Course:

Operations
Management and
Research
Course taught By: Dr. Arshia Kaul
Types of Processes to be
covered
Project > Network Analysis (Module 11 – OR Technique)
Job-shop
Assembly Line Process
Continuous Flow Process
Module 2
PRODUCTION PROCESS
Session 5
MODULE 2 INTRODUCTION
• Discussion based on Pre-Read – Process Fundamentals
• Discussion based on Pre-Read- Introduction_process_analysis
Basic Components of Process
 Recall : Operations management is about designing, managing and
improving the set of activities that create products and services and deliver
them to customers.
We call the activities, the people, the technology , the knowledge and the
procedures that dictate how work is organized the operating system.
The basic building block of the operating systems is the process.
Most operating systems consists of multiple processes.
A process takes inputs (raw materials, energy) and uses resources
(labour, capital equipment, knowledge) to create outputs that are of
greater value to customers (and thereby of greater value to the
organization).
Process analysis is all about , a set of concepts and tools that will enable us
to describe, measure, diagnose and improve operating processes.
 Process Flow Diagram:
Components
The following are the representations in a process flow diagram:
Tasks (activities) : They are shown as small rectangles
Flows as arrows

Storage of goods as inverted triangles

The capacity is the maximum output rate.

Work-in Process(WIP) inventory is shown before packaging (Pack in the
given process flow)
Finished Goods Inventory (FGI) after packaging.
Source: Process Fundamentals by Anne Gray and James Leonard , HBS (Not copied , only shown for explanation to class)
 Process Flow Diagram/ Process
Map

Source: Process Fundamentals by Anne Gray and James Leonard , HBS (Not copied , only shown for explanation to class)
 How will you make the
following process flow ?
If the mixers and proofers and ovens are not set up in parallel.
The product could flow from either mixer to either proofer and then either
oven.
How would the process flow diagram look like ?

Source: Process Fundamentals by Anne Gray and James Leonard , HBS (Not copied , only shown for explanation to class)
 Components of Process
PROCESS BOUNDARIES INPUTS
A process transforms inputs into outputs. Inputs are items
It decides what is and what is not part of our that flow into a process from the environment to be
system. transformed into outputs.
The objective of the analysis drives the decision They include raw materials, components, energy,
about what to include within the process customers, parts, data and so on.
boundaries. To analyse a process, we must measure inputs, such as
In the croissant making for example if we want materials and energy and determine the amount of each
needed to make some amount of output.
to analyse how the preparation of the raw
materials affects our production line, we It is sometimes more useful to measure the input in
should include the preparation of the dollars by determining, how much it would cost to
dough and fillings within our process purchase these units.
boundaries. Alternatively, if the bake and pack Thus in many analyses it will be necessary to consider the
tasks are handled by a separate team and are economic conditions influencing the cost of materials and
not within our control, we may decide to omit energy. Measuring the cost of inputs becomes more
those tasks from the process boundaries. difficult and requires additional care as the time horizon
lengthens.
Source: Process Fundamentals by Anne Gray and James Leonard , HBS (Not copied , only shown for explanation to class)
 Components of Process Contd.
OUTPUTS TASKS AND STORAGE
The output of the process is either a good or a service Tasks are typically value-adding activities performed by
The products in the process flow diagram is shown as finished resources like labour and capital to convert the inputs
goods inventory. into something more nearly like the desired output.
In some systems, the finished goods inventory does not exist at Some examples of output : (1) operating a drill press to
all, the process produces the output directly for distribution. change a piece of metal. (2) inspecting a part to make
In some cases the finished goods inventory is maintained sure it meets some standard (3) flying an airplane (4)
separately from those of the operating system. anesthetizing a patient before the operation
Although it is a simple matter to count the number of loaves of Storage : Holding of inventory
bread produced daily by the bakery, or to count the number of
patients served by a hospital each year, it is not simple to place Storage occurs when no task is not being performed
value on a given output.
and the good or service is not being transported.
An economic point of view could be used for measurement of
the value. Thus understanding of the economic point of view is They are represented in the process flow diagram by
very important. an inverted triangle.
Main characteristics of the output that could be considered :
cost of providing the output, the quality of the output and the
timeliness of the output.

Source: Process Fundamentals by Anne Gray and James Leonard , HBS (Not copied , only shown for explanation to class)
 Components of Process Contd.
RESOURCES FLOWS
Flows can be categorised into the flow of
Resources are often categorised into labour goods and the flow of information.
(eg. Worker time) and capital(fixed assets,
machines, buildings). Flows are of two types : (i) Physical flow
Performing a task may require multiple (ii) Information
resources (eg. Machine and a worker
operating the machine), and resources are Depicted below :
sometimes shared across several tasks.
The ability of the resources to be shared is
based on the degree of specialization.
For examples, compared to more flexible
workers, specialized workers can often
perform certain tasks particularly well (eg. in
terms of quality or productivity), but are less
able to be allocated across multiple tasks.

Source: Process Fundamentals by Anne Gray and James Leonard , HBS (Not copied , only shown for explanation to class)
 Measuring Performance of
Process
CAPACITY EFFICIENCY
Is defined as the maximum possible output rate
from a process and is measured in units of output It is a common metric used to assess the
per unit time , such as tons per day, parts per performance of physical processes.
minute or customers per hour. Efficiency indicates the amount (or value) of
inputs in a process requires to generate a
For example, a steel mill can produce some
particular amount (or value) of output .
number of tons of steel per year, an insurance
office can process some number of claims per Efficiency is typically measured as the ratio
hour. of output to input and is often expressed as a
dimensionless percentage because both
Capacity is easy to define but difficult to outputs and inputs are usually measured in
measure. the same units.
Theoretical capacity of the process is the most For example, the efficiency of an engine is
output that it could generate under ideal typically expressed as a ratio of output
conditions over some period of time. It is the energy to input energy.
upper bound for the process.
Effective capacity of a process which refers to
maximum output rate during a given period of
Source: Process Fundamentals by Anne Gray and James Leonard , HBS (Not copied , only shown for explanation to class)
time considering a set of constraints under which
 Measuring Performance of
Process
PRODUCTIVITY PROFITABILITY

Related concept that measures the Is an efficiency measure that

amount of output produced per unit measures the amount of economic
of input. value generated from a set of
resources.
For productivity measures, the
output and input can be measured in Among the many ways to measure
different unit. profitability, gross profit margin is
expressed as a percentage and is
For example, a labour productivity calculated by subtracting all direct
metric might measure output in expenses incurred in production
terms of quantity or value produced (raw materials, labour etc.) from
but measure input in terms of hours sales
of labour.

Source: Process Fundamentals by Anne Gray and James Leonard , HBS (Not copied , only shown for explanation to class)
 Measuring Performance of
Process
UTILIZATION CAPACITY UTILIZATION

Is another efficiency Capacity utilization is a measure of

common
measure . how much output was actually
achieved relative to capacity (how
Utilization is the ratio of (i) input or much output could have been
resource the process actually used to achieved in an ideal situation).
create the output to (ii) the amount
of that input or resource available
for use

Source: Process Fundamentals by Anne Gray and James Leonard , HBS (Not copied , only shown for explanation to class)
 Measuring Performance of
Process
Flexibility is another characteristic that should often be considered when
analysing a process.
The flexibility of a process refers to its ability to produce a range of product
models in quantities desired by customers.
Product variety can be produced by processes designed either (a) with
flexible resources that can produce a combination of outputs simultaneously
or (b) to be changed over to quickly transition from producing one product
model to another by using different tasks, resources and/or inputs.

