basic concepts of operations

8/9/2019 Basic Concepts of Operations

1/39

BASIC CONCEPTS

OF OPERATIONS

PREP TEAM


2/39

List of Interns

Amazon Aditya Navali

Tanuj Madan

Flipkart Ravi Teja Palla

Phani Kiran

Global E-Proure!GEP" Rohit Mennon

Tata #teel #ayantan $a%

&o%h Abhi%hek Katiyar

A&G Teja% Kulkarni


3/39

BASIC CONCEPTS

OPERATIONS MANAGEMENT

PROCESS ANALYSIS

SUPPLY CHAIN MANAGEMENT

INVENTORY MANAGEMENT

THEORY OF CONSTRAINTS


4/39

Operations Manageent

B!siness f!n"tion responsi#$e forp$anning% "oor&inating an& "ontro$$ingt'e reso!r"es nee&e& to pro&!"e

pro&!"ts an& ser(i"es for a "opan)*

Services Manufacturers

Intangi#$e Pro&!"t Tangi#$e pro&!"t

No in(entor) In(entor) "osts

Hig' "!stoer "onta"t Lo+ "!stoer "onta"t

S'ort response tie Longer response tie

La#or intensi(e Capita$ intensi(e

,i-"!$t) in eas!ringo!tp!t

.!anti/a#$e o!tp!t


5/39

Operations an& s!pp$)strateg) Setting #roa& po$i"ies an& p$an for !sing reso!r"es of a /r

to #est s!pport its $ong ter "opetiti(e strateg)*

Copetition &iensions "o!$& #e0 Cost or Price

Ma1e t'e pro&!"t or &e$i(er t'e ser(i"e "'eap Quality

Ma1e a great pro&!"t or &e$i(er a great ser(i"e

Delivery Speed

Ma1e t'e pro&!"t or &e$i(er t'e ser(i"e 2!i"1$)

Delivery Reliability ,e$i(er it +'en proise&

Coping with changes in demand

C'ange its (o$!e

Flexibility new product introduction speed

C'ange it


6/39

Or&er .!a$i/ers 3 4inners

!rder "uali#ers are t'e #asi" "riteriat'at perit t'e /rs5 pro&!"t to #e"onsi&ere& as "an&i&ates for p!r"'ase

#) "!stoers

!rder $inners are t'e "riteria t'at

&i6erentiates t'e pro&!"ts 3 ser(i"es ofone fro anot'er


7/39

Pro"ess Ana$)sis 7 Basi" ,e/nitions

%ottlenec&' Go(erns t'e o!tp!t rate of t'e pro"ess

Setup (ime'Tie re2!ire& to prepare a a"'ine to a1e anite

!peration (ime' S! of t'e set!p tie an& r!n tie for a

#at"' of parts $aiting (ime'Tie spent +aiting to #e ta1en !p for

operation

(hroughput (ime' It is t'e a(erage tie for a !nit to o(et'ro!g' t'e s)ste* S! of operation tie an& +aiting tie*

Cycle (ime'Tie #et+een "op$etion of 8 !nits of o!tp!t

Capacity' Ma9i! a s)ste "an pro&!"e in a gi(en tieperio&

Capacity )tili*ation0 A"t!a$ o!tp!t:Capa"it)

!utput Rate'Tota$ tie:C)"$e Tie


8/39

Pro"ess C$assi/"ation

Ma&e to !rder pro"ess is a"ti(ate& on$) inresponse to an a"t!a$ or&er ;


9/39

Pro"ess 7 S'op F$oor

,ob Shop' Mar1e& #) $o+ (o$!e of 'ig'(ariet) of goo&s 3 ser(i"es* 4or1 in"$!&essa$$ >o#s% ea"' +it' soe+'at &i6erent

pro"essing re2!ireents -ssembly .ine' Use& +'en 'ig'er

(o$!es of stan&ar&i?e& goo&s or ser(i"esare nee&e&* Repetiti(e pro"essing

Pro/ect' Mar1e& #) a n!#er of a"ti(itiesto #e perfore& in a &e/ne& se2!en"e*En& of a$$ a"ti(ities ar1 t'e en& of t'e

