DSCI-303Operations Management1Sessions 15 & 16.docx

DSCI-303
Operations Management
1
Sessions 15 & 16
1
What and why of inventory..
Input process
Inventory
Output process
Rate of supply from input process

Rate of demand from output process
Inventory
2
2
Inventory helps..
Maintain independence of operations
Meet variation in product demand
Allow flexibility in production scheduling
Provide a safeguard for variation in raw material delivery time
Take advantage of economic purchase-order size
3
4

Inventory considerations..
Inventory = stacks of money sitting on forklifts, on shelves, and
in trucks and planes while in transit
For many businesses, inventory is the largest asset on the
balance sheet at any given time
Inventory is often not very liquid
It may be a good idea to try to get the inventory down as far as
possible
4
Inventory affects ROA (Return on Assets)
5
Return on Assets
Profit
Total assets
Working capital + Fixed assets
=
=
Ability to supply from stock
Obsolescence, damage, loss
Cost of funding inventory
Storage costs
Ordering costs
Amount you owe suppliers
Amount customers owe you

e.g. Automotive parts distributor
e.g. Local retail store
Single-stage inventory system
Suppliers
Suppliers
Stock
Sales operation
Central depot

Distribution
Local distribution point
Sales operation
Two-stage inventory system
Single-stage, two-stage, multi-stage inventory systems
6
e.g. Television manufacturer
Suppliers
Input stock
Stage 1
WIP
Stage 2
WIP

Stage 3
Finished goods stock
Multi-stage inventory system
6
A multi-echelon inventory system
Yarn producers

Cloth manufacturers
Garment manufacturers
Regional warehouses

Retail stores
7
7
Inventory Models
The single-period model
Used when we are making a one-time purchase of an item
Multi-period models
Fixed-order quantity model
Used when we want to maintain an item “in-stock,” and when
we restock, a certain number of units must be ordered
Fixed–time period model
The item is ordered at certain intervals of time
8

The Single-Period Inventory Model
Consider the problem of deciding how many newspapers to
order for a news stand
Too few papers: run out of stock, lose associated profit
Too many papers: have left over inventory, lose the amount paid
on the left over papers
Probability of over/under-stock is different for each order
quantity
Numbers involved drive the final order quantity..
9
The Multi-Period Models
Fixed–order quantity model
Also called the Economic Order Quantity model / Q-model
Event triggered (stock falling below certain level)
Fixed–time period model
Also called the periodic system / periodic review system /
fixed-order interval system / P-model
Time triggered

10
The Multi-Period Models - comparison
11
EOQ model: Inventory over time
Time
Instantaneous deliveries of Q per period
Q
D
Inventory level
Steady and predictable demand (D)

Slope = demand rate (D)
=
Average inventory
Q
2
Order quantity = Q
12
12
EOQ model: The re-order point

400
300
200
100
Inventory level
0
0
1
2
3
4
5
6
7
8
Re-order level
Re-order point
Time
Demand (D) = 100 items per week
Order lead time

13
13
EOQ model: Two alternatives..
Time
Inventory level
Plan A
Q = 400
Demand (D) = 1000 items per year
Average inventory for plan A = 200
Average inventory for plan B = 50
0.1 yr
0.4 yr
100

14
EOQ Model: Inventory Costs
Holding (or carrying) costs
Costs for storage, handling, insurance, and so on
Ordering costs
Costs of placing an order
Setup (or production change) costs
Costs for arranging specific equipment setups, and so on
Shortage costs
Costs of running out
15
5
400
350
300

250
200
150
100
50
400
350
300
250
200
150
100
50
Order quantity
Costs
Economic order quantity (EOQ)
Total costs
Holding costs
Order costs

EOQ Model: Economic Order Quantity
16
16
EOQ Model Assumptions
Demand for the product is constant and uniform throughout the
period
Lead time (time from ordering to receipt) is constant
Price per unit of product is constant
Inventory holding cost is based on average inventory
Ordering or setup costs are constant
All demands for the product will be satisfied
17

EOQ Model: The formula
18
12
EOQ Model: Example
19
We wish to find the economic order quantity and the reorder
point given annual demand of 1,000 units, ordering cost of $5
per order, holding costs of $1.25 per unit per year, a lead time
of 5 days and per unit cost of $12.50.
EOQ Model: Example

20
We wish to find the economic order quantity and the reorder
point given annual demand of 1,000 units, ordering cost of $5
per order, holding costs of $1.25 per unit per year, a lead time
of 5 days and per unit cost of $12.50.
EOQ changes when true costs are considered..
Original holding costs
Original total costs
Revised holding costs
Order quantity
Costs

Original EOQ
Revised EOQ
Revised order costs
Revised total costs
Original order costs
21
21
Safety stock(s) – when demand / lead-time is uncertain

Inventory level
S
Q
Time
t1
t2
d1
d2
Re-order level (ROL)
Distribution of lead-time usage
?

22
22
The probability distributions for order lead time and demand
rate combine to give the lead-time usage distribution
0.4
0.3
0.2
0.1
0
110
120
130
140
Probability
Demand rate

0.4
0.3
0.2
0.1
0
1
2
3
4
5
Probability
Order lead time
0.4
0.3
0.2
0.1
0
Probability
100–199
Lead-time usage

120–299
300–399
400–499
500–599
600–699
700–799
23
23

100
90
80
70
60
50
40
30
20
10
100
90
80
70
60
50
40
30
20
10

Class C items
Class B items
Class A items
Pareto curve for stocked items
Percentage of types of items
Percentage of value of items
24
24
Homework 2 is due by 6 pm on Oct 31
Questions?
26

26
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DSCI 303 Session 01 - Sep 03.pptx
DSCI-303

Session 01
1
Why should anyone study Operations Management?
Transformation of inputs into output/s is at the core of every
business
Important for even non-OM executives across functional areas
Every business activity is a process, and OM provides a
framework to understand, analyze, and improve business
processes
What kind of job / business are you targeting at the end of your
studies?
Let’s take some examples..
OM can help in every instance!
What knowledge, skills, and tools can help you succeed in that?
Breadth of knowledge
Ability to systematically analyze a business problem and
present the findings
Ability to work with a diverse set of people
Ability to see the big picture (i.e. how the business makes
money!)

http://www.youtube.com/watch?v=DS9TqkGR2t0
Why are we here ?????????
2
How a firm creates value and makes money:
How effective Ops Mgmt. is a key to maximizing revenue and
minimizing costs
Process analysis:
Process mapping, process design, management, control, and
improvements
How to manage products and services:
Similarities and differences
What will we learn???
3

