OPERATIONS MANAGEMENT -1

Term 2, B2014-16, Oct-Dec 2014

Process Analysis

OPM 1 Term 2, B2014-16, Oct-Dec 2014

Session 03 Process Analysis

Prof. Kedar P. Joshi

converts iron ores into iron briquettes to supply steel plants

Figure 1

West

OPM 1 Term 2, B2014-16, Oct-Dec 2014

Session 03 Process Analysis

Prof. Kedar P. Joshi

To Create a Process Flow Chart (Diagram) Figure 2

2nd Stage
FB Reactor
CFB
Preheater

1st Stage
CFB Reactor

~ 110 m

Inclined
Bucket Elevator

Briquetting
Plant

Process
Gas
Heat
Exchanger
Iron
Ore
Fines

Electrical
Substation&
Control
Room

Process Gas
Compressor
Fired Gas Heaters

HBI Product

~ 160 m

Engineering drawing
OPM 1 Term 2, B2014-16, Oct-Dec 2014

Session 03 Process Analysis

Prof. Kedar P. Joshi

Elements of a Process

Figure 3

Activities
Carried out by resources
Add value and are required
for completion of the flow unit
May or may not carry inventory
Have a capacity (maximum number
of flow units that can flow through
the activity within a unit of time)
Arrows
Indicate the flow of the flow unit
Multiple flow unit types possible
Inventory / Buffers
Do NOT have a capacity; however,
there might be a limited number of
flow units that can be put in this
inventory space at any moment of time
Multiple flow unit types possible
OPM 1 Term 2, B2014-16, Oct-Dec 2014

Session 03 Process Analysis

Prof. Kedar P. Joshi

Figure 4

Pre-Heater
Pile of Iron ore fines

Process flow diagram, first step

OPM 1 Term 2, B2014-16, Oct-Dec 2014

Session 03 Process Analysis

Prof. Kedar P. Joshi

Figure 5

Pre-Heater

Lock
Hoppers

1st Reactor

2nd Reactor

Pile of Iron ore fines

Process flow diagram, to be continued

OPM 1 Term 2, B2014-16, Oct-Dec 2014

Session 03 Process Analysis

Prof. Kedar P. Joshi

Figure 6

Lock
Hoppers

Pre-Heater

1st Reactor

2nd Reactor

Pile of Iron ore fines

Briquetting

Discharge

Flash
Heater

Finished Goods

Completed process flow Process flow diagram

OPM 1 Term 2, B2014-16, Oct-Dec 2014

Session 03 Process Analysis

Prof. Kedar P. Joshi

Figure 7

Pre-Heater

Lock
Hoppers

1st

2nd

Reactor

Reactor

Discharge

Flash
heater

Briquetting

Pile of Iron
ore fines
Finished
goods

Completed PFD for the Circored process

OPM 1 Term 2, B2014-16, Oct-Dec 2014

Session 03 Process Analysis

Prof. Kedar P. Joshi

Process flow diagram accounting for mass reduction

7.5% Outflow

Pre-Heater

Lock
Hoppers

15% Outflow

1st Reactor

10% Outflow

2nd Reactor

Pile of Iron ore fines

Briquetting

Discharge

Flash
Heater

Finished Goods

OPM 1 Term 2, B2014-16, Oct-Dec 2014

Session 03 Process Analysis

Prof. Kedar P. Joshi

Process Concepts
Important

Process capacity
Flow rate
Cycle Time
Manufacturing Lead Time (MLT) /Throughput Time
Bottleneck
Process utilization and capacity utilization
Workload and implied utilization

Additional

Lot Size/Batch Size

Setup time
Run time
Waiting time
Idle time
Buffer

OPM 1 Term 2, B2014-16, Oct-Dec 2014

Session 03 Process Analysis

Prof. Kedar P. Joshi

Bottleneck and process capacity

Capacity: Number (amount) of units that can be processed per time
Each briquetting machine has a capacity of 55 tons per hour

