Operations Analysis

Xun Wang,Wessam Abouarghoub.

Logistics Systems Dynamics GroupLogistics and Operations Management Section

Cardiff Business School

What is Operations?• Operations is the set of activities that creates value

in the form of goods and services by transforming inputs into outputs.– Goods: tangible products– Services: intangible products

OperationsInput Output

What is Operations Management?• Operations Management (OM) is decision making

involving the design, planning and control of the many factors that affect operations.– Productivity, cost, flexibility, quality, service

Ford Model T www.ford.co.uk

What is Operations Management?• Typical structure of organizations:

– Marketing– Finance– Human Resource– Production/Operations

• Operations are costly!

Why bother with Operations Management?• Manufacturing still important in the UK• Manufacturing important in developing countries• Global outsourcing

– Supply chain issues• Service has become more and more important• Methods, tool, techniques can be carried over to

other sectors– Government– Healthcare

Three basic types of industrial sectors

• Primary. Agriculture etc• Secondary. Manufacturing etc• Tertiary. Services etc• As a country develops, its businesses migrate from

primary to secondary to tertiary sectors• This means that the type of operations change over

time, and as Operations Managers our tasks will change over time

As a country develops its operations changes….

% gross domestic product by sector

1980 1996 Country Primary Secondary Tertiary Primary Secondary Tertiary

Australia 12 28 60 8 22 70 Belgium 3 39 58 2 34 64 Canada 12 33 55 8 30 62 France 6 40 54 4 33 63

Germany 4 47 49 2 41 57 Italy 7 40 53 3 31 66 Japan 5 41 54 2 40 58

Norway 24 28 48 21 22 57 Singapore 2 36 62 1 36 64

South Africa 31 29 40 15 33 52 Spain 8 40 52 4 30 66

Sweden 5 41 54 3 36 61 UK 7 38 55 4 33 63

USA 8 29 63 4 24 72

As a country develops its operations changes…. (India)

As a country develops its operations changes…. (China)

Service

Manufacturing

Agriculture

45

45

10

Employment in the UK

Consultants income • 31% of consultants income is from operations management

activities

Marketing/ sales

OperationsManagementCorporateStrategyIT Strategy

Benefits/Accurial

OrganistionaldesignFinance

Supposed Outcomes

• A comprehensive understanding of various operations management techniques.

• Critically evaluate the context and assumptions behind these techniques.

• Judge the intrinsic trade-offs identified in determining targets and solutions in operations management problems.

Who am I?Dr Xun (Paul) Wang, PhD, MAdmin, BAdminRoom S05wangx46@cardiff.ac.uk

My office hours I have an open door policy on Mondays 14.00-16.00and Tuesdays 14.00-16.00. If you wish to see me at other times, please email for an appointment as I usually have a very busy schedule.

My secretaryElaine Adams, Room C52, AdamsE27@cardiff.ac.uk

Who am I?Dr Wessam Abouarghoub, PhD, MSc, BSc, HND, Chief Mate MarinerRoom C44AbouarghoubW@cardiff.ac.ukhttp://business.cardiff.ac.uk/contact/staff/abouarghoub

My office hours I have an open door policy on Monday 12.00 – 14.00 and Wednesday 15.00 – 17.00. If you wish to see me at other times, please email for an appointment as I have a very busy schedule.

My secretaryElaine Adams, Room C52, AdamsE27@cardiff.ac.uk

Operations Analysis:Lectures and Tutorials

• Lectures in weeks 1-10 in JHRC. Lectures Wednesdays 13.10-15.00.

• Tutorials in room P21– Groups 2, 3, 4. 13.10-15.00hrs. Tuesday 21st Oct, 11th Nov, 25th Nov, 9th Dec.

• Tutorials in room C23– Groups 5, 6,7,8. 15.10-17.00 hrs. Tuesday 21st Oct, 11th Nov, 25th Nov, 9th Dec.

• Tutorials in room L02– Groups 9,10,11,12. 09.10-11.00 hrs. Wednesday 22th Oct, 12th Nov, 26th Nov, 10th Dec.– Groups 13,14,15,16. 11.10-13.00 hrs. Wednesday 22th Oct, 12th Nov, 26th Nov, 10th Dec.

