Transcript Flow Rate and Capacity Analysis

5. Flow Rate and Capacity Analysis
Flow Rate and Capacity Analysis
1
 Throughput
 Resources
and Capacity
and Resource Pools
 Theoretical capacity
 Bottleneck resources
 Capacity
 Product
utilization
mix and its effect on theoretical capacity and
profitability
 Capacity
Improvement
5. Flow Rate and Capacity Analysis
Throuhput and Takt Time
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Throughput: Average Flow Rate
The average number of flow units that flow through a process per
unit of time in a stable process
Takt time = 1/(throughput)
The time interval between exit of two consecutive products. The
average activity time at a workstation on an assembly line.
Process Capacity
The maximum sustainable flow rate of a process
5. Flow Rate and Capacity Analysis
Resources in a Process
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Information
structure
Inputs
Process
Management
Network of
Activities and Buffers
Flow units
(customers, data,
material, cash, etc.)
Resources
Labor + Capital
Outputs
Goods
Services
5. Flow Rate and Capacity Analysis
Resources and Resource Pools
4
Resources
» Capital – Fixed Assets such as land, buildings, facilities, equipment
and machinery
» Labor – people such as engineers, operators, assemblers, chefs
customer-service representatives, etc.
Resource Unit: An individual resource (chef, mixer, oven etc)
Resource Pool: A collection of interchangeable resource units that can
perform an identical set of activities
Resource Pooling: The combining of separate resource pools into a single
pool to perform several activities
Unit Load of a Resource Unit (Tp): The amount of time the resource works to
process each flow unit
5. Flow Rate and Capacity Analysis
A Resource Pool
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Activity
Resource
Work Content
(minutes)
Mailroom
Mailroom
Clerk
0.6
Data Entry
Data-entry
Clerk
4.2
Initial
Processing
Claims
processor
4.8
Inspection
Claims
Supervisor
2.2
Final
Processing
Claims
processor
1.8
Resource
Unit Load
(minutes)
Mailroom Clerk
0.6
Data-entry Clerk
4.2
Claims processor
6.6
Claims
Supervisor
2.2
5. Flow Rate and Capacity Analysis
Flow Rate Measurement
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Theoretical capacity of a resource unit – maximum sustainable
flow rate if it were fully utilized
Theoretical capacity of a resource pool – sum of all the
theoretical capacities of all the resource units in that pool
Bottleneck – the slowest resource pool of a process
Theoretical bottleneck – The resource pool with the minimum
theoretical capacity
Theoretical capacity of a process – theoretical capacity of the
theoretical bottleneck
5. Flow Rate and Capacity Analysis
The Theoretical Capacity
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Theoretical Capacity of a Resource unit = 1/unit load = 1/ Tp
Theoretical capacity of a Resource pool = Rp = cp/ Tp
Resource
pool (p)
Unit Load
(min./claim)
(Tp)
Theoretical
Capacity of a
Resource Unit =
1/Tp claims/min
Number of Units Theoretical Capacity
in Resource Pool of Resource Pool
= cp
Rp=cp/Tp
claims/min
Mailroom
clerk
0.6
1.6666
1
1.66
Data-entry
clerk
4.2
0.2380
8
1.90
Claims
processor
6.6
0.1515
12
1.82
Claims
supervisor
2.2
0.4545
5
2.27
5. Flow Rate and Capacity Analysis
Other Factors Affecting Theoretical Capacity
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Load batching – a resource processes several flow units
simultaneously (one oven and 10 loaves of bread)
Scheduled availability – The amount of time that a resource is
schedule for operation. (certain hours, certain days, total hours per
week)
Theoretical capacity of a resource unit =
(1 / Tp) × Load batch × Scheduled availability
Theoretical capacity of a resource pool =
Rp =(cp / Tp) × Load batch × Scheduled availability
5. Flow Rate and Capacity Analysis
Theoretical Capacity for Physicians Claims (Revised)
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Resource pool Scheduled
(p)
availability
(min/day)
Unit Load
(min/claim)
(Tp)
Theoretical
Capacity of
Resource Unit
(claims/day)
Number of Theoretical Capacity
Units in
of Resource Pool
Resource
(claims/day) (Rp)
Pool
Mailroom
clerk
450
0.6
450/0.6 = 750
1
760×1 = 750
Data-entry
clerk
450
4.2
450/4.2=107.1
8
107.1×8 = 856.8
Claims
processor
360
6.6
360/6.6=54.5
12
54.5×12 = 654
Claims
supervisor
240
2.2
240/2.2=109.1
5
109.1×5 = 545.5
Claims supervisors are the bottleneck and theoretical capacity is 545 claims per day
5. Flow Rate and Capacity Analysis
Throughput and Capacity Utilization
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Throughput is rarely equal to theoretical capacity because of
» Internal inefficiencies (resource unavailability or idleness)
» External inefficiencies (low inflow/supply or low
outflow/demand)
Capacity utilization of a resource pool (ρp) – Measures degree to
which resources are effectively used by a process.