The course is explicitly designed to cover each of these!
Interactive lectures will introduce the main topics
Real-life examples will help us relate to these concepts
There will be pre-announced quizzes along the way
Class participation will:
Improve everyone’s learning
Improve your course grade
Homework assignments will:
Test your ability to apply the course concepts on your own
How will we achieve this ???
4
Group project will get you to:
Hone your ability to work in teams, and prepare a professional
report
Present your collective findings to a managerial audience
Finally, a comprehensive final exam will give you an
opportunity to showcase all your knowledge and skills acquired
or augmented during the course!
How will we achieve this ???
5

In-class Quizzes:
Pre-announced on Blackboard, administered in-class
No make-up quizzes offered
Individual effort only
Each quiz carries 20 points
6 Quizzes in total, only best 5 scores will be retained
Collectively, the quizzes drive 10% of the final grade
Let’s take a closer look!
6
Homework Assignments:
Pre-scheduled, available on Blackboard from the beginning!
Submission only through Blackboard
Individual effort only

Each assignment carries 150 points
No late submissions, no make-up assignments
3 assignments in total, only best 2 scores will be retained
Collectively, the homework assignments drive 30% of the final
grade
7
Term (team) Project:
Will require teams of 4 students each
An announcement with instructions will be sent on Sep 15
Each team will analyze the assigned company’s business
throughout the term
Each team will need to submit two interim reports, and one final
report
No late submissions, no make-up project
The term project carries 200 points, and drives 20% of the final
grade
8

Term (team) Project Presentation
(with optional video recording & debrief):
Tied to the term project
Will be scheduled for Dec 8, 9, 10, 11
Carries 100 points, and drives 10% of the final grade
More details will be provided later on..
9
Final Exam (optional, provided you act in time):
Comprehensive!
Open textbook / notes (non-electronic)
Bring your own calculator/pen/pencils (BYOCPP)
See the 1st page of course syllabus for the schedule
Will be 2-hr long
No alternate arrangements allowed except for students with a
pre-certified disability
Carries 200 points, and drives 20% of the final grade (unless

declared otherwise by submitting your choice before the
deadline)
10
Class Attendance and Participation:
Attendance:
2 points x 25 out of 27 sessions = 50 points = 5% of the final
grade
Participation:
0-5 points per session, 50 points max = 5% of the final grade
11

Let’s repeat..
12
Do show up in every class, better yet – do come prepared!
Do read the HWs before each class, write up your answers right
after the class!
Do remain courteous to your faculty & fellow students at all
times.
Do read the instructions in the syllabus and the assignments
before starting.
Do leverage (in a timely manner..) all opportunities to get
feedback.
Do choose your teammates wisely!
Do check your submissions before AS WELL AS after
submitting!
Do follow “work hard, play hard” strategy!
Do have FUN!

How to get an A: Some do’s
13
Don’t apologize for arriving late or leaving early! Just get on
with it..
Don’t let your phone ring and don’t look at your phone / tablet /
laptop..
Don’t pack up your things before I actually end the class!
Don’t ever ask if you “missed anything important” during an
absence!
Don’t ask about ANYTHING without checking the syllabus
first!
Don’t plagiarize, else be prepared for the consequences..
Don’t get mad if you receive critical feedback.
Don’t EVER ask for a better grade just because you have always
had an A!
Don’t complain about the workload saying “you know, this isn't
the only class I'm taking”..
How to get an A: Some don’ts

14
Now, let’s get to know one another!
15
Amit (that’s me..):
Origin
Continents
Three lives
Education
Industries
Current interests and hobbies
16

Now, it’s your turn: Cover the following quickly:
Name, where you are from (State / Country)
One interesting fact about you that almost no one knows..
The grade that you want to score in this course..
17
Questions?
18

18
Sr. Assessment Item Points Weight
1
Knowledge of Key Operations Concepts
-class Quizzes (best 5 out of 6)
20 points x 5 = 100 points 10%
2
Application of Knowledge
150 points X 2 = 300 points 30%
3
Presentation of Work
Presentation (1)
4
Class Attendance and Participation
0-5 points X 27 = 50 points 5%
Total: 1000 points 100%
* = Optional, provided you respond to a Blackboard assignment
by the stated deadline. If so, your course
grade will be based on the rest of the assessmen ts. If no
response is received by the deadline, the final
exam is mandatory. In this case, the final exam will count
towards the course grade regardless of
whether you actually show up for the final or not.

DSCI-303
Session 02
1
What is Operations and Supply Chain Management?
Operations and supply management (OSM): The design,
operation, and improvement of the systems that create and
deliver the firm’s primary products and services
Concerned with the management of the entire system that
produces a good or delivers a service
2
Operations: One Firm
Customers

Input resources
Output products and services
Transformed resources
Materials
Information
Customers
Transforming resources
Facilities
Staff
Design
Planning and control
Operation’s performance
Operations strategy
Improvement
Operations management
Operations strategy
3

“Dominant” Transformed Resource
Material? Information? Customer?
4
Manufacturing Operations
Mining companies
Warehouses
Postal services
Container shipping line
Trucking companies
Grocery Store
Automobile Plant
Banks
Airline
Financial Analysis
Theme Park
News Service
Theatre
Telecom
Spa
Market Research
Dentist
Online Trading
Gym
Google
Hotel
Credit card company
Skydiving

Products vs. Services
Intangibility
Inseparability
Heterogeneity
Perishability
5
5
Products – Services Continuum
6
6
Products with services or Services with products?
Benefits?

Examples?
Future?
Servitization
7
Design: the processes for designing products and services
through active collaboration between suppliers, customers, and
the firm
Planning: the processes needed to operate an existing supply
chain / firm operations strategically
Sourcing: the selection of suppliers that will deliver the goods
and services needed to create and deliver the firm’s product
Making: Where the major product is produced or the service is
provided
Delivering: carriers are picked to move products to warehouses
and customers
Returning: the processes for receiving worn-out, defective, and
excess products back from customers
Work Involved..
8
Operations: Entire Supply Chain
9

The consultancy services market – % of worldwide revenues of
40 largest consultancy firms
Marketing/sales
2
Operations and process management
31
Corporate strategy
17
IT strategy
17
Benefits/Actuarial
16
Organizational design
11
Financial
6
Operations management is fashionable!
10

10
Flow between operations
The level of the supply network
The level of the operation
Flow between processes
The level of the process
Flow between resources

Operations at Three Different Levels
11
11
Financial services
An account management centre at a large retail bank
Financial analyst advising a client at an investment bank
Furniture manufacturing
Mass production of kitchen units
Craft production of reproduction ‘antique’ furniture

Hotels
Value-for-money hotel
Lobby of an international luxury hotel
Differences within Sectors vs. between Sectors
12
12
Variation in demand
High
Low
Visibility
High
Low
Variety
High
Low
High

Volume
Low
High
What affects Operations?
The 4 Vs
13
13
High
Implications
Low repetition
Each staff member performs more of each task
Less systemization
High unit costs
Implications
High repeatability
Specialization
Capital intensive
Low unit costs
Volume
Low
High

