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OPERATIONS MANAGEMENT
for MBAs Fourth Edition
1
Meredith and Shafer
Production Systems
John Wiley and Sons, Inc.
Modified by Nikolaos P. Rachaniotis
Assistant Professor in Supply Chain
Management
University of Piraeus, Department of
Industrial Management
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Production Systems
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Operations Processes
In the previous we identified the critical
factors in providing value to the customer.
Here we discuss the selection and design
of the transformation process that can
deliver those factors—low cost, high
quality, enhanced functionality, speed,
and so on—in an efficient and effective
manner.
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Fender’s Custom Shop
Customers include Eric Clapton, John Deacon
(Queen), David Gilmour, Yngwie Malmsteen
and Stevie Ray Vaughn
Production Steps:
◦ computer controlled routers and lathes
shape guitar bodies and necks
◦ also have Neck Duplicator
◦ necks and bodies hand and machine sanded
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Fender’s Custom Shop continue
◦ detailed inlay work done with Hegner
precision scroll saw
◦ paint and finishing operations in special
room where air is re-circulated 10
times/minute
◦ buffed
◦ hung up and seasoned for two weeks
◦ final assembly by actual musicians
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IBM’s Charlotte, NC Plant
Assembly line produces 27 significantly
different products
Products include hand-held bar-code
scanners, portable medical computers, fiber-
optic connectors and satellite
communications devices
“Kits” of parts delivered to workers
Computer screen displays assembly
instructions.
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Rickard Associates
Produces magazines and marketing
materials
Only two of editorial production company’semployees work at headquarters in NJ
Art director works in AZ
Editors are located in FL, GA, MI, and D.C.
Freelancers even more scattered
Internet and AOL used to coordinate work
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Martin Marietta Aerospace
Plant
Originally with numerous functional
departments
◦ high WIP levels
◦ long lead times
◦ long travel distances
◦ departmental barriers inhibited communication
Plant subsequently arranged into three
focused factories
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Martin Marietta continue
Each focused factory completed entireelectronic assembly for particularapplication
Each focused factory treated asseparate business enterprise
Factory manager assigned to eachfocused factory
“ NFL draft ” used to select workerteams
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Martin Marietta continue
Within focused factories part families identified based
on technology and processes
Standard routings identified for each part family
Improvements
◦ seven months of consecutive production with no
scrap
◦ 50% reduction in WIP
◦ 21% reduction in lead times
◦ 90% reduction in overtime
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Variety of Transformation
Systems
Fender Custom Shop is job shop
Rickard Associates is job shop and is
also a virtual organization
Martin Marietta converted from a job
shop to focused factories
IBM uses a flow shop
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Forms of Transformation Systems
Transformation system design
considers alternative transformation
forms and selects the best one, given
the characteristics of desired outputs.
Layout analysis seeks to maximize the
efficiency or effectiveness of
operations.
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Forms of Transformation
Systems
Continuous Process
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Continuous Process
Highly standardized products in large
volumes
Often these products have become
commodities
Typically these processes operate 24
hours/day seven days/week
Objective is to spread fixed cost over
as large a volume as possible
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Continuous Process continue
Starting and stopping a continuous
process can be prohibitively expensive
Highly automated and specialized
equipment used
Layout follows the processing stages
Output rate controlled through
equipment capacity and flow mixture
rates
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Continuous Process continue
Low labor requirements
Often one primary input
Initial setup of equipment and procedures very complex
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Forms of Transformation
Systems
Flow Shop
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Flow Shop
Similar to continuous process except
discrete product is produced
Heavily automated special purpose
equipment
High volume - low variety
Both services and products can use
flow shop form of processing
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A Generalized Flow Shop Operation
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Advantages of the Flow Shop
Low unit cost
◦ specialized high volume equipment
◦ bulk purchasing
◦ lower labor rates
◦ low in-process inventories
◦ simplified managerial control
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Disadvantages of Flow Shop
Variety of output difficult to obtain
Difficult to change rate of output
Minor design changes may require
substantial changes to the equipment
Worker boredom and absenteeism
Work not very challenging
Vulnerable to equipment breakdowns
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Disadvantages of Flow Shop continue
Line balanced to slowest element
Large support staff required
Planning, design and installation is a
very complex task
Difficult to dispose of or modify special
purpose equipment
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Flow Shop Layout
Objective is to assign tasks to groups
The work assigned to each group
should take about the same amount of
time to complete
Final assembly operations with more
labor input often subdivided easier
Paced versus unpaced lines
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Line Balancing
24
number of theoretical workstations, task times / cycle timeTN
timecycle stations) N(
task timetotal
input
output = efficiency
T
demand
work timeavailable timeCycle
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Line Balancing Example
Task Time Required
(min)
Precedes
A 2.2 B, C, D
B 3.4 E
C 1.7 E
D 4.1 F
E 2.7 F
F 3.3 G
G 2.6 --
25
Total Time: 20 mins
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Line Balancing Example continue
Company operates one shift per day
Available time per shift is 450 minutes
Demand is 75 units/day
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Precedence Diagram
27
A
B
C
D
E
F G
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Calculations
cycle time = 450/75 = 6 minutes/part
NT = 20/6 = 3.33 = 4 stations
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Task Assignment
Station
Time
Avail.
