MgtOp 340 Topic 5
MgtOp 340 Topic 5
MgtOp 340 Topic 5
Professor Munson
Topic 5
Process and Capacity Design
The federal governmentis starting to issue citations against employers who dont let workers
go to the bathroom when they feel they need toSome Hudson workers said they had accidents
while waiting for relief workers or supervisors to make toilet breaks possibleAnd its pretty
hard to leave the line when youve got thousands of chickens coming at you.
One unique, extremely time-saving technique was to build the fuselage [of the Blackbird
airplane] on the half shell. The left and right half were assembled independently to create easier
worker access, then fit together and riveted into place. That was a major first in aircraft
manufacturing.
Recently, process innovations have become more important than product innovations in
determining global success.
Man Walked on the Moon but Man Cant Make Enough Devils Food Cookie Cakes
Wall Street Journal, 9/23/94
A manager gave her extra tickets for Schuberts Unfinished Symphony to her efficiency
consultant as a reward for his hard work in the firms recent cost-cutting initiative. The next
morning, she got the following:
1. For considerable periods, the four oboe players had nothing to do. Their number
should be
reduced and their work spread over the whole orchestra, thus eliminating peaks
of activity.
2. All 12 violins were playing identical notes. This seemed unnecessary duplication,
and the staff
of this section should be cut drastically.
3. No useful purpose is served by repeating with horns the passage that had already
been played
by the strings. If such redundant passages were eliminated, the concert could be
reduced from
two hours to twenty minutes.
4. If Schubert had attended to these matters, he probably would have been able to
finish the
symphony after all.
Lucy
Option A:
The bakery is considering replacing some of its
existing equipment with more advanced and
faster equipment. The choice is between: (i)
purchasing two new ovens that are each capable
of baking a batch of 100 loaves in hour, or (ii)
purchasing a new packaging line that is capable
of packaging a batch of 100 loaves in hour.
Which option would allow the greatest increase
in the bakerys overall capacity?
Option B:
making process?
What is the overall daily capacity?
What is the process cycle time of the croissant
making process?
Figure 5
Mix
Proof
Roll & Cut
Mix Filling
Fill & Fold
Bake
Pack
5
10
20
30
Batch #1
40
TIME
50
60
70
80
Batch #2
Mold parts
Molded parts
Inventory
Final Assembly
Purchase parts
From Vendors
Finished
Components
Purchased parts
Inventory
Assumptions
One worker is needed to operate each
machine in the molding dept.
The molding dept. has 10 machines.
Currently 6 workers in the molding dept.,
earning $15 per hour.
Molding machines produce 25 parts/hour.
Molding workers will work overtime at a
50% wage premium (now work 8 hrs./day).
The purchased parts operation has virtually
unlimited capacity.
15 workers in final assembly working an 8hour shift and earning $10 per hour.
5-day work week.
Assembly line moves at 150 parts per hour.
What is the weekly capacity of the molding
operation?
Expansion Option:
Suppose that 4 workers are added to the
molding dept. so that all 10 machines are
utilized. What is the new capacity of the
molding dept.?
Sanding
10 min./unit
4 min./unit
Drilling
12 min./unit
Line 1
Measuring
Finishing
8 min./unit
2 min./unit
Sawing
Sanding
10 min./unit
4 min./unit
Drilling
12 min./unit
Line 2
1. Bottleneck?
2. Process Time?
3. Process Cycle Time?
Capacity Planning
Capacity is the limiting capability of a productive unit
to produce within a stated time period, normally
expressed in terms of output units per unit of time.
Buffa and Sarin, Modern Production/Operations Management, Wiley, 1987.
