Transcript 15.2 Single - Factor (One - Way) Analysis of Variance

Processes and
Technologies
Process (Definition of)
Process: Any part of an organization that takes inputs and
transforms them into outputs
Process Flowcharting (definition of)
• 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
Flowchart Symbols (1 of 2)
Tasks or operations
Decision Points
Examples: Giving an
admission ticket to a
customer, installing an
engine in a car, etc.
Examples: How much
change should be
offered to a customer,
which tool should be
used, etc.
Flowchart Symbols (2 of 2)
Storage areas or
queues
Examples: Sheds, lines
of people waiting for a
service, etc.
Flows of
materials or
customers
Examples: Customers
moving to a seat,
mechanic getting a tool,
etc.
Example 2: Flowchart for Inspection
Process
Material
Received
from
Supplier
No,
Continue…
Inspect
Material for
Defects
Defects
found?
Yes
Return to
Supplier for
Credit
Process Terminology (1 of 2)
Single-stage Process
Stage 1
Multi-stage Process
Stage 1
Stage 2
Stage 3
Process Terminology (2 of 2)
A buffer refers to a storage area between
stages where the output of a stage is placed
prior to being used in a downstream stage.
Allows stages to operate independently
Multi-stage Process with Buffer
Buffer
Stage 1
Stage 2
Process Planning
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Process selection
Make-or-buy decisions
Specific equipment selection
Process plans
Process analysis
Process Selection
Process Selection: Deciding on the way
production of goods or services will be organized
Process selection can involve substantial
investment in
 Equipment
 Layout of facilities
Major Implications of Process Selection
•
•
•
•
Capacity planning
Layout of facilities
Equipment
Design of work systems
To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved.
Factors that Affect Process
Decisions
Required Variety,
Required Volume (how many)
Required Flexibility (degree of)
Process Strategy
 Overall approach to produce goods and
services
 Defines:
 Capital intensity
 Process flexibility
 Vertical integration
 Customer involvement
Process Selection and System
Design
Forecasting
Capacity
Planning
Product and
Service Design
Technological
Change
Facilities and
Equipment
Layout
Process
Selection
Work
Design
From Function to Process
Sales
Manufacturing
Purchasing
Accounting
Product Development
Order Fulfillment
Supply Chain Management
Customer Service
Function
Process
Process Selection
Batch
• Variety
– How much
Job Shop
• Flexibility
– What degree
• Volume
– Expected output
Repetitive
Continuous
Types of Processes
(Process Flow Structures)
 Projects
 Job shop
 Batch production
 Mass production
 Continuous flow
production
Types of Processes (1 of 2)
Determine how to produce a product or provide a
service
Projects (nonroutine jobs)
Job shop
Small scale (e.g. copy center making a single copy of
a student term paper)
Batch
Moderate volume (e.g. copy center making 10,000
copies of an ad piece for a business)
Types of Processes (2 of 2)
Repetitive- Mass production/assembly
High volumes of standardized goods or services
(e.g. Automobile manufacturer)
Continuous Flow Line
Very high volumes of non-discrete goods (eg.
Petroleum manufacturer)
Product and Service Processes
Process
Type
Job Shop
Appliance
repair
Emergency
room
Ineffective
Commercial
baking
Batch
Classroom
Lecture
Automotive
assembly
Repetitive
Automatic
carwash
Continuous
(flow)
Ineffective
Steel
Production
Water
purification
Process-Focused Strategy Examples
Bank
Hospital
© 1995 Corel Corp.
© 1995
Corel
Corp.
Machine
Shop
© 1995 Corel Corp.
Repetitive-Focused Strategy - Examples
Fast
Food
Clothes
Dryer
McDonald’s
over 95 billion served
Truck
© 1995 Corel Corp.
© 1984-1994 T/Maker Co.
© 1995 Corel Corp.
Product-Focused Examples
Paper (Continuous)
© 1984-1994 T/Maker Co.