Overall capacity of a sequence of processes is determined by the slowest

process, i.e. the resource with the smallest capacity.
Process capacity=Min{Capacity of Res 1, ., Capacity of Res 2}

Incorporating available input rate and demand rate,

Throughput=Min{Input rate, Process capacity, Demand rate}
Supply constrained

Input

Bottleneck
Capacity

Demand constrained

Input

Bottleneck
Capacity
Flow
FlowRate
Rate

Flow
FlowRate
Rate

Excess
capacity

Demand

Excess
capacity
Demand

OPM 1 Term 2, B2014-16, Oct-Dec 2014

Session 03 Process Analysis

Prof. Kedar P. Joshi

Capacity Related Terminology

Setup time : the

time that a part
spends waiting for a
resource to be set
up to work on this
same part

OPM 1 Term 2, B2014-16, Oct-Dec 2014

Process time/run
time is the time
that the part is
being processed

Session 03 Process Analysis

Queue time is the

time that a part
waits for a resource
while the resource
is busy with
something else

Prof. Kedar P. Joshi

Time Components of Production Cycle (Continued)

Wait time is the time that a

part waits not for a resource
but for another part so that
they can be assembled
together

OPM 1 Term 2, B2014-16, Oct-Dec 2014

Idle time is the unused time

that represents the cycle
time less the sum of the
setup time, processing time,
queue time, and wait time

Session 03 Process Analysis

Prof. Kedar P. Joshi

Time to Produce a Certain Amount of Supply

Assuming the process is already producing output.

How long does it take for the Trininad plant to produce

10,000 tons?
A restaurant has 40 tables. Average flow time = 60 min How
long is the wait time if you are sixth on the waiting list?
OPM 1 Term 2, B2014-16, Oct-Dec 2014

Session 03 Process Analysis

Prof. Kedar P. Joshi

Littles Law
Throughput Time = Work-in-Process /Throughput rate
( Hopp amd Spearman, 2000)

Average Inventory = Average Flow Rate X Average Flow Time

( Cachon and Terweiesch, 2004)

Operations management (OM) covers a large arena of practice.

Littles Law is discussed in several current OM texts, including Hopp and Spearman
(2000), Cachon and Terwiesch (2004).
Queuing theory and OM generally use different notations for Littles Law parameters,
and so we introduce that issue first. In a desire to get close to people who are actually
using LL to support decision making,

OPM 1 Term 2, B2014-16, Oct-Dec 2014

Session 03 Process Analysis

Prof. Kedar P. Joshi

Littles Law
Patients
11

Cumulative
Inflow

10
9

Cumulative
Outflow

8
7

Flow Time

Inventory

5
4
3
2
Inventory=Cumulative Inflow Cumulative Outflow

1
0 7:00

8:00

9:00

Time

10:00 11:00 12:00 13:00 14:00 15:00 16:00 17:00 18:00

Cumulative In-flow and Out-flow

OPM 1 Term 2, B2014-16, Oct-Dec 2014

Session 03 Process Analysis

Prof. Kedar P. Joshi

The process capacity of Circored plant in Trinidad

PreHeater

Lock
Hoppers

1st (cfb) Reactor

2nd (fb)
Reactor

Flash
heater

Discharge

Briquetting

Capacities
Preheater 120 tons/hour
Lock Hoppers 110 tons/hour
1st (cfb) Reactor 112 tons/hour. Processes 28 tons every 15 minutes
2nd (fb) Reactor 100 tons/hour. Processes 400 tons every 4 hours
Flash heater 135 tons/hour
Process Capacity
Discharge 118 tons/hour
= min{120,110,112,100,135,118,165}
Briquetting 165 tons/hour

= 100 tons/hour

OPM 1 Term 2, B2014-16, Oct-Dec 2014

Session 03 Process Analysis

Prof. Kedar P. Joshi

The cycle time of circored plant in Trinidad

PreHeater

Lock
Hoppers

1st (cfb) Reactor

2nd (fb)
Reactor

Flash
heater

Discharge

Briquetting

Cycle time: Amount of time taken to process 1 unit in a repetitive processing.

