operations management
jenny2000000
4_ProcessFlowAnalysisII2.pptxClass 4: Process Flow Analysis II
Instructor: Mani Lakshmanan
P300 Introduction to Operations Management
1
What we have covered so for
Process flow
Theoretical flow time
Actual flow time
Cycle time
Capacity
Utilization
Yield
2
Outline
Demand rate and inventory buildup
Inventory buildup
Activity utilization
Theoretical vs. Actual flow time
3
Review: Two Ways to Find the Cycle Time of a Whole Process
1. Gantt Chart
Cycle time is the time between the completion of two consecutive orders
For a given order, when can it be processed by one activity?
Condition 1: the order has been processed by activity that is predecessor of the given activity
Condition 2: all the resources used by the given activity are not busy with processing other orders
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Review: Two Ways to Find the Cycle Time of a Whole Process
2. Bottleneck: slowest activity or resource
The cycle time of the bottleneck is the cycle time of the whole process
5
Outline
Demand rate and inventory buildup
Inventory buildup
Activity utilization
Theoretical vs. Actual flow time
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A Simple Process
Demand Rate (Arrival Rate): rate at which materials or orders enter the system
Demand rate vs. capacity rate
Demand Rate always ≤ Capacity Rate :
Demand Rate sometimes > Capacity Rate :
Capacity rate, C
[units/hr]
...
...
...
...
...
Steady state process
Non-steady state process
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Input
Output
Demand rate, D
[units/hr]
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Before today, when we talk about a process, we actually only look at this process itself. We don’t pay attention to the external world. So, we think that the capacity rate is sufficient to determine the output rate of the system. However, a process has to accept some exogenous input at the first place. So, there must be another rate in our picture to capture how fast the input arrives to the process. That is what we call demand rate.
By acknowledging the demand rate, we have to be more careful in our process analysis, since the existence of the two rates complicates a process’s performance. For instance, there are both demand and capacity rates. You are standing at the end of the system to observe the output. By what rate will you find the finished goods go out the system? It depends on the ordering between demand rate and capacity rate. If demand rate is always smaller than capacity rate, then how many output should exactly be equal to how many arrived. In such scenario, there will never be inventory built up, since every arrived demand will immediately be taken care. We call such process as steady state process.
However, if during the time period we study, there are some moments that demand rate is higher than capacity rate. What will happen? At those moments, what will you observe? Inventory. There will be unprocessed jobs waiting in front of the system. Typically, if demand rate can be bigger than capacity rate, we will call those process as non-steady state process.
So, you can understand it by this way, steady here means, steadily there is no inventory appeared. The requirement for this is demand rate is always smaller than capacity rate. Non-steady state means that the state of the inventory can vary from zero to any positive number.
What you see here (Inventory Buildup)
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| Accept Order | 1 min | |
| Burn CD | 3 min | |
| Print Package | 2 min |
3 persons working on the line
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What you see here (Ideal flow)
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| Accept Order | 1 min | |
| Burn CD | 3 min | |
| Print Package | 2 min |
3 persons working on the line
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What you see here (Ideal flow)
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Single person working on the line
What you see here (Inventory Buildup for customers)
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Single person working on the line
Time
Demand Rate
7pm
9pm
1am
5pm
50
200
Time
200
Inventory
100
7pm
9pm
1am
5pm
Capacity rate = 100 / hr
Non-Steady State Process
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Now let me show you an example, how inventory state in a non-steady state process can change. Here, we have capacity rate 100 per hr. The demand rate is changing over the time. But its changing pattern is known beforehand. You can find that between 7pm and 9pm, demand rate is actually bigger than the capacity rate. Then, this is a non-steady state process.
Ok, let us check how inventory changes across the time. From 5pm to 7pm, will there be any unfinished jobs? No. So, the state of inventory is 0. What will happen from 7pm to 9pm? In first hour, there are 200 job requests, but you can only handle 100 of them. How many left? 100. How about the second hour, another 100 jobs left. So, what you can observe is more and more jobs are waiting in front of you. Inventory is just built up. From 9pm to 1am, the demand rate reduced to 50 per hour again. Then what will happen? In first hour, 50 new jobs arrive, but you can process 100. So, you inventory is cut down by 50 units. In the second hour, the same thing happens, another 50 old jobs are processed. Ok, how long does it take to clean all the waiting jobs? 4 hours. So, graphically, we can find a downward line reaching 0 at 1am. So, the inventory state is non-steady, increasing from 0 to 200 and then reducing to 0 again.
Inventory Buildup
Demand Rate < Capacity Rate
no inventory build-up
Exiting inventory is processed at rate:
Capacity rate – Demand rate
Demand Rate > Capacity Rate
Inventory buildup at rate:
Demand Rate - Capacity Rate
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Now from this example, can you conclude how inventory will build up? When demand rate is smaller capacity rate, would you see inventory buildup? No. Oppositely, yes. But at what rate will inventory build up?