Measures of Capacity
Maximum output rate
Maximum input rate
Quantity of input units
Examples of Capacity Measures
Organization
auto plant
steel plant
beer brewery
airline
restaurant
warehouse
foundry
hospital
business school
Output Measure
Input Measure
cars per week
available labor hrs.
tons of steel per month iron ore receivable
per day
cases of beer per year daily aluminum can
production
passengers per month number of seats
customers per day
available seat-turns
cases picked per day
square feet of space
daily pieces produced number of molds
surgeries per day
hospital beds
sections per semester
number of faculty
Diseconomies
Sources of Capacity
Short Term
Long Term
Disadvantages
generally cheapest
does not disperse existing labor force
no product or process separation
possible economies of scale
deoptimizes layout
postpones introduction of new technology
increased complexity strains management
larger workforce may cause deteriorated
labor relations (possibly unions)
disaster risk
New Branch
Advantages
Disadvantages
multi-site overhead
cannot solve base plant problems
Relocation
Advantages
Disadvantages
layout
materials handling and storage
new technology
possible economies of scale
U.S.
10,000
15,000
$12
$6
U.K.
8,000
12,000
6
3
Process Design
Process design: Selection of inputs, operations, work
flows, and methods.
Causes of process (re)design:
New product
Change in competitive priorities
Change in volume
Poor performance
New technology
Change in cost/availability of inputs
Legislation/regulation
Product-Process Matrix
Payment System
Hourly wages
or salary
More
More
Higher
Lower
Equipment
Specialized
Capital Investment
Planning and Control
Higher
More
Important
70-90%
Scheduling
Less Complex
Quality Control
Management Tasks
Staff Needs vs. Line Needs
Long-Term vs. Day-to-Day
More Formal
More Staff
Long Term
Process Capability
Use the process capability index Cpk to
determine if the process is generally producing
within the spec limits (99.73% of time if a
normal distribution).
Calculate the mean and standard deviation .
USL LSL
,
3
3
C pk min
Z
-3.
-2.9
-2.8
-2.7
-2.6
-2.5
-2.4
-2.3
-2.2
-2.1
-2.0
-1.9
-1.8
-1.7
-1.6
-1.5
-1.4
-1.3
-1.2
-1.1
-1.0
-0.9
-0.8
-0.7
-0.6
-0.5
-0.4
-0.3
-0.2
-0.1
-0.0
0.0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
0.9
1.0
1.1
1.2
1.3
1.4
1.5
1.6
1.7
1.8
1.9
2.0
2.1
2.2
2.3
2.4
2.5
2.6
2.7
2.8
2.9
3.
0
0.0013
0.0019
0.0026
0.0035
0.0047
0.0062
0.0082
0.0107
0.0139
0.0179
0.0228
0.0287
0.0359
0.0446
0.0548
0.0668
0.0808
0.0968
0.1151
0.1357
0.1587
0.1841
0.2119
0.2420
0.2743
0.3085
0.3446
0.3821
0.4207
0.4602
0.5000
0.5000
0.5398
0.5793
0.6179
0.6554
0.6915
0.7257
0.7580
0.7881
0.8159
0.8413
0.8643
0.8849
0.9032
0.9192
0.9332
0.9452
0.9554
0.9641
0.9713
0.9772
0.9821
0.9861
0.9893
0.9918