• If you are unsure of your tutorial group, please go to Postgraduate Student Hub at the new building.

• Note there is an assessment week in-between weeks 5 and 6. Thus there is no Operations Analysis lecture on the 5th November (although there are other activities scheduled).

Module assessment outline• Methods, techniques and tools of operations

management• The exam will cover what was taught in the class.• 3 hours, end of module examination in January• Internal and External Examiners will moderate the

grading• Final module marks will be awarded by the Board

of Examiners in April 2015.

The secret formula for an MBA• An MBA is 180 academic credits.

– According to the UK’s QAA standards this is equivalent to 1800 hours of study.

• 1800 hrs / 48 weeks = 37.5 hrs a week study• Operations Analysis = 10 credits

– 10 credits = 100 hours of study– 20 hours of lectures, 8 hours of syndicates– 100 - 20 - 8 = 72 hours of self study and revision

• 72 hours / 10 weeks= 7.2 hrs a week of self study for Operations Analysis!

• If you turned up after week 2 then you need to do 9.5 hrs self study a week on Operations Analysis (week 3 it requires 11.5 hrs per week)!

learningcentral.cf.ac.ukThings you should bring to every lecture;• pens, • pencils, • coloured pens/pencils,• calculator, • paper,• previous lecture notes,• ruler,• brain.

Things you should not bring to lectures:Mobile phones, drinks, food, cigarettes, beer

There are many Operations Management books in the library. A good start is…

What sort of maths skills are required?

,,,,, x

., cmxydxdy

2,

$, £, ¥, € The noble quest of making money

is greatly assisted by a little mathematics!

Formula sheets in the exams• I do give out formula sheets for the more

complicated equations as remembering equations is not a learning objective. 

• However, you will be excepted to apply, use, critic, adapt equations in formula sheets to both theoretical and practical situations.

• I also expect you to be able to derive solutions (usually of the simpler equations) from first principles, this is a learning objective.  – In this case I will, of course, not give to the equation in a

formula sheet as that would be giving away the answer!

Maths Support ServiceThe Maths Support Service is freely available to all students of Cardiff University, not just those studying Mathematics, to assist with any maths based problems, no matter how small!

The service offers:• Friendly one-to-one or small group assistance• Informal drop-in sessions and appointments• Access to a range of learning resources

http://www.cf.ac.uk/mathssupport/

Syllabus for Operations AnalysisWeek No. Lecture Topics Lecturer Tutorial

1 Process Modelling I Wang

2 Process Modelling II Wang3 Activity Sampling Wang

4 Optimisation and Linear programming

Wang Process Mapping & SADT (Abouarghoub)

5 Project Management Wang

Assessment week

6 Economics of Operations I Wang Activity Sampling (Abouarghoub)

7 Economics of Operations II Wang

8 Decision Making Under Uncertainty

Wang Linear Programming (Abouarghoub)

9 Inventory I Wang

10 Inventory II – Cause and Effect Diagrams

Wang Project Management (Abouarghoub)

End of Introduction to Operations Analysis

Lecture 1. Process mapping

Process mapping• Process mapping describes processes in terms of how the activities

within the process relate to each other.• There are different techniques for process mapping (we will cover that

in the next lecture), but they both have the following features:– They identify different types of activities that take place during the process– They show the flow of materials, people or information through the process

Purpose of process mapping• Overview

– Identify what actually takes place

• Basics for discussion– Clarity for yourself and others– Understand how different players view the process under study and the tasks and

activities in the process

• Opportunity to see improvements– Evaluate different process designs– Identify value adding and wasteful activities– Aid in the design of a simpler/ more effective systems

• Skills you can use anywhere• Increases your effectiveness

Procedure of process mapping• Describe the process that you want to map

– “The process has the purpose of …”– “The aim of this process is to …”

• Identify names of tasks– Which event triggers the above said process– Which event concludes it– Which tasks are included in the process

• What kind of the task is it?– Operation; transport; store; delay; inspection; decision; …

• Identify the person/role/department who carries out the step– Yourself; your assistant; the finance department, …

Process flow mapping symbolsOPERATIONIndicates a main step in a process, method or procedure where a change in “state” occurs

STOREa controlled delay in the process where material is received into and issued from a store or a file or an item is retained for reference purposes

INSPECTIONIndicates an inspection for quality and / or a check for quantity

TRANSPORTmovement betweenparts of the process

DECISIONDecision/judgement has to be made which will decide the following process

DELAYan uncontrolleddelay in the process

Process for making a cup of coffee

Prepare cup

Add coffee powder to

cup

Boilwater

Add water to

cup

Stir your drink

Need sugar?

