MAN4504 Exam 2

Repetitive Manufacturing + Example

Allows for high volume, emphasizes quality, many variation possible, highly skilled Harley Davidson

Which process strategy offers the greatest product flexibility?

Process Focus

Production process steps

1. Sourcing the parts

2. Make the product

3. Deliver the products (e-commerce)

Made-To-Stock

Customer goes to a retail location to buy a finished product. The lead time is short. Inventory investment is high.

Assemble To Order

The customer asks a manufacturer for a specific type of product. The manufacturer has unassembled goods that are put together for a customer. This may take several weeks. Lower investor cost

Make to Order

Raw materials exist in the facotry but must be processed and assembled. Customer clothing, for example.

Engineer to Order

Can be direct to customer, such as custom cabinets, custom potato friers. Usually the longest to do.

Lead time

Time order is placed until it is received by the customer

Lean manucturing

A means of achieving high high levels of customer service with minimal inventory.

Mass Customiaztion

High variety, high volume (dell), low variable costs

Process Focus

Low Volume, High variety (service)

Repetitive

Medium volume, changes in modules lead to some differentiation, skilled labor (autos, motorcycles)

Product Focus

High volume, low variety (Frito-Lay)

Four Strategies

1. Process

2. Repetitive

3. Product focus

4. Mass customization

Describe characteristics of Process Focus

1. Facilities are organized around specific activities or processes.

2. General purpose equip. and skilled personnel.

3. High degree of flexibility

   1. Procut flows may vary and scheduling may be challenging

Describe characteristics of Repetitive Focus

1. Assembly line

2. Characterized by modules with parts and assemblies

3. Modules may be combined

4. Less flex than process focus, but more efficient

5. Harley Davidson

Describe characteristics of Product Focus

1. Facilities are organized by product

2. High volume but low variety

3. Long, continuous production runs enable efficient processes

4. Typically high fixed cost but low variable costs

5. Less skilled labor

6. Frito Lay (Various facilities are dedicated to making Doritos, Lays, etc)

Describe characteristics of Mass Customization

1. Rapid, low cost production of goods

2. Combines the flex of a process focus with the efficiency of a product focus

3. Invisalign, Dell

Crossover chart

Y-intercept is defined by the fixed cost of the process and the slope is defined by variable costs. The x-axis represents volume. The ideal volume is determined by the intersection with the lowest cost (y-axis).

Value Added Time vs Stall Time

Value time is time used for essential processes such as operations — though not all necessary time has value. Transportation and inspection are necessary but do not add value.

What percent of this process is value added time?

85.7%, 2.5/3.15

Describe the service blueprint

There are multiple levels, with the customer interacting only with customer service.

Value Stream Mapping

examines the supply chain to determine where value is added

Volume Stream Mapping

1. extends from customer to supplier

2. Is a variation on time function mapping

3. examines the supply chain to determine where value is added

4. extends time function mapping back to the supplier

Capacity

The limit to production

Throughput

The number of units a facility can hold, receive, store, or produce

Long Term PLanning

Add facilities, long leat time equipment

Intermediate time planning (3 months - 1 year)

Modify Capacity: Subcontract, add equipment, add shifts

Use Capacity: add personnel, build or use inventory

Short term planning (Within 3 months)

Use Capacity: Scheduling, allocating resources

Design Capacity

Theoretical output, usually a rate

Effective capacity

The capacity a firm expects to achieve given current operating constraint (usually lower than design capacity)

What is the design capacity of a machine that produces 1,000 bags of chips/ hr in a plant that runs for 16 hours?

16,000 bags/ day

What is the effective capacity of a machine that produces 1,000 bags of chips/ hr in a plant that runs for 16 hours, but loses 3 hours of output a day on preventative maintenances.

Effective: 16,000/day

Lost in output:( 3)1,000

Design capacity = 13,000/day

Actual output: the machines are not running for .25 hrs a day due to late parts and machine breakdowns.

The actual output:

Design capacity: 13,000

Breakdowsn: -250 bags/ day

Actual: 12750/ day

Utilization

Actual output/ design capacity

If demand exceeds capacity

raise prices, schedule longer lead time, increase capacity

Capacity exceeds demand

Stimulate market, product changes

Adjusting to seasonal demands

Produce products with complementary demand patterns

Examples of seasonal and complementary demand

Jet ski manufacturing increasing during summer months; we can also produce snowmobiles to offset low demand months in the winter.

How to match capacity to demand

1. Staffing changes

2. Adjust equipment

3. Improve processes to increase throughput

4. Redesign products to facilitate more throughput

5. Adding process flexibility to meet changing preferences

6. Closing facilities

How to reduce risk

1. Leading demand with incremental expansion

2. Leading demand with one-step expansion

3. Lagging demand with incremental expansion

4. Have average capacity with incremental expansion (up and down)

Bottleneck time

the time of th slowest workstationT

Throughput time

The time it takes a unit to go through production from start to end, with no waiting

A (2 min) → B(4 min) → C (3 min)

If the actual time is 48 minutes.

Throughput time: 9 minutes

Cycle time efficiency: 9/48 = 0.1875

Given this line, calculate the bottleneck time and throughput time.

Bottleneck: Wrapping (37.5)

Throughput Time: 142.5 seconds

Capacity per hour: 3,600 seconds/ 37.5 seconds per sandwich = 96

What if we replaced two toasters with one toaster that could toast twice as fast?

Throughput: 122.5

Bottleneck: Wrapping 37.5

Capacity per hour: 3600/37.5 sandwiches per hour

Find the throughput, capacity per hour, and bottleneck for the following process.

Throughput: 46 minutes

Bottleneck: Cleaning, 24 minutes

Capacity per hour: 60 minutes/ 24 minutes = 2.4 patients

Break-even assumptions

1. Cost and revenue are linear functions

2. We know all the costs associated with production

   1. Time value of money is ignored

Break Even in Units

$$\frac{FixedCosts}{Price-VariableCosts}$$

Break Even in Dollars

$$\frac{Fixed}{Price-Variable}$$

$$BEP_{x}Price$$

$$\frac{Fixed}{\frac{\left(Price-Variable\right)}{Price}}$$

$$\frac{Fixed}{\frac{\left(1-Variable\right)}{Price}}$$

Cycle Time

$$\frac{Time}{Bottleneck}$$

Quality tools found in a hospital

• Continuous improvement

• Empowerment

• Benchmarking

• just-in-time

• Quality tools (pareto charts)

Goals of an operations manager

built a atotal quiality management system that identifies and satisfied customers’ needs

How does improved quality lead to sales gains?

• Improved response

• Flex pricing

  • Improved reputation

How does quality reduce costs?

• Increased productivity

• Lower rework and scrap costs

  • Lower warranty costs

What example was given in the lecture regarding quality?

Memory chips. Samsung gets to charge more for chips due to slighter better quality. Commodities are not very differentiated.

What is the flow of activity in terms of quality management?

Organizational practices → Quality principles (quantified/ measured) → Employee fulfillment (empowerment) → Customer satisfaction

What are the three main implications of Quality?

1. Company reputation

2. Product Liability

3. Global Implications