Inventory Buildup: Example
Gary manages a receiving station for peanuts. Farmers deliver their loads of peanuts from 5 am to 5 pm. Gary can process them at a rate of 5 tons an hour, and on a heavy day, a total of 90 tons can be expected.
(a) Draw the Inventory buildup diagram. Assume that the peanuts arrive at the station at an even pace all day.
Inventory
5:00am
5:00pm
10 T
Time
20 T
30 T
11:00pm
40 T
11:00am
Demand: 90/12=7.5
7.5-5=2.5 tons/hr
0-5=-5 tons/hr
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Ok, the idea sounds straightforward. Let see if you have really understand it. I have an inventory buildup problem here, and I will give you couple of minutes to work it out by yourself. Then I will go over it.
From 5am to 5pm, what is the demand rate? 90/12 = 7.5
What is the capacity rate? 5
At what rate will inventory be built up? 7.5-5=2.5.
How long will the inventory be built up? Till 5pm, in total 12 hours.
So what is the highest amount of inventory we will see? 2.5 * 12 = 30.
Suppose Gary keeps working after 5pm. What is the demand rate now? 0. Capacity rate? 5. So, there is no more inventory built up. Then how will the existing inventory change as time goes on? At what time can all the inventory be processed? 30/5=6 hours later, at 11pm. In graph, we will get…
Inventory Buildup: Example
The station has room to hold only 10 tons of peanuts in raw material inventory prior to processing. Once this space is filled, the farmers’ trucks must wait to dump their contents.
(b) At what time will the trucks likely start to wait to unload?
Answer: 9:00 am
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Let us see another version of inventory buildup problem. Again, please first try it yourself.
The time for truck begins to wait is the time that peanuts holding room is filled. Or in other word, when inventory is built more than 10 tons. At what rate is inventory built? 2.5 per hour. How will it take to fill that 10 ton’s room? 10/2.5=4 hours. So 4 hours after 5am, gives us 9am.
Outline
Key points in Kristen’s cookie case
Demand rate and inventory buildup
Inventory buildup
Activity utilization
Theoretical vs. Actual flow time
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Outline
Key points in Kristen’s cookie case
Demand rate and inventory buildup
Inventory buildup
Activity utilization
Theoretical vs. Actual flow time
17
Flow Time
Flow time: the total time it takes on unit to get trough a process
Theoretical flow time
= Summation of all activities’ cycle time
Flow time = 1+3+2=6 min
Accept
Order
Print Package
And Manual
Burn CD
WIP
Orders
WIP
Complete order
1 min
3 min
2 min
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Flow Time
Theoretical flow time
= Summation of all activity cycle time
Actual flow time
= Theoretical flow time + waiting time
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Flow time: responsiveness
Cycle time: capacity
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Example
WIP
Burn CD
CAPACITY:
20 CDs/ hour
CYCLE TIME:
3 minutes
Theoretical flow time of the system:
Actual flow time of the system:
3 minutes
?
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More information needed to estimate delay…
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Ok, let us try this example. This is our Softwide process from your first homework. From the current information, can we identify the theoretical flow time? Yes, what is it? 7 minutes. Can we tell what is the actual flow time? No, we have no idea of its demand rate, even no idea whether there is waiting there. So, we cannot say anything right now. How about I tell you there are 3 minutes of waiting time, then what can you say now about the actual flow time?
Softwide Example
WIP
Burn CD
CAPACITY:
20 CDs/ hour
CYCLE TIME:
3 minutes
Theoretical flow time of the system:
Actual flow time of the system:
3 minutes
?
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If we release blank CDs to the burner stage every 4 minutes: How much WIP? What is actual flow time?
No Inventory buildup
Actual flow time is 3 minutes.
every 4 minutes
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Ok, let us try this example. This is our Softwide process from your first homework. From the current information, can we identify the theoretical flow time? Yes, what is it? 7 minutes. Can we tell what is the actual flow time? No, we have no idea of its demand rate, even no idea whether there is waiting there. So, we cannot say anything right now. How about I tell you there are 3 minutes of waiting time, then what can you say now about the actual flow time?
Softwide Example
WIP
Burn CD
CAPACITY:
20 CDs/ hour
CYCLE TIME:
3 minutes
Theoretical flow time of the system:
Actual flow time of the system:
3 minutes
?
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If we release blank CDs to the burner stage every 2 minutes: How much WIP? What is actual flow time?
Inventory goes to infinity as time goes by.
The later a unit enters the system, the longer it stays there
every 2 minutes
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Ok, let us try this example. This is our Softwide process from your first homework. From the current information, can we identify the theoretical flow time? Yes, what is it? 7 minutes. Can we tell what is the actual flow time? No, we have no idea of its demand rate, even no idea whether there is waiting there. So, we cannot say anything right now. How about I tell you there are 3 minutes of waiting time, then what can you say now about the actual flow time?
