Chapter 3 - Operations management (McGraw-Hill Cachon & Terwiesch)

Process analysis

A rigorous framework for understanding the detailed operations of the business. Among other things the process analysis determines how many flow units can be processed per unit of time (the process capacity) and how busy the resources of the process are (utilization).

Process flow diagram

A graphical way to describe the process. It uses boxes to depict resources, arrows to depict flows, and triangles to depict inventory location.

Resource

The group of people and/or equipment that transforms inputs into outputs.

Flow unit

The unit of analysis that we consider in a process analysis; for example, patients in a hospital, scooters and a kick scooter plant, and calls in a call center.

Upstream

The parts of the process that are at the beginning of the process flow

Downstream

Parts of the process that are at the end of the process flow

Processing time

The time it takes a resource to complete one flow unit

Capacity

The maximum number of flowing in second flow through that resource per unit of time

Capacity equation

Resources/processing time

Process capacity

The maximum flow rate the process can provide per unit of time. This determines the maximum supply of the process. The process capacity is the smallest capacity of all resources in the process.

Demand rate

The number of flow unions the customers want per unit of time

Capacity constrained

The case in which demand exceeds supply and the flow rate is equal to process capacity

Demand constrained

The case in which process capacity exceeds demand and thus the flow rate is equal to the demand rate

Throughput

A synonym for flow rate, the number of flow units flowing through the process per unit of time

Utilization

The ratio between the flow rate (how fast the process is currently operating) and the process capacity (capturing how fast the process could be operating if there was sufficient demand). Note that utilization can be defined at the level of an individual resource or at the level of the entire process.

Cycle time

The time between completing two consecutive flow units

Utilization equation

Flow rate/capacity

Cycle time equation

1/flow rate

Lead time

The time between when an order is placed and when it is filled. Process lead time is frequently used as an alternative term for flow time

Bottleneck

Resource with lowest capacity in a process

Worker paced

A process line in which each resource is free to work at its own pace: if the first resource finishes before the next one is ready to accept the flow unit, then the first resource puts the completed flow unit in inventory between the two resources.

Machine pace

A process in which all steps are connected through a conveyor belt and all of the steps must work at the same rate even if some of them have more capacity than others.

Time through the empty system

The time it takes the first flow unit to flow through an empty process; that is, a process that has no inventory

Time through the empty system equation

Number of stations X cycle time

Time required to produce a given quantity X starting with an empty system

The time it takes to process with no inventory to produce a given quantity