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IES 303 Engineering Management & Cost Analysis | Dr. Karndee Prichanont, SIIT IES 303 Chapter 4: Process Analysis Objectives: • Introduce some practical tools used in designing and improving processes Week 4 Dec 1, 2005 1 IES 303 Engineering Management & Cost Analysis | Dr. Karndee Prichanont, SIIT Process Analysis Understanding how process work is essential to ensuring the competitiveness of a company Example of 2 fast-food restaurants If restaurant A can delivery a hamburger to customer for $0.50 in direct costs and restaurant B costs $0.75, ____________________________________________ ____________________________________________ ____________________________________________ 2 IES 303 Engineering Management & Cost Analysis | Dr. Karndee Prichanont, SIIT Objectives of Process Analysis To be able to answer the following key questions: How many customers can the process handle per hour? How long will it take to serve a customer? What change is needed in the process to expand capacity? How much does the process cost? What part of process should be improved or eliminated in order to reduce non-value added cost? 3 IES 303 Engineering Management & Cost Analysis | Dr. Karndee Prichanont, SIIT Measuring Process Performance Productivity Ratio of output to input ________________________________________________ Efficiency Ratio of actual output of a process relative to some standard ________________________________________________ Throughput Time ________________________________________________ Utilization ________________________________________________ 4 IES 303 Engineering Management & Cost Analysis | Dr. Karndee Prichanont, SIIT A Systematic Approach to Process Analysis 2 3 1 6 4 5 Figure 4.2 5 IES 303 Engineering Management & Cost Analysis | Dr. Karndee Prichanont, SIIT Flowchart of the Sales Process for a Consulting Company Figure 4.3 6 IES 303 Engineering Management & Cost Analysis | Dr. Karndee Prichanont, SIIT Flowchart of Nested Subprocess of Client Agreement and Service Delivery Step Figure 4.4 7 IES 303 Engineering Management & Cost Analysis | Dr. Karndee Prichanont, SIIT Flowchart of the Process Showing Handoffs Between Departments Figure 4.5 8 IES 303 Engineering Management & Cost Analysis | Dr. Karndee Prichanont, SIIT Flow Diagrams Service visible to customer Service not visible to customer Repair authorized Customer drops off car Mechanic makes diagnosis* Discuss needed work with customer* Parts available Check parts availability† Perform work† Parts not available Order parts Repair not authorized Inspect/ test and repair Corrective work necessary Customer departs with car Collect payment Notify customer * = Points critical to the success of the service † = Points at which failure is most often experienced Repair complete Perform corrected work Figure 4.6 9 IES 303 Engineering Management & Cost Analysis | Dr. Karndee Prichanont, SIIT Process Charts 10 IES 303 Engineering Management & Cost Analysis | Dr. Karndee Prichanont, SIIT Recommended readings “Work measurement at United Parcel Service (UPS)” from Operations Management for Competitive Advantages, page 192 “Customer-Driven Service for McDonald’s – Selfordering kiosks and environment” from Operations Management for Competitive Advantages, page 153 - 154 11 IES 303 Engineering Management & Cost Analysis | Dr. Karndee Prichanont, SIIT Case Exercise Select a process (service or manufacturing) Example of service system: MK restaurant (dine-in or delivery) SIIT registration process Write a flow diagrams and/or process chart for its operations 12 IES 303 Engineering Management & Cost Analysis | Dr. Karndee Prichanont, SIIT Pareto Charts Figure 4.9 13 Figure 4.10 IES 303 Engineering Management & Cost Analysis | Dr. Karndee Prichanont, SIIT Cause-and-Effect Diagram Ex: Checker Board Airlines Personnel Equipment Aircraft late to gate Other Mechanical failures Passenger processing at gate Late cabin cleaners Unavailable cockpit crew Weather Late cabin crew Air traffic delays Late baggage to aircraft Poor announcement of departures Delayed flight departures Late fuel Weight/balance sheet late Late food service Contractor not provided updated schedule Materials Delayed check-in procedure Waiting for late passengers Procedures Figure 4.11 14 IES 303 Engineering Management & Cost Analysis | Dr. Karndee Prichanont, SIIT Tools for Improving Quality Wellington Fiber Board Co. Step 1—Checklist Step 2—Pareto chart Step 3—Cause-and-effect diagram Step 4—Bar chart 15 IES 303 Engineering Management & Cost Analysis | Dr. Karndee Prichanont, SIIT Wellington Fiber Board Co. Checklists Headliner Defects Defect type Tally Total A. Tears in fabric //// 4 B. Discolored fabric /// 3 C. Broken fiber board //// //// //// //// //// //// //// / //// // D. Ragged edges Total Figure 4.12 36 7 50 16 IES 303 Engineering Management & Cost Analysis | Dr. Karndee Prichanont, SIIT Wellington Fiber Board Co. Pareto Chart 40 100 80 C 30 60 20 40 10 20 D A 0 Figure 4.12 Cumulative percentage Number of defects 50 B 0 Defect type 17 IES 303 Engineering Management & Cost Analysis | Dr. Karndee Prichanont, SIIT Wellington Fiber Board Co. Cause-and-Effect Diagram People Materials Training Out of specification Not available Absenteeism Communication Machine maintenance Humidity Schedule changes Broken fiber board Machine speed Wrong setup Other Process 18 Figure 4.12 IES 303 Engineering Management & Cost Analysis | Dr. Karndee Prichanont, SIIT Wellington Fiber Board Co. Bar Chart Number of broken fiber boards 20 15 10 5 0 First Figure 4.12 Second Shift Third 19 IES 303 Engineering Management & Cost Analysis | Dr. Karndee Prichanont, SIIT Next week Case: Jose’s Authentic Mexican Restaurant Read and analyze the case: Jose’s Authentic Mexican Restaurant, textbook page 166 Answer the posted questions. Also perform and construct any applicable graphical displays in analyzing the problem. 20