Midterm Week 1

PROCESS SELECTION, DESIGN, AND ANALYSIS

1)      Explain the strategic importance of process selection:

a)      Process selection refers to deciding on the way production of goods or services
will be organized. Processes convert inputs to outputs; they are the core of operations
management.

2)      Explain the influence that process has on an organization:

a)      Process Selection affects the entire organization and its ability to achieve its
mission, and affects the organization’s supply chain.

3)      The basic processing types are:

a) Job Shop: Usually operates on a relatively small scale. It is used when a low
volume of high-variety goods or services will be needed. High flexibility and
skilled workers are necessary. Example: Veterinarian Office

b) Batch: Used when a moderate volume of goods or services are needed. The
skill level of workers need not be as high, and equipment need not be as
flexible. Examples: Bakeries, movie theaters, and airlines.

c) Repetitive: Used when high volumes of standardized goods or services are

needed. Slight flexibility of equipment is needed. Skill of workers is relatively
low. This process type is often referred to as an assembly. Examples: TVs,
automobiles, and computers.

d) Continuous: Used when a high volume of nondiscrete, highly standardized

output is desired. These systems have almost no variety in output and need no
equipment flexibility. Skill of workers can range from high to low depending on
the complexity of the system. Examples: process to make steel, salt, sugar,
and flour.

e) Project: Used for work that is non routine, with a unique set of objectives to be
accomplished in a time frame. Examples: putting on a play, publishing a book,
and building a bridge.

Process Design

Every firm that produces a good or a service will do so by the use of a process.  This
process will use the firm’s resources in order to transform the primary inputs into some
type of output.  In designing the actual process, particularly the number and sequence
of steps, several important factors need to be considered.
Product variety – Is the product highly standardized, or is the product highly
customized?

Volume of output – Is the business created to produce large volumes or a small amount
of output?

Is the technology to be used for general purpose or specialized? Is it capital intensive?

The skill level of employees, it is very high or low

Make-to-order and Make-to-stock

It is useful to categorize processes as either make-to-order or make-to-stock.

In a make-to-order business, the customer’s order is not manufactured until the order is
received. This allows customization to the exact specifications that the customer
requires. It may also be referred to as build-to-order. This type of production is
considered a pull type system. The work is “pulled” through the process when customer
demand is present.

The disadvantage of this type of system is that it takes time for the firm to acquire any
materials and needed components, and then to schedule and produce the customers
order. Goods are made in small amounts, and may be more expensive.
 
The advantage of this type of process is that inventory is lower than in a typical make-
to-stock system. There is not any uncertainty about what the customer desires and
there is no obsolete stock to be disposed of. Dell Computer has utilized this type of
system to produce personal computers very successfully.

Process Analysis=  is the documentation and detailed understanding of how work is

performed and how it can be redesigned.

13. Process Analysis • Process analysis is the documentation and detailed

understanding of how work is performed and how it can be redesigned

14. • Identify opportunity Managers must pay attention to 4 core processes.

=supplier relationship 
=Order fulfillment 
=Customer Relationship 
=Define scope 
Midterm Week 2

FACILITY AND WORK DESIGN

Facility Layout

Facility layout refers to the specific arrangement of physical facilities. Facility-layout

studies are necessary whenever:

● a new facility is constructed,

● there is a significant change in demand or throughput volume,

● a new good or service is introduced to the customer benefit package, or

● different processes, equipment, and/or technology are installed.

Facility Layout Product Layout

Advantages: Lower work-in-process inventories, shorter processing times, less material

handling, lower labor skills, and simple planning and control systems.

Disadvantages: A breakdown at one workstation can cause the entire process to shut

down; a change in product design or the introduction of new products may require major

changes in the layout, limiting flexibility.

Doing Things Right, From the Start, Is Key in Facility Layout Design

The way your production systems are laid out can come back to haunt you if you don’t

take into consideration all the relative factors from the start. The right facility layout

design will improve your operation, but it should be well-planned in advance. Once your
production lines begin operating, the downtime required to make changes can be costly

and could cause your company to lose customers. There are numerous operational

factors that DSI’s engineering solutions team will consider in advance when we’re called

upon to design the optimal layout for your company’s workflow.