Since different units can be processed in parallel, cycle time is not the flow time.

Cycle time (designed) = 1 / Process Capacity

How long does it take to process 1 ton of iron ore?
Since 1 hour is required for 100 tons, 1/100 hour suffices for 1 ton.
That is, the cycle time is 0.01 hour = 0.6 min = 36 seconds
Every 36 seconds 1 ton of iron briquette is completed.
OPM 1 Term 2, B2014-16, Oct-Dec 2014

Session 03 Process Analysis

Prof. Kedar P. Joshi

Process utilization and Capacity utilization

The objective of most businesses is to increase profit, not to

increase utilization.
A service process should not pursue 100% utilization.
OPM 1 Term 2, B2014-16, Oct-Dec 2014

Session 03 Process Analysis

Prof. Kedar P. Joshi

Utilization of limited demand

Assume the demand is only 657,000 tons
Design capacity = (100 tons/hr X 24 hours/day X 365 days/ yr) =876,000
tons

The bottleneck is the resource with the highest utilization.

OPM 1 Term 2, B2014-16, Oct-Dec 2014

Session 03 Process Analysis

Prof. Kedar P. Joshi

Utilization Profile
100%

Mismatch between demand and

supply at the process level

Utilization

90%

Bottleneck

80%

Imbalance relative
To bottleneck

70%
60%
50%
40%
30%

20%
10%
0%
Preheater

Lock
Hoppers

OPM 1 Term 2, B2014-16, Oct-Dec 2014

CFB

Stationary
Reactor

Session 03 Process Analysis

Flash
heater

Pressure
let-down
system

Briquetting
machine

Total
process

Prof. Kedar P. Joshi

Workload and implied utilization

Utilization only carries information about excess capacity.

Implied utilization captures the mismatch when the demand
exceeds the capacity.
OPM 1 Term 2, B2014-16, Oct-Dec 2014

Session 03 Process Analysis

Prof. Kedar P. Joshi

The utilization with demand of 1,095,000 tons/year

Implied (requested) Utilization of a resource = Demand / Capacity of the resource

Utilization
Bottleneck
125%

100%
75%

50%

0%

Preheater

Lock
Hoppers

OPM 1 Term 2, B2014-16, Oct-Dec 2014

CFB

FB

Session 03 Process Analysis

Flash
Heater

Discharge

Briquetting

Overall
process

Prof. Kedar P. Joshi

STEPS FOR BASIC PROCESS ANALYSIS WITH ONE TYPE

OF FLOW UNIT
Find the capacity of every
resource, if there are
multiple resources
performing the same
activity add their capacities
together.

The resource with the

lowest capacity is called the
bottleneck. Its capacity
determines the capacity of
the entire process (Process
Capacity).

Similarly we find the utilization of each

resource as Flow rate

OPM 1 Term 2, B2014-16, Oct-Dec 2014

Session 03 Process Analysis

The flow rate is found based

on Flow Rate= Minimum
(Available input. Demand,
Process capacity)

We find the Utilization of the process as :

Prof. Kedar P. Joshi

Different units flowing in the same system

Outsourcing business processes is common

Billing, Recruiting, Maintenance, Customer call centers, etc

The company which handles the outsourced process is likely to deal with various
kinds of units
Case in point: A company that provides resume validation service:

Demand is 180 applications per day ( 30 for consulting, 110 for staff and remaining for internships)
Contact
Contactfaculty/
faculty/
other
persons
other persons

Consulting
Staff

Verified Applications

File
File

Internship
Contact
Contactprior
prior
employers
employers

Confirmation
Confirmation
letter
letter

Benchmark
Benchmark
grades
grades
OPM 1 Term 2, B2014-16, Oct-Dec 2014

Session 03 Process Analysis

Prof. Kedar P. Joshi

STEPS FOR BASIC PROCESS ANALYSIS WITH MULTIPLE

TYPES OF FLOW UNITS
1.
2.
3.

