage 2 has a processing time of 12 minutes. It means that the productive capacity is 5 per
hour. Similarly, the painting stage has a productive capacity of 3 per hour. It does not make
sense to compute the productive capacity for the drying operation as it does not use any
constrained resource. For practical purposes, one can stack as many pallets as one wants to on
the floor for drying.
6. Based on this computation, we conclude that the manufacturer can produce three pallets (12
toys) per hour. If the manufacturer works with an 8-hour operation, he/she could produce up to
24 pallets per day.
Solution
• The Production Capacity at various Stages:

Prepare Pre-treat Paint Dry Inspect & Pack

(8 Mins) (12 Mins) (20 Mins) (10 Mins) (5 Mins)
7.5 5 3 12
pallets/hour pallets/hour pallets/hour pallets/hour pallets/hour

• THE THROUGHPUT TIME FOR THE PROCESS IS 55 MINUTES

• THE SPRAY PAINTING IS THE BOTTLENECK IN THE PROCESS
• CYCLE TIME IS 20 MINUTES. THE IMPLICATION OF THIS IS THAT WHEN THE PROCESS OPERATES
IN A CONTINUOUS MANNER, A PALLET OF FINISHED TOYS COME OUT EVERY 20 MINUTES.
Assumptions
• The process is a continuous operation (that is, it operates at a steady state with no start-up and shut
down issues)
• An adequate amount of resources (including material, men, machines, and other resources) is
available.

• Once the operation starts, there are no delays and breakdowns in the system.

• There are no variations and statistical fluctuations (so that the time estimates are fixed and
constant)

• The process produces a standard set of items. Therefore, there are no additional time losses due to
set-up and changeover other than those already factored into the time estimates.
Process Strategies
Dell Computer Company
• Mass customization provides a competitive advantage
 Sell custom-built PCs directly to consumer
 Lean production processes and good product design allow responsiveness
 Integrate the Web into every
aspect of its business
 Focus research on software
designed to make installation and
configuration of its PCs fast
and simple
Process Strategies

 How to produce a product or provide a service that

 Meets or exceeds customer requirements
 Meets cost and managerial goals
 Has long term effects on
 Efficiency and production flexibility
 Costs and quality
Process Strategies

• Four basic strategies

• Process focus
• Repetitive focus
• Product focus
• Mass customization

• Within these basic strategies there are many ways they may be implemented
Process Focus

•Facilities are organized around specific activities or processes

•General purpose equipment and skilled personnel
•High degree of product flexibility
•Typically, high costs and low equipment utilization
•Product flows may vary considerably making planning and scheduling a
challenge
Process Focus
Job Shop

Many departments and

many routings
Many
Many variety of
inputs outputs
Process Flow Diagram Customer

Purchasing Customer sales

representative

Vendors PREPRESS DEPT

Accounting Receiving PRINTING DEPT

Warehouse COLLATING GLUING, BINDING,

DEPT STAPLING, LABELING

Information flow POLYWRAP DEPT

Material flow
SHIPPING

Customer
Repetitive Focus

•Facilities often organized as assembly lines

•Characterized by modules with parts and assemblies made
previously
•Modules may be combined for many output options
•Less flexibility than process-focused facilities but more efficient
Repetitive Focus
Automobile Assembly Line

Raw Modules
materials combined
and for many
module output
inputs options

Few
modules
Process Flow Diagram
Frame tube Frame-building Frame Hot-paint
bending work cells machining frame painting
THE ASSEMBLY LINE
TESTING Engines and
Incoming parts transmissions
28 tests
From Milwaukee
on a JIT arrival
Air cleaners Oil tank work cell schedule

Fluids and mufflers Shocks and forks

Fuel tank work cell Handlebars

Wheel work cell Fender work cell

Roller testing
Crating
Product Focus

• Facilities are organized by product

• High volume but low variety of products
• Long, continuous production runs enable efficient processes
• Typically high fixed cost but low variable cost
• Generally less skilled labor
Product Focus
Continuous Work Flow

Output
variations in
Few size, shape,
inputs and
packaging
Product Focus
D A Scrap
Nucor Steel Plant steel