The implications of high and low Volume in operations and
processes
14
14
High
Implications
Flexible
Complex
Match customer needs
High unit costs
Implications
Well defined
Routine
Standardized
Regular
Low unit costs
Variety
High
Low
The implications of high and low Variety in operations and
processes

15
15
High
Implications
Changing capacity
Anticipation
Flexibility
In touch with demand
High unit costs
Implications
Stable
Routine
Predictable
High utilization
Low unit costs
Variation in demand
High
Low
The implications of high and low Variation in operations and
processes
16

16
High
Implications
Short waiting tolerance
Satisfaction governed by customer perception
Customer contact skills needed
Received variety is high
High unit costs
Implications
Time lag between production and consumption
Standardization
Low contact skills
High staff utilization
Centralization
Low unit costs
Visibility
High
Low
The implications of high and low Visibility in operations and
processes
17

17
Questions?
18
DSCI-303
Session 03
1

Operations can make or break a firm..
2
Operations: Stakeholders
Shareholders
Directors / top management
Staff
Staff representative bodies
Regulatory bodies
Government
Suppliers
Lobby / interest groups
Customers
‘Society’
3
Triple Bottom Line
Operations Performance Objectives
4

Competitive Dimensions
Competitiveness
Quality
Being RIGHT
Speed
Being FAST
Dependability
Being ON TIME
Cost
Being PRODUCTIVE
Being ABLE TO CHANGE
Flexibility
5

All objectives may not be as important!
Polar diagrams are used to indicate the relative importance of
each performance objective to an operation or process.
They can also be used to indicate the difference between
different products and services produced by an operation or
process.
Cost
Quality
Flexibility
Dependability
Speed
6
6
Polar diagrams for
a Taxi service vs. a Bus service
(Shows the relative importance of each competitive dimension)

7
This chart was created in MS-Excel using “Radar Chart”
7
Questions?
8
DSCI-303
Session 04
1

Operations Strategy vs. Operations Management
2
What is strategy?
Setting broad objectives that direct an enterprise towards its
overall goal.
Planning the path (in general rather than specific terms) that
will achieve these goals.
Stressing long-term rather than short-term objectives.
Dealing with the total picture rather than stressing individual
activities.
Being detached from, and above, the confusion and
distractions of day-to-day activities.
3
What is the role of the operations function?

Operations as implementer of strategy
Operations implements strategy
Strategy
Operations
Operations drives strategy
Operations as driver of strategy
Strategy
Operations
Operations supports strategy
Operations as supporter of strategy
Strategy
Operations
4
4
Top-down perspective

What the business wants operations to do
Operations resources perspective
What operations resources can do
What day-to-day experience suggests operations should do
Bottom-up perspective
Market requirement perspective
What the market position requires operations to do
Operations strategy
The four perspectives on operations strategy
5
5
1
What you HAVE
in terms of operations capabilities

What you NEED
to ‘compete’ in the market
Operations resources
Market requirements
What you WANT
from your operations to help you ‘compete’
What you DO
to maintain your capabilities and satisfy markets
Strategic reconciliation
Reconciling market requirements and operations resources
6
6
Operations strategy at Flextronics
Operations strategic decisions

Industrial parks, with
low cost but close locations
and co-located suppliers
Market requirements
Low costs
Responsiveness
Flexibility
Flextronics
7
Operations strategy at Southwest
Operations strategic decisions
Stripped down service
One technology
Cheap airport
locations
Fast turnround
Market requirements
Low prices
Reliability
Basic service

8
Competitive Dimensions
Competitiveness
Quality
Being RIGHT
Speed
Being FAST
Dependability
Being ON TIME
Cost
Being PRODUCTIVE
Being ABLE TO CHANGE
Flexibility
9

Order-winning, qualifying, and less important competitive
factors
Neutral
+ve
–ve
Performance
Competitive benefit
Qualifying factors
Order qualifiers: the basic criteria that permit the firms
products to be considered as candidates for purchase by
customers
10
10

factors
Neutral
+ve
–ve
Performance
Competitive benefit
Order-winning factors
Order winners: the criteria that differentiates the products and
services of one firm from another
11
11
Neutral

+ve
–ve
Performance
Competitive benefit
Less important factors
factors
Less important factors: the criteria that customers hardly care
about
12
12
Introduction
Growth
Maturity
Decline
Sales volume

Volume
Customers
Competitors
Variety of product/ service design
Slow growth in sales
Innovators
Few/none
Customization or frequent design changes
Rapid growth in sales volume
Early adopters
Increasing numbers
Increasingly standardized
Sales slow and level off
Bulk of market
Stable number
Emerging dominant types
Market needs largely met
Laggards
Declining numbers
Possible move to commodity standardization
The effects of the product / service life cycle
Time
13
13
6

Introduction
Growth
Maturity
Decline
Sales volume
The effects of the product / service life cycle (Continued)
Time
Likely order winners
Likely qualifiers
Dominant performance objectives
Product/ service characteristics
Quality
range
Flexibility
quality
Availability quality
Price
range
Speed
dependability
quality
Low price
dependable supply

Quality
range
Cost
dependability
Low price
Dependable supply
Cost
14
14
6
Next time..
Quiz 1
Questions?
16

DSCI-303
Session 05
1
Quiz 1

Product & Service Design
Operations strategy
Design
Improvement
Planning and control
Process design
Supply network design
Layout
and flow
Process technology
People, jobs and organization
Product/service design
Operations management
3

3
Products, services and the processes which produce them all
have to be designed.
Decisions taken during the design of a product or service will
have an impact on the decisions taken during the design of the
process which produces those products or services and vice
versa.
Nature and purpose of the design activity
4
4
The design of products/services (WHAT) and…
…the design of processes (HOW)
Products and services should be designed in such a way that
they can be created effectively.
Product/service design has an impact on the process design and
vice versa.

Processes should be designed so they can create all products
and services which the operation is likely to introduce.
5
5
What is designed in a product or service?
A concept
the understanding of the nature, use and value of the service or
product;
A package
the group of ‘component’ products and services that provide
those benefits defined in the concept;
A process
the way in which the component products and services will be
created and delivered.
6
6
The stages of product / service design

Concept generation
Concept screening
Preliminary design
Evaluation and improvement
Prototyping and final design
7
7
Concept generation
Ideas from customers formally through Marketing activities
Listening to customers – on a day-to-day basis
Ideas from competitor activity – For example, reverse
engineering
Ideas from staff – Especially those who meet customers every
day

Ideas from research and development
Ideas from other stakeholders
8
8
Broad categories of evaluation criteria for assessing concepts
Feasibility – How difficult is it?
The criteria for screening concepts
What investment both managerial and financial, will be needed?
What return
in terms of benefits to the operation will it give?
What risks
do we run if things go wrong?
Acceptability – How worthwhile is it?
Vulnerability – What could go wrong?