Elig.
Tasks
Will
Fit?
Task
Assign.
Idle
Time
1 6.0 A A
3.8 B,C,D B,C B
0.4 C,D -- -- 0.4
2 6.0 C,D C,D D
1.9 C C C
0.2 E -- -- 0.2
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Task Assignment continue
Station
Time
Avail.
Elig.
Tasks
Will
Fit?
Task
Assign.
Idle
Time
3 6.0 E E E
3.3 F F F 0.0
4 6.0 G G G 3.4
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Line Balancing Solution
31
A
B
C
D
E
F G
Station 1
Station 2
Station 3
Station 4
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Efficiency
efficiency = 20/(4*6) = 83.3%
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Forms of Transformation
Systems
Job Shop
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Job Shop
High variety - low volume
Equipment and staff grouped based on
function
Each output processed differently
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A Generalized Job Shop Operation
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Advantages of the Job Shop
Flexibility to respond to individual demands
Less expensive general purpose equipment
used
Maintenance and installation of general
purpose equipment easier
General purpose equipment easier to modify
and therefore less susceptible to becoming
obsolete
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Advantages of the Job Shop continue
Dangerous activities can be segregated
from other operations
Higher skilled work leading to pride of
workmanship
Experience and expertise concentrated
Pace of work not dictated by moving line
Less vulnerable to equipment
breakdowns
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Disadvantages of the Job Shop
General purpose equipment is slower
Higher direct labor cost
High WIP inventories
High material handling costs
Management control very difficult
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Forms of Transformation
Systems
Cellular Production
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The Cell Form
Combines flexibility of job shop with
low costs and short response times of
flow shop
Based on group technology
First identify part families
Then form machine cells to produce
part families
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Conversion of a Job Shop Layout to a
Cellular Layout
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Organization of Miscellaneous Parts
into Families
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Advantages of Cellular
Production
Reduced machine setup times
◦ increased capacity
◦ economical to produce in smaller batch
sizes
◦ smaller batch sizes result in less WIP
◦ less WIP leads to shorter lead times
◦ shorter lead times increase forecast
accuracy and provide a competitive
advantage
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Advantages of Cellular Production continue
Parts produced in one cell
Capitalize on benefits of using worker
teams
Minimal cost to move from job shop to
cellular production
Can move from cellular production to
“mini-plants”
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Disadvantages of Cellular
Production
Volumes too low to justify highly
efficient high volume equipment
Vulnerable to equipment breakdowns
Balancing work across cells
Does not offer the same high degree of
customization as the job shop
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Cellular Layout
Teams of workers and equipment to
produce families of outputs
Workers cross-trained
Nominal cells versus physical cells.
Remainder cell
Cell formation methods
◦ production flow analysis
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Forms of Transformation
Systems
Project Operations
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Project Operations
Large scale
Finite duration
Nonrepetitive
Multiple
interdependent
activities
Offers extremely
short reaction times
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Selection of the Process
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Volume/Variety Considerations
High volume indicate automated mass
production
High variety implies use of skilled labor
and general purpose equipment
Make-to-stock versus make-to-order
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Effect of Output Characteristics on
Transformation Systems
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Service Processes
Often implemented with littledevelopment or pretesting
Need to consider amount of customercontact
Customers may not arrive at smooth andeven increments
Including customer in service processprovides opportunities to improve service
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Copyright
Copyright 2010John Wiley & Sons, Inc. All rights reserved.
Reproduction or translation of this work beyond that named in
Section 117 of the United States Copyright Act without the express
written consent of the copyright owner is unlawful. Requests for
further information should be addressed to the Permissions
Department, John Wiley & Sons, Inc. Adopters of the textbook are
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only, to make copies for distribution to students of the course the
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instructional needs. Under no circumstances can copies be made
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from the use of the information contained herein.
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