Source: Process Fundamentals by Anne Gray and James Leonard , HBS (Not copied , only shown for explanation to class)
 Measuring Performance of
Process
PRODUCT QUALITY PROCESS QUALITY
Quality can be defined in different ways. Process refers to the ability of the
Product Quality can be evaluated using external process to consistently produce
or internal measures. products or services within their
External quality measures generally assess how design specifications.
well the product design satisfies the wants and
needs of customers, especially compared to In order to produce them within
competing products available in the marketplace.
these specifications, the process
Product performance, features, reliability, must be operating within certain
durability, serviceability and design aesthetics
may all be components of product quality.
tolerances.
Internal measures of product quality, generally Process measures such as the
compare whether individual units meet product temperature inside the kiln or
design specifications or performance standards.
amount of force applied by a punch
press, are generally used in
assessing process quality.
Source: Process Fundamentals by Anne Gray and James Leonard , HBS (Not copied , only shown for explanation to class)
 Measuring Performance of
Process
CYCLE TIME BOTTLENECK

The cycle time is the average time The bottle neck of a process is the task or
resource that limits production, which is one with
between completion of successive the longest cycle time.
units, and can be defined for an Just as the neck of the bottle limits the rate at
individual task or resource or for which the liquid inside can be poured, a process’s
portions of a larger process. bottleneck limits how quickly products can move
through the process, and thus determines the
Cycle time answers the question process cycle time.
“How often does a unit complete a Bottleneck may shift depending on what products
task or the process? Or “How often are being produced or what labour equipment is
available at any point in time.
does a resource compete a unit?”
Because the bottleneck paces and limits its
capacity, it is an important point for management
focus.

Source: Process Fundamentals by Anne Gray and James Leonard , HBS (Not copied , only shown for explanation to class)
 Measuring Performance of
Process
IDLE TIME TAKT TIME
Idle time refers to the time when useful work is Takt time is the cycle time at which a process
not being performed. would need to be paced in order to meet
Both workers are machines can have idle time. customer demand.

Time spent waiting to receive or deliver a unit is Takt time can be calculated by taking the time
idle time unless there is some other useful task to available to produce a certain product and
be performed in the interim. dividing by customer demand for the product.
Idle time can be present in an even balanced For eg. If an automobile assembly line is
process as well. available for 16 hours (960 minutes) per dday
and customer demand is 1,000 cars per day, the
For eg. A worker in the packaging department, for
takt time is 0.96 minutes per car.
example, may merely load 20 loaves of bread on a
machine and then stand by for a while. This time The process to fully meet the demand , it must
maybe idle for the worker (unless he or she is be designed so that the process cycle time is no
needed to monitor the equipment’s performance. more than 0.96 minutes.

Source: Process Fundamentals by Anne Gray and James Leonard , HBS (Not copied , only shown for explanation to class)
 Measuring Performance of
Process
THROUGHPUT TIME BATCH SIZE(LOT SIZE)

Throughput time is defined as the Most processes produce more than one product type.
time it takes for a specific job or Suppose a process produced three products : P1, P2
and P3. The process could produce 1 unit of P1 , then
order to go through the entire 1 unit of P2 , then 1 unit of P3 , then 1 unit of P1 and
process. In manufacturing settings , so on until 100 of each are produced.
throughput time is also known as Alternatively the process could produce 100 units of
manufacturing lead time. P1 before beginning production on 100 units of P2.
Throughput time is measured in In first case, batch size is 1 and in he second case the
batch size is 100 units.
units of time (eg. Seconds, minutes
and so forth). If time must be expended from setting up the
equipment to make the transition from producing P1
to producing P2, then these two batch sizes will result
in quite different throughput time and cycle time.

Source: Process Fundamentals by Anne Gray and James Leonard , HBS (Not copied , only shown for explanation to class)
Measuring Performance of
Process
DIRECT LABOUR CONTENT DIRECT LABOUR UTILIZATION
Direct labour content is the actual amount of work   Direct labour utilization is often the
contained in the product.
key efficiency metric in labour-
Eg. Say in the batch of 100 loaves of bread ,while
packaging equipment has cycle time of ¾ hour , the intensive processes and measures
packaging operator takes 40 minutes on activities the percentage of time that workers
such as loading of bread onto machines ,setting up are actually working on a product or
the right bags on each machine and making
necessary machine adjustments. performing a service:
The direct labour content of packaging would be
40/100 loaves or 0.4 minutes/loaf.
The direct labour content of the bread, the direct
labour content of the bread-making would need to be
included. Indirect labour hours(maintenance,
materials handling and management etc.) are not
included.
 Measuring Performance of
Process: Example
 Take the example of a Hawaiian shirt production Step 4 (pack and ship): The pack and
process. This process includes the following four steps:
ship worker takes the next available tote
Step 1: (cutting) A roll of fabric (with the desired and places the completed shirt in a plastic
shirt pattern) is gathered and laid out on the cutting bag. The bag is then packaged in a
table. Then the necessary pieces of shirt (one torso, two
sleeves, one collar and one shirt-pocket) are cut using standard size shipping box along with a
semi-automatic fabric cutter. The cut pieces of the shirt customer receipt and return slip, both of
are placed in a tote and staged before step 2. which are printed out at the pack-and ship
Step 2 (sewing base): When ready, the sewing station. The box is sealed with packaging
machine is operator at step 2 takes the next available tape, and a shipping label is attached to the
tote and stitches the two sleeves and the pocket to the outside. Completed boxes are staged at the
torso. The base shirt is then placed back into the tote
(along with the remaining raw material) and staged shipping door for pickup by a parcel carrier.
before step 3.
Step 3 (sewing extras): The sewing machine operator For simplicity assume that there is only
at step 3 takes the next available tote and stitches the
collar, two company logo patches (one for the back of one worker at each step of the process.
the collar and one for the left short sleeve, and six Figure illustrates a high-level process map
buttons to the base shirt. of the four-step process.

Source: Operations Management: An introduction to Process Analysis, Darden Business Publishing (University of Virginia
Darden School Foundation (Not copied , only shown for explanation to class)
 Measuring Performance of Process:
Calculating Capacity and Identifying
Bottlenecks
First question that we would want to address in a process is … How much
can the existing process produce? Or How many customers can the existing
process service?
For analysis, we will assume a steady state regarding the workload of the
process. No ramp up in the work.
The assumption is that a worker can arrive at his or her station and
immediately continue working on whatever unit he or she was working on
end of the previous day. This is a valid assumption for many production
settings (eg. Unfinished cars on a production line remain on the line
overnight to be completed the next day )

Source: Operations Management: An introduction to Process Analysis, Darden Business Publishing (University of Virginia
Darden School Foundation (Not copied , only shown for explanation to class)
 Measuring Performance of Process:
Calculating Capacity and Identifying
Bottlenecks
Suppose that time studies are performed on the Hawaiian-shirt process
with the following minutes- per-shirt values found for each step.