Overall evaluation of the concept
Concept screening
9
9
Uncertainty regarding the final design
Certainty regarding the final design
TIME
Reduction in number of possibilities along the way
CONCEPT
FINAL DESIGN SPECIFICATON
Choice and evaluation ‘Screens’

Large number of design options
One design

10
10
Example – Square watermelons
What market-related questions would you ask before
producing square watermelons commercially?
What finance-related questions would you ask before
What operations-related questions would you ask before
11

11
Designing Service Products
Service products are very different
Direct customer involvement introduces significant variability
in the process
Questions to address:
How will this variability be addressed?
What are the implications for operational cost and the customer
service experience?
12
Questions?
13

Operation management2.zip
DSCI-303
Session 06
1
Designing processes
There are different ‘process types’.
Process types are defined by the volume and variety of ‘items’
they process.
Process types go by different names depending on whether they
produce products or services.
2

2
High
Volume
Low
High
Variety
Project
Low
Manufacturing process types
Process tasks
Process flow
Diverse/ complex
Repeated/ divided
Intermittent
Continuous
Jobbing
Batch / Cell
Mass
Contin-uous

3
3
One-off, complex, large scale, high work content ‘products’
Specially made, every one customized
Defined start and finish: time, quality and cost objectives
Many different skills have to be coordinated.
Project processes
4
4
Very small quantities: ‘one-offs’, or only a few required
Specially made. High variety, low repetition. ‘Strangers’ every
one customized

Skill requirements are usually very broad
Skilled jobber, or team, complete whole product.
Jobbing processes
5
5
Higher volumes and lower variety than for jobbing
Standard products, repeating demand. But can make specials
Specialized, narrower skills
Set-ups (changeovers) at each stage of production.
Batch Processes
6
6

Higher volumes than batch
Standard, repeat products (‘runners’)
No set-ups, or almost instantaneous ones.
Low and/or narrow skills
Mass (line) processes
7
7
Extremely high volumes and low variety: often single product
Standard, repeat products (‘runners’)
Highly capital-intensive and automated
Few changeovers required
Difficult and expensive to start and stop the process.
Continuous processes
8

8
Volume
Low
High
Variety
Low
High
Service process types
Process tasks
Process flow
Diverse/ complex
Repeated/ divided
Intermittent
Continuous
Professional service
Service shop
Mass service
9

9
Professional service
High levels of customer (client) contact.
Clients spend a considerable time in the service process.
High levels of customization with service processes being
highly adaptable.
Contact staff are given high levels of discretion in servicing
customers.
People-based rather than equipment-based.
10
10
Medium levels of volumes of customers
Medium, or mixed, levels of customer contact

Medium, or mixed, levels of customization
Medium, or mixed, levels of staff discretion.
Service shops
11
11
High levels of volumes of customers
Low to medium levels of customer contact
Low, or mixed, levels of customization
Low, or mixed, levels of staff discretion.
Mass service
12
12

All the options:
13
13
Variety
Volume
Deviating from the ‘natural’ diagonal..
None
None
The ‘natural’ line of fit of process to volume/variety
characteristics
Project
Jobbing
Batch
Mass
Continuous
Manufacturing operations process types
Professional

service
Service
shop
Mass
service
Service operations process types
More process flexibility than is needed so high cost
Less process flexibility than is needed so high cost
14
14
9
Questions?
15

DSCI-303
Session 07
1
Throughput (TH) = Work In Process (WIP) x Cycle Time (CT)
Little’s law (a really quite useful law)
Cycle time = 2 mins
Throughput time = ?
WIP = 10

Throughput time = 10 × 2 mins
Throughput time = 20 mins
2
2
Throughput time and capacity utilization
0
20%
40%
60%
80%
100%
Capacity utilization

Low
X
X
X
High utilization but long throughput times
Low utilization but short throughput times
Reduce process variability
High
10 mins
30 mins
Arrival frequency (demand)
Processing time
Utilization = 33.33 % Q = 0
Average length of queue
X
Utilization = 50 % Q = 0
20 mins
X
10 mins
Utilization = 100 % Q = 0

X
Utilization = 100 % Q = infinity
9 mins
X
5–15 mins
5–15 mins
Arrival frequency (demand)
Processing time
Utilization = <100% % Q = >0
Process throughput time
(or inventory)
3
3
Term Project
What?
How?
When?

Where?
4
4
Homework 1 can be submitted on Blackboard
from Sep 26
& is due by 6 pm on Oct 3
Questions?
6

DSCI-303
Session 08
1
The relative positioning of transforming resources
Layout design involves..
The allocation of tasks to transforming resources
The flow of transformed resources
2

2
Layout types: Fixed-position layout
3
3
Layout types: Functional layout
4
4
Layout types: Cell layout
5

5
Layout types: Product layout
6
6
Regular flow more important
Regular flow more feasible
Layout types – impact of volume and variety
Low
Volume
High
High
Variety
Low
Fixed-position layout
Functional layout

Cell layout
Product layout
Flow becomes continuous
Flow is intermittent
7
7
Service functional types
Mass services
Service shops
Manufacturing functional types
Continuous processes
Mass processes
Batch processes

Basic layout types
Fixed-position layout
Functional layout
Cell layout
Product layout
Process and layout types..
Jobbing processes
Professional services
Project processes
8
8
Cost implications of layout types
Volume
Costs
Use product

Use
cell
Use functional
Use fixed-position
Fixed-position
Functional
Cell
Product
9
9
9
1 every 15 minutes

15
15
15
15
1 every 15 minutes
30
30
30
30
Product Layout: ‘Long and thin’ versus ‘short and fat’ layouts

1 every 15 minutes
60
60
60
60
Short -fat process
Long-thin process
A 60 minute task with a required cycle time of 15 minutes
10
10
Product Layout: ‘Long and thin’ versus ‘short and fat’ layouts
11
Advantages of long-thin processes

Controlled flow
Simple materials handling
Lower capital requirement (no duplication)
Greater efficiency
Higher space utilization
Advantages of short-fat processes
Higher mix flexibility
Higher volume flexibility
Greater robustness
Less monotonous
Higher ownership
Long and short describes the number of stages
Fat and thin describes the amount of work at each stage
11
Next time..