4.
5.

For each resource, compute the number of minutes that the resource can produce; this is 60 (min/hour)
Number of resources within the resource pool.
Create a process flow diagram, indicating how the flow units go through the process; use multiple colors to
indicate the flow of the different flow units.
Create a table indicating how much workload each flow unit is consuming at each resource:
The rows of the table correspond to the resources in the process.
The columns of the table correspond to the different types of flow units.
Each cell of the table should contain one of the following:
1. If flow unit does not visit the corresponding resource, ;
2. Otherwise, demand per hour of the corresponding flow unit activity time.
Add up the workload of each resource across all flow units.
Compute the implied utilization of each resource as
Implied utilization =
Result of Step 3
Result of Step 1

The resource with the highest implied utilization is the bottleneck.

OPM 1 Term 2, B2014-16, Oct-Dec 2014

Session 03 Process Analysis

Prof. Kedar P. Joshi

An application as a unit
Demand per hour for validation: 3 for consulting; 11 for staff; 4 for internship.
Activity
Time (min)
Per applct

Number
of workers

Available
Capacity
Applct/hr

Consulting
Workload
Per hour

Staff
Workload
Per hour

Intern
Workload
Per hour

Total

File

20

11

18

18/20= 90%

Contact Persons

20

3/6= 50%

Contact
Employers

15

12

11

14

14/12= 117%

Benchmark
Grades

15

4/15= 27%

Confirmation
Letter

30

11

18

18/30= 60%

OPM 1 Term 2, B2014-16, Oct-Dec 2014

Session 03 Process Analysis

Implied
Utilization

Prof. Kedar P. Joshi

Using One minute of work as the flow unit to find the bottleneck
Demand per hour for validation: 3 for consulting; 11 for staff; 4 for internship.
Activity
Time (min)
Per applct

Number
of workers

Available
Capacity

Consulting
Workload
Minutes Per
hour

Staff
Workload
Minutes Per
hour

Intern
Workload
Minutes Per
hour

Total

File

60

3X3

11 X 3

4X3

54

54/60= 90%

Contact Persons

20

120

3 X 20

60

60/120= 50%

Contact
Employers

15

180

3 X 15

11 X15

210

210/180=
117%

Benchmark
Grades

120

4X8

32

32/120= 27%

Confirmation
Letter

60

3X2

11

4X2

36

36/60= 60%

OPM 1 Term 2, B2014-16, Oct-Dec 2014

Session 03 Process Analysis

Implied
Utilization

Prof. Kedar P. Joshi

An application as a unit
What is the minimum number of people to hire so that the
implied utilization of contact employers is below 100%?

What happens to implied utilizations when staff applications

decrease to 8 per hour? Compute the new utilizations.

OPM 1 Term 2, B2014-16, Oct-Dec 2014

Session 03 Process Analysis

29

Prof. Kedar P. Joshi

Summary of process analysis

Prepare a
Process Flow
Diagram

Extensions required Use different

Colors to mark
for working with
multiple flow units Flow units

Compute the
Capacity for
each of the
Resources

Use demand to
compute the
implied utilization
levels

Note that capacity

levels may differ
depending on
product type

Compute the work

load across all
product types

Identify the
Bottleneck

Compute various
Performance
measures

Step with highest

implied utilization

World class enterprises excel at the speedy and flexible integration of

the business processes.
Finding the bottleneck allows us to compute a variety of performance
measures.
You Can't Manage What You Don't Measure
OPM 1 Term 2, B2014-16, Oct-Dec 2014

Session 03 Process Analysis

Prof. Kedar P. Joshi