Flow Time
Theoretical flow time
= Summation of all activity cycle time
Actual flow time
= Theoretical flow time + waiting time
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Inventory
Flow time: responsiveness
Cycle time: capacity
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Theoretical vs. Actual Flow Time
(BBC news)
Barry Roberts has a painful lump on his neck.
He was referred to a consultant at St James' Hospital, Leeds.
However, it took three months for a letter to arrive from the hospital - and when it did, it informed him that would have to wait 209 weeks for a meeting with a consultant plastic surgeon.
“This is absolutely amazing, I could not believe it”
------Barry Roberts
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Flow time efficiency is a commonly used measure for process performance or customer satisfaction. People intuitively use this concept by comparing what they want to do and how long they have to wait. The poor efficiency in this case is not the unique example in real life.
Theoretical vs. Actual Flow Time
Flow time efficiency =
Theoretical flow time / Actual flow time
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In fact, let me show you more examples. The table here lists the values of the flow time efficiency for a variety of processes. We just got surprisingly low flow time efficiency. This implies how important to reduce the waiting time and to improve the flow time performance. To know how to reduce the waiting time, we need to first fully understand how waiting time is generated. What factors will determine the length of the waiting time. This is our job in the class’s remaining time.
Ok, will we see waiting time in steady state process? No, since there is no inventory, every arrived job is processed immediately. So waiting time occurs in non-steady state process. What is also appeared in non-steady state process? Inventory. So intuitively, we will think there is certain relationship between waiting and inventory.
Flow Time
Theoretical flow time
= Summation of all activity cycle time
Actual flow time
= Theoretical flow time + waiting time
26
Inventory
By default, flow time = actual flow time
Flow time: responsiveness
Cycle time: capacity
26
Accept Order
Burn CD
Print Package
Timeline
123456789012345678
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| Print Package | ||||||||||||||||||
| Timeline | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 0 | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 |
| Accept Order | 1 min | |||||||||||||||||
| Burn CD | 3 min | |||||||||||||||||
| Print Package | 2 min | |||||||||||||||||
Sheet2
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| Timeline | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 0 | 1 | 2 | 3 | 4 | 5 | 6 | 7 |
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| Burn CD | 3 min | ||||||||||||||||
| Print Package | 1 min | ||||||||||||||||
Sheet3
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Sheet4
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| Timeline | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 0 | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 |
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| Burn CD | 2 min | |||||||||||||||||
| Print Package | 1 min | |||||||||||||||||
Customer Arrival
Accept Order
Burn CD
Print Package
Accept Order
Burn CD
Print Package
Timeline
123456789012345678
Accept Order
1 min
Burn CD
3 min
Print Package
2 min
Sheet1
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| Print Package | ||||||||||||||||||
| Timeline | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 0 | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 |
| Accept Order | 1 min | |||||||||||||||||
| Burn CD | 3 min | |||||||||||||||||
| Print Package | 2 min | |||||||||||||||||
Sheet2
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| Timeline | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 0 | 1 | 2 | 3 | 4 | 5 | 6 | 7 |
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| Burn CD | 3 min | ||||||||||||||||
| Print Package | 1 min | ||||||||||||||||
Sheet3
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| Timeline | 1 | 2 | 3 | 5 | 6 | 7 | 8 | 9 | 0 | 1 | 2 | 3 |
| Accept Order | 1 min | |||||||||||
| Burn CD | 2 min | |||||||||||
| Print Package | 1 min | |||||||||||
Sheet4
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| Timeline | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 0 | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 |
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| Burn CD | 2 min | |||||||||||||||||
| Print Package | 1 min | |||||||||||||||||
Sheet5
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| Timeline | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 0 | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 |
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| Burn CD | 3 min | |||||||||||||||||
| Print Package | 2 min | |||||||||||||||||
Customer Arrival
Accept Order
Burn CD
Print Package
Industry Process
Average
Flow Time
Theoretical
Flow Time
Flow Time
Efficiency
Life Insurance
New Policy
Application
72 hrs. 7 min. 0.16%
Consumer
Packaging
New Graphic
Design
18 days 2 hrs. 0.14%
Commercial Bank
Consumer
Loan
24 hrs. 34 min. 2.36%
Hospital Patient Billing
10 days 3 hrs. 3.75%
Automobile
Manufacture
Financial
Closing
11 days 5 hrs 5.60%
|
Industry |
Process |
Average Flow Time |
Theoretical Flow Time |
Flow Time Efficiency |
|
Life Insurance |
New Policy Application |
72 hrs. |
7 min. |
0.16% |
|
Consumer Packaging |
New Graphic Design |
18 days |
2 hrs. |
0.14% |
|
Commercial Bank |
Consumer Loan |
24 hrs. |
34 min. |
2.36% |
|
Hospital |
Patient Billing |
10 days |
3 hrs. |
3.75% |
|
Automobile Manufacture |
Financial Closing |
11 days |
5 hrs |
5.60% |
