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4 – 1 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall. Process Analysis 4 For Operations Management, 9e by Krajewski/Ritzman/Malhotra.

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Presentation on theme: "4 – 1 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall. Process Analysis 4 For Operations Management, 9e by Krajewski/Ritzman/Malhotra."— Presentation transcript:

1 4 – 1 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall. Process Analysis 4 For Operations Management, 9e by Krajewski/Ritzman/Malhotra © 2010 Pearson Education PowerPoint Slides by Jeff Heyl

2 4 – 2 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall. Process Analysis Processes may be the least understood and managed aspect of a business A firm can not gain a competitive advantage with faulty processes Processes can be analyzed and improved using certain tools and techniques Process analysis can be accomplished using a six-step blueprint

3 4 – 3 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall. A Systematic Approach Figure 4.1 – Blueprint for Process Analysis Define scope 2 Identify opportunity 1 Implement changes 6 Evaluate performance 4 Redesign process 5 Document process 3

4 4 – 4 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall. Documenting The Process Three effective techniques for documenting and evaluating processes are 1)Flowcharts 2)Service blueprints 3)Process charts They help you see how a process operates and how well it is performing Can help find performance gaps

5 4 – 5 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall. Flowcharts No Yes NoYes No Yes Line of visibility Finish Figure 4.2 –Flowchart of the Sales Process for a Consulting Company Payment received? Client billed by accounting, sales, or consulting Follow-up by accounting, sales, or consulting Approval by consulting? Final invoice created by accounting, sales, or consulting Nested Process Client agreement and service delivery Is proposal complete? Follow-up conversation between client and sales Sales and/or consulting drafts proposal Sales: Initial conversation with client Marketing lead Follow-up conversation between client and consulting Consulting drafts proposal Consulting: Initial conversation with client Consulting lead Sales lead

6 4 – 6 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall. Flowcharts Final invoice created by accounting, sales, or consulting Delivery of service by consulting 50% invoiced by accounting, sales, or consulting Letter of agreement signed Project manager assigned Form completed by sales or consulting Verbal OK from client Is proposal complete? Figure 4.3 –Flowchart of the Nested Sub-process of Client Agreement and Service Delivery

7 4 – 7 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall. Credit and invoicing Production Control and Manufacturing Assembly and Shipping PRODUCTION FINANCE SALES CUSTOMER Flowcharts No Yes No Yes Payment received Payment Order stopped Order cancellation Order cancelled Payment sent Product packages Product and invoice received 100% of credit checked within 24 hours Two scheduling errors per quarter Invoice sent Notice of shipment Order shipped Order picked Order Packages assembled and inventoried ