Transcript Production and Operations Management: Manufacturing and

Performance Measurement
Financial
 Net
–
profit
an absolute measurement in dollars
 Return
–
a relative measure based on investment
 Cash
–
on investment
flow
a survival measurement
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Performance Measurement
Operational
 1.
–
 2.
–
 3.
–
Throughput
the rate at which money is generated by the system
through sales
Inventory
all the money that the system has invested in
purchasing things it intends to sell
Operating expenses
all the money that the system spends to turn inventory
into throughput
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Productivity
 Does
not guarantee profitability
–
Has throughput increased?
–
Has inventory decreased?
–
Have operational expenses decreased?
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Some Capacity Related Terminology
 Capacity
–
Available time for production
 Bottleneck
–
Capacity is less than demand placed on resource
 Nonbottleneck
–
Capacity is greater than demand placed on resource
 Capacity-constrained
–
resource (CCR)
Capacity is close to demand placed on resource
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Components of Production Cycle Time
 Setup
–
time
the time that a part spends waiting for a resource to
be set up to work on this same part
 Process
–
time
the time that the part is being processed
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Components of Production Cycle Time
 Wait
–
the time that a part waits not for a resource but for
another part so that they can be assembled together
 Idle
–
time
time
the unused time
»
the cycle time less the sum of the setup time, processing
time, queue time, and wait time
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Saving Time
Bottleneck
Nonbottleneck
What are the consequences of saving
time at each process?
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Drum, Buffer, Rope
Bottleneck (Drum)
A
B
Communication
(rope)
C
D
E
F
Market
Inventory
buffer
(time buffer)
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Case: Kristen’s Cookies
Mixing
dishing
baking
cooling
packing
pay
6 min
2 min
10 min
5 min
2 min
1 min
*
*
(3 dozen)
K
*
R
1.
2.
3.
4.
5.
(1 dozen)
*
How long will it take to fill an order?
How many orders can be filled in a four-hour period?
What happens if a second oven is added?
What happens if Kristen does this alone?
What happens if Kristen sells standardized cookies?