Quiz 2
12
Questions?
14

DSCI 303 Session 09 - Oct 01.pptx
DSCI-303
Session 09
1
Quiz 2
Supply Chain Design: Key Questions
What is a SUPPLY CHAIN?
Why should an organization take a total supply network
perspective?
What is involved in configuring a supply network?
What type of supply network is appropriate?
Where should an operation be located?
3

3
Customers..
Suppliers..
What is a Supply Chain?
The Firm
Supply…CHAIN..

2nd tier..
1st tier..
1st tier..
2nd tier..
Upstream..
Downstream..
4
4
An example..
5
Plastic homeware manufacturer
First tier suppliers
Packaging supplier
Plastic stockist
First tier customers

Wholesaler
Second tier suppliers
Ink supplier
Cardboard company
Chemical company
Second tier customers
Retailer
Retailer
Direct supply
Information

5
Why take a total supply network perspective?
Looking at the whole supply chain allows a firm:
To identify significant linkages / risks involved
To focus on long-term issues
To understand the sources of competitive advantages and
disadvantages
To decide on the extent of vertical integration
6
6
What is involved in configuring a Supply Chain?
Decide on the extent of vertical integration
Decide on the type of supply chain
Decide on where to locate the business
7
7

Vertical integration
Extent – Narrow process span
Extent – Wide process span
Direction – Upstream vertical integration
Direction – Downstream vertical integration
Wholesaler
Raw material suppliers
Component maker
Assembly operation
Retailer
Balance — should excess capacity be used to supply other
companies?
8

8
Types of supply chain..
Demand Uncertainty
Supply Uncertainty
9
9
Offshoring & outsourcing: related YET different..
10
Outsourcing
Domestic supplier delivers products and/or services
Offshore outsourcing
Overseas supplier delivers products and/or services
Domestic operations
Focal operation performs activities themselves
Offshore operations
Focal operation’s overseas operation delivers products and/or
services

Location of operations
Don’t own the assets
Own the assets
Domestic
International
10
Deciding where to locate..
The
operation
Supply-side factors
which vary to influence costs as location varies.
For example:
labor costs
land costs
energy costs
transportation costs
community factors
Demand-side factors
which vary to influence customer service/revenue
as location varies.
For example:

labor skills
suitability of site
Image
convenience for customers
11
11
Supply chain planning and control
First tier supplier

Second tier supplier
First tier customer
Second tier customer
End customer
Demand side
Supply side
Purchasing and supply management
Physical distribution management
Logistics
Materials management
Supply chain management

Information flow
Physical flow
12
12
Questions?
14

DSCI-303
Session 10
1
Supply chain management ..
Products and services
New products and services
Delivery information
Payment request/Credit.
‘Downstream’ flow of products and services for customer
Fulfilment
‘Upstream’ flow of customer
Requirements
Long-term plans and requirements
Market research information

Individual orders
Payment
Demands for new products and services
Consumer
Operation 1

Operation 2
Operation 3
2
2
P&G finds that retail demand for diapers is very steady
The orders placed by a firm (i.e., demand for upstream firms)
should also be steady
Low demand variation should imply low safety stock
Is that what actually happens????
NO! Demand shows GREATER volatility for upstream firms!
3
The bullwhip effect:
P&G
DC
Distributor
Walmart
Target
Retailers
Supplier
Manufacturer
Factory

4
What actually happens?
Weekly demand
Weekly demand
Weekly demand
Weekly demand
Weekly demand
Bullwhip Effect: Demand and inventory variation is amplified
as you go upstream in the supply chain
P&G
DC
Distributor
Walmart
Target
Retailers
Supplier
Manufacturer
Factory

Orders
0
Time
Sales from Retailer
Consumers

Orders
0
Time
Retailer’s orders to Wholesaler
Time
Wholesaler’s orders to Distributor

Orders
0
Distributor’s orders to Manufacturer

Orders
0
Time
Retailer
Wholesaler
Distributor
Manufacturer
Demand variation increases in magnitude as we go upstream
The more upstream we go, the more swings we encounter
5

5
6
6
MARKET
6
5
4

3
2
1
3rd LEVEL SUPPLIER
2nd LEVEL SUPPLIER
1st LEVEL SUPPLIER
ORIGINAL EQUIPMENT MFG.
DEMAND
PERIOD
Prodn.
Stock
Prodn.
Stock
Prodn.
Stock
Prodn.
Stock
100
100
100
100
100
100
100
100
100
100
100
100
100

3
2
1
ALL OPERATIONS HOLD ONE PERIOD’S STOCK
20
100
60
60
100
80
80
100
90
100
95
90
100
95
180
60
120
120
80
100
100
90
95

95
95
95
95
60
120
90
90
100
95
95
95
95
100
90
95
95
95
95
95
95
95
95
95
95
95
95
95
95
95
95
95
95
95
95
95

95
95
95
95
95
95
95
OEM
7
7
The bullwhip effect..

6
5
4
3
2
1
3rd LEVEL SUPPLIER
2nd LEVEL SUPPLIER
1st LEVEL SUPPLIER
DEMAND
PERIOD
Prodn.
Stock
Prodn.
Stock
Prodn.
Stock
Prodn.
Stock
100
100
100
100
100
100
100
100

100
100
100
100
100
Name:
DSCI 303: Quiz 3
Grading: 20 points (total)
1 point for completely filling both columns for each supply
chain entity x 4 = 4 points
4 points for getting all numbers correct for each supply chain
entity x 4 = 16 points
On Oct 15!
8
8
9
The bullwhip effect - Causes
Causes of bullwhip effect
Demand forecast update
Order batching
Price fluctuation
Order rationing and gaming

10
The bullwhip effect - Remedy
Improved communication across the supply chain
Better forecast
Consistent pricing
Accurate, real-time sharing of demand data (ERP systems can
help)
Reduce delays (order processing delays as well as shipping
delays)
Term Project: 1st Interim Report is due
by 6 pm on Oct 10

Questions?
12
0
25
50
75
100
125
150
175
200
135791113151719
0
25
50
75
100
125
150
175
200
135791113151719
0
25
50
75

100
125
150
175
200
135791113151719
0
25
50
75
100
125
150
175
200
135791113151719
0
25
50
75
100
125
150
175
200
135791113151719
Operation management 3.zip
DSCI-303
Session 11
1

Web-integrated enterprise resource planning (collaborative
commerce, c-commerce)
Enterprise resource planning (ERP)
Manufacturing resource planning (MRPII)
Increasing integration of information systems
Increasing impact on the whole supply network
The development of ERP
Material requirements planning (MRP)
2
2
Material requirements planning
Master production schedule

Customer orders
Forecast demand
Bill of materials
Inventory records
Purchase orders
Materials plans
Works orders
Material Requirement Planning (MRP) schematic
3
3
The concept of MRP II
Design
Marketing
Operations

Finance
Central database
4
4
Integrated database
ERP integrates several systems
Purchasing and supply applications
Operations applications
Financial applications
Strategic reporting applications
Sales and marketing applications
Delivery and logistics applications

Service applications
HRM applications
Senior management and stakeholders
Employees
Suppliers
Customers
Front-office staff
Back-office staff
Employees
5
5
‘Partnership’ supply management

