NU OPNS 430 - Process Analysis and Applications Module

Unformatted text preview:

Slide 1Operational Performance MeasuresProcess Architecture is defined and represented by a process flow chart:Pizza Pazza Flow ChartOperational Measure: Flow Time Driver: Activity TimesMost time inefficiency comes from waiting: E.g.: Flow Times in White Collar ProcessesLevers for Reducing Flow TimeOperational Measure: Capacity Drivers: Resource LoadsA Recipe for Capacity MeasurementsBariatric Surgery : Flow ChartBariatric Clinic Capacity – Open Surgeries & Cash PaymentBariatric Clinic Capacity – Laparoscopic Surgeries & Cash PaymentBariatric Clinic Capacity – Open Surgeries & Insurance PaymentBariatric Clinic Capacity – Laparoscopic Surgeries & Insurance PaymentLevers for Increasing Process CapacityIncreasing Process Capacity in The GoalOther factors affecting Process CapacityProduct Mix Decisions: Open or Laparoscopic SurgeryProduct Mix DecisionsSlide 20Learning Objectives: Process AnalysisS. Chopra/Operations/Process Analysis & Apps 1Operations Management:Process Analysis and Applications ModuleOperational Measures: Time T, Inventory I, Throughput rate RCapacity and Flow Time Analysis»Pizza Pazza / Bariatric Surgery»Levers for ImprovementMulti-product Capacity Management and Investment»Joint Marketing & Production Decisions»Optimal Capacity InvestmentS. Chopra/Operations/Process Analysis & Apps 2Operational Performance MeasuresHow to measure and decrease flow times?How to measure and increase throughput?S. Chopra/Operations/Process Analysis & Apps 3Process Architecture is defined and represented by a process flow chart:Process = network of activities performed by resources1. Process Boundaries:–input–output2. Flow unit: the unit of analysis3. Network of Activities & Storage/Buffers–activities with activity times–routes: precedence relationships (solid lines)4. Resources & Allocation5. Information Structure & flow (dashed lines)S. Chopra/Operations/Process Analysis & Apps 4Pizza Pazza Flow ChartS. Chopra/Operations/Process Analysis & Apps 5Operational Measure: Flow TimeDriver: Activity Times(Theoretical) Flow TimeCritical ActivityFlow Time efficiencyS. Chopra/Operations/Process Analysis & Apps 6Industry Process Average FlowTimeTheoretical FlowTimeFlow Time EfficiencyLife Insurance New PolicyApplication72 hrs. 7 min. 0.16%ConsumerPackagingNew GraphicDesign18 days 2 hrs. 0.14%Commercial Bank Consumer Loan 24 hrs. 34 min. 2.36%Hospital Patient Billing 10 days 3 hrs. 3.75%AutomobileManufactureFinancialClosing11 days 5 hrs 5.60%Most time inefficiency comes from waiting: E.g.: Flow Times in White Collar ProcessesS. Chopra/Operations/Process Analysis & Apps 7Levers for Reducing Flow TimeDecrease the work content of critical activities–work smarter–work faster–do it right the first time–change product mixMove work content from critical to non-critical activities–to non-critical path or to ``outer loop’’Reduce waiting time.S. Chopra/Operations/Process Analysis & Apps 8Operational Measure: CapacityDrivers: Resource Loads(Theoretical) Capacity of a ResourceBottleneck Resource (Theoretical) Capacity of the ProcessCapacity Utilization of a Resource/Process = throughput [units/hr]capacity [units/hr]S. Chopra/Operations/Process Analysis & Apps 9A Recipe for Capacity MeasurementsResource Unit Load Resource Capacity Process Resource(time/job)Unit Capacity # of units TotalCapacity Utilization** assuming system is processing at full capacityS. Chopra/Operations/Process Analysis & Apps 10Bariatric Surgery : Flow ChartS. Chopra/Operations/Process Analysis & Apps 11Bariatric Clinic Capacity – Open Surgeries & Cash PaymentS. Chopra/Operations/Process Analysis & Apps 12Bariatric Clinic Capacity – Laparoscopic Surgeries & Cash PaymentS. Chopra/Operations/Process Analysis & Apps 13Bariatric Clinic Capacity – Open Surgeries & Insurance PaymentS. Chopra/Operations/Process Analysis & Apps 14Bariatric Clinic Capacity – Laparoscopic Surgeries & Insurance PaymentS. Chopra/Operations/Process Analysis & Apps 15Levers for Increasing Process CapacityDecrease the work content of bottleneck activities–work smarter, work faster–do it right the first time–eliminate non-value added work from bottlenecks»reduce/eliminate setups and changeovers–synchronize flows to & from bottleneck»reduce starvation & blockageMove work content from bottlenecks to non-bottlenecks–to non-critical resource or to third partyIncrease Net Availability–work longer–increase scale (invest)–increase size of load batches–eliminate availability wasteS. Chopra/Operations/Process Analysis & Apps 16Increasing Process Capacity in The Goal“is to increase the capacity of only the bottlenecks”–“ensure the bottlenecks’ time is not wasted”»increase availability of bottleneck resources»eliminate non-value added work from bottlenecksreduce/eliminate setups and changeovers»synchronize flows to & from bottleneckreduce starvation & blockage–“ the load of the bottlenecks (give it to non-bottlenecks)”»move work from bottlenecks to non-bottlenecks»need resource flexibility– unit capacity and/or #of units.»investS. Chopra/Operations/Process Analysis & Apps 17Other factors affecting Process CapacityBatch (Order) SizesProduct Mixother managerial policies ...S. Chopra/Operations/Process Analysis & Apps 18Product Mix Decisions:Open or Laparoscopic SurgeryRevenue per open surgery: $15,000Variable Cost of Materials: $1,000Revenue per Laparoscopic surgery:$18,000Variable Cost of Materials: $2,000S. Chopra/Operations/Process Analysis & Apps 19Product Mix DecisionsOpen and Laparoscopic have exactly the same process. Theonly difference is in surgery (laparoscopic takes 30 minutesextra) and in the rooms (laparoscopic uses rooms for 2 dayswhereas open uses rooms for 4 days.S. Chopra/Operations/Process Analysis & Apps 20Product Mix DecisionsMargin per Open surgery = $14,000Margin per Laparoscopic surgery = $16,000Margin per week from Open surgery = 72.72*(15,000 - 1,000) = $1,018,055 / weekMargin per week from Laparoscopic surgery = 63.15*(18,000 - 2,000) = $1,010,400 / weekS. Chopra/Operations/Process Analysis & Apps 21Learning Objectives: Process AnalysisManage better with the three key operational measures and an inter-functional macro process view of the organizationProcess measures: –Flow time  manage critical activities–Capacity  manage bottleneck resourcesLevers for


View Full Document
Download Process Analysis and Applications Module
Our administrator received your request to download this document. We will send you the file to your email shortly.
Loading Unlocking...
Login

Join to view Process Analysis and Applications Module and access 3M+ class-specific study document.

or
We will never post anything without your permission.
Don't have an account?
Sign Up

Join to view Process Analysis and Applications Module 2 2 and access 3M+ class-specific study document.

or

By creating an account you agree to our Privacy Policy and Terms Of Use

Already a member?