Product – Process Matrix
Dimension
Job shop
Batch
Repetitive
Continuous
Job variety
Very High
Moderate
Low
Very low
Process
flexibility
Very High
Moderate
Low
Very low
Unit cost
Very High
Moderate
Low
Very low
Volume of
output
Very Low
Low
High
Very High
Process Selection with Break-even
Analysis
A standard approach to choosing among alternative
processes or equipment
Model seek to determine the point in units produced (and
sold) where we will start making profit on the process or
equipment
Model seeks to determine the point in units produced (and
sold) where total revenue and total cost are equal
Process Selection with
Break-Even Analysis
cf
v
cv
p
Total cost = fixed cost + total variable cost
TC = cf + vcv
Total revenue = volume x price
TR = vp
Profit = total revenue - total cost
Z = TR - TC
= vp - (cf + vcv)
= fixed cost
= volume (i.e., number of units produced and sold)
= variable cost per unit
= price per unit
Solving for
Break-Even Volume
TR = TC
vp = cf + vcv
vp - vcv = cf
v(p - cv) = cf
cf
v= p-c
v
Break-Even Analysis: Example 1
Fixed cost = cf = $2,000
Variable cost = cv = $5 per raft
Price = p = $10 per raft
The break-even point is
cf
2000
v= p-c =
= 400 rafts
v
10 - 5
Break-Even Analysis: Example 1
Total
cost
line
$3,000 —
$2,000 —
$1,000 —
Total
revenue
line
400
Break-even point
Units
Break-Even Analysis: Example 2
Choosing Between Two Processes
Process A Process B
$2,000 + $5v= $10,000 + $2v
$3v = $8,000
v = 2,667 rafts
Below 2,667, choose A
Above 2,667, choose B
Break-Even Analysis: Example 2
Choosing Between Two Processes
Total cost of
process A
$20,000 —
Total cost of
process B
$15,000 —
$10,000 —
Choose
process A
Choose
process B
$5,000 —
|
1000
|
2000
|
3000
|
4000 Units
Point of indifference = 2,667 Units
Choosing Between Three Processes
Fixed cost
$
Variable cost
$
Process A
$
Process B
Process C
$
400,000
300,000
200,000
V1(2,857) V2 (6,666)
Fixed cost –
Process A
Volume
Fixed cost –
Process B
Fixed cost –
Process C
Make-or-Buy Decisions
1. Cost
2. Available Capacity
3. Quality Considerations
4. Speed
5. Reliability
6. Expertise
7. Nature of Demand
Make?
Buy?
Specific Equipment Selection
1.
2.
3.
4.
5.
6.
7.
8.
Purchase cost
Operating cost
Annual savings
Revenue
enhancement
Replacement analysis
Risk and uncertainty
Piecemeal analysis
Breakeven analysis
Transition From Product Design to
Process Design:
Product and Production Documents
Product Documents
• Engineering drawings
– Shows dimensions, tolerances, & materials
– Shows codes for Group Technology
• Assembly drawing
-- Shows exploded view of product
• Bill of Material
– Lists components, quantities & where used
– Shows product structure
Engineering Drawings - Show
Dimensions, Tolerances, etc.
Assembly Drawing
Head
Neck
Handle
End
Cap
Bill of Material Example
Bill of Material
P/N: 1000
Name: Bicycle
P/N
Desc
Qty
1001
Handle Bars
1
1002
Frame Assy
1
1003
Wheels
2
1004
Frame
1
Units Level
Each
1
Each
1
Each
2
Each
2
Assembly Chart (Gozinto Chart)
Bottom bun
Beef patty
Salt
Cheese
SA
Lettuce
Sauce
Onions
First-layer assembly
Middle bun
Beef patty
Salt
Cheese
Lettuce
Sauce
Onions
Pickles
SA
Second-layer assembly
Sesame seed top bun
Wrapper
Completed Big Mac
Assembly Drawing and Assembly
Chart
Process Analysis
 The systematic examination of all aspects of a
process to improve its operation to make it:
 Faster
 More efficient
 Less costly
 More responsive
 Basic tools
 Process flowchart
 Process diagrams
 Process maps
Process Flowchart Symbols
Operations
Inspection
Transportation
Delay
Storage
Process Flowchart: Example 1
SUBJECT: Request tool purchase
Dist (ft)
Time (min)
Symbol
Description
 D  Write order
 D On desk
75
 D  To buyer
 D  Examine
 = Operation;  = Transport;  = Inspect;
D = Delay;  = Storage
Process Flow Chart: Example 2: Hamburger Assembly
Dist.
(Ft)
1.5
1.0
.5
.5
Time
(Mins)
.05
2.50
.05
.05
.15
.10
.20
.05
Chart
Symbols










Process Description
Meat Patty in Storage
Transfer to Broiler
Broiler
Visual Inspection
Transfer to Rack
Temporary Storage
Obtain Buns, Lettuce, etc.