Step Description Run Time

Minutes/Shirt
1 Cutting 12.5
2 Sewing (base) 10
3 Sewing (extras) 15
4 Pack/ship 5

Source: Operations Management: An introduction to Process Analysis, Darden Business Publishing (University of Virginia
Darden School Foundation (Not copied , only shown for explanation to class)
 Measuring Performance of Process:
Calculating Capacity and Identifying
Bottlenecks
Assuming that there is 1 worker per step and that the operation runs 8
hours per day , 5 days per week. . Capacity for step 1 is

5 𝑑𝑎𝑦𝑠 𝑝𝑒𝑟 𝑤𝑒𝑒𝑘 ∗ 8 ℎ𝑜𝑢𝑟𝑠 𝑝𝑒𝑟 𝑑𝑎𝑦 ∗ 60 𝑚𝑖𝑛𝑠 𝑝𝑒𝑟 ℎ𝑜𝑢𝑟 2400 𝑚𝑖𝑛𝑠 𝑝𝑒𝑟 𝑤𝑒𝑒𝑘
𝐶𝑎𝑝𝑎𝑐𝑖𝑡𝑦 = =
12.5 𝑚𝑖𝑛𝑠 𝑝𝑒𝑟 𝑠ℎ𝑖𝑟𝑡 12.5 𝑚𝑖𝑛𝑠 𝑝𝑒𝑟 𝑠ℎ𝑖𝑟𝑡
= 192 𝑠ℎ𝑖𝑟𝑡𝑠 𝑝𝑒𝑟 𝑤𝑒𝑒𝑘

Applying same logic the capacity for each step can be calculated. Check
what answers you are getting
Step Description Run Time Capacity
Minutes/Shirt Shirts/Week
1 Cutting 12.5 192
Note : Capacity is
an indicative 2 Sewing (base) 10 240
average, 3 Sewing (extras) 15 160
production could be 4 Pack/ship 5 480
more or less than
Source: Operations Management: An introduction to Process Analysis, Darden Business Publishing (University of Virginia
thisDarden School Foundation (Not copied , only shown for explanation to class)
 Measuring Performance of Process:
Calculating Capacity and Identifying
Bottlenecks
𝑇𝑜𝑡𝑎𝑙 𝑎𝑣𝑎𝑖𝑙𝑎𝑏𝑙𝑒 𝑡𝑖𝑚𝑒 How will you
𝐶𝑎𝑝𝑎𝑐𝑖𝑡𝑦 =
𝑇𝑖𝑚𝑒 𝑟𝑒𝑞𝑢𝑖𝑟𝑒𝑑 𝑡𝑜 𝑝𝑟𝑜𝑐𝑒𝑠𝑠 𝑎 𝑢𝑛𝑖𝑡 (𝑜𝑟 𝑏𝑎𝑡𝑐ℎ) increase the
capacity of the
process ?

Once capacity of each step is calculated for each process, we can

determine the capacity of the overall process. To do this , first the bottleneck
must be identified.
At the current situation step three is considered as the bottleneck as it is
the slowest process and has minimum capacity.

Source: Operations Management: An introduction to Process Analysis, Darden Business Publishing (University of Virginia
Darden School Foundation (Not copied , only shown for explanation to class)
 Measuring Performance of Process:
Calculating Capacity with shared resources
Consider the case, when single sewing machine is shared between step 2
and step 3.
Although each step would have the same capacity as before , the single
sewing machine would have a much lower capacity than either of the steps.
A single sewing machine, available for 5 days a week , 8 hours a day can
perform step 2 and 3 in 25 minutes per shirt resulting in a capacity of :
5 𝑑𝑎𝑦𝑠 𝑝𝑒𝑟 𝑤𝑒𝑒𝑘 ∗ 8 ℎ𝑜𝑢𝑟𝑠 𝑝𝑒𝑟 𝑑𝑎𝑦 ∗ 60 𝑚𝑖𝑛𝑠 𝑝𝑒𝑟 ℎ𝑜𝑢𝑟 2400 𝑚𝑖𝑛𝑠 𝑝𝑒𝑟 𝑤𝑒𝑒𝑘
𝐶𝑎𝑝𝑎𝑐𝑖𝑡𝑦 = =
10 𝑚𝑖𝑛𝑠 𝑝𝑒𝑟 𝑠ℎ𝑖𝑟𝑡 + 15 𝑚𝑖𝑛𝑠 𝑝𝑒𝑟 𝑠ℎ𝑖𝑟𝑡 25 𝑚𝑖𝑛𝑠 𝑝𝑒𝑟 𝑠ℎ𝑖𝑟𝑡
= 96 𝑠ℎ𝑖𝑟𝑡𝑠 𝑝𝑒𝑟 𝑤𝑒𝑒𝑘

In this case the shared resource becomes the bottleneck and new capacity
of system is 96 shirts per week.

Source: Operations Management: An introduction to Process Analysis, Darden Business Publishing (University of Virginia
Darden School Foundation (Not copied , only shown for explanation to class)
 Measuring Performance of Process:
Calculating Capacity Utililization
Capacity utilization is the ratio of the amount of resource used (eg. Demand) to the amount of
available (eg. Capacity) in that time period.
Capacity utilization provides us with a measure of how much of the capacity of an operation is
used. Suppose that the Hawaiian-shirt has an operating capacity (i.e. producing 160 shirts per
week) . Recall, however that Step 1 can operate at a capacity of 192 shirts per week. This implies
that the average capacity utilization at step 1 is as follows:
160 𝑠ℎ𝑖𝑟𝑡𝑠 𝑝𝑒𝑟 𝑤𝑒𝑒𝑘
𝐶𝑎𝑝𝑎𝑐𝑖𝑡𝑦 𝑈𝑡𝑖𝑙𝑖𝑧𝑎𝑡𝑖𝑜𝑛 = = 83.3%
192 𝑠ℎ𝑖𝑟𝑡𝑠 𝑝𝑒𝑟 𝑤𝑒𝑒𝑘

On similar basis, the capacity utilization for Step 2 is 66.66%, step 3 is 100% (i.e. the bottle neck
step) and step 4 is 33.3%.
Calculating capacity of the system provides a good way to examine where there may be slack in
the system.
Capacity is a rate and always measured is units per time. In practical sense, when managing a
process it may help to measure the process in time per unit instead.

