Operations Management Dr Ron Lembke PRODUCTION PROCESSES RESPONSIVENESS

Operations Management Dr. Ron Lembke PRODUCTION PROCESSES

RESPONSIVENESS – SUPPLY CHAIN DESIGN � Price / Quality / Speed? � Decoupling Point � Make to Stock – ready on the shelf – Breyer’s � Assemble to Order – parts waiting for an order – DQ � Make to Order – Raw Materials waiting – Cold Stone � Engineer to Order – Anything you want – Home made MTS ATO MTO ETO Design Produce Assemble Deliver

LITTLE’S LAW � Assume things are in “steady state, ” not startup � Production level = average demand � Inventory = Throughput rate * Flow Time � Flow Time = Inv / Throughput rate � TH rate = Inv / Flow Time � Single workstation, a line, or whole supply TH = 5 units/day chain TH Rate = 100 units/ hr Inv = 24 units Flow Time = 24 /100 = 0. 24 hrs Flow Time = 15 days Inv = 5/day * 15 days = 75 units WIP

PROCESS STRATEGY Variety High Process Focus (job shops) Repetitive (cars, motorcycles) Medium Product Focus (steel, glass) Low Medium High Volume

PROCESS FOCUS (JOB SHOP) � Low volume, high variety, “do it all” � “Job shop” environment (e. g. Kinko’s) � High amount of flexibility � Each job is different � Relatively high cost per unit � Very high flexibility

PROCESS SELECTION / EVOLUTION � � � Products tend to move through the four stages over life cycle. Unit costs decrease as standardization increases, and production increases. Flexibility decreases as volume, standardization increase

PROCESS STRATEGY Variety High Medium project Workcenter Manufacturing Cell Assembly Line Continuous Process Low Medium High Volume

PROCESS FLOW STRUCTURES Job Shop - low standardization, every order is a different product, new design � Batch Shop - Stable line of products, produced in batches � Assembly Line - Discrete parts moving from workstation to workstation � Continuous Flow - Undifferentiated flow of product (beer, paper, etc. ) �

DESIGN FOR MANUFACTURING -BEFORE

SUMMARY � Production Process selection very important � Strategic considerations – decoupling � Volume / Variety tradeoffs � Maturation of processes over life cycle � Little’s Law: FT = TH * INV