ρp = Throughput/Theoretical capacity of a resource pool = R/Rp
5. Flow Rate and Capacity Analysis
Capacity Utilization
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Throughput = 480
Resource pool (p)
Theoretical Capacity Capacity Utilization
of Resource Pool
(ρp=R/Rp)
(claims/day) (Rp)
Mailroom clerk
750
480/750=64%
Data-entry clerk
856.8
480/857=56%
Claims processor
654
480/654=73%
Claims supervisor
545.5
480/545=88%
The capacity utilization of the entire process is 88%
5. Flow Rate and Capacity Analysis
VOH Hospital: Work Content and Resources
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Activity Description
Work
Content
min/pat
---
Resources Allocated
Start
Patient leaves Dr office
---
1
Patient walks to the X-ray
7
2
X-ray request travels to X-ray lab by messenger
20
Messenger
3
X-ray technician fills form
6
X-ray tech
4
Receptionist receive patient info
5
Receptionist
5
Patient undresses for X-ray
3
Changing room
6
A lab technician takes X-rays
7.5
X-ray tech, X-ray lab
7
A darkroom technician develop X-rays
15
Dark room tech, darkroom
8
The lab technician develop X-ray
2.5
X-ray tech
9
Patient puts on clothes and get ready to leave
3
Changing room
10
Patient walls back to Dr’s office
7
11
The X-rays are transferred to the Dr. by a messenger
20
12
Patient and X-rays arrive at the Dr’s office
---
-----
Messenger
---
5. Flow Rate and Capacity Analysis
Theoretical Capacity and Capacity Utilization
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Resource
pool (p)
Unit load
(min/ pat)
Messenger
20+20=40 60/40=1.5
Receptionist 5
Theoretical
Capacity of
Resource
Unit
(patients per
hour)
60/5=12
Number
Units in
Resource
Pool
(Cp)
Theoretical
Capacity of
Resource Pool
(patients per hour)
(Rp)
Capacity
Utilization (%)
ρp = R/Rp
6
1.5×6=9
5.5/9=61.11%
1
12×1=12
5.5/12=45.83%
X-ray tech
6+7.5+2.5 60/16=3.75
+16
4
3.75×4=15
5.5/15=36.67%
X-ray lab
7.5
60/7.5=8
2
8×2=16
5.5/16=34.38%
Darkroom
tech
15
60/15=4
3
4×3=12
5.5/12=45.83%
Darkroom
15
60/15=4
2
4×2=8
5.5/8=68.75%
Changing
room
3+3=6
60/6=10
2
10×2=20
5.5/20=27.50%
5. Flow Rate and Capacity Analysis
Unit Load for a Product Mix
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Unit load for a given product mix is computed as the weighted average of unit
loads of individual products.