Source: Operations Management: An introduction to Process Analysis, Darden Business Publishing (University of Virginia
Darden School Foundation (Not copied , only shown for explanation to class)
 Measuring Performance of
Process: Calculating Cycle time
The average amount of time that elapses between completing successive items at a stage,
assuming that a process is operating at a capacity. The cycle time at a process is defined as the
inverse of the capacity at that step.
For example, consider step 1 again. The cycle time can be calculated as follows:

1
𝐶𝑦𝑐𝑙𝑒 𝑡𝑖𝑚𝑒 =
𝑐𝑎𝑝𝑎𝑐𝑖𝑡𝑦
1
=
192 𝑠ℎ𝑖𝑟𝑡𝑠 𝑝𝑒𝑟 𝑤𝑒𝑒𝑘
1 𝑤𝑒𝑒𝑘𝑠
=
192 𝑠ℎ𝑖𝑟𝑡𝑠
5 ∗ 8 ∗ 60 𝑚𝑖𝑛𝑢𝑡𝑒𝑠 𝑖𝑛 𝑎 𝑤𝑒𝑒𝑘
=
192 𝑠ℎ𝑖𝑟𝑡𝑠
= 12.5 𝑚𝑖𝑛𝑠 𝑝𝑒𝑟 𝑠ℎ𝑖𝑟𝑡
Note, if we were to calculate the cycle times for steps 2 through 4, the cycle time will come same
as the run time of original Hawaiian-shirt process. This is because we have not included
the setup time at any of the individual step.
Cycle time for the overall process will be 15 minutes per shirt (i.e. the cycle time of the
bottleneck step).
Source: Operations Management: An introduction to Process Analysis, Darden Business Publishing (University of Virginia
Darden School Foundation (Not copied , only shown for explanation to class)
Measuring Performance of
Process: Calculating Cycle time
Cycle time provides us with various different ways to think about capacity and
a different way to visualize the process.
For example, a car assembly line that operates non-stop on an 8-hour shift
and produces 480 cars per shift, the cycle time is 1/480 shifts per car or 1 min.
per car( an 8-hour shift lasts an 8 hr./day x60 min./hr=480 min./day. , thus 480
min./day to produce 480 cars /day gives a cycle time of 1 min. per car)
Thus if we were to stand at the end of the production line, we should see, on
an average , a fully assembled car come off the line every minute.
Because cycle time is inverse of the capacity , if the cycle time is known then
the capacity can be calculated and vice versa. Having said this, we do not need
to calculate cycle time to calculate the capacity of the process.
Cycle time provides an alternative way to think about capacity.
 Measuring Performance of
Process: Calculating Capacity
with 2 sewers
Revisiting the process design , the question may arise , why steps 2 and 3
have to performed sequentially, with two sewers splitting the tasks for
sewing a shirt.
The steps could be combined. To determine the capacity for this alternative
process configuration , we assume that a single worker can sew a shirt in 25
mins./shirt (adding the run times for steps 2 and steps 3).
We then calculate the capacity for the combined steps 2 and 3 (with two
servers) as follows:
2 𝑠𝑒𝑤𝑒𝑟𝑠 ∗ (5 𝑑𝑎𝑦𝑠 𝑝𝑒𝑟 𝑤𝑒𝑒𝑘 𝑝𝑒𝑟 𝑠𝑒𝑤𝑒𝑟 ∗ 8 ℎ𝑟𝑠. 𝑝𝑒𝑟 𝑑𝑎𝑦 ∗ 60 𝑚𝑖𝑛𝑠. 𝑝𝑒𝑟 ℎ𝑜𝑢𝑟
𝐶𝑎𝑝𝑎𝑐𝑖𝑡𝑦 =
25 𝑚𝑖𝑛𝑠. 𝑝𝑒𝑟 𝑠ℎ𝑖𝑟𝑡
4800 𝑚𝑖𝑛𝑠 𝑝𝑒𝑟 𝑤𝑒𝑒𝑘
=
25 𝑚𝑖𝑛𝑠. 𝑝𝑒𝑟 𝑠ℎ𝑖𝑟𝑡
= 192 𝑠ℎ𝑖𝑟𝑡𝑠 𝑝𝑒𝑟 𝑤𝑒𝑒𝑘

Source: Operations Management: An introduction to Process Analysis, Darden Business Publishing (University of Virginia
Darden School Foundation (Not copied , only shown for explanation to class)
 Measuring Performance of
Process: Calculating Capacity
with 2 sewers
The numerator captures that two sewers are available for 2*2400
minutes/week to sew complete shirts.
Observe that the capacity of 192 shirts/week for the combined steps 2 and
3 is higher than our previously calculated capacity of 160 shirts per week
for step 3 (bottleneck step).
By combining steps 2 and 3, we eliminate idle time that the sewer at step 2
incurs in the original process configuration (since he or she can only
process as fast as the rate of step 3 ).
The overall capacity for the new process configuration is 192 shirts / week,
which is equal to capacity of both step 1 and the new combined steps 2 and
3.
An important question to answer is why do we split the steps between
sewers? Why not always have the workers in a process perform all the
steps. Making the entire sandwich or a shirt completely.
Source: Operations Management: An introduction to Process Analysis, Darden Business Publishing (University of Virginia
Darden School Foundation (Not copied , only shown for explanation to class)
 Measuring Performance of
Process: Calculating Takt time
Till now we have considered the calculation for finding out how many shirts
per week. Now we will try and see how we can increase the capacity of the
process.
One way to potentially increase the capacity of the process is to shift tasks
away from the bottleneck.
Now we see how load-balancing and operator loading charts can be used to
increase the capacity
To load balance , the steps of the process, we first need to determine
the limit to constrain how much time per shirt we can spend at each
step in the process.
Given a time frame and a target number of units to produce (per unit of
time) , we can divide the former 𝑇𝑎𝑘𝑡 𝑡𝑖𝑚𝑒 =
by the
𝐴𝑚𝑜𝑢𝑛𝑡 latter
𝑜𝑓 𝑡𝑖𝑚𝑒 𝑎𝑣𝑎𝑖𝑎𝑙𝑏𝑙𝑒and get the maximum time

available to make a single unit and still meet the target production quantity.
𝑈𝑛𝑖𝑡𝑠 𝑑𝑒𝑚𝑎𝑛𝑑𝑒𝑑 𝑝𝑒𝑟 𝑢𝑛𝑖𝑡 𝑡𝑖𝑚𝑒

We refer to this value as takt time, coming from the German word for
“pace”
Darden or “rhythm”.
Source: Operations Management: An introduction to Process Analysis, Darden Business Publishing (University of Virginia
School Foundation (Not copied , only shown for explanation to class)
 Difference between Takt time &
Cycle Time
The difference between takt and cycle time is follows:
Takt time refers to the target time per unit as derived from customer demand.
Cycle time refers to actual time per unit that can be achieved from the production floor.
If cycle time for any step exceeds the takt time, then the demand cannot be fully met and
cycle time must be reduced. Otherwise, the step will not be able to keep pace with demand.
Say the demand for shirts is 172 shirts per week. The Hawaiian-shirt production process for
8 hours a day , 5 days a week, which means there is a total of 2,400 minutes per week to
meet demand.
2400 𝑚𝑖𝑛𝑠 𝑝𝑒𝑟 𝑤𝑒𝑒𝑘
𝑇𝑎𝑘𝑡 𝑡𝑖𝑚𝑒 = = 13.96 𝑚𝑖𝑛𝑠 𝑝𝑒𝑟 𝑠ℎ𝑖𝑟𝑡
172 𝑠ℎ𝑖𝑟𝑡𝑠 𝑝𝑒𝑟 𝑤𝑒𝑒𝑘

Note, for the process to meet demand no step can have a cycle time greater than 13.96
minutes per shirt. Another way to put it , at the end of the production line, we need to see a
shirt come off the line every 13.96 minute s (or less) on an average to ensure that the process
is fully meeting the demand.
Source: Operations Management: An introduction to Process Analysis, Darden Business Publishing (University of Virginia
Darden School Foundation (Not copied , only shown for explanation to class)
 Further on Takt time & Cycle
Time
Step 3 is not only the bottleneck but its cycle tie also exceeds the takt time.
Therefore meeting the demand of 172 shirts per week is not possible with
the current process configuration.
To increase the capacity of the process, we could either increase the time
available at the sewing(extras) step by either adding a second sewing
machine and operator or by increasing the number of hours the current
sewer works.
The second option is to reduce the time required to process a unit at each
step by either (i) eliminating unnecessary tasks (ii) improving the time for
specific tasks or (iii) rebalancing tasks between steps.