Continuous caster

B
C Electric
Ladle of molten steel furnace

Continuous cast steel sheared

into 24-ton slabs
Hot tunnel furnace - 300 ft
E F

Hot mill for finishing, cooling, and coiling

H G
I
Mass Customization

 The rapid, low-cost production of goods and service to satisfy

increasingly unique customer desires
 Combines the
flexibility of a
process focus
with the efficiency
of a product focus
Mass Customization
Number of Choices
Item 1970s 21st Century
Vehicle models 140 286
Vehicle types 18 1,212
Bicycle types 8 19
Software titles 0 400,000
Web sites 0 98,116,993
Movie releases 267 458
New book titles 40,530 77,446
Houston TV channels 5 185
Breakfast cereals 160 340
Items (SKUs) in 14,000 150,000
supermarkets
LCD TVs 0 102
Mass Customization
Repetitive Focus
Flexible people
and equipment
Supportive
supply chains Modular techniques

Mass Customization
Effective Rapid
scheduling throughput
techniques techniques

Process-Focused Product-Focused
High variety, low volume Low variety, high volume
Low utilization (5% to 25%) High utilization (70% to 90%)
General-purpose equipment Specialized equipment
Comparison of Processes

Process Repetitive Product Focus Mass

Focus Focus (High-volume, Customization
(Low volume, (Modular) low-variety) (High-volume,
high variety) high-variety)

Small Long runs, Large quantity, Large

quantity, large standardized small variety quantity, large
variety of product made of products variety of
products from modules products

General Special Special Rapid

purpose equipment purpose changeover
equipment aids in use of equipment on flexible
assembly line equipment
Comparison of Processes
Process Repetitive Product Focus Mass
Focus Focus (High-volume, Customization
(Low volume, (Modular) low-variety) (High-volume,
high variety) high-variety)

Operators are Employees Operators are Flexible

broadly are modestly less broadly operators are
skilled trained skilled trained for the
necessary
customization

Many job Repetition Few work Custom

instructions reduces orders and job orders require
as each job training and instructions many job
changes changes in job because jobs instructions
instructions standardized
Comparison of Processes
Process Repetitive Product Focus Mass
Focus Focus (High-volume, Customization
(Low volume, (Modular) low-variety) (High-volume,
high variety) high-variety)

Raw material JIT Raw material Raw material

inventories procurement inventories inventories
high techniques are low are low
used

Work-in- JIT inventory Work-in- Work-in-

process is techniques process process
high used inventory is inventory
low driven down
by JIT, lean
production
Comparison of Processes
Process Repetitive Product Focus Mass
Focus Focus (High-volume, Customization
(Low volume, (Modular) low-variety) (High-volume,
high variety) high-variety)

Units move Movement is Swift Goods move

slowly measured in movement of swiftly
through the hours and unit through through the
plant days the facility is facility
typical

Finished Finished Finished Finished

goods made goods made goods made goods often
to order to frequent to forecast build-to-order
forecast and stored (BTO)
Comparison of Processes
Process Repetitive Product Focus Mass
Focus Focus (High-volume, Customization
(Low volume, (Modular) low-variety) (High-volume,
high variety) high-variety)

Scheduling is Scheduling Relatively Sophisticated

complex, based on simple scheduling
trade-offs building scheduling, required to
between various establishing accommodate
inventory, models from output rate to custom orders
availability, a variety of meet forecasts
customer modules to
service forecasts
Comparison of Processes
Process Repetitive Product Focus Mass
Focus Focus (High-volume, Customization
(Low volume, (Modular) low-variety) (High-volume,
high variety) high-variety)

Fixed costs Fixed costs Fixed costs Fixed costs

low, variable dependent on high, variable high, variable
costs high flexibility of costs low costs must be
the facility low

Costing Costs usually High fixed High fixed

estimated known due to costs mean costs and
before job, extensive costs dynamic
known only experience dependent on variable costs
after the job utilization of make costing
capacity a challenge
Comparison of Processes
Variable
costs
Variable Variable
$ costs $ costs $
Fixed costs Fixed costs
Fixed costs
Low volume, high variety Repetitive High volume, low variety
Process A Process B Process C

$ st
co

st
ta l st
l co

co
To Tota
tal
To

400,000
300,000
200,000
Fixed cost Fixed cost Fixed cost
Process A Process B Process C

(2,857) V1 V2 (6,666) Volume

Thank You!

Monday, March 18, 2024 57