Chapter 3 E l i P C i Evaluating Process Capacity
Chapter 3 E l i P C i Evaluating Process Capacity
Chapter 3 E l i P C i Evaluating Process Capacity
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What Drives a <strong>Process</strong> Flow?Productionmode<strong>Process</strong>characteristicAdvantageChallengeMake-to-StockProduce standardproducts for futuredemand.Standardized product.Lower production cost.Fast delivery.Handling seasonaldemand.Forecasting and settingtarget stocking level.Make-to-Order<strong>Process</strong> is activated inresponse to actual orders.Product variety.Flexible process.Low inventory.Customer satisfaction.Delivery Performance.Quality Control.Build to Order, Configure to Order5CustomerorderTraditionalSupplyCookAssembleDeliverMcDonald’sCustomerorderSupplyCookAssembleFGIDeliverMcDonald’s customer satisfaction drops for three years in a row.The company reported its first ever quarterly loss in 2003.63
Bottleneck and <strong>Process</strong> <strong>Capacity</strong>• <strong>Process</strong> capacity is determined by the resource with thesmallest capacity.• Flow rate = Min{ Available input, <strong>Process</strong> <strong>Capacity</strong>, Demand }9Finding the Bottleneck in a <strong>Process</strong>Stationary reactorStationary reactorflow rateWIPflow time400 units 100 units/hour4 hours105
Example: Bread Making and Packing11Time to Produce a Certain Amount of Supply• Assuming the process is already producing outputTime to fulfill X units =Xflow rate• A restaurant has 40 tables. Average flow time = 60 minHow long is the wait time if you are sixth on the waiting list?126
<strong>Process</strong> Utilization and <strong>Capacity</strong> Utilization<strong>Process</strong> Utilization flow rateprocess capacityResource Utilization flow rateresource capacity• The objective of most businesses is to increase profit,not to increase utilization.• A service process should not pursue 100% utilization.13Utilization with limited demand• Assume the demand is only 657,000 tons.• The bottleneck is the resource with the highestutilization.147
Workload and Implied Utilization• Utilization only carries information about excess capacity.• Implied utilization captures the mismatch when thedemand exceeds the capacity.153.6 Multiple Types of Flow Units• The flow may break up into multiple flows.• Different types of flow units move through the process.168
Finding the Bottleneck in the Multiproduct Case• The product mix affects the process capacity.• Not all activities are required by all product type.17Summary• World class enterprises excel at the speedy andflexible integration of the business processes.• Finding the bottleneck allows us to compute a varietyof performance measures.• You Can't Manage What You Don't Measure189
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