Source: Operations Management: An introduction to Process Analysis, Darden Business Publishing (University of Virginia
Darden School Foundation (Not copied , only shown for explanation to class)
 Operator-loading chart
ORIGINAL OPERATOR LOADING CHART BALANCED OPERATOR LOADING CHART

Source: Operations Management: An introduction to Process Analysis, Darden Business Publishing (University of Virginia
Darden School Foundation (Not copied , only shown for explanation to class)
 Operator-loading chart
We can further verify that the updated process can now meet the demand by recalculating the
capacity.
The capacity at step 2 reduces to 200 shirts per week ( from 240 shirts per week)
Capacity of step 3 increase to 184.6 which is approximately 185 shirts per week( from 160 shirts
per week).
Although the capacity of step 2 has reduced , this is secondary since (i) step 2 is not the
bottleneck (ii) overall process capacity has increased from 160 shirts per week to 185 shirts per
week.
There are also alternate ways to rebalance. For, example if we were to switch the task of sewing
the sleeve logo (3 mins.) to step 2 , this shifts the bottleneck to step 2 but results in the same
overall process capacity. Realistically it may make sense to move this step to step 2 as the sewer is
already attaching the sleeves to torso in step 2.
Operator loading charts can be used not only to examine ways to rebalance tasks between steps,
but also to look for ways to reduce the number of resources required in a process. They also help
us to visualize the bottlenecks. Design of the process can be revisited.

Source: Operations Management: An introduction to Process Analysis, Darden Business Publishing (University of Virginia
Darden School Foundation (Not copied , only shown for explanation to class)
 Batches
So far it is assumed that the Hawaiian shirts are being processed at each step one at a time.
The potential setup time required for the steps in the process are ignored.
Batch: A group of items or orders that is processed all at one time. The batch size is then
the number of items or orders that are processed as a batch.
We assume here that Hawaiian shirts are processed in batches of 5 shirts per batch. This
means that a batch of 5 shirts transverse the process together in a tote, with each shirt
being processed at a step before the tote (and all 5 shirts ) moves to the next step.
Successive batches are different from one another. For example, here the shirts may be of
different fabric in different batches.
We assume that the shirts are processed as batches throughout the process and the run
times remains the same.
Sometimes items may be batched together only in a certain stages of a process. Also cases
occur when the task for successive items in a batch easier due to repetition.

Source: Operations Management: An introduction to Process Analysis, Darden Business Publishing (University of Virginia
Darden School Foundation (Not copied , only shown for explanation to class)
 Set up time
Set up time is the amount of time it takes to set up or prepare before
processing an item or batch of items of a process way.
Set up time includes the tasks such a calibrating the settings on a sewing
machine, setting up a large-scale printer for a new publication run etc.
Setup time is also called changeover time , since it is the time that incurred
in order to change from working on one type of product or service to another.
Set up time is no-value added time because products are not produced or
customers are not serviced while the setup occurs.
Till now we ignored set up times , but there may be some steps which
require preparation time. For instance, the cut pieces require to be set up
before sewing.

Source: Operations Management: An introduction to Process Analysis, Darden Business Publishing (University of Virginia
Darden School Foundation (Not copied , only shown for explanation to class)
 Incorporating Set up time and
Batches in Calculating Capacity
In the Hawaiian shirt case assume that there is a setup time of 22 minutes per batch for
step 1.
This setup time to select an lay out the fabric as well as calibrate the necessary tools for
cutting. Based on the new batch size and setup time, we recalculate the capacity of step
1 as follows: 5 𝑑𝑎𝑦𝑠 𝑝𝑒𝑟 𝑤𝑒𝑒𝑘 ∗ 8 ℎ𝑜𝑢𝑟𝑠 𝑝𝑒𝑟 𝑑𝑎𝑦 ∗ 0 𝑚𝑖𝑛𝑠 𝑝𝑒𝑟 ℎ𝑜𝑢𝑟
𝐶𝑎𝑝𝑎𝑐𝑖𝑡𝑦 =
22 𝑚𝑖𝑛𝑠 𝑝𝑒𝑟 𝑏𝑎𝑡𝑐ℎ + ሺ5 𝑠ℎ𝑖𝑟𝑡𝑠 𝑝𝑒𝑟 𝑏𝑎𝑡𝑐ℎ ∗ 12.5 𝑚𝑖𝑛𝑠 𝑝𝑒𝑟 𝑠ℎ𝑖𝑟𝑡ሻ

2400 𝑚𝑖𝑛𝑠 𝑝𝑒𝑟 𝑤𝑒𝑒𝑘

=
84.5 𝑚𝑖𝑛𝑠 𝑝𝑒𝑟 𝑏𝑎𝑡𝑐ℎ

= 28.4 𝑏𝑎𝑡𝑐ℎ𝑒𝑠 𝑝𝑒𝑟 𝑤𝑒𝑒𝑘

The cycle time for a batch of five shirts at step 1 is 84.5 minutes per batch, which
includes 62.5 minutes per batch of run time and 22 minutes per batch of setup time .
Converting the batch per week to shirts per week.
= 28.4 𝑏𝑎𝑡𝑐ℎ𝑒𝑠 𝑝𝑒𝑟 𝑤𝑒𝑒𝑘*5 shirts per batch = 142 shirts per week

Source: Operations Management: An introduction to Process Analysis, Darden Business Publishing (University of Virginia
Darden
Source:
School
Operations
Foundation
Management:
(Not copied
An ,introduction
only shown for
to Process
explanation
Analysis,
to class)
Darden Business Publishing (University of Virginia
Incorporating Set up time and
Batches in Calculating Capacity
Why did the capacity decrease ? ...
This happened because now more time is required for each step as we are
incorporating the setup time.
Updated cycle time in mins. per shirt is
1
𝐶𝑦𝑐𝑙𝑒 𝑡𝑖𝑚𝑒 =
𝑐𝑎𝑝𝑎𝑐𝑖𝑡𝑦