0.9938
0.9953
0.9965
0.9974
0.9981
0.9987
1
0.0010
0.0018
0.0025
0.0034
0.0045
0.0060
0.0080
0.0104
0.0136
0.0174
0.0222
0.0281
0.0351
0.0436
0.0537
0.0655
0.0793
0.0951
0.1131
0.1335
0.1562
0.1814
0.2090
0.2389
0.2709
0.3050
0.3409
0.3783
0.4168
0.4562
0.4960
0.5040
0.5438
0.5832
0.6217
0.6591
0.6950
0.7291
0.7611
0.7910
0.8186
0.8438
0.8665
0.8869
0.9049
0.9207
0.9345
0.9463
0.9564
0.9649
0.9719
0.9778
0.9826
0.9864
0.9896
0.9920
0.9940
0.9955
0.9966
0.9975
0.9982
0.9990
2
0.0007
0.0018
0.0024
0.0033
0.0044
0.0059
0.0078
0.0102
0.0132
0.0170
0.0217
0.0274
0.0344
0.0427
0.0526
0.0643
0.0778
0.0934
0.1112
0.1314
0.1539
0.1788
0.2061
0.2358
0.2676
0.3015
0.3372
0.3745
0.4129
0.4522
0.4920
0.5080
0.5478
0.5871
0.6255
0.6628
0.6985
0.7324
0.7642
0.7939
0.8212
0.8461
0.8686
0.8888
0.9066
0.9222
0.9357
0.9474
0.9573
0.9656
0.9726
0.9783
0.9830
0.9868
0.9898
0.9922
0.9941
0.9956
0.9967
0.9976
0.9982
0.9993
3
0.0005
0.0017
0.0023
0.0032
0.0043
0.0057
0.0075
0.0099
0.0129
0.0166
0.0212
0.0268
0.0336
0.0418
0.0516
0.0630
0.0764
0.0918
0.1093
0.1292
0.1515
0.1762
0.2033
0.2327
0.2643
0.2981
0.3336
0.3707
0.4090
0.4483
0.4880
0.5120
0.5517
0.5910
0.6293
0.6664
0.7019
0.7357
0.7673
0.7967
0.8238
0.8485
0.8708
0.8907
0.9082
0.9236
0.9370
0.9484
0.9582
0.9664
0.9732
0.9788
0.9834
0.9871
0.9901
0.9925
0.9943
0.9957
0.9968
0.9977
0.9983
0.9995
4
0.0003
0.0016
0.0023
0.0031
0.0041
0.0055
0.0073
0.0096
0.0125
0.0162
0.0207
0.0262
0.0329
0.0409
0.0505
0.0618
0.0749
0.0901
0.1075
0.1271
0.1492
0.1736
0.2005
0.2296
0.2611
0.2946
0.3300
0.3669
0.4052
0.4443
0.4840
0.5160
0.5557
0.5948
0.6331
0.6700
0.7054
0.7389
0.7704
0.7995
0.8264
0.8508
0.8729
0.8925
0.9099
0.9251
0.9382
0.9495
0.9591
0.9671
0.9738
0.9793
0.9838
0.9875
0.9904
0.9927
0.9945
0.9959
0.9969
0.9977
0.9984
0.9997
5
0.0002
0.0016
0.0022
0.0030
0.0040
0.0054
0.0071
0.0094
0.0122
0.0158
0.0202
0.0256
0.0322
0.0401
0.0495
0.0606
0.0735
0.0885
0.1056
0.1251
0.1469
0.1711
0.1977
0.2266
0.2578
0.2912
0.3264
0.3632
0.4013
0.4404
0.4801
0.5199
0.5596
0.5987
0.6368
0.6736
0.7088
0.7422
0.7734
0.8023
0.8289
0.8531
0.8749
0.8944
0.9115
0.9265
0.9394
0.9505
0.9599
0.9678
0.9744
0.9798
0.9842
0.9878
0.9906
0.9929
0.9946
0.9960
0.9970
0.9978
0.9984
0.9998
6
0.0002
0.0015
0.0021
0.0029
0.0039
0.0052
0.0069
0.0091
0.0119
0.0154
0.0197
0.0250
0.0314
0.0392
0.0485
0.0594
0.0721
0.0869
0.1038
0.1230
0.1446
0.1685
0.1949
0.2236
0.2546
0.2877
0.3228
0.3594
0.3974
0.4364
0.4761
0.5239
0.5636
0.6026
0.6406
0.6772
0.7123
0.7454
0.7764
0.8051
0.8315
0.8554
0.8770
0.8962
0.9131
0.9279
0.9406
0.9515
0.9608
0.9686
0.9750
0.9803
0.9846
0.9881
0.9909
0.9931
0.9948
0.9961
0.9971
0.9979
0.9985
0.9998
7
0.0001
0.0015
0.0021
0.0028
0.0038
0.0051
0.0068
0.0089
0.0116
0.0150
0.0192
0.0244
0.0307
0.0384
0.0475
0.0582
