1. Management Decision Making: Operations and Decision Analysis May 2010 Week 1-Tutorial Business Processes Operations, Productivity & Strategy Anupam Das, PhD

3. Steps of Process design Process Design Processes that design product and services Processes that produce products and services Concept generation Screening Preliminary design Evaluation and improvement Prototyping and final design Supply network design Layout and flow Process technology Job design Overlap Stages of Design

7. Process Mapping - Example Standard Sandwich Process Raw Mat. Assembly Stored Sandwiches To Outlets. Stored Sandwiches Sell Take Payment Customer Request Raw Mat. Assembly Take Payment Customer Request Bread and Base Filling Assembly of Bases Stored bases Customer Req. Use Standard Base? Yes No Assemble from standard base Fillings Assemble whole sandwich Take Payment Customized Sandwich Process Old Process New Process

8. Process Mapping - Example

9. Process Mapping - Example

10. Process Mapping - Example

13. Assessing the performance of new customized sandwich process The impact of process design on operations performance objectives Performance Objective Change with new process Comments Quality No Change? Check to make sure that sandwich bases do not deteriorate in storage Speed Faster for 95% of customers Dependability Less predictable delivery time Need to manage customer expectations regarding delivery time for non-standard sandwiches Flexibility No change Cost Potentially low cost Need to forecast the number of each type of sandwich base to pre-assemble Performance Objective Good process design can ……. Quality Provide the appropriate resources which are capable of producing the product or service to its design specifications Speed Move materials, information or customers through each stage of the process without delays Dependability Provide technology and staff who are dependable Flexibility Provides resources which can be changed quickly so as to create a range of products or service Cost Ensure high utilization of resources and therefore efficient and low-cost processes.

14. Practice Problems Problem 1: Mance Fraily, the Production Manager at Ralts Mills, can currently expect his operation to produce 1000 square yards of fabric for each ton of raw cotton. Each ton of raw cotton requires 5 labor hours to process. He believes that he can buy a better quality raw cotton, which will enable him to produce 1200 square yards per ton of raw cotton with the same labor hours. What will be the impact on productivity (measured in square yards per labor-hour) if he purchases the higher quality raw cotton?

15. Problem 2: C. A. Ratchet, the local auto mechanic, finds that it usually takes him 2 hours to diagnose and fix a typical problem. What is his daily productivity (assume an 8 hour day )? Mr. Ratchet believes he can purchase a small computer trouble-shooting device, which will allow him to find and fix a problem in the incredible (at least to his customers!) time of 1 hour . He will, however, have to spend an extra hour each morning adjusting the computerized diagnostic device. What will be the impact on his productivity if he purchases the device? Practice Problems

16. Problem 3: Joanna French is currently working a total of 12 hours per day to produce 240 dolls . She thinks that by changing the paint used for the facial features and fingernails that she can increase her rate to 360 dolls per day. Total material cost for each doll is approximately $3.50 ; she has to invest $20 in the necessary supplies (expendables) per day; energy costs are assumed to be only $4.00 per day ; and she thinks she should be making $10 per hour for her time. Viewing this from a total (multifactor) productivity perspective, what is her productivity at present and with the new paint? Practice Problems

17. Problem 4: How would total (multifactor) productivity change if using the new paint raised Ms. French’s material costs by $0.50 per doll? Problem 5: If she uses the new paint, by what amount could Ms. French’s material costs increase without reducing total (multifactor) productivity? $3.77 Practice Problems