Chapter 3An Introduction to

Operations Management

How to Create a Process Flow Diagram

~ 160 m

Iron OreFines

CFBPreheater

InclinedBucket Elevator

1st StageCFB Reactor

2nd StageFB Reactor

BriquettingPlant

HBI Product

ProcessGasHeatExchanger

Process GasCompressor

Fired Gas Heaters

~ 1

10

m

ElectricalSubstation&ControlRoom

Pile of Iron ore fines

Pre-Heater

Briquet- ting

Flashheater

Dis-charge

Finishedgoods

Lock Hoppers

1st Reactor

2nd Reactor

How to Create a Process Flow Diagram

• Simplify a complex process using a process flow diagram• Bottleneck analysis: analyze the process by looking at the bottleneck• Bottleneck may depend on the product mix• Time to complete X units

• Starting with a loaded system:

• Starting with an empty system

- For continuous flow processes: (X-1) = X

- If capacity constrained, flow rate is dictated by the bottleneck

Key-points in Process Analysis

XTime to fulfill X units

Flow Rate

1

XTime to fulfill X units Time through empty process

Flow Rate

Flow Rate=Min{Demand, Capacity}

Flow Rate Flow Rate

Demand constrained

Demand

InputBottleneck(Capacity)

Flow Rate

ExcessCapacity

Flow Rate

Capacity constrained Demand constrained

Flow Rate R Demand vs. Capacity Constraints

Input

DemandExcessCapacity

Bottleneck(Capacity)

Process Utilization and Capacity Utilization

• Utilization: How much is produced relative to what could be produced

• Can be computed for an entire process and for each resource in a process

Flow RateResource Utilization =

Resource Capacity

Flow RateProcess Utilization =

Process Capacity

Capacity Requested by DemandImplied Utilization =

Available Capacity

Maximum values?

How To Conduct a Process Analysis

Extensions Requiredfor workingWithmultiple flow units

Prepare a process flow

diagram

Compute the capacity for each of the resources

Use demand to compute the implied utilization

levels

Identify the bottleneck

Compute performance

measures

Identify the flow

unit

Use differentcolors to markflow units

Note that capacity levels may differ depending on product type

Step withhighest impliedutilization

Compute workload across

all product types

A finance company receives 1,000 loan applications per 30 day working month and makes accept/reject decisions based upon a thorough review. On average, 20% of all applications receive approval. An internal audit revealed that the company has 500 applications in process at various stages.In response to customer complaints, the company forms an initial review team to pre-process all applications. Each application will be categorized either A (excellent), B (needs more detailed review), or C (reject). On average 25% of the applications are type A, 25% are type B, and 50% are type C. 70% of type A and 10% of type B applications are approved on review. Internal audit checks show that 200 applications are with the initial review team, 25 with the type A team, and 150 with the type B team.

Has customer service improved? Why?

A hospital ER is currently organized so that all patients register through an initial check-in process. At his turn, each patient is seen by a doctor and then exits the process, either with a prescription or with admission to the hospital. Currently, 50 people per hour arrive at the ER, 10% of whom are admitted to the hospital. On average, 30 people are waiting to be registered and 40 are registered and waiting to see a doctor. The registration process takes, on average, 2 minutes per patient. Among patients who receive prescriptions, average time spent with a doctor is 5 minutes. Among those admitted to the hospital, average time is 30 minutes. On average,

1. how long does a patient stay in the ER? 2. how many patients are being examined by doctors? 3. how many patients are in the ER?