Need milk?

Add sugar to

cup

Add milk to cup

Wait

YES

NO NO

YES

Stir your drink

Process for making a cup of coffee

1

Go to coffee machine

1

Take filter out of machine

2

Take to bin

2

Knock out used bins

3

Go to sink

3

Wash filter

4

Go back to coffee m/c

4

Fill filter with fresh beans

5

Tamp down beans

6

Refit filter to coffee m/c

7

Turn on m/c

1

Wait for m/c to heat up

8

Put cup under filter

9

Turn m/c to steam

10

Steam beans and fill up cup

11

Turn off m/c

12

Take cup out from m/c

5

Go to the conservatory

13

Enjoy

Cross-functionalprocess maps

•Sometimes it is useful to use “streamed” process maps highlight the roles different people (or departments) play in delivering the product or service.•AKA process maps with “swimming lanes”

Shopping for a pair of jeans

Purpose, viewpoint and detail• When drawing a process map it is important to keep in

mind the purpose of your study – Maps drawn for one purpose may not be suitable for another purpose

• Different viewpoints of the process exist– A customers view of the process is different from a company’s view or

the product’s (or paper / information) view (indeed different customers may also have different perspectives / opinions).

• The appropriate level of detail is affected by the purpose and context of your study– At a supply chain level, perhaps a whole factory can be considered an

operation. Mapping inside the factory though requires much more detail.

• Process mapping requires skill & professional judgement

The four process states• You should always tackle a process mapping

problem with a sceptical mind as there are four process states– What people say it is– What they perceive it to be– What it actually is– What it should be

• Remember, people may be lazy, ignorant or afraid and they do lie!

Critical examination of your process map

• After we have drawn a map of the “as is” situation we need to improve it.

• We do this by critically examining the map to - determine the true reasons behind each event- draw up a list of improvements

• Focus attention first on each individual event and then on the process as a whole

Your attitude will affect your process mapping results!

1. Facts must be established. Do not accept what “appears to be”, or “should be” or what is “said to be”

2. Preconceptions must not be allowed to colour the facts3. The problem must be tackled with a challenging and

sceptical attitude4. Hasty judgements must be avoided5. Detail must receive persistent and close attention6. Experiments not based on firm evidence should be

documented and reserved to the appropriate place in the investigation

7. New methods should not be considered until all the features of the current method have been systematically examined

The seven lean wastes (DOTWIMP)• Defects. Any repair, rework or spoilage.• Over production. Producing too much or producing too

soon. – Overproduction is the worst waste because it hides or generates all

others, especially the inventory waste. • Transportation. All transport is a waste.• Waiting. For parts, people or machines. • Inventory. Any more than the minimum amount required to

get the job done.• Motion. Any motion (of man) that does not add value.• Processing. Excess capacity, excess quality standards.

• But what about wasting people’s talent? Or energy?

Waste Definition Causes Why is it a waste?

Transport Unnecessary movement of parts between processes Unnecessary material handling

Badly designed process/cell Complex material flow Poor value stream flow Sharing of equipment

Increases production time Products could get damaged during transit Takes time, resources & space Increases WIP

Inventory Any raw material, WIP or finished goods which are not having value added to them

Mismatch between demand & production Inaccurate forecasting Excessive downtime / set up Push instead of pull Large batch sizes Unreliable suppliers

Adds cost & requires investment Requires space to store Extra resources needed to manage Hides shortages & defects Can become stolen, damaged, obsolete & out of date Needs to be insured

Motion Waste motion occurs when individuals move more than is necessary to complete the process

No standard operating procedure Poor housekeeping Badly designed cell Inadequate training

Adds cost Interrupts production flow Increases production time Can cause injury

Waiting People or parts that wait for a work cycle to be completed

Shortages & unreliable supply chain Lack of flexible workers Downtime / Breakdown Ineffective production planning Large batch sizes Quality, design, engineering issues