pro>e"t* Pro>e"t is t)pi"a$$) a one s'ot


10/39

Lean Si9 Siga


11/39

Re&!"ing Variation


12/39

C$assi/"ations of Operations P$anning

.ong Range Planning 0 @ )ears

Medium Range Planning 0 )ear Short Range Planning 0 $ess t'an )ear ;SDU

Le(e$=

T'e e&i! range p$anning ;"riti"a$= is tere&as -ggregate Production Planning ;APP=* In

s!"' "ases t'e &ean& is ass!e& to #e&)nai"*

(he goal of aggregate planning is to achievea production plan that will e0ectively utili*e

the organi*ation1s resources to satisfyexpected demand*


13/39

Pro&!"tion P$anning Frae+or1

,ean&Fore"asti

ng

APPAggregat

ePro&!"tio

nP$anning

MPSMaster

Pro&!"tion

S"'e&!$ing

MRPMateria$

Re2!ireent

P$anning

,a) to,a)

S"'e&!$ing


14/39

Porter5s @ For"es Porter5sVa$!e "'ain

' Frae+or1 to ana$)?e"opetition

' To 1no+ attra"ti(enessof In&!str)

' C'ain of a"ti(ities in a /r' Stri(e for Copetiti(e a&(antage a= Cost 3 #= ,i6erentiation

a&(antage


15/39

S!pp$) C'ain Manageent

Supply Chain 2SC3't'e se2!en"e of#!siness pro"esses an& inforationt'at pro(i&es a pro&!"t or ser(i"e fros!pp$iers t'ro!g' an!fa"t!ring an&&istri#!tion to t'e !$tiate "!stoer*

Supply Chain Management 2SCM3'is a set of approa"'es !ti$i?e& toe-"ient$) integrates!pp$iers%an!fa"t!res% +are'o!ses% an& stores%so t'at er"'an&ise is pro&!"e& an&

&istri#!te& at rig't 2!antities% to t'erig't $o"ations% an& at t'e rig't tie% inor&er to inii?e system wide costs+'i$e satisf)ing service levelre"uirements


16/39

E(o$!tion of S!pp$) C'ain P'i$osop')

SCM P+4.!S!P+5' T'e entire s!pp$)

"'ain is a sing$e%integrate& entit)

' T'e "ost% 2!a$it) 3&e$i(er)re2!ireents

are "entra$

' S!pp$) t!ne& to&ean&

'


17/39

Iss!es in SCM

,e"isions in SCM

A* Operationa$ $e(e$ 0 &a) to &a) &e"isions E9 0 S"'e&!$ing% $oa&ing

B* Ta"ti"a$ $e(e$ 0 E(er) 2!arter 3 )ear E9 0 P!r"'asing% in(entor)

C* Strategi" $e(e$ 0 Long $asting e6e"t E9 0 Pro&!"t&esign%o!tso!r"ing

.Fe+ Iss!es in SCM

o.,istri#!tion net+or1 "on/g!rationo.

In(entor) Contro$o.S!pp$) Contra"tso.S!pp$) C'ain Integration an& Strategi" Partneringo.O!tso!r"ing an& O6 so!r"ingo. Inforation Te"'no$og) an& ,e"ision s!pport s)steso.S!pp$) si&e an& ,ean& si&e ris1s


18/39

Ne+ Con"epts 3 Tren&s inSCM

ERP ;MRP= S)stes% S!pp$ier S"ore"ar&s

O6s'ore o!tso!r"ing

Ven&or Manage& In(entor)

ISO "erti/e& s!pp$iers

RFI, ; Ra&io Fre2!en") I&enti/"ation=


19/39

In(entor) Manageent 0 4')

E"onoi"s in(o$(e& in pro&!"ing orp!r"'asing in #at"'es

Un"ertaint) in #ot' &ean& an& s!pp$)

Seasona$it) in &ean& pattern A(ai$a#i$it) of &i6erent transportation

an& &istri#!tion o&e$s


20/39

In(entor) Manageent 0 T)pes 3 De) Ters

In(entor) in S!pp$) C'ain 0

a= Ra+ Materia$ In(entor)

#= 4or1 In Pro"ess ;4IP= In(entor)

"= Finis'e& Pro&!"t

De) Ters 0

Ser(i"e $e(e$ Safet) sto"1

Cost of o(er sto"1ing

Cost of !n&er sto"1ing


21/39

E6e"ti(e In(entor) Po$i") Fa"tors

C!stoer ,ean& 7 Fore"asting%Varia#i$it)