0.0708
0.0853
0.1020
0.1210
0.1423
0.1660
0.1922
0.2206
0.2514
0.2843
0.3192
0.3557
0.3936
0.4325
0.4721
0.5279
0.5675
0.6064
0.6443
0.6808
0.7157
0.7486
0.7794
0.8078
0.8340
0.8577
0.8790
0.8980
0.9147
0.9292
0.9418
0.9525
0.9616
0.9693
0.9756
0.9808
0.9850
0.9884
0.9911
0.9932
0.9949
0.9962
0.9972
0.9979
0.9985
0.9999
8
0.0001
0.0014
0.0020
0.0027
0.0037
0.0049
0.0066
0.0087
0.0113
0.0146
0.0188
0.0239
0.0301
0.0375
0.0465
0.0571
0.0694
0.0838
0.1003
0.1190
0.1401
0.1635
0.1894
0.2177
0.2483
0.2810
0.3156
0.3520
0.3897
0.4286
0.4681
0.5319
0.5714
0.6103
0.6480
0.6844
0.7190
0.7517
0.7823
0.8106
0.8365
0.8599
0.8810
0.8997
0.9162
0.9306
0.9429
0.9535
0.9625
0.9699
0.9761
0.9812
0.9854
0.9887
0.9913
0.9934
0.9951
0.9963
0.9973
0.9980
0.9986
0.9999
9
0.0000
0.0014
0.0019
0.0026
0.0036
0.0048
0.0064
0.0084
0.0110
0.0143
0.0183
0.0233
0.0294
0.0367
0.0455
0.0559
0.0681
0.0823
0.0985
0.1170
0.1379
0.1611
0.1867
0.2148
0.2451
0.2776
0.3121
0.3483
0.3859
0.4247
0.4641
0.5359
0.5753
0.6141
0.6517
0.6879
0.7224
0.7549
0.7852
0.8133
0.8389
0.8621
0.8830
0.9015
0.9177
0.9319
0.9441
0.9545
0.9633
0.9706
0.9767
0.9817
0.9857
0.9890
0.9916
0.9936
0.9952
0.9964
0.9974
0.9981
0.9986
1.0000
Example
The Sweet Sugar Company uses an automatic machine to fill 1,000 one-pound boxes of sugar per
hour. The tolerances are specified at 1.000 pounds on the low side (a legal requirement) and
1.005 pounds on the high side (they dont want to waste much sugar).
The company can select one of two machines. Machine A costs $500,000 to purchase and has a
natural process variability of = 0.0003 pounds (normally distributed). Machine B costs $50,000
to purchase and has a natural process variability of = 0.05 pounds (normally distributed). It
costs $0.20 to fix a box of sugar that does not meet specifications. The machines can work 40
hours per week, 52 weeks per year. Which machine should be purchased?
Machine B
Zup =
Zdown =
Machine A
Zup =
Zdown =
Annual Output =
Suppose that sugar costs $0.60 per pound. Suppose that management is considering
changing the spec limits to 3 for machine B, with the lower spec limit still
equal to 1.000 pounds. What would be the new process target? What would be the
economic impact of this decision?
= LSL + 3 =
USL = + 3 =
Zup =
Cost to Fix =
Also need the Filling Cost
What happens if the firm only needs to fix boxes that weigh less than
1.000 pounds?
Implications
Machine accuracy can have a big
effect on operating costs. It often
pays to reduce variability.
Spec limits should be chosen
carefully.
The process center should be
chosen while considering the costs
(which may be different) of going
both below and above the spec
limits.
The process center should not
necessarily always lie exactly
between the upper and lower spec
limits.