1
= × 2400 𝑚𝑖𝑛𝑠. 𝑝𝑒𝑟 𝑤𝑒𝑒𝑘
142 𝑠ℎ𝑖𝑟𝑡𝑠 𝑝𝑒𝑟 𝑤𝑒𝑒𝑘

= 16.9 𝑚𝑖𝑛𝑠. 𝑝𝑒𝑟 𝑠ℎ𝑖𝑟𝑡

 Updated capacity and cycle time for each
step Incorporating Set up time and Batches
Step Descriptio Run Time Set up Capacity Cycle Time
n Minutes/S time Shirts/Wee Mins./shirt
hirt Min./batc k
h
1 Cutting 12.5 22 142 16.9

2 Sewing 12 0 200 12
(base)
3 Sewing 13 0 185 13
(extras)
4 Pack/ship 5 0 480 5

Source: Operations Management: An introduction to Process Analysis, Darden Business Publishing (University of Virginia
Darden School Foundation (Not copied , only shown for explanation to class)
 Updated capacity and cycle time for each
step Incorporating Set up time and Batches
Bottle neck of the process has now shifted from step 3 to 1.
Also notice that run time and cycle time of step 1 are not same.
Recall cycle time is inverse of capacity.
Capacity incorporates setup time for each batch m the cycle time has
increased.
Run time is not always same as cycle time.
The choice of batch size can have a large impact on the capacity of a
process.
How does changing the batch size effect the shirt process?

Source: Operations Management: An introduction to Process Analysis, Darden Business Publishing (University of Virginia
Darden School Foundation (Not copied , only shown for explanation to class)
 Little’s Law : (without batch size and
set up time) : Throughput rate
Till now we have addressed how much the There is a natural relationship between capacity and
throughput rate.
process will produce?
In the hawaiian shirt example, capacity was calculated to
We have not addressed that how responsive be 185 shirts per week (assuming that there are no
the process is... batches or setup times , and steps 2 and 3 are balanced ).
This represents the maximum number of shirts that can
Identifying and reducing how long it takes be produced per week, however this is not necessarily
an item or a customer to pass through a how much we will produce .
process leads to a better customer service We may not (and likely will not) operate at capacity all
and thus directly impacts revenues by either the time.
increasing the market share or allowing a Depending on demand , we may produce fewer than 185
firm to change a premium for the better shirts per week.
service provided. The actual rate of production is the throughput
rate.
Throughput rate: The rate at which units
Capacity represents a ceiling or upper limit for
flow through a process. It represents the throughput rate.
actual rate at which a process or system
The aim is to align the throughput rate with demand to
generates its products or serves its ensure that the customer needs are met and to prevent us
customers. The unit of measure for from overproducing.
throughput rate is units per week or cars
Source: Operations Management: An introduction to Process Analysis, Darden Business Publishing (University of Virginia
per Darden
month). School Foundation (Not copied , only shown for explanation to class)
 Little’s Law : (without batch size and
set up time) :Throughput time
Throughput time is defined as the time it takes for a specific job or order to go through the
entire process. In manufacturing settings , throughput time is also known as manufacturing lead
time. Throughput time is measured in units of time (eg. Seconds, minutes and so forth).
To visualize throughput time , imagine we were at step 1 in the Hawaiian-shirt process, and we
started a stopwatch when the next shirt began processing.
If we followed that shirt throughout the process and stopped the stopwatch when it completed
at step 4, we would find that the time it took the shirt to traverse the entire process are drawn.
The starting and stopping of the stopwatch depends on the boundaries we set.
How much time on an average it takes to produce a specific item is given by throughput time.
It gives the sense of how responsive is the system to customer demand.
Throughput time cannot be found by simply adding cycle times or run times as it does not
capture the waiting time that often occurs in a system due to inventory buildup or overall
throughput rate of the process.

Source: Operations Management: An introduction to Process Analysis, Darden Business Publishing (University of Virginia
Darden School Foundation (Not copied , only shown for explanation to class)
 Little’s Law :
For a system in equilibrium , Little’s Law governs the relationship between
the average rate of flow through a system (i.e. average throughput rate),
average amount of inventory in the system and the average amount of time
that a unit spends in the system (average throughput time). For a system
with defined boundaries that is in equilibrium, let,
I= is the average amount of inventory (i.e. the average number of units )
within the system
R =Average throughput rate through the system
T= Average throughput time for a unit to pass through the system
Little’s Law states that the relationship among I, R and T is given as
follows:
I=R x T

Source: Operations Management: An introduction to Process Analysis, Darden Business Publishing (University of Virginia
Darden School Foundation (Not copied , only shown for explanation to class)
Session 6
M OD ULE 2 C ON TD.
• Distinguish between various Designs of production Systems
• Product Design
• Process Design
• Production Design

