1. MGMT 208: Operations Management
Fall 2011
Class #2

2. Toyota’s Way What is Toyota doing now?
Taiichi Ohno’s answer was very simple:
“All we are doing is looking at the time line from the moment the customer gives us an order to the point when we collect the cash. And we are reducing that time line by removing the non-value-added wastes.”
(Taiichi Ohno. Toyota Production System: Beyond Large-Scale Production. p. ix.)

3. Little’s Law Example
A major manufacturer sells $300 million worth of cellular equipment per year. Average amount in accounts receivable is $45 million. What is the average elapse time from the time a customer is billed to the time payment is received?
Note that in this case, the process is the manufacturer’s account receivable department and the flow unit is a dollar in accounts receivable.

4. Analyzing the Job Flow process chart
Chart used to examine the overall sequence of an operation by focusing on movements of the operator or flow of materials

5. Symbols for Flow-Process Chart
Operation (a task or work activity)
Inspection (an inspection of the product for
quantity or quality)
Transportation (a movement of material from
one point to another)
Storage (an inventory or storage of materials
awaiting the next operation)
Delay (a delay in the sequence of operations)

6. Details of Method FLOW PROCESS CHART ANALYST D. Kolb PAGE 1 of 2
Job Requisition of petty cash
Details of Method
ANALYST
D. Kolb
PAGE
1 of 2
Operation
Movement
Inspection
Delay
Storage
Requisition made by department head
Put in “pick-up” basket
To accounting department
Account and signature verified
Amount approved by treasurer
Amount counted by cashier
Amount recorded by bookkeeper
Petty cash sealed in envelope
Petty cash carried to department
Petty cash checked against requisition
Receipt signed
Petty cash stored in safety box

8. Example: Bariatric Surgery Flow Chart
40% quit
10% quit
Cash
Initial
phone
call
Initial
consul-
tation
Request
tests
Set
appointmt
for test 1
Test 1
delay
decide
Medical
Necessity
Letter
Insurance
Approval
decide
Set
appointmt
Insurance
Yes (50%)
90%
More tests (50%)
5 x 1.2 = 6 min
(20% callback)
Patient
Receptionist
30 min
Patient
Surgeon
10 min
Patient
Surgeon
5 min
Patient
Receptionist
60 min
Patient
Care-nurse
Outpatient room
2 days
Patient
20 min
Patient
Surgeon
5 min
Patient
Receptionist
Set
appointmt
for test 2
5 min
Patient
Receptionist
Visit 2
15 min
Patient
Surgeon
Test 2
30 min
Patient
Care-nurse
Outpatient room
80% approved
Insurance
Approval
delay
2 wks
Patient
2 days
Patient
20% denied & quit
Check-ups
&
Recovery
Laparoscopic
Surgery
15 min
2 s-nurses OR OR
Cleaning
x %
Follow Up
Patient
Leaves
2 days
Patient,
Inpatient room
Care nurse 120min
(10minx6x2)
75 min
2 surgery nurses
Anesthetist, surgeon
patient, OR
Drs.
Prep
Pre-
surgery
Seminar
Patients
Arrive &
Check-in
Schedule
surgery
Pre-
surgery
Visit 3
15 min
Surgeon
anesthetist
30 min
Patient
Care-nurse
1- x %
60 min
6 Patients
Surgeon
Seminar room
10 min
Patient
Care-nurse
20 min
Patient
Surgeon
Outpatient room
Check-ups
&
Recovery
Open
Surgery
Patient
Prep
30 min
Patient
Care-nurse
4 days
Patient,
Inpatient room
Care nurse 240min
(10minx6x4)
45 min
2 surgery nurses
Anesthetist, surgeon
patient, OR
J.A. Van Mieghem/Operations/Process Analysis & Apps

9. Questions to ask when adopting a process view
1. What are the process boundaries: what is the input and output?
2. What is the flow unit or the unit of analysis?
3. “Attach yourself to” the flow unit and record its process steps through the process
What are the value-added and necessary activities? What are the associated processing times or work content?
Where does the flow unit wait (buffers)? What are the associated waiting times?
What are the routes a flow unit can take? What are necessary precedence relationships? (i.e., what must be done sequentially?)
Note that the first improvement step will be to delete non-value-added and unnecessary activities and buffers = waste
G. Allon/Operations/Process Analysis & Apps

10. Questions to ask when adopting a process view (Cont.)
4. Who does the work? What are the resources for each activity?
What are all the activities a given resource performs? (cross-training , flexibility)
What are the resource constraints? What determines the flow rate? (demand or capacity)
How is quality measured?
What is the cost of each resource?
5. What information is required to perform each activity? Where does this information come from? This specifies the information flow (dashed lines)
Key for Capacity Analysis

11. Case Study
Paediatric Orthopaedic Clinic at the Children's Hospital of Western Ontario

12. Introduction
As Chief of Paediatric Orthopaedic Surgery, Dr. Leitch was very concerned by the long wait times that the young patients (and their parents) were experiencing in the clinic. Long wait times tended to aggravate the already pent-up distress and concern that they were feeling. She glanced at recently collected data on service times and wondered how the process might be improved, while continuing to balance budgetary pressures to reduce costs. Moreover, any changes could not be done in isolation, as her clinic shared resources with other departments. A monthly executive meeting was fast approaching, and expectations were starting to run high that Leitch’s efforts might be able to spur improvements in other departments too.

13. Issues Major: Minor: Reducing lengthy wait times
Improving process and service performance
Reducing variability in activity times and wait times
Identifying the interactions with patients from other departments (shared resources)
Efficiently managing both demand and human resources to address patient needs.

14. Average Patient Mix at the Clinic
Patients - 80
New – 80
(40% of total patients)
Follow-up - 48
(60% of total patients)
Need X-Ray – 40.8
(85% of follow-up patients)
No X-Ray required- 7.2
(15% of follow-up patients)

15. Process Flow Diagram