What Needs to Be Looked At

Facility Layout DesignThe space in which your business’s activities take place will have

a significant impact on the quality of the work and the rate at which it’s produced. The

ideal manufacturing facility layout design integrates the needs of workers, materials and

equipment in a way which results in a well-functioning and productive system.

These are a few of the factors that need to be looked at when designing a facility layout:

Process flow: Work should move smoothly down the line with no bottle-necking or

backtracking.

Use of space: Traffic lanes should allow for employees or transport equipment to easily

move about as needed and there should be adequate and accessible space for storage

and staging.

Safety: All business operations must comply with the guidelines mandated by local

government and the Department of Labor’s Occupational Safety and Health

Administration.

Communication ease: The production line should be laid out so that both

communications and supervisory support can take place easily.

Employee morale: A facility design which fosters employee morale and motivation can

have a positive impact on productivity.

Preview How Your Facility Will Look and Operate

At DSI we use the most up-to-date simulation, modeling and CAD software to design

and illustrate how your production facility will look and operate when it’s up and running.

This is an important part of design engineering and consulting; previewing your

company’s layout prior to construction and implementation.

Midterm Week 3 & 4

Supply Chain Design and Capacity Management

What is Supply Chain Design?

Supply chain design is the process by which a company structures and manages the
supply chain in order to identify the right balance between inventory, transportation, and
manufacturing cost.

Why use Supply Chain Design?

 
Supply Chain Design is being used to match the supply and demand under uncertainty
by positioning and managing inventory effectively. In addition, uses resources
effectively in a dynamic environment.

What Is Capacity Management?

Capacity management refers to the act of ensuring a business maximizes its potential
activities and production output—at all times, under all conditions. The capacity of a
business measures how much companies can achieve, produce, or sell within a given
time period. Consider the following examples:

A call center can field 7,000 calls per week.

A café can brew 800 cups of coffee per day.

An automobile production line can assemble 250 trucks per month.

A car service center can attend to 40 customers per hour.

A restaurant has the seating capacity to accommodate 100 diners.

Understanding Capacity Management

Since capacity can change due to changing conditions or external influences —

including seasonal demand, industry changes, and unexpected macroeconomic events
— companies must remain nimble enough to constantly meet expectations in a cost-
effective manner. For example, raw material resources may need to be adjusted,
depending on demand and the business's current on-hand inventory.

Implementing capacity management may entail working overtime, outsourcing business

operations, purchasing additional equipment, and leasing or selling commercial
property.
Companies that poorly execute capacity management may experience diminished
revenues due to unfulfilled orders, customer attrition, and decreased market share. As
such, a company that rolls out an innovative new product with an aggressive marketing
campaign must commensurately plan for a sudden spike in demand. The inability to
replenish a retail partner's inventory in a timely manner is bad for business.

Businesses thus face inherent challenges in their attempts to produce at capacity while
minimizing production costs. For instance, a company may lack the requisite time and
personnel needed to conduct adequate quality control inspections on its products or
services. Furthermore, machinery might break down due to overuse and employees
may suffer stress, fatigue, and diminished morale if pushed too hard.
 
Capacity management is of particular concern to large companies because it's relatively
easy to purchase additional hardware for smaller organizations at a low cost; however,
when a business grows, adding new software becomes exponentially more expensive.
Thus capacity management must take into account several different aspects related to
growth and production costs.

Space Management

Capacity management also means calculating the proportion of spacial capacity that is
actually being used over a certain time period. Consider a company operating at a
maximum capacity that houses 500 employees across three floors of an office building.
If that company downsizes by reducing the number of employees to 300, it will then be
operating at 60% capacity (300 / 500 = 60%). But given that 40% of its office space is
left unused, the firm is spending more on per-unit cost than before.

Consequently, the company might decide to allocate its labor resources to only two
floors and cease leasing the unused floor in a proactive effort to reduce expenditures on
rent, insurance, and utility costs associated with the empty space.

KEY TAKEAWAYS

 Capacity management refers to the act of ensuring a business maximizes its

potential activities and production output—at all times, under all conditions.
 Companies must remain nimble enough to constantly meet expectations in a
cost-effective manner.
 Companies that poorly execute capacity management may experience
diminished revenues due to unfulfilled orders, customer attrition, and decreased
market share.