The character of internal operations activity
Do nothing
Do everything important
Do everything
Transactional – many suppliers
Close –
few suppliers
Type of inter-firm contact
Virtual spot trading
Long-term virtual operation
Vertically integrated operation
Traditional supply management
Supply chain relationships – by relationship
6
6
Business to Business (B2B)
Most common, all but the last link in the supply chain
E-commerce examples:
EDI networks
Business information exchanges.
Business to Consumer (B2C)

Retail operations
Catalogue operations, etc.
Internet retailers
Amazon.com, etc.
Consumer to Business (C2B)
Consumers ‘offer’, business responds
Some airline ticket operators
Priceline.com, etc.
Supply chain relationships – by entities
Trading ‘swap’ and auction transactions
Specialist ‘collector’ sites
Ebay.com, etc.
Consumer to Consumer (C2C)
Business
Consumer
To…
Business
Consumer
From…
7

7
Logistics-System Design Matrix
Modes of transport
8
Term Project: 1st Interim Report is due
by 6 pm on Oct 10
Next time (Wed)..
Quiz 3
10

Questions?
11
DSCI-303
Session 12
1
The bullwhip effect..

6
5
4
3
2
1
3rd LEVEL SUPPLIER
2nd LEVEL SUPPLIER
1st LEVEL SUPPLIER
DEMAND
PERIOD
Prodn.
Stock
Prodn.
Stock
Prodn.
Stock
Prodn.
Stock

100
100
100
100
100
100
100
100
100
100
100
100
100
Name:
DSCI 303: Quiz 3
Grading: 20 points (total)
1 point for completely filling both columns for each supply
chain entity x 4 = 4 points
4 points for getting all numbers correct for each supply chain
entity x 4 = 16 points
Today is Oct 15!
2
Quiz 3

Operation or process
Input
Output
Compare / replan
Intervention
Plans
A simple model of planning and control
Monitor
4

4
Planning is deciding
Control is
what activities should take place in the operation
when they should take place
what resources should be allocated to them
understanding what is actually happening in the operation
deciding whether there is a significant deviation from what
should be happening
(if there is a deviation) changing resources in order to affect the
operation’s activities.
Planning and control (Continued)
5
5
Planning: P:D ratio
6
The P:D ratio of an operation indicates how long the customer
has to wait for the service or product as compared with the total
time to carry out all the activities to make the service or product

available to the customer
Cust-omer
Obtain resources
Create
Deliver
Design
P = D
Design, resource, create and deliver to order
Cust-omer
Create
Deliver
Obtain resources
Design
D
P
Design, create and deliver to order
Examples: advertising agency, construction project
Examples: website development, custom furniture production
Lower volume
Higher variety
Higher volume
Lower variety

4
Planning: P:D ratio
7
Cust-omer
Cust-omer
Lower volume
Higher variety
Higher volume
Lower variety
Create
Deliver
Obtain resources
Choose
D
P

Create and deliver to order
Examples: hair blow-dry bar, house builder with standard
designs
Deliver
Obtain resources
Choose
D
Create
Create
P
Examples: internet retail fulfilment, assemble to order
computers (e.g. Dell)
Partially create and deliver to order
4
Planning: P:D ratio
8

Cust-omer
Cust-omer
Lower volume
Higher variety
Higher volume
Lower variety
Deliver
Obtain resources
Choose
D
Create
P
Create to stock
Examples: domestic appliance production
Deliver
Obtain resources
Choose
D

Create
P
Collect/choose from stock
Examples: collect retailer (e.g. IKEA), vending machines
4
Process: any part of an organization that takes inputs and
transforms them into outputs
Cycle time: the average successive time between completions of
successive units
Utilization: the ratio of the time that a resource is actually
activated relative to the time that it is available for use
Process Analysis
9
4

Single-stage Process
Stage 1
Stage 1
Stage 2
Stage 3
Multi-stage Process
Types of processes:
10
4
Multi-stage process with buffer..

11
Process flowcharting: the use of a diagram to present the major
elements of a process
The basic elements can include tasks or operations, flows of
materials or customers, decision points, and storage areas or
queues
Process Flowcharting:
12
4
Gambling at a slot machine..
Gambling at a slot machine begins with someone inserting a
silver dollar in the slot machine. The coin moves to the payout
bucket (used for payout whenever someone wins a jackpot) if
the payout bucket is not full. If it is full, the coin moves to the

winnings bucket. The player is obviously not aware of this coin
movement. After inserting the coin, the gambler pulls the arm
on the slot machine to play. If the player wins a prize, the slot
machine activates the payout from the payout bucket, and then
pays out the winnings. Then (regardless of the outcome – win or
lose), the player decides whether to play again or not. If the
player wants to play again, the process starts all over again. If
not, the player quits.
13
(Imperfect) Process chart for a slot machine
14
Questions?
15

DSCI-303
Session 13
1
Process flowcharting: the use of a diagram to present the major
elements of a process
The basic elements can include tasks or operations, flows of
materials or customers, decision points, and storage areas or
queues
Process Flowcharting:
2

4
Process Flowcharting Example 1: Waking up
Process Description:
For Andy, the process of waking up starts when his alarm rings.
When the alarm rings, Andy has to decide whether he is ready
to get up or not. If he is ready to get up, he gets out of the bed,
and the process of waking up comes to an end. If he is not ready
to get up, he hits the snooze button on the alarm, and goes back
to sleep for 5 minutes. This process continues until Andy wakes
up.
3
4
Process Flowcharting Example 1: Waking up
Any issues?
4

4
Process Flowcharting Example 2: Bank teller
Process Description:
For a bank teller, it all starts when a customer arrives at the
counter. After the customer makes a cash withdrawal request,
the teller has to check the customer’s ID, available account
balance, and whether such withdrawal is allowed under the
bank’s policy. Only if the customer shows a valid ID, the teller
will check the balance, and only if the account has the
necessary balance, the teller will check whether the withdrawal
request complies with the bank’s policy. If the request complies
with the bank’s policy, the teller records the transaction, and
then gives cash to the client. If any of the process checks (ID,
balance, compliance with the bank’s policies) fail, then the
withdrawal request is rejected.
5
4

Process Flowcharting Example 2: Bank teller
Any issues?
6
4
Process Flowcharting Example 3: Your Call!
Let’s make one example up!
7
4
Multi-stage process with buffer..

8
Buffer: a storage area between stages where the output of a
stage is placed prior to being used in a downstream stage
Blocking: occurs when the activities in a stage must stop
because there is no place to deposit the item
Starving: occurs when the activities in a stage must stop
because there is no work
Bottleneck: stage that limits the capacity of the process
Buffering, Blocking, and Starving..
9
The drum, buffer, rope, concept
Stage or process B
Stage or process A

Stage or process D
Stage or process E
Buffer of inventory
Stage or process C
Bottleneck drum sets the beat
Communication rope controls prior activities
10
10
Questions?
11

DSCI-303
Session 14
1
What does planning involve?
2
Capacity .. means the scale of an operation.
What is capacity?
This alone does not reflect the operation’s processing
capability.