D I S T I N G U I S H B E T W E E N T H E VA R I O U S P R O C E S S E S ( I ) P R O J E C T > N E T W O R K A N A LY S I S
( M O D U L E 1 1 – O R T E C H N I Q U E ) ( I I ) J O B - S H O P ( I I I ) A S S E M B LY L I N E P R O C E S S ( I V )
CONTINUOUS FLOW PROCESS
Product Design
Product Design
Product Design: one way for manufacturers to satisfy customers and gain
a differential advantage is through product design which refers to the
arrangement of elements that collectively form a good service.
It is concerned with the form and function of a product. Form design involves the
determination of what the product would look like i.e. the shape and appearance
of the product , what it will be made of (product structure) and how it will be
made (process design). Functional design deals with what the product will
perform and how it performs.
Functional design is concerned with the first and foremost requirement of a
good product i.e. the product should effectively perform the function for which it
is developed. For example, for a television set, the picture quality (video) and
sound quality (audio) is more important than the appearance of the cabinet in
which the picture tube is fixed.
Form design : is concerned with the appearance and aesthetic considerations
and also the size, volume and weight of the product which are secondary to the
performance of the product.
 Product Design Contd.
IMPORTANCE OF PRODUCT WHAT DOES PRODUCT DESIGN
DESIGN DO?
The production strategy is directly affected by  The activities responsible of product design
product design for the following reasons: include the following :
 As products are designed, all the detailed
 Translating customer needs and wants into product and
characteristics of each product are established. service requirements (marketing)
 Each product characteristic directly affects how
the product can be made or produced. (i.e.,  Refining existing products (marketing)
process technology and process design) and  Developing new products (marketing, product design and
 How the product is made determines the design production)
of the production system (production design)  Formulating quality goals (quality assurance , production)
which is the heart of production and operations
strategy.  Formulating cost targets (accounting)
 Affects marketability  Constructing and testing prototype (marketing,
 An excellent design includes usability, production)
aesthetics, reliability , innovation and  Documenting specifications (product design)
appropriateness.
Product Design Contd.
REASONS FOR PRODUCT OBJECTIVES OF PRODUCT
DESIGN OR REDESIGN DESIGN
To remain competitive in the market The overall objective is profit generation
in the long run.
Make business grow and increase
profits To achieve the desired product quality
When productivity gains result in To reduce the development time and
reduction of workforce, developing new cost to the minimum.
products can mean adding jobs and
retaining surplus workforce instead of To reduce the cost of the product
downsizing. To ensure producibility or
Sometimes it is redesigning to include manufacturability (designing for
customer complaints, accidents or manufacturing and assembly).
injuries during product use , excessive
warranty claims or low demand.
Sometimes redesign is initiated to
achieve cost reductions in labour and
material costs.
Product Design Contd.
FACTORS AFFECTING PRODUCT FACTORS AFFECTING PRODUCT
DESIGN DESIGN
Customer Requirements Cost/Price Ratio
Convenience of the operator or user Product Quality
Trade off between function and form Process Capability
Types of materials used Effects on existing product
Work methods and equipments Packaging
Product Design Contd.
CHARACTERISTICS OF A GOOD CHARACTERISTICS OF A GOOD
PRODUCT DESIGN PRODUCT DESIGN
Function or performance Standardization
Appearance or aesthetics Specification
Reliability Safety
Maintainability
Availability
Producibility
Simplification
Approaches to Product Design
Designing for the customer
Designing for Manufacturer and Assembly
Designing for ease of Production
Designing for Quality
Designing for Ergonomics
Designing for Environmental Protection
Designing for Recycling
Designing for Disassembly
Designing for Customization
Others : (i) Computer aided design (ii) value engineering
Legal, Ethical and Environmental
Issues in Product Design
Any aspect of the product which may cause potential harm to the
environment must be considered seriously to avoid such issues.
The government regulations regarding pollution control, environment
protection, consumer safety etc. must be considered by product designers
while designing the products. Eg. The automobile design should take into
account emission levels and safety features such as seat belts.
Another reason for design improvement is product liability which means a
manufacturer is liable for any injuries or damages caused by a faulty
product because of poor design and workmanship.
Ethical issues often rise in the design of products and services. Managers
must be aware of these issues and designers must adhere to ethical
standards. Ethical considerations while designing the products may result in
trade-off decisions.
Eg. It is unethical to release a software to the market without removing
most of the bugs involved.
 Process
WHAT IS A PROCESS? TYPES OF PROCESSES
A process is a sequence of activities that is intended Conversion Processes: Converting
to achieve some result, typically create added value raw materials into finished products
for customers.
for example iron ore to iron and then
A process converts inputs into outputs in a
production system. It involves the use of steel . These could be metallurgical,
organization’s resources to provide something of chemical, manufacturing or
value. No product can be made and no service can be
provided without a process and no process can exist
construction processes.
without a product or service.
Manufacturing Processes: Can be
Processes underlie all work activities and are found
in all organizations. Deciding which process to use is categorised as (i) forming processes
an essential issue in the design of a production (ii) machining processes (iii)
system.
assembly processes
Process decisions involve many different choices is
selecting human resources, equipment and Testing processes: Which involve
machinery and materials.
inspection and testing of products
Process decisions are strategic and can effect the
organization’s ability in the long run.
(sometimes considered as part of
manufacturing processes.
Process Contd.
TYPES OF MANUFACTURING PROCESSES

Forming Process: include foundry processes (to produce castings) and

other processes such as forging, stamping, embossing and spinning. These
processes change the shape of the raw material (a metal) into the shape of
the workpiece without removing or adding material.
Machinig Process: comprise metal removal operations such as turning,
milling, drilling. Grinding, shaping, planning, boring etc.
Assembly Processes: Involves joining of parts or components to produce
assemblies having specific functions. Examples of assembly processes are
welding, brazing, soldering, riveting, fastening with bolts and nuts and
joining using adhesives.
What is a Process Planning?
It consists of (i) process design (ii)
operations design
OPERATIONS DESIGN
PROCESS DESIGN
Operations Design: is concerned
Process Design: is concerned with with the design of the individual
the overall sequences of operations manufacturing operation. It
required to achieve the product examines the man-machine
specifications. It specifies the type of relationship in the manufacturing
work stations to be used, the process. Operations design must
machines and equipments necessary specify how much labour and
to carry out the operations. The machine time is required to produce
sequence of operations are each unit of the product.
determined by (a) the nature of
the product (b) the materials
used (c) the quantities to be
produced and (d) the existing
physical layout of the plant
Framework of Process Design
The process design in concerned with the following:
1. Characteristics of the product or service offered to the customers.
2. Expected volume of output
3. Kinds of equipments and machines available in the firm
4. Whether equipments and machines should be of special purpose or general
purpose
5. Cost of equipments and machines needed
6. Kind of labour skills available, amount of labour available and their wage rates
7. Expenditure to be incurred for manufacturing processes
8. Whether the process should be capital-intensive or labour-intensive.
9. Whether the process should be capital-intensive or labour-intensive.
10. Make or buy decision
11. Method of handling materials economically.
Case : Bangalore International
Airport Project
Identify the characteristic of the process in the case.