Stop / start production Poor workflow continuity Creates bottlenecks Loses capacity Lengthens lead times Failed delivery dates

Over-Production

To produce sooner, faster or in greater quantities than required to meet customer demand Manufacturing too much, too early or “Just in Case”

MRP push rather than kanban pull Large batch sizes Looks better to be busy Lack of customer focus

It costs money to consume resources before you have too It creates inventory & that hides quality problems and uses up space Overproduction discourages a smooth flow of goods or services

Over-Processing

Processing beyond the standard required by the customer

Out of date standards ‘We have always done it like this’ attitude Not understanding the customer & the process Lack of innovation & improvement Lack of standard operation procedures

By improving processing efficiency we ultimately use less resource to achieve the same customer satisfaction It increases productive time It’s work above and beyond specification

Defects

A defect is a component which the customer would deem unacceptable to pass the quality standard

Out of control/Incapable processes Lack of skills, training & on the job support Inaccurate design & engineering Machine inaccuracy Black art processes

Defects reduce or discourage customer satisfaction Defects have to be rectified which costs money, time, effort, materials & creates paper work Defects in the field reduces customer confidence & you could lose customers Defects interrupt the schedule

Waste is everywhere

• Many (all?) processes have wasteful activities

• The target is to eliminate waste

• This is usually done by reducing complexity in the process (i.e. simplifying it!)

• Each process consists of value add and non-value add (waste) activities

VA and NVA activities

Current process

Remove waste

Redesigned process

Categories of waste

Value add (VA) activitiesAnything that the customer is willing to pay for

Non-value add (NVA) activitiesAn activity that costs money but does not add value to the need

(perceived as waste)Something the customer is not willing to pay for

Necessary NVA (NNVA) activitiesNNVA activities are NVA activities that do not add value but which

are essential to ensure that the VA activities fulfil the needNNVA activities may also be there to meet legal requirements

What is a value adding activity?To be a value added action the action must meet all

three of the following criteria:1) The customer is willing to pay for this activity.2) It must be done right the first time.3) The action must somehow change the product or service in some manner.

Waste measurement & reduction

VA and NVA activities usually defined in terms of time

The main principals to waste reduction are:Elimination (of activities)Time compression (doing things quicker)Concurrency (parallel operations)

VA and NVA activities are identified via process modelling

Shopping for Silk in Shanghai

Notice how the numbers are used. Within which category numbers are consecutively. This allows the number of each category to be easily determined, by simply observing the last instance of each category.

Shopping for Silk in Swansea

Title: Completed by:

“As is” “As should be” “As could be” Date:

Time

Units

Distance

Units Ope

ratio

n

Insp

ectio

n

Tran

spor

t

Stor

age

Del

ay

# Task Description

VA

NN

VA

NVA

Notes

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

© 2008, Stephen Disney.

Process mapping data collection form

Making a cup of coffee

360

Formula 1 pit stop

• Formula 1 pit stop

• Pit stops: 1950 and 2013

• Formula 1 pit stop: slow motion

Pit stop – 1950s

Driver

Tyre man

Fuel man

Jack operator

1

Driving in lane

2

Stopping

3

Jacking up the front

13

Departure

Change front right tyre

4

Refuelling

9

12

Lower the car

Clean spillages

10 11

Clean windshield

1

Wait in car

1

Move to left

Change front left tyre

5

Move to the rear

2 6

Jacking up the rear

Change front right tyre

7 3

Move to left

Change front left tyre

8

Changing tyre – 1950s

1

Knock screw off

Fetch new tyre

42

Remove old tyre

3

Fit new tyre

4

Fit screw

5

Fasten screw

Put downold tyre

3Put downspanner

1

Put down screw

2

Take upspanner

6

Take up screw

5

Examine the operations first• Transports and delays may superficially appear to

give the greatest scope for improvement• However it is often possible to streamline the

process by considering the operations first. - Can they be eliminated?

- Can they be re-ordered?

This will then alter the transport and delays • If the operations are “capable” do we require so

many inspections?

Primary examination of each activity1) Purpose. “What is achieved?” and “is it necessary?”.

