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Capacity Planning • Waiting Line Management • Sequencing Definition of Operations

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Capacity Planning • Waiting Line Management • Sequencing Definition of Operations Operations Management Wendell Gilland Aviation Industrial Readiness Program January, 2020 Key Operations Issues That We Will Discuss • Definition of Operations • Capacity Analysis • Capacity Planning • Waiting Line Management • Sequencing Definition of Operations Inputs Human Resources Facilities and Processes Technology, Materials, Land, Energy, and Information Transformation Process Outputs Physical Goods Auxiliary Services Services Performance Measurement (Quality, Cost, Time, Productivity) Three Strategies for Production Build To Assemble Build To Order To Order Stock BTO: Begin production ATO: Build modules BTS: Manufacture entire only after receiving a prior to receiving order; product prior to receiving customer order. assemble product after customer order. receiving customer order. Slower Response Time Faster Raw Finished Materials Inventory Goods High Labor Skill Level Low Key Differences Between Service and Manufacturing Operations • High Customer Contact • Customer Participation in the Service Process • Perishability of Services • Site Selection Dictated by Customer Location • Labor Intensiveness • Variable, Non-Standard Outputs • Difficulty of Measuring Service Productivity Key Operations Issues That We Will Discuss • Definition of Operations • Capacity Analysis • Capacity Planning • Waiting Line Management • Sequencing Capacity - basic definition • Capacity: the productive capability of a facility, usually measured as a quantity of output per unit time. • Why is capacity important? Meet demand in the short term Strategically – Better service (internet, telecommunications) – Demand in the long term (opportunities) What is a Bottleneck? The step in the production/service delivery process: Bottleneck a) that has the lowest capacity when measured Definition using a comparable unit of measure and, therefore, b) that limits the overall output of the system. a) On paper: Determine the capacity - using a How Do You comparable measure - of each step in the process. Find A b) Line of sight: Find the place in the production Bottleneck? process that has the highest level of Work-In-Process (WIP) inventory. Capacity Analysis Example - Steel Mill 3 2 Iron Ore Parts Blast Parts Basic Oxygen Continuous Finishing Processing Furnace Furnace Caster Mill 4,000 tpd 3,000 tpd 4,200 tpd 6,000 tpd 5,000 tpd 1 1 Part Part Coke Scrap Ovens Handling 1,000 tpd 1,500 tpd November 6, 2007 Key Operations Issues That We Will Discuss Today • Definition of Operations • Capacity Analysis • Capacity Planning • Waiting Line Management • Sequencing Forecasting - Background • Forecast (n.): A statement or inference about the future, usually using information about the past to make predictions about the future. • Some general principles of forecasting All forecasts are wrong The longer the forecast horizon, the less accurate the forecast is likely to be. Expert judgement increases as forecast horizon increases Production Planning - Necessary Because Demand is Rarely Constant and/or Easily Predictable Plot of Daily Demand by Month 160 140 120 100 Average 80 60 Daily Demand 40 20 - April May June July March August JanuaryFebruary October September NovemberDecember Methods of Influencing Demand • Price Incentives • Reservations • Backlogs: wait for orders • Complementary Products or Services • Advertising/promotion Methods of Influencing Supply • Hiring or firing workers • Overtime or slack time • Part time / temporary labor • Subcontracting • Inventories Aggregate Planning Strategies • Chase Strategy Capacity (work force levels) is adjusted to match demand requirements over planning horizon. • Level Strategy A constant capacity or work force level is maintained over planning horizon. Inventory / demand backlogs are built and dissipated. • Mixed Strategy Both inventory and work force levels are allowed to change over the planning horizon. Capacity and Labor Planning: Making Supply Match Demand • Variability makes it difficult to match Supply and Demand Cyclical Variability in Demand Seasonal Variability in Demand Intra-week Variability in Demand Intra-day Variability in Demand Variability in Supply? In the fight against Variability, your best weapon is often Flexibility Key Operations Issues That We Will Discuss Today • Definition of Operations • Capacity Analysis • Capacity Planning • Waiting Line Management • Sequencing Waiting Line Management What is your experience on a typical visit to the Post Office? What Happens at the Detailed Process Level? Arrival • Determine distribution of time between each arriving customer Process R used to represent average customer arrival rate (e.g., 3 customers per minute) Service • Determine distribution of time needed to serve each Process customer S used to represent average service rate Capacity Utilization = R / S Example: Base Access Gate Assume the average time between contractor arrivals to the base is 20 seconds, and each contractor spends an average of 18 seconds being cleared by the security guard. Both arrival times and service times are distributed exponentially. What is the utilization rate? What other performance measures are important? Under Certain Assumptions, The Average Throughput Time Can Be Calculated Directly Assumptions • Arrival time distributed exponentially • Service time distributed exponentially • Single server Called an M/M/1 Queueing Network 1 / S TPT = 1 - (Capacity Utilization) What Happens to Waiting Time as Capacity Utilization Increases Throughput Time Throughput 1/S 0.5 1.0 Capacity Utilization Key Operations Issues That We Will Discuss Today • Definition of Operations • Capacity Analysis • Capacity Planning • Waiting Line Management • Sequencing Example: Single Station Scheduling Problem B A Which is next? E C D Processing Queue Station Job Processing Time Due Date A 6 hours 16 hours B 15 22 C 4 26 D 10 19 E 7 45 Common Heuristic Sequencing Rules RULE PRIORITY GIVEN TO ... First Come, First Served (FCFS) Jobs’ arrival order Shortest Processing Jobs with shorter processing time Time (SPT) Earliest Jobs closer to due date Due Date (EDD) Slack Time Jobs with least Slack Time Remaining Remaining (STR) = Due Date - Processing Time – Current Time Evaluating the Performance of the Job Sequencing Result (i.e., the schedule) Average The average time that jobs spend in the Flow Time system Lateness Either the average lateness or the maximum lateness across all jobs processed. Average The time-weighted average number of jobs Inventory in the system Operations Management: Take-Aways • Capacity of an operation determined by bottleneck resource • Different levels of demand can be met by varying workforce or inventory/backlog levels • Variability can cause significant delays in response time • Determining the order in which jobs are processed can play a significant role in the performance of a system.
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