Can you identify the activities and represent it in the form of a network
diagram?
Case : Continuous Process :
Bottling Plant
Identify the characteristic of the process in the case
Bottling Plant
Case : Batch to Continuous
Process : Medicine Industry
Identify the characteristic of the process in the case
Case : medical industry
Case : Honda Case: Mixed
Assembly Line
Identify the characteristic of the process in the case
Process Selection
Process Selection refers to the way production of goods or services is
organized.
It is the basis for decisions regarding capacity planning, facilities (or plant)
layout, equipments and design of work systems,
Process Selection is necessary when a firm takes up production of new
production of new products or services to be offered to the customers.
Three primary questions to be addressed before deciding on process
selection are :
How much variety of products or services will the system need to handle?
What degree of equipment flexibility will be needed ?
What is the expected volume of output?
Process Strategy
A Process strategy is an organization’s approach to process selection for the
purpose of transforming the resource inputs into goods and services(outputs).
The objective of a process strategy is to find a way to produce goods and
services that meet customer requirement and product specification (i.e. design
specifications) within the constraints of cost and other managerial limitations.
The process selected will have a long-term effect on efficiency and production as
well as flexibility , cost and quality of the goods produced. Hence it is necessary
that a firm has a sound process strategy at the time of selecting the process.
Key aspects in process strategy include:
 Make or Buy decisions
 Capital intensity
 Process Flexibility
Process Strategy Contd.
Make or Buy decisions : refer to the extent to which a firm will
produce goods or provide service in-house or go for outsourcing (buying
or sub-contracting) ,
Capital intensity : Refers to the mix of equipment and labour which will
be used by the firm.
Process Flexibility : Refers to the degree to which the system can be
adjusted to changes in processing requirements due to such factors as
changes in product or service design, changes in volume of products
produced and changes in technology.
Process Strategy Contd.
 Three Process strategies : Virtually every good or service is made by using some
variation of one of three process strategies. They are
 (i) Process focus : Majority of global production is devoted to low volume , high
variety products in manufacturing facilities called job shops. They are for example :
welding , grinding, painting carried out in departments devoted to these processes.
Such facilities are process focussed in terms of equipment, machines layout and
supervision. They provide high degree of product flexibility as products move
intermittently between processes. Each process is designed to perform a wide variety
of activities and handle frequent changes. Such processes are called intermittent
processes. These facilities high variable costs and low utilisation of facilities.
 (ii) Repetitive focus : This is a product oriented production process that uses
modules. It falls between product focus and process focus. Its uses modules which
are parts or components prepared often in a continuous or mass production
process. A good example is the Assembly Line which is used for assembling
automobiles and household appliances and is less flexible than process-focused
facility. Personal computer is an example of a repetitive process using modules in
which the modules are assembled to get a custom product with desired configuration.
Process Strategy Contd.
(iii) Product focus : It is a facility organized around products, a product
oriented, high-volume low-variety process. It is referred to as continuous
process because it has very long continuous production run. Examples of
product focussed processes are steel, glass, paper , electric bulbs ,
chemicals and pharmaceutical products, bolts etc. Product-focussed
facilities need standardization and effective control. The specialised nature
of the facility requires high fixed cost , but low variable costs reward high
facility utilization.
Process Management
Process Management is concerned with the selection of inputs, operations, work flows and
methods that transform inputs into outputs.
The starting point of input selection is the make-or buy decision i.e. deciding parts and
components are to be produced in-house and which are to be purchased from outside
suppliers.
Process decisions are concerned with the proper mix of human skills and equipments needed
to produce the parts in-house and which part of the processes are to be performed by each
equipment and worker.
Process decisions must be made when :
A new modified product or service is being offered
Quality must be improved
Competitive priorities have changed
Demand for a product or service is changing
Cost or availability of materials has changed
Competitors are doing better by using new technology or a new process
 Process Decisions
Five common process decisions considered by production/ operations managers are :
I. Process choice : determines whether resources are organized around products or
processes in order to implement the flow strategy. It depends on the volumes and degree
of customization to be provided.
II. Vertical integration : is the degree to which a firm’s own production system handles
the entire supply chain starting from the procurement of raw materials to distribution of
finished goods.
III. Resource flexibility : is the ease with which equipments and workers can handle a wide
variety of products, levels of outputs , duties and functions.
IV. Customer involvement: refers to the ways in which customers become part of the
production process and the extent of their participation.
V. Capital intensity: is the mix of equipments and human skills in a production process.
Capital intensity will be high if the relative cost of equipment is high when compared to
the cost of human labour.
Process Choices
The major process choices are discussed :
I. Job-shop process: It is used when low volume, high –variety goods are
needed. Processing is intermittent , each job requires somewhat
processing requirements. A job-shop is characterised by high
customisation (made to order) , high flexibility of equipment and skilled
labour and low volume. A tool and die shop is an example where job
process is used to produce one kind of tools. Companies having job-shops
can carry out work for other firms.
II. Batch Process: Batch processing is used when moderate volume of
goods and services is required and also a moderate variety in products
and services. A batch process differs from the job process with respect to
volume and variety. In batch processing , volumes are higher because
same or similar products or services are produced repeatedly , provided
examples of products produced in batches include paint, ice-cream , soft
drinks , drinks and magazines.
 Process Choices
The major process choices are discussed :
I. Repetitive Process: Used when higher volumes of more standardised goods or services
are needed. This type of process is characterised by slight flexibility of equipment (as
products are standardized) and generally low labour skills. Products produced include
automobiles , home appliances television sets , computers , toys etc. Repetitive process is
also is also referred to as line process as it include production lines and assembly lines in
mass production. Resources are organized around a product or service and materials
move in a line flow from one operation to the next according to a fixed sequence with little
work-in progress inventory. Manufacture-to-stock, assemble-to-order and mass
customisation.
II. Continuous Process: This is used when a very highly standardised product is desired in
high volumes. These systems have almost no variety in output and hence there is no need
for equipment flexilibility. A continuous process is the extreme end of high volume,
standardised production with rigid line flows. The process is often capital intensive ,
operate round the clock to maximize equipment utilization and to avoid expensive shut
downs and shut ups . Example petroleum products, steel, sugar paper, cement etc.
Process Choices
Project Process: It is characterised by high degree of job customization ,
the large scope of each project and need for substantial resources to
complete the project. Examples of projects are building a shopping centre ,
a dam, a bridge , hospital etc. Projects tend to be complex , take a long time
and consist of a large number of complex activities.
Vertical Integration
Vertical Integration: Vertical integration is the amount of production and
distribution chain, from suppliers of components to the delivery or products/ services
to customers, which is brought under the ownership of a firm.
 The management decides the level of degree of integration by considering all the
activities performed from the acquisition of raw materials to the delivery of finished
products to customers.
When managers to have more vertical integration there is less outsourcing.
The vertical integration is based on make-or-buy decisions. Make decisions ensures
meaning more integration and buy decisions meaning less integration.
Vertical integration is (i) Backward integration : represents moving upstream
towards the source of raw materials and parts for example steel mill owns iron ore
and coal mines. (ii) Forward integration : in which the firm acquires the channel
distribution (such as having own warehouses and retail outlets)
Vertical Integration
ADVANTAGES DISADVANTAGES

Can sometimes increase market Not attractive for low volumes.

share and allow the firm enter
foreign markets more easily. High capital investment and
operating costs.
Can achieve savings in production
cost and produce higher quality Less ability to react more quickly to
goods. changes in customer demands ,
competitive actions and new
Can achieve more timely delivery techniques.
Better utilization of resources
Process Decisions Contd.
RESOURCE FLEXIBILITY CUSTOMER INVOLVEMENT

The choice that management makes It is the extent to which customers
concerning competitive priorities interact with the process.
determine the degree of flexibility
required of a firm’s resources – its A firm which competes on
employees , facilities and equipment . customization allows customers to
Production managers must decide come up with their own product
whether to have flexible workforce which specification or even become
will provide reliable customer service and involved in the designing process for
avoid capacity bottlenecks. the product (quality function
Flexible workforce is useful with flexible deployment approach to design for
flow strategy to even out fluctuating work incorporating the voice of the
loads. customer).
Process Decisions Contd.
Capital intensity: Means the predominant resource used in
manufacturing, i.e. capital equipments and machines rather than labour.
Decision regarding the amount of capital investment needed for equipment
and machines is important for the design of new process. One advantage is
increase in product quality and productivity and on big disadvantage may be
high investment cost low-volume operations.
Comparison between Processes
Types of Processes
https://www.youtube.com/watch?v=YEJzW8rsIzo
Comparison
between
Processes
Case : National Cranberry Case
Cranberry Processing
https://www.youtube.com/watch?v=JNDG4iw5FY4
Case : Toshiba Ome Works
Case: Assembly Line (HBR)
Production Design
Production Design: The design of products and services is partially
dependent on the production system design and vice versa. A product or
service designed in one way may be costly to produce, but it may be
somewhat less costly when designed another way. The designing of products
from the point of view of producibility is known as production design.
The producibilty and minimum possible production cost of a product are
established originally by the product designer and the process technology,
process design and selection of the productive system are governed by the
limitations of the product design. Hence the basic modes of production for
products are thought of in the product design stage itself. This conscious
effort to design for producibility and low manufacturing costs are referred
to as production design.
Comparison Between
Production Processes
Comparison between Project, Job-shop, Batch Production, Continuous Flow
Production.
https://www.youtube.com/watch?v=YEJzW8rsIzo
Business Information Flow

© WILEY 2010 85
OM Decisions

© WILEY 2010 86