Challenge why the activity exists. The answer will guide you to whether a particular activity should be included in the new process

2) Place. “Where is it done?” and “Why there?”3) Sequence. “When is it done?” and “Why then?”. This

will guide you towards the best sequence of events4) Person. “Who does it?” and “Why that person?”5) Means. “How is it done?” and “Why is it done that way?”

Secondary examination of each activity

1) Purpose. “What else could be done?” and “What else should be done?”

2) Place. “Where else could it be done?” and “Where should it be done?”

3) Sequence. “When else could it be done?” and “When should it be?”.

4) Person. “Who else could do it?” and “Who should do it?”

5) Means. “How else could it be done?” and “How should it be done?”

Purpose of the examination• The answers will guide you towards the new design• Unnecessary activities can be eliminated• If an activity can’t be eliminated it could be

- changed - combined with another activity - done in a different place- done in a different order (in parallel?)- done by different people- done by a different means

• Could an activity be simplified?• Could an activity be made to be external to the

process?

Wheel man Regulation Wheel team Wheel team

PaulPit stop Hand

After car is lifted Seems logical / habit After car is stopped

Wheel nut is removed

Yes, absolutely Nothing Nothing

By spanner No investment in technology

Wheel gun Wheel gun

4

In the pit stop Regulation None Pit stop

Remove the wheel nut

After car is stopped

(Un) securing the wheel

• Senses the torque, thus more accurate• Handmade equipment, more expensive

• Cheap• Inaccurate, slow to communicate

Jack operator Logical None Jack operator

PaulPit stop Hand

After wheel nut is fitted

Habit After wheel is fitted

Car is lowered Yes, absolutely Nothing Nothing

By jack Jack is lifting the car None By jack

12

In the pit stop Logical None Pit stop

Lowering the car

After wheel is fitted

Signalling

• Accurate, automatic, fast• Prone to errors, failed sensors or false positive

triggers • Cars could be stranded in the pit or released early

• Flexible to the environment• Subject to the crews’ communication and

response speed

Lollipop man Need inspection Lollipop man Lollipop man

PaulPit stop Hand

When the car is in the pit stop

Seems logical When the car is in the pit stop

Drivers know when to stop, start engine and depart

Yes, absolutely Nothing Nothing

By lollipop sign No investment in technology

Traffic light system Traffic light system

In front of the car Habit Somewhere with a better sight

Somewhere with a better sight

Providing signal to driver

When the car is in the pit stop

Pit stop – 2013

Lollipop man

Driver

Other mechanics

Jack operators x2

Driving in lane

Signing brake

Braking

Jacking up the car

If other cars passing lane

Lift sign

Departure

Other changes / adjustments

Lowerthe car

Signingfirst gear

Removing the nut

Remove the old tyre

Fitting the new tyre

Fitting the nut

Tyre changer

Tyre carrier 1

Tyre carrier 2

First Gear

Changing tyre – 2013

Removing the nut

Remove the old tyre

Fitting the new tyre

Fitting the nut

Tyre changer

Tyre carrier 1

Tyre carrier 2

Pit stop – 2013

Front wing men Alter wings and nose cone

Stabilizer

Fire extinguisher

Crew

Starter man

Put out fire that occurs

Stabilizes the car

Remove rubbish from air intake

Restart engine if stalls

Crew Cleaning windshield

Crew Watering the driver

F1 pit stop

• “You could design new equipment to shave off a tenth, or five-hundredths of a second, but it’s expensive and there’s a point at which the resources could be better allocated elsewhere.”– Jonathan Wheatley, Red Bull Team Manager

Single Minute Exchange of Dies (SMED)• When a machine (or operator) is required to produce

more then one product (or service) then a “set-up” or “changeover” may be necessary when the machine changes from producing one product to another.

• SMED, or Single Minute Exchange of Dies is a technique invented Dr Shigeo Shingo to reduce the waste incurred to convert processes from running one part or operation to another.

Set-up activities in different industriesScenario Set-up activitiesLathe Removing completed work piece from lathe and placing new work piece in the

lathe, selecting new cutting tool, fixing and aligning new cutting tool to lathe, consult engineering drawings.