Billing: Physician claims, Hospital claims, and 60/40 mix
Resource Pool
UL (Physician)
min. /claim
UL (Hospital)
min. /claim
UL (60%-40%) mix
min. /claim
Mailroom clerk
0.6
1.0
0.6(.6)+1(.4) =0.76
Data-entry clerk
4.2
5.2
4.60
Claims processor
6.6
7.5
6.96
Claims supervisor
2.2
3.2
2.60
5. Flow Rate and Capacity Analysis
Theoretical Capacity for Physicians Claims
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Resource pool Scheduled
(p)
availability
(min/day)
Unit Load
Theoretical
(min/claim) Capacity of
(Tp)
Resource Unit
(claims/day)
Number of
Units in
Resource
Pool
Theoretical
Capacity of
Resource Pool
(claims/day) (Rp)
Mailroom
clerk
450
0.6
450/0.6 = 750
1
760×1 = 750
Data-entry
clerk
450
4.2
450/4.2=107.1
8
107.1×8 = 856.8
Claims
processor
360
6.6
360/6.6=54.5
12
54.5×12 = 654
Claims
supervisor
240
2.2
240/2.2=109.1
5
109.1×5 = 545.5
5. Flow Rate and Capacity Analysis
Theoretical Capacity for Hospital Claims
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Resource
pool (p)
Scheduled
availability
Unit Load
(Tp)
(min./day)
(min./claim)
Theoretical
Capacity of
Resource Unit
(claims/day)
Number of
Units in
Resource
Pool
Theoretical
Capacity of
Resource Pool
(Rp) (claims/day)
Mailroom
clerk
450
1.0
450 / 1.0 = 450
1
450× 1 = 450
Data-entry
clerk
450
5.2
450 / 5.2= 86.5
8
86.5 × 8 = 692
Claims
processor
360
7.5
360 / 7.5 = 48
12
48 × 12 = 576
Claims
supervisor
240
3.2
240 / 3.2 = 75
5
75 × 5 = 375
5. Flow Rate and Capacity Analysis
Theoretical Capacity for 60% / 40% Mix
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Resource
pool (p)
Scheduled
availability
Unit Load
(Tp)
(min./day)
(min./claim)
Theoretical
Capacity of
Resource Unit
(claims/day)
Number of
Theoretical
Units in
Capacity of
Resource Resource Pool
Pool
Rp (claims/day)
Mailroom
clerk
450
0.76
450/0.76=592
1
592×1 = 592
Data-entry
clerk
450
4.60
450/4.60=98
8
98×8 = 784
Claims
processor
360
6.96
360/6.96=51.7
12
51.7×12 = 621
Claims
supervisor
240
2.60
240/2.60=92
5
92×5 = 460
Linear Programming: Find the optimal product mix to maximize profit.
Greedy Algorithm. Produce products with highest unit contribution
margin
5. Flow Rate and Capacity Analysis
Optimizing Profitability: Wonder Shed example
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Resource Pool
Worker S
Punch press R
Punch press B
Worker PR
Worker PB
Forming machine R
Forming machine B
Worker FR
Worker FB
Welding gun
Worker SA
Worker FA
Inspector
No. Units
in
Resource
Pool
Load
Batch
Unit Load
Standard
minutes
1
1
1
1
1
1
1
1
1
1
1
1
2
1
1
1
1
1
1
1
1
1
1
1
1
1
10
22
30
22
30
12
6
12
6
13
13
10
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Theoretical
Capacity of
resource
pool
(standard
per hour)
Unit load
fancy
minutes
Theoretical
Capacity of
resource
pool
(fancy per
hour)
6.00
2.73
2.00
2.73
2.00
5.00
10.00
5.00
10.00
4.62
4.62
6.00
3.33
10
30
50
30
50
15
10
15
10
20
20
15
40
6.00
2.00
1.20
2.00
1.20
4.00
6.00
4.00
6.00
3.00
3.00
4.00
3.00
Theoretical
capacity of
Unit Load resource Pool
75% - 25% (75%-25% mix
mix
per hour)
10
24
35
24
35
12.75
7
12.75
7
14.75
14.75
11.25
37
6.00
2.50
1.71
2.50
1.71
4.71
8.57
4.71
8.57
4.07
4.07
5.33
3.24
5. Flow Rate and Capacity Analysis
Optimizing Profitability: Wonder Shed exampl
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Decisions of product mix affect process capacity which therefore affect
profitability
Optimize profitability by producing products with highest unit contribution margin
» keep in mind: unit load, resource capacity, and process capacity
Contribution Margin – revenue less all of its variable costs
Contribution Margin per Unit
Standard
Fancy
=
=
$200
$260
Contribution Margin Per Unit of Time
Standard 2 × $200
= $400 per hour
Fancy
1.2 × $260
= $312 per hour
5. Flow Rate and Capacity Analysis
Optimizing Profitability
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Shift length
working days per mo.
Avail hours
Demand - Fancy
Demand - Standard
CM - Fancy
CM - Standard
Type
Fancy
Standard
Standard
Fancy
8
25
200
150
350
260
200
No. of units No. of hours units per hour C.M. per unit ext. profit
150
125
1.2
$260
$39,000
150
75
2
$200
$30,000
200
$69,000
350
30
175
25
200
2
1.2
$200
$260
$70,000
$7,800
$77,800
5. Flow Rate and Capacity Analysis
Why Wasted Time?
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Process capacity is usually less than the theoretical capacity due to process
inefficiencies (time wasted).
 Resource availability loss: resource is not available
» Breakdown or absenteeism
» Preventive maintenance
Scheduled availability: the scheduled time period during which a resource unit is
available for processing flow units
Net availability = Schedule availability – Lost time due to breakdown and
maintenance
Availability loss factor = 1 – (Net Availability/Scheduled Availability)

Resource idleness: resource is available but is not processing
» Starvation: Idleness of resources due to the unavailability of inputs
» Blockage: When resources are prevented from producing because there is
no place to store (internal), or there is no demand (external)
5. Flow Rate and Capacity Analysis
Setup Batch, Unit Load, Total Unit Load
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Setup or Changeover: activities related to cleaning, resetting and retooling of
equipment in order to process a different product.
Qp : Setup batch or lot size; the number of units processed consecutively after a
setup;
Sp : Average time to set up a resource at resource pool p for a particular product
Average setup time per unit is then Sp / Qp
Tp = Unit load (it does not count for the setup time)
Total unit load = Tp + Sp / Qp
What is the “right” lot size or the size of the set up batch? Lot Size  or  ?
» The higher the lot size, the lower will be the total unit load and thus the
higher the capacity.
» The higher the lot size, the higher will be the inventory and therefore, the
higher the flow time.
Reducing the size of the setup batch is one of the most effective ways to reduce the
waiting part of the flow time.
5. Flow Rate and Capacity Analysis
Total Unit Load for Products, and a Product mix
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Two Sizes Tiles
Regular 300 units (75%)
Jumbo 100 units (25%)
Cutting time
2 minutes
1 minute
Setup time
30 minutes
30 minutes
Regular
Jumbo
Mix
2
1
(2×.75)+(1×.25)=1.75
Sp/Qp
30/300=0.1
30/100=0.3
(0.1×0.75)+(0.3×0.25)=0.15
Total unit load
2+0.1=2.1
1+0.3=1.3
(2.1×.75)+(1.33×.25)= 1.9
Unit Load (Tp)
Load batch: the number of units processed simultaneously. Often constrained by
technological capabilities of the resource.
Setup batch: the number of units processed consecutively after a setup. Setup is
determined managerially
5. Flow Rate and Capacity Analysis
Effective Capacity of a Process
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Theoretical Capacity of a resource unit: (1/Tp) ×Load Batch ×Scheduled Availability
Effective Capacity of a resource unit : (1/Total Unit Load) × Load Batch ×Net
Availability
Effective Capacity takes into account the setup per unit time (Total unit load) and the
resource availability loss (Net availability)
The effective capacity of a pool is the effective capacity of all resources in the pool:
(cp/Total Unit Load) × Load Batch ×Net Availability
» Cp is the number of units in the resource pool
» Total unit load= Tp+(Sp/Qp)
The effective capacity of a process is the effective capacity of its slowest resource
pool (effective bottleneck).
5. Flow Rate and Capacity Analysis
Resource Pools, Effective Capacity
25
Resource Pool
Worker S
Punch press R
Punch press B
Worker PR
Worker PB
Forming machine R
Forming machine B
Worker FR
Worker FB
Welding gun
Worker SA
Worker FA
Inspector
No. Units in
Resource
Pool
Load
Batch
(Total) Unit
Load
Standard
minutes
1
1
1
1
1
1
1
1
1
1
1
1
2
1
1
1
1
1
1
1
1
1
1
1
1
1
10
22
30
22
30
12
6
12
6
13
13
10
36
Scheduled
avilability
hours /day
8
8
8
8
8
8
8
8
8
8
8
8
8
Loss
Factor
6.25%
5%
5%
5%
5%
10%
10%
6.25%
6.25%
10.0%
6.25%
6.25%
6.25%
Net
Effective Cap.
Availability Resource Pool
(Minutes) (flow units/day)
450
456
456
456
456
432
432
450
450
432
450
450
450
Effective capacity = (cp/Total Unit Load) × Load Batch ×Net Availability
45.00
20.73
15.20
20.73
15.20
36.00
72.00
37.50
75.00
33.23
34.62
45.00
25.00
5. Flow Rate and Capacity Analysis
Levers for Managing Throughput
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Theoretical capacity
» The theoretical capacity of the theoretical bottleneck.
» Rp = cp/Tp × Load batch × Scheduled availability
Effective capacity
» Replace Schedule availability with net availability
» Replace Unit load (Tp) by Total unit load Tp+Sp/Qp. That is unit load plus
setup per unit in the setup batch
Process capacity
» Is less than Effective Capacity  Resource idleness due to starvation and
blockages
Throughput
» Average flow rate per unit Note: (1/throughput = Takt time)
Throughput ≤ Process capacity ≤ Effective capacity ≤ Theoretical capacity
5. Flow Rate and Capacity Analysis
Improving Theoretical Capacity
27
Decrease unit load on the bottleneck: Decrease the work content
of the activity performed by the bottleneck resource pool
Increase the Load Batch of the bottleneck resource: Expanding
the resource will increase resource capacity
Increase the number of bottleneck resources: Adding units to the
bottleneck resource pool will increase resource capacity
Increase Scheduled Availability of bottleneck resource: Add
more hours to the resource such as adding overtime or second
shift operations
5. Flow Rate and Capacity Analysis
Internal and External Bottlenecks
28
Internal Bottleneck: When Throughput is equal to Process Capacity
 The output of the process is limited by the process’s own
constraints (the bottleneck resource)
External Bottleneck: When Throughput is less than to Process Capacity
 The output of the process is limited by conditions external to the
the boundaries of the internal process constraints.
 Examples include: demand for product, raw material shortages
If process capacity is close to throughput, the dominating effect is internal
(recourse unavailable; breakdowns, preventative maintenance, set up). You
should increase net availability of the bottleneck resource pools and reduce
setup waste.
If effective capacity is close to the theoretical capacity the dominating effect is
external (starvation, blockage). The way to raise capacity in this case is to
reduce idleness.
5. Flow Rate and Capacity Analysis
Increase net availability, Reduce setup
29
Increasing net availability
» Regular Maintenance of equipment
 Reduces breakdowns during manufacturing process
 Perform maintenance after production line shutdown
 Have problem solving measures in place to keep the manufacturing
process functioning
Reducing setup waste
» Planning
 Reduce the frequency of changeovers
 Managing the product mix
» Reduce the amount of time required to setup a line
 Caution: Increasing batch size or length of run leads to increased
inventory and longer flow times.
5. Flow Rate and Capacity Analysis
Decrease resource idleness
30
Decreasing resource idleness
» Starvation and Blockage are the problems.
 If we have two raw material for a process and one is unavailable we
have a starvation condition
 If the buffer is not big enough upstream and there is no place for the
product to go we have a blockage condition
» Techniques to avoid Starvation and Blockage
 Proper buffer size
 Process flow synchronization
Internal bottle neck will require increasing the capacity of the bottle
neck to a capacity where a new bottleneck will appear. Once the
old bottleneck does not have the lowest capacity do not continue to
increase capacity. It will not increase overall capacity any further.