OPERATIONS MANAGEMENT
INTRODUCTION
Operations management is the process of managing resources to deliver Goods & Services to
Customers.
DIMENSIONS OF OPERATIONS MANAGEMENT
1. Strategy
2. Design
3. Control
Example: Bank
Strategy
Location, Geographical Coverage, Number of Offices
Nature of Services to Offer
Design
Process Steps, Layout, Number of counters
Capacities
Application design
Control
Queue Discipline, Control of Errors
Scheduling & Processing
Information Display
Example: Construction
Strategy ( 2-5 years)
Diversification and Expansion
New Sites, Scope of Project, Areas in Acres, What facilities, How Many Apartments (1/2/3 BHK)
Design (6 months – 1 years)
Manpower planning (Eng. ,Labors etc)
Site layouts, No of Equipments
Capacity planning
Control ( day to 1 months activities)
Scheduling of People, Managing site work
Inventory or Material management
WHAT OM COVERS ?
Production process
Theory of constraint, Capacity planning
Location Planning
Inventory Management Models
Material Requirement Planning (MRP)
Lean construction
Work Study technique
Aggregate Production Planning
Waiting line or Queuing theory
Supply chain management
PRODUCTION PROCESS
Types of Production Processes
1. Job Shop
2. Batch Process
3. Assembly Line
4. Continuous Process
5. Project
Job Shop
Variety of products
Customization
Variable time production
Low volume, fluctuations in volume
Small scale operations
Process layout, e.g., fabrication units, machine shop
Key Issues in Managing Job Shops:
Capacity management
– shifting bottlenecks
– setups/changeover times
– rework
– work-in-process (WIP) movement
– cross function training
– functional coordination
Product mix choice
Variety vs complexity - flexibility
Worker incentives
Layout of a job shop
Batch Process
Goods produced in discrete batches (or lot sizes)
Moderate processing demand
Economies of scale
Process flow more or less routine
Little or no variability in product selection - known in advance, e.g., apparel manufacturer
Goods produced in discrete batches (or lot sizes)
Moderate processing demand
Economies of scale
Process flow more or less routine
Little or no variability in product selection - known in advance, e.g., apparel manufacturer
Key Issues in Managing Batch Processes
Planning & Forecasting
Determining batch sizes
Capacity management
Shop floor synchronization
Worker incentives
Assembly Lines
Worker paced assembly line e.g., fast food outlet
Machine paced assembly line e.g., automobile assembly
Large to medium volume/standard products
High processing turnover
Predefined standard BOM
High degree of labour & equipment utilization
Routing & scheduling fixed
System fairly inflexible
Key Issues in Managing Assembly Lines
Time standards
Assembly line balancing
Material availability
Worker incentives
Continuous Process
Continuous rapid movement of goods
High volume operations
Highly standardized product
Product based layout
High levels of automation, e.g., oil refinery, paper, fertilizer
Key Issues in Managing Continuous Process
Capacity planning
Technological Change
Raw material availability
Process control & monitoring
Project
One of a kind
Customized-High Variety
Dedication of resources/Sharing across projects
e.g., construction, software
Key Issues in Managing Project
Capital/Resource Deployment
Managing Critical Resources/Activities
Subcontracting
Managing Network of Activities
Product Process Matrix
Manufacturing Strategy Framework
Manufacturing Deliverable
Process Analysis
Process
Cycle time = 6 min
Rated capacity = 10 units / hour
6 min/unit
= 80 units / shift (for 8 hours shift)
But Lunch break 30 min and 2 tea break of 15 min
Effective capacity = 70 units / shift
Actual capacity = 60 units / shift (one hour breakdown)
Efficiency = 60/70 = 0.86
Capacity utilization = 60/80 = 0.75
Lead Time = 6 min
Process
Cycle time = 4 min
Rated capacity = 15 units / hour
= 120 units / shift (for 8 hours shift)
4 min/unit
But Lunch break 30 min and 2 tea break of 15 min
Effective capacity = 105 units / shift
Actual capacity = 84 units / shift (one hour breakdown)
Efficiency = 84/105 = 0.80
Capacity utilization = 84/120 = 0.70
Lead Time = 4 min
Process
Process Cycle time = 6 min
Lead Time = 10 min
Rated capacity = 10 units/hour
Process
Workstation 2 required 12 min setup every hour as they change the part
Cycle Time = 6 min
Rated capacity = 80 units/shift
Effective capacity = 8 units/hour
= 56 units/shift (1/2 hours lunch +15min 2 tea break)
Lead Time
Workstation 1 Workstation 2
Job 4 Min 6 Min. Lead Time
No. Start after End at Start after End at MLT Waiting
1 0 4 4 10 10 1
2 4 8 10 16 12 1
3 8 12 16 22 14 2
4 12 16 22 28 16 3
5 16 20 28 34 18 3
6 20 24 34 40 20 4
7 24 28 40 46 22 4
8 28 32 46 52 24 4
9 32 36 52 58 26 5
10 36 40 58 64 28
11 40 44 64 70 30
12 44 48 70 76 32
13 48 52 76 82 34
14 52 56 82 88 36
Lead Time
Workstation 1 Workstation 2
Job 6 Min 4 Min. Lead Time Job
No. Start after End at Start after End at MLT Waiting
1 0 6 6 10 10 0
2 6 12 12 16 10 0
3 12 18 18 22 10 0
4 18 24 24 28 10 0
5 24 30 30 34 10 0
6 30 36 36 40 10 0
7 36 42 42 46 10 0
8 42 48 48 52 10 0
9 48 54 54 58 10 0
10 54 60 60 64 10 0
11 60 66 66 70 10 0
12 66 72 72 76 10 0
13 72 78 78 82 10 0
14 78 84 84 88 10 0
Manufacturing Lead Time = Cycle Time * Work-in-Process
MLT = Sum(Process time) + Sum(waiting time )
MLT = Sum(Process time) if waiting time is zero
Fundamentals of Process Analysis
Objectives
Process Analysis
Process Flowcharting
Types of Processes
Process Performance Metrics
Elements of a Process
What is a Process ?
Example of a Process:
Inputs: labour, material, utilities & capital
Outputs: goods & services
Activities: equipment
Flows: material & information
Storage: RM, WIP, FG (Raw Materials)
Types of Materials
RM : Raw materials
WIP : Work in Process (buffer)
FG : Finished good
Process Concepts
Time: Cycle Time, Idle Time, Lead Time/Throughput Time
Capacity: Rated Capacity, Effective Capacity, Utilization
Inventory: RM, WIP (buffer), FG
Bottleneck
Lot Size/Batch Size
Balanced/Unbalanced Line
Setup/Changeover Time
Process/Run Time
Process Flow Diagram
Process Flow Analysis
Mapping the Process
– Identify entities that convert inputs to outputs
– Flows: product and information
– Storage locations
– Process Flow Diagram
Characteristics of the Process
– Capacities
– Inputs & outputs
Managerial Decisions
– technology
– design
– people
• supervision
• training
• workforce allocation
• incentives
– practices
• quality
• scheduling: work, people, orders, material
• delivery
• production/service volumes including lot sizes
• buffer sizes & locations
• maintenance
Mediating Factors
– Variability: customer demand, inputs, process & outputs
Process Flowcharting
Process flowcharting is the use of a diagram to present the major elements of a process
The basic elements can include tasks or operations, flows of materials or customers, decision
points, and storage areas or queues
It is an ideal methodology by which to begin analyzing a process