Press Remove die from the press machine, locate and fix new die into the machine.

Telephone operator at call centre

Ask for customer account number, ask for nature of enquiry, retrieve necessary data on account / problem by navigating various computer screens.

Hair dresser Obtain payment from previous customer, clean chair, ask requirements, wash / dry hair.

Fruit juice producer Empty filling machine of juice, washing out machine pipes, change over juice containers.

Restaurant Washing of a saucepan.

Formula One pit stop Change tyres, replenish coolants and fuel, undertake small repairs, clean windshield, giving driver a drink.

Airline Getting passengers and luggage off and then one to plane, cleaning cabin, restocking cabin consumables (food drink, duty free gifts), refuelling, changing staff.

Sports stadium Changing the arena for a basketball game from an ice hockey game.

Internal and external set-up activities• An internal activity is the work done whilst the

machine is not producing good product.

• An external activity is the work done whilst the machine is producing good product.

• If there is no machine in your scenario, think about the “core” activity that progresses the work to its final state in order to identify what is internal or external. – Internal changeover activities delay the progress towards

the final state, external activities do not.

Charging the battery on your camera • Scenario 1. Before SMED

– 1a. You are taking pictures and the battery runs out.– 1b. You plug the power cable into the camera and wait for the battery to be

charged. Whilst this is happening you are not taking any pictures.– 1c. Unplug the power cable– 1d. Carry on taking pictures

• Activity 1b and 1c are the internal changeover / set-up activities

• Scenario 2. After SMED– 2a. You are taking pictures and the battery runs out.– 2b. You remove the flat battery and replace it with a previously fully charged

battery.– 2c. Carry on taking pictures.– 2d. You plug in the power cable and charge the flat battery at your

convenience.• Activity 2b is an internal set-up activity and 2d is an external set-up

activity

A four stage approach to achieve SMED

• Step 1. Separate out the internal tasks from the external tasks (move the external tasks backwards or forwards, introduce parallelization)

• Step 2. Reduce the number and duration of the internal tasks. Sometimes you need to convert internal tasks to external ones

• Step 3. Reduce the external tasks. • Step 4. Improve all set-up activities.

• http://www.youtube.com/watch?v=Q_A89Tv5Rl4

Changing tyre – Identifying external and internal tasks

1

Knock screw off

Fetch new tyre

42

Remove old tyre

3

Fit new tyre

4

Fit screw

5

Fasten screw

Put downold tyre

3Put downspanner

1

Put down screw

2

Take upspanner

6

Take up screw

5

4 can be moved forward

1 2

3

5 can be reduced by parallelizationcan be moved backward

6

Changing tyre – 2013

Removing the nut

Remove the old tyre

Fitting the new tyre

Fitting the nut

Tyre changer

Tyre carrier 1

Tyre carrier 2

Hold gun Hold gun and nut

Hold new tyre

Put down old tyre

Imagine you are in the Tour de France…The tour de France is a bike race. You are in the front group, but you get a flat tire.

You raise your hand up to signal the officials’ car immediately behind the group that there’s something wrong so they can announce it on race radio. The hand you raise makes a difference. If it’s your rear wheel that is flat, you raise your right hand - you raise your left hand for a front flat.

Prepare the bike. If your rear wheel is flat, shift your gears into the smallest cog on the rear wheel in order to make the current wheel drop out of the rear end more easily and make it easier for the mechanic to get the new one on. Whether it’s a front or rear wheel change, you flip the release lever on the brake so the pads move away from the rim.

Remove the offending wheelIf you have time before the mechanic arrives, flip the quick release lever and remove the wheel from the bike.

When the mechanic arrives with the new wheel, remember to hold on to the bike as the mechanic is completely focused on getting the new wheel on and secured, not holding the bike upright. If you hold onto the bike, he can use both hands to get the wheel change done faster.

Get started again.Staying calm is the key to getting going again quickly. Take a deep breath, get one foot on the pedal and shove off. Let the mechanic give you a push and then focus on catching up with the group.

Homework Question. Draw a process map of this activity. Highlight which are the internal tasks and the external tasks.

Thank you for your attention!

Handouts

Shopping for silk in Shanghai: Case studyNotes on SMED

Mathematics for Operations Managers