Hence, we must incorporate a time dimension appropriate to the
use of assets.
For example, 24,000 liters per day;
10,000 calls per day;
57 patients per session;
Etc.
3
3
Climatic
Festive
Behavioural
Political
Financial
Social

Demand varies..
Construction materials
Beverages (beer, cola)
Foods (ice-cream)
Clothing (swimwear, shoes)
Gardening items (seeds)
Fireworks
Travel services
Holidays
Tax processing
Doctors (influenza epidemic)
Sports services
Education services.
4
4

Demand fluctuations in four operations
5
5
Good forecasts are essential ..
But, so is an understanding of demand uncertainty because it
allows you to judge the risks to the service level.
When demand uncertainty is high, the risks to service level of
under provision of capacity are high.
Demand
Time
Only 5% chance of demand being lower than this
Demand
Time
Distribution of demand

Only 5% chance of demand being higher than this
6
6
Loading time
Equipment ‘idling’
Speed losses
Slow running equipment
Net operating time
Not worked (unplanned)
Breakdown failure
Set-up and change-overs
Total operating time

Availability losses
Operating equipment effectiveness (OEE)
Availability rate = a
= Total operating time
Loading time
Performance rate = p
= Net operating time
Total operating time
Quality rate = q
= Valuable operating time
Net operating time
Quality losses
Valuable operating time
Quality losses
7

7
How capacity is used..
Design capacity
168 hours per week
Effective capacity
109 hours per week
Planned loss of 59 hours
Actual output – 51 hours per week
Avoidable loss – 58 hours per week
Efficiency
Actual output
Effective capacity
=
Utilization
Actual output
Design capacity
=

8
8
Economies and Diseconomies of Scale
Economies of scale: as a plant gets larger, the average cost per
unit drops
Lower operating and capital costs
Per unit cost of equipment drops
More specialization of labor
At some point, the plant becomes too large
Diseconomies of scale becomes a problem
9
Ways of reconciling capacity and demand
Level capacity

Demand
Capacity
Chase demand
Demand management
Capacity
Capacity
Demand
Demand
10
Absorb demand
Adjust output to match demand

Change demand
10
Considerations in Changing Capacity
Maintaining system balance
Want similar capacities at each operation
Deal with bottlenecks
Frequency of capacity additions
Cost of upgrading too frequently
Cost of upgrading too infrequently
External sources of capacity
Outsourcing
Sharing capacity
11
Pull and push philosophies..

12
12
Planning Service Capacity
Time: goods can not be stored for later use and capacity must be
available to provide a service when it is needed
Location: service goods must be at the customer demand point
and capacity must be located near the customer
Volatility of demand: much greater than in manufacturing
13
26
Yield Management
Yield management: the process of allocating the right type of
capacity to the right type of customer at the right price and time
to maximize revenue or yield
Can be a powerful approach to making demand more predictable

Has existed as long as there has been limited capacity for
serving customers
Its widespread scientific application began with American
Airlines’ computerized reservation system (SABRE)
14
Yield management most effective when…
Demand can be segmented by customer
Fixed costs are high and variable costs are low
Inventory is perishable
Product can be sold in advance
Demand is highly variable
15
Homework 2 can be submitted on Blackboard

from Oct 24
& is due by 6 pm on Oct 31
Questions?
17
DSCI 303 Session 15 and 16 - Oct 27 and Oct 29.pptx
DSCI-303
1
Sessions 15 & 16

1
What and why of inventory..
Input process
Inventory
Output process
Rate of supply from input process
Rate of demand from output process
Inventory
2

2
Inventory helps..
Maintain independence of operations
Meet variation in product demand
Allow flexibility in production scheduling
Provide a safeguard for variation in raw material delivery time
Take advantage of economic purchase-order size
3
4
Inventory considerations..
Inventory = stacks of money sitting on forklifts, on shelves, and
in trucks and planes while in transit
For many businesses, inventory is the largest asset on the
balance sheet at any given time
Inventory is often not very liquid
It may be a good idea to try to get the inventory down as far as
possible

4
Inventory affects ROA (Return on Assets)
5
Return on Assets
Profit
Total assets
Working capital + Fixed assets
=
=
Ability to supply from stock
Obsolescence, damage, loss
Cost of funding inventory
Storage costs
Ordering costs
Amount you owe suppliers
Amount customers owe you
e.g. Automotive parts distributor

e.g. Local retail store
Single-stage inventory system
Suppliers
Suppliers
Stock
Sales operation
Central depot
Distribution
Local distribution point
Sales operation
Two-stage inventory system
Single-stage, two-stage, multi-stage inventory systems

6
e.g. Television manufacturer
Suppliers
Input stock
Stage 1
WIP
Stage 2
WIP
Stage 3
Finished goods stock
Multi-stage inventory system

6
A multi-echelon inventory system
Yarn producers
Cloth manufacturers

Garment manufacturers
Regional warehouses
Retail stores
7

1. Homework Assignments (best 2 out of 3):
· Top two scores out of the three homework assignment scores
will be used for the final grade calculation.
· Will contain multiplequestions requiring calculations /
analysis / reflection.
· Will be posted on Blackboard on prescheduled dates, and will
be due by 6:00 pm (PST) seven days after. For example, the
assignment posted on a Friday will be due by 6:00 pm (PST)
next Friday.
· Submission must be made via Blackboard, and MUST be in the
form of a single MS-Word file / PDF file (as specified in the
Homework Assignment), uploaded as an attachment with your
response. Any other type of submission will receive zero points.
· The file name MUST include the course code, section number,
homework assignment number, your last name, and your first
name as exemplified below (do change the Section Number,
FirstName, and LastName as appropriate). Files named
differently will automatically face a penalty (a stern warning for
the first offence, 5-point penalty for the second offence, 25-
point penalty for each subsequent offence).
· Homework 1:
DSCI303_Section1_HW1_FirstName_LastName.docx
· If you make multiple submissions for an assignment, only your
last submission made before the deadline will be graded. It is
the student’s responsibility to ensure that the correct file is
submitted, and that the file has uploaded successfully.
· Late submissions: One late submission (with up to six hours of
delay) will face no penalty. Subsequent offences / submissions

more than six hours late will automatically receive zero points
regardless of the excuse.
· No make-up assignments will be offered.
2. Final Exam (1, optional):
· Offered only at the times specified by the University registrar,
except for those with a pre-approved disability-related
accommodation.
· May contain a mix of multiple choice questions and questions
that require analysis / calculation / reflection.
· Cumulative, open book, and open notes (non-electronic).
· No electronic devices except a calculator will be allowed in
the exam hall. If a student appears to be using any other
electronic device during the exam, the student will be asked to
leave right away, and will receive zero points for the final exam
regardless of his actual performance.
No make-up exam will be offered
DSCI 303 - Homework 02 - Assignment.docx
DSCI 303: Homework 02 (150 points)
Hello everyone!
The second homework assignment for DSCI 303 is here!
You need to:
· Prepare a Process Flow Diagram that captures the flow of
material, process steps, decision points, storage / buffer, and the
hourly processing capacity of each step in the process based on
the description given below.
· Use a software program (of your choice) to create a ONE-