Rep$enis'ent $ea& tie 7 "ertain or

!n"ertain N!#er of &i6erent Pro&!"ts:SDUs

Ser(i"e $e(e$ re2!ireents

T'e $engt' of t'e p$anning 'ori?on Costs 7 a= Or&er "ost 7$arge or&er %

sa$$er pri"e

#= In(entor) Ho$&ing Cost E9 0


22/39

In(entor) Contro$ Po$i"ies

In(entor) "ontro$ ans+ers t'e fo$$o+ing2!estions 4'at s'o!$& #e t'e or&er 2!antit) ;.=

4'en s'o!$& an or&er #e p$a"e&% "a$$e&reor&er point ;ROP=

Ho+ !"' safet) sto"1 ;SS= s'o!$& #e

aintaine&T+o "ategories of In(entor) "ontro$

po$i"ies

4nventory ControlPolicy

ContinuousReview

Periodic Review

!rder Quantity Constant Varia#$e

(ime betweenorders

Varia#$e Constant

$hen to !rder6 4'en in(entor) At t'e en& of T


23/39

E"onoi" Or&er .!antit);.= Or&er 2!antit) of in(entor) t'at inii?es tota$

"ost of in(entor) anageent

Ba$an"es t+o "osts in(entor) "arr)ing "osts an&or&ering "osts

Tota$ in(entor) "ost Or&ering "ost Carr)ing"ost

,ri(es $o+ or&ering "osts &!e to 'ig' #at"' si?es

Ma) $ea& to 'ig' in(entor) $e(e$s t'at in"rease0 Re+or1 "osts

Lost or #ro1en ites

O#so$es"en"e

Ass!ptions ,i6erent Mo&e$s


24/39

ABC Ana$)sis

C$assi/"ation of a$$ "ons!ption ites% #ase& ont'e 7Consumption 8alue9

Cons!ption Va$!e , C

, ann!a$ &ean& in !nits C "ost per !nit in Rs* Base& on CV% in(entor) of a n!#er of ites "an

#e separate& into A% B an& C "$asses

- items'Top ites a""o!nt for :;< of C8

% items'Ne9t 8 ites a""o!nt for =;< of C8 C items' Botto J ites a""o!nt for >;< of

C8


25/39

Pareto R!$e ;K:8=

Named a(ter the )talian eonomi%t* Vilfredo Pareto

+ ,e ob%erved that ./ o( the inome in )taly* 0a% reeived by

1./ o( the )talian population2

+ Thi% beame the (amou% 80/20 rule

+ 1./ o( lient% are re%pon%ible (or ./ o( %ale% volume

+ ./ o( %tok movement% are (or 1./ o( our produt%

The a%%umption i% that 3most of the results in any situation are

determined by a small number of causes.

+ Are mo%t o( our problem% !proe%% variation" au%ed by a

limited number o( thin4% !variable%"5

+ Pareto analy%i% an help %ee i( thi% i% true

+ Note6 $on7t think that the perenta4e% 0ill al0ay% be .81.

+ 9ou7re ju%t lookin4 (or %omethin4 that stands out


26/39

=?

THEORY OFCONSTRAINTS

S'ortter Capa"it) Optii?ation


27/39

=:

T'eor) of Constraints

Signi/"an"e of #ott$ene"1s Ma9i! spee& of t'e pro"ess is t'e spee&

of t'e s$o+est operation

An) ipro(eents +i$$ #e +aste& !n$esst'e #ott$ene"1 is re$ie(e& Bott$ene"1s !st #e i&enti/e& an& ipro(e& if

t'e pro"ess is to #e ipro(e&


28/39

=@


P!rpose is to i&entif) #ott$ene"1s or ot'er"onstraints an& e9p$oit t'e to t'e e9tentpossi#$e I&enti/"ation of "onstraints a$$o+s anageent to

ta1e a"tion to a$$e(iate t'e "onstraint in t'e f!t!re Re&!"e ")"$e tieTie fro re"eipt of "!stoer or&er to s'ipent

Ipro(e an!fa"t!ring ")"$e e-"ien") ;MCE= Pro"essing tie : tota$ ")"$e tie

Ass!es "!rrent "onstraints "annot #e "'ange& int'e s'ortr!n 4'at s'o!$& #e pro&!"e& no+% +it' "!rrent

reso!r"es% to a9ii?e pro/ts


29/39

=A



30/39

B;


