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Process Analysis - Opreations Management
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Process Analysis - Opreations Management

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  • 1. PROCESSANALYSIS
  • 2. PROCESSA logical set of steps Inputs are available Different resources available for maximum utilization Limitations or constraints Goods and/or services are the end result or output
  • 3. PROCESS Identify the tasks Design of those tasks Implementation of those tasks Coordination of those tasks Identification of risks and risk minimization strategy What outputs are required
  • 4. PROCESS New or modifies products/services are offered Quality of product or services is improved Competitive position or priority has changed Current performance is not Cost of inputs has changed
  • 5. PROCESS Demand for existing products and services is changing New technology is emerging
  • 6. 6-6PROCESS SELECTION Projects one-of-a-kind production of a product to customer order Batch production different jobs through the system in groups or batches
  • 7. PROCESS SELECTION Mass production produces large volumes of a standard product for a mass market Continuous production used for very-high volume commodity products
  • 8. 6-8 Types of Processes PROJECT BATCH MASS CONT. Made-to- Made-to- Type of Unique order stock Commodity product (customized) (standardized ) One-at-a- FewType of Mass Masscustomer time individual market market customersProductdemand Infrequent Fluctuates Stable Very stable Source: Adapted from R. Chase, N. Aquilano, and R. Jacobs, Operations Management for Competitive Advantage (New York:McGraw-Hill, 2001), p. 210
  • 9. 6-9 Types of Processes PROJECT BATCH MASS CONT. Demand Low to Very low High Very high volume mediumNumber of Infinite Many,different Few Very fewproducts variety varied Repetitive, Continuous,Production Long-term Discrete,system assembly process project job shops lines industries Source: Adapted from R. Chase, N. Aquilano, and R. Jacobs, Operations Management for Competitive Advantage (New York:McGraw-Hill, 2001), p. 210
  • 10. 6-10 Types of Processes PROJECT BATCH MASS CONT. Varied General- Special- HighlyEquipment purpose purpose automatedPrimary Mixing,type of Specialize Fabrication Assembly treating,work d contracts refining Experts, LimitedWorker Wide range Equipmentskills crafts- range of of skills monitors persons skills Source: Adapted from R. Chase, N. Aquilano, and R. Jacobs, Operations Management for Competitive Advantage (New York:McGraw-Hill, 2001), p. 210
  • 11. 6-11 Types of Processes PROJECT BATCH MASS CONT. Efficiency, Highly efficient, Custom work,Advantages latest technology Flexibility, quality speed, large capacity, low cost ease of control Capital Non-repetitive, Costly, slow, Difficult to change,Dis- small customer difficult to investment; far-reaching errors,advantages base, expensive lack of manage limited variety responsiveness Machine shops, Automobiles, Construction, print shops, televisions, Paint, chemicals,Examples shipbuilding, foodstuffs spacecraft bakeries, computers, education fast food Source: Adapted from R. Chase, N. Aquilano, and R. Jacobs, Operations Management for Competitive Advantage (New York:McGraw-Hill, 2001), p. 210
  • 12. PROCESS SELECTION Cost  Fixed costs - constant regardless of the number of units produced  Variable costs - vary with the volume of units produced Revenue - price at which an item is sold
  • 13. PROCESS SELECTION Total revenue o price times volume sold Profit o difference between total revenue and total cost
  • 14. PROCESS SELECTION Total cost = fixed cost + total variable cost TC = cf + vcv Total revenue = volume x price TR = vp Profit = total revenue - total cost Z = TR – TC = vp - (cf + vcv)
  • 15. Solving for Break-EvenVolume TR = TC vp = cf + vcv vp - vcv = cf v(p - cv) = cf Cf v = p - cv
  • 16. Example: Fixed cost = cf = $2,000 Variable cost = cv = $5 per raft Price = p = $10 per raft
  • 17. Break-Even Analysis: Graph $3,000 — Total cost line $2,000 — $1,000 — Total revenue line 400 Units/volume Break-even point
  • 18. Example:Break-even point is cf 2000 v= p-c = = 400 rafts v 10 - 5
  • 19. PROCESS SELECTION Process A Process B$2,000 + $5v = $10,000 + $2v $3v = $8,000 v = 2,667 unitBelow 2,667, choose AAbove 2,667, choose B
  • 20. 6-20$20,000 — Total cost of process A$15,000 — Total cost of process B$10,000 — $5,000 — Choose Choose process A process B | | | | 1000 2000 3000 4000 Units Point of indifference = 2,667 Units
  • 21. PROCESS ANALYSIS Process Flowcharts  Symbolic representation of processes  Incorporate  nonproductive activities (inspection, transportation, delay, storage)  productive activities (operations)
  • 22. Flowchart of apple Process: Apple Sauce Distance Operation Description Transport (min) Time Storage Inspect of (feet) DelayStep process 1 Unload apples from truck 20 2 Move to inspection station 100 ft 3 Weigh, inspect, sort 30 4 Move to storage 50 ft 5 Wait until needed 360 6 Move to peeler 20 ft 7 Apples peeled and cored 15 8 Soak in water until needed 20 9 Place in conveyor 510 Move to mixing area 20 ft11 Weigh, inspect, sort 30 Page 1 0f 3 Total 480 190 ft

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