PAGE Process Flow Diagram – hand-drawn diagrams will
automatically receive zero points, and multi-page diagrams will
face a 10-point penalty for each additional page.
· Then, convert your work into a SINGLE PDF file before
submitting. All the requested details must be legible when the
diagram is printed on a Letter (8.5”x11”) or an A3 (11”x17”)
paper.
· If any process step has multiple machines / resources that are
identical to one another (identical source of input, identical
transformation, identical destination for the output), draw only
one shape for the step, and acknowledge the number of
machines under the box / inverted triangle.
· Mention the processing capacity of each step under the box /
inverted triangle. Be consistent with the unit of time used
across your diagram.
· Name the file using the following sample as a guide (files
named differently will automatically face a 25-point penalty):
· DSCI303_Section1_HW2_FirstName_LastName.pdf
· For example: DSCI303_Section2_HW2_Brad_Pitt.pdf
· Submit your response as a SINGLE one-page PDF file
attachment on Blackboard no later than by 6 pm on October 31,
2014. As you know, late responses attract a penalty (as
described in the course syllabus), so don’t be late!
Only Blackboard submissions count! Do let me know right away
if you have any questions or concerns.
Note: This is an individual-effort task – do not receive / provide
any assistance from / to others.
How your response will be graded:
1. Correct diagram (110 points)
1.1: Receiving and testing: 14 points
1.2: Dumping: 9 points
1.3: Temporary storage: 21 points

1.4: Dechaffing / destoning / drying: 12 points
1.5: Separation / quality grading: 24 points
1.6: Bulking and bagging: 30 points
2. Neat, professional, easy-to-follow diagram (40 points)
1.
2.
2.1. Your name, section name at the top of the page: 2 points
2.2. Course name, assignment name at the top of the page: 2
points
2.3. Dotted-line boundaries around each process stage: 6 points
2.4. Correctly and legibly labeled boxes and arrows: 10 points
2.5. Clear indication of process start and end: 8 points
2.6. Properly aligned boxes, diamonds, inverted triangles and
arrows: 12 points
Introduction:
Oh My God Cherries Inc. (OMGCI) – a North Carolina-based
processor of cherries has a cherry processing plant located in
Florida. This plant, called FL-1, receives both fresh (dry
harvested) and process cherries (water harvested / wet) during
each harvesting season. The handling process for cherries is
highly mechanized at FL-1. The process consists of several
operations: receiving and testing, dumping, temporary storage,
destoning, dechaffing, drying, separation, and bulking /
bagging. The objective of the entire process is to gather bulk
cherries and prepare them for storage / further processing.
Process stages:
1. Receiving and testing:
Trucks arrive at FL-1 loaded with dry or wet cherries. When the
truck arrives, its gross and empty weights are recorded in one
step. Then, prior to unloading the cherries (achieved through
dumpers, described in the next step), three separate samples are
taken at the same time to determine the following:
· The percentage of the truck’s net weight that is made up of

clean cherries
· The percentage of unusable (poor / smaller / frosted) cherries
in the truck
· The color grade of the cherries in the truck
2. Dumping:
After a truckload of cherries is weighed and sampled, the truck
moves to one of the seven HH301 dumpers. The dumpers empty
the truck content onto one of the seven rapidly moving belt
conveyors. Each of the seven conveyors takes the cherries to the
second level of the plant for storage in one of the 30 transient
storage bins (TSBs).
3. Temporary storage:
TSBs 1-20 can hold 250 barrels each, and TSBs 21-30 can hold
400 barrels each. TSBs 1-15 are used for dry cherries only, and
TSBs 26-30 are used for wet cherries only. TSBs 16-25 can be
used for either wet or dry cherries (however, dry and wet
cherries are never combined in any TSB). Wet cherries from
these bins are directly taken to one of the five dechaffing units.
The dry cherries are routed through one of the four destoning
units capable of processing 1500 barrels per hour each, before
going through a dechaffing unit.
4. Dechaffing / Destoning / Drying:
The dechaffing units can process up to 1500 barrels of cherries
per hour each. Only the first two dechaffing units are used to
process the wet cherries at any time. After dechaffing, the wet
cherries are taken to one of the six drying units before being
taken to the quality grading area. The drying units process wet
cherries that come out of dechaffing area at the rate of 200
barrels per hour each. After drying, the wet cherries are taken to
the quality grading area (as explained in the next paragraph).
The dry cherries first go through destoning, then dechaffing
(only the last three dechaffing units are used for the dry
cherries), and then finally move to the quality grading area as

explained below.
5. Separation / quality grading:
After destoning, dechaffing, and drying (as applicable), the
cherries are transported to one of the two large take-way
conveyors that take the cherries to the jumbo separators. Each
of the two large take-way conveyors is able to process 500
barrels of cherries per hour, and is attached to twelve jumbo
separators that separate the cherries into three groups – 1st
quality, potential 2nd quality, and unacceptable cherries. The
first quality cherries are taken to the shipping area (as explained
in the next paragraph). The unacceptable cherries fall through
waste chutes into water-filled waste flumes, and float off to the
disposal area. The potential 2nd quality cherries fall into the
Bailey mill that separate the cherries into 2nd quality cherries
and unacceptable cherries. Unacceptable cherries coming out of
the Bailey mill also fall through waste chutes into water-filled
waste flumes, and float off to the disposal area.
6. Bulking and bagging:
Five conveyors (four from the jumbo separators and one from
the Bailey mill) transport separated (1st and 2nd quality)
cherries to the shipping building. Each of the five conveyors
can feed cherries to any of the three main flexible conveyors in
the shipping area. These flexible conveyors can route the
cherries to any of the five bagging stations, any of the three
bulk bin stations, or to any of the six bulk truck stations.
From the bulk truck stations, the cherries leave the FL-1 plant
in bulk trucks for shipment directly to the finish processing
plant.
From the bagging stations as well as bulking stations, the
cherries leave the FL-1 plant as described below:
· In bins for storage at freezers with bulk bin storage capability
· In bags for storage in freezers that could handle only bagged

cherries
· In bins / bags for storage in freezers that could handle both
bins and bags.
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