Constraining reso!r"e !st #e a9ii?e& A$$ ot'er operations !st #e geare& to+ar& t'is goa$

Ma) re2!ire s!#optii?ation in ot'er areas Upstrea operations !st pro(i&e on$) +'at t'e "onstraint

"an 'an&$e ,o+nstrea operations +i$$ on$) re"ei(e +'at t'e "onstraint

"an p!t o!t

Constraint !st #e 1ept operating at its f!$$ "apa"it) If not% t'e entire pro"ess s$o+s f!rt'er

Fo"!s is on a9ii?ing t'ro!g'p!t Sa$es 7 tota$$) (aria#$e "osts

A$$ ot'er "osts treate& as /9e& operationa$ e9penses Cannot (ar) !"' in t'e s'ortr!n


31/39

B>


Base& on t'e "on"epts of &r!% #!6er an& ropes

,r!

O!tp!t of t'e "onstraint is t'e &r!#eat

Sets t'e tepo for ot'er operations

Te$$s !pstrea operations +'at to pro&!"eTe$$s &o+nstrea operations +'at to e9pe"t

B!6er Sto"1pi$e of +or1 in pro"ess in front of "onstraint

Pre"a!tion to 1eep "onstraint r!nning if !pstrea operations areinterr!pte&

Rope Se2!en"e of pro"esses prior to an& in"$!&ing t'e "onstraint

4ant to p!$$ t'e rope at t'e a9i! spee& Spee& of t'e "onstraint


32/39

B=



33/39

BB

Steps in t'e TOC Pro"ess

Interna$ Pro"ess "onstraints

Ma"'ine tie% et"*

Po$i") "onstraints No o(ertie% et"*

E9terna$

Materia$"onstraints Ins!-"ient

ateria$s

Mar1et "onstraints Ins!-"ient &ean&

* I&entif) t'e s)ste "onstraints

Ho+ is a "onstraint i&enti/e&


34/39

B


8* ,e"i&e 'o+ to e9p$oit t'e "onstraint Pro&!"e t'e ost pro/ta#$e pro&!"t i9

4ant it +or1ing at Ho+ !"' of a #!6er

Ho$&ing "osts In"$!&ing ris1% 2!a$it) "osts

Sto"1o!t "osts

* S!#or&inate e(er)t'ing e$se to t'e pre"e&ing

&e"ision P$an pro&!"tion to 1eep "onstraint +or1ing at

Ma) nee& to "'ange perforan"e eas!res to"onfor !pstrea a"ti(ities to t'e rope spee&


35/39

B


Produt : Produt 1$emand per month :*... ;..Prie per unit ..=Material o%t per unit ?..= ..=

Te%t omponent% .21> .2?.A%%emble omponent% :2.. :2>.)n%tall eletroni% .2>. .2>.Final in%petion and te%t :21> :2..Paka4e and %hip .2:. .2:.

)denti(y the on%traint

Produt : Produt 1 Total

,our%available

per month#lakhour%

Te%t omponent% 1>. 1?. ?.A%%emble omponent% :... . ;.. :>. :;. !


36/39

B?


)denti(y the be%t u%e o( the on%traint

Prie per unit =..Material o%t per unit =?.. =..Throu4hput per unit =>.. =..Con%taint time per unit :21> :2..

Throu4hput per hour =?.. =..

)denti(y the mo%t pro(itable produt miD

Total demand :*... ;..nit% produed in be%t miD


37/39

B:


* A$$e(iate t'e "onstraint ,eterine 'o+ to in"rease its "apa"it)

@* Repeat t'e pro"ess A$+a)s a ne+ "onstraint


38/39


39/39

BA

E(a$!ation of TOC

,isa&(antages Negati(e ipa"t on non"onstraine& areas

,i(erts attention fro ot'er areas t'at a) #e

t'e ne9t "onstraintTeptation to re&!"e "apa"it)

Ignores $ongr!n "onsi&erations Intro&!"tion of ne+ pro&!"ts

Contin!o!s ipro(eent in non"onstraine&areas

Ma) $ea& organi?ation a+a) fro strateg)

basic concepts of operations

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