Assemble Order
Place in Finish Rack
3.5
3.15
TOTALS
2 =4 Operation
1 - 2
Value-added time
time/Total time =
(2.50+.20)/3.15=85.7%
Process Flowchart: Example 3
Description
of
process
1
Unload apples from truck
2
Move to inspection station
3
Weigh, inspect, sort
4
Move to storage
5
Wait until needed
6
Move to peeler
7
Apples peeled and cored
15
8
Soak in water until needed
20
9
Place in conveyor
5
10
Move to mixing area
11
Weigh, inspect, sort
Page 1 0f 3
Total
Distance
(feet)
Location: Graves Mountain
Process: Apple Sauce
Time
(min)
Operation
Transport
Inspect
Delay
Storage
Step
Date: 9-30-02
Analyst: TLR
20
100 ft
30
50 ft
360
20 ft
20 ft
30
480
190 ft
Service Process Design
Techniques for Improving Service
Productivity (1 of 2)
Strategy
• Separation
• Self-service
• Postponement
• Focus
Technique
• Structure service so customers
must go where service is offered
• Self-service so customers
examine, compare and evaluate
at their own pace
• Customizing at delivery
• Restricting the offerings
Techniques for Improving Service
Productivity (2 of 2)
• Modules
• Modular selection of service.
Modular production
• Automation
• Separating services that lend
themselves to automation
• Precise personnel scheduling
• Clarifying the service options
• Explaining problems
• Improving employee flexibility
• Scheduling
• Training
More Opportunities to Improve
Service Processes
Methods
Layout
Human Resource
Technology
Technologies
Technology
Technology: The application of scientific discoveries to
the development and improvement of products and
services and operations processes.
Technology innovation: The discovery and
development of new or improved products, services, or
processes for producing or providing them.
Kinds of Technology
Operations management is primarily concerned with
three kinds of technology:
Product and service technology
Process technology
Information technology
All three have a major impact on:
Costs
Productivity
Competitiveness
Technology as a Competitive
Advantage
Innovations in
Products and services
Cell phones
PDAs
Wireless computing
Processing technology
Increasing productivity
Increasing quality
Lowering costs
Eases flexibility
Technology Acquisition
Technology can have benefits but …
Technology risks include:
What technology will and will not do
Technical issues
Economic issues
Initial costs, space, cash flow, maintenance
Consultants and/or skilled employees
Integration cost, time resources
Training, safety, job loss
Advantages Created by
HighTechnology
Advantages:
 Increased precision
 Increased productivity
 Increased flexibility, increased product variety
 Decreased cost (labor, material, inventory,
transportation and quality costs)
 Improved product features and quality
 Decreased pollution
 Decreased size
 Decreased power requirements.
Information Technology
 Management Information Systems (MIS)
 Move large amounts of data
 Decision Support Systems (DSS)
 Add decision making support
 Expert System
 Recommend decision based on expert
knowledge
Enterprise Software
Collect, analyze, and make decisions
based on data
ERP - Enterprise Resource Planning
Managing wide range of processes
Human resources, materials management,
supply chains, accounting, finance,
manufacturing, sales force automation,
customer service, customer order entry
Finding hidden patterns through data
mining
Advanced Communications
Electronic data interchange (EDI)
Internet, extranets
Wireless communications
Teleconferencing &
telecommuting
 Bar coding, RFT
 Virtual reality
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Process Technology: Automation
 Machinery that has sensing and control devices
that enables it to operate
- Fixed automation
- Programmable automation
Manufacturing Hardware Technology
 Numerically controlled (NC) machines
 Controlled by punched tape
 Computer numerical controlled (CNC)
 Controlled by attached computer
 Direct numerical control (DNC)
 Several NC machines controlled by single
computer
 Robotics
 Flexible manufacturing systems (FMS)
 Includes automated material handling
Production Process &
Technology Alternatives
# Different Products or Parts
High
General Purpose, NC,
CNC
Flexible
Manufacturing
System
Low
Low
CIM
Dedicated
Automation
Volume of Products or Parts
High
Flexible Manufacturing Systems
(FMS)
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Programmable machine tools
Controlled by common computer network
Combines flexibility with efficiency
Reduces setup & queue times
Flexible Manufacturing System
CNC
Machine
Finished
goods
Computer
control
room
Terminal
Pallet
Automatic
tool changer
CNC
Machine
Parts
Manufacturing Software Technology
 Computer Aided Design and Computer Aided
Manufacturing (CAD/CAM)
Computer Integrated Manufacturing (CIM)
CAM refers to the use of specialized
computer programs to direct and control
manufacturing equipment. When CAD
information is translated into instructions
for computer aided manufacturing, CAM,
the result of these two technologies is
known as CAD/CAM