Business & Finance Productions and Operations Assignment

Process Analysis and Resource Utilization

Part One

Prof. Fiyinfoluwa Abioye

Bowie State University

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Content

• Resource Utilization

• Process Throughput and Bottlenecks

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Resource Utilization

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Utilization is the fraction of time a workstation or individual is busy over the long run. 100 percent utilization is difficult to achieve. For example, utilization in most job shops ranges from 65 to 90 percent. In flow shops, it might be between 80 and 95 percent, and for most continuous flow processes, utilization is above 95 percent. Job shops require frequent machine changeovers and delays, whereas flow shops and continuous flow processes keep equipment more fully utilized.

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Service facilities have a greater range of resource utilization. Movie theaters, for example, average 5 to 20 percent utilization when seat utilization is computed over an entire month. Most airlines and hotels find seat and room utilization, respectively, above 50 percent.

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Two ways of computing resource utilization are

𝑈𝑡𝑖𝑙𝑖𝑧𝑎𝑡𝑖𝑜𝑛 𝑈 = 𝑟𝑒𝑠𝑜𝑢𝑟𝑐𝑒𝑠 𝑢𝑠𝑒𝑑

𝑟𝑒𝑠𝑜𝑢𝑟𝑐𝑒𝑠 𝑎𝑣𝑎𝑖𝑙𝑎𝑏𝑙𝑒

𝑈𝑡𝑖𝑙𝑖𝑧𝑎𝑡𝑖𝑜𝑛 𝑈 = 𝑑𝑒𝑚𝑎𝑛𝑑 𝑟𝑎𝑡𝑒

𝑠𝑒𝑟𝑣𝑖𝑐𝑒 𝑟𝑎𝑡𝑒 × 𝑛𝑢𝑚𝑏𝑒𝑟 𝑜𝑓 𝑠𝑒𝑟𝑣𝑒𝑟𝑠

For a process design to be feasible, the calculated utilization over the long run cannot exceed 100 percent. These equations can be used to identify process design options to achieve a target utilization.

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Process Throughput and Bottlenecks

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The number of units or tasks that are completed per unit time from a process is called throughput. Throughput might be measured as parts per day, transactions per minute, or customers per hour, depending on the context. A logical question to consider is how much throughput can be achieved for an entire process. Process throughput is limited by the smallest output rate of the work activities that comprise the process. A bottleneck is the work activity that effectively limits the throughput of the entire process.

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Example:

The process for renewing a driver’s license at the Archer County Courthouse is as follows. First, the clerk fills out the application; then the clerk takes the driver’s picture and finally, a typist enters the information into the computer system and processes the new license. It takes an average of five minutes to fill out an application, one minute to take a picture, and seven minutes to process the new license. There are two clerks and three typists. How many licenses can be processed in one hour if both the clerks and typists have an 80 percent target utilization?

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Solution:

The service rate for clerks is 5+1 = 6 minutes per license. This converts to an hourly rate of 10 licenses/hour/clerk. With 2 clerks, the effective service rate is 20 licenses/hour

At 80 percent utilization,

𝑈𝑡𝑖𝑙𝑖𝑧𝑎𝑡𝑖𝑜𝑛 𝑈 = 𝐷𝑒𝑚𝑎𝑛𝑑 𝑟𝑎𝑡𝑒

𝑆𝑒𝑟𝑣𝑖𝑐𝑒 𝑟𝑎𝑡𝑒 × 𝑁𝑢𝑚𝑏𝑒𝑟 𝑜𝑓 𝑠𝑒𝑟𝑣𝑒𝑟𝑠

0.8 = 𝑁𝑢𝑚𝑏𝑒𝑟 𝑜𝑓 𝑙𝑖𝑐𝑒𝑛𝑠𝑒𝑠/ℎ𝑜𝑢𝑟

20 𝑙𝑖𝑐𝑒𝑛𝑠𝑒𝑠/ℎ𝑜𝑢𝑟

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𝑁𝑢𝑚𝑏𝑒𝑟 𝑜𝑓 Τ𝑙𝑖𝑐𝑒𝑛𝑠𝑒𝑠 ℎ𝑜𝑢𝑟 = 0.8 × 20 = 16

Typists require seven minutes per license, which converts to 8.57 licenses/hour/typist. At 80 percent utilization, we get

0.8 = 𝑁𝑢𝑚𝑏𝑒𝑟 𝑜𝑓 𝑙𝑖𝑐𝑒𝑛𝑠𝑒𝑠/ℎ𝑜𝑢𝑟

8.57 Τ𝑙𝑖𝑐𝑒𝑛𝑠𝑒𝑠 Τℎ𝑜𝑢𝑟 𝑡𝑦𝑝𝑖𝑠𝑡 × 3 𝑡𝑦𝑝𝑖𝑠𝑡𝑠

𝑁𝑢𝑚𝑏𝑒𝑟 𝑜𝑓 Τ𝑙𝑖𝑐𝑒𝑛𝑠𝑒𝑠 ℎ𝑜𝑢𝑟 = 0.8 × 25.71 = 20.57

The throughput of this system is limited by the work activity of the clerks, so the total process output is 16 licenses/hour. Therefore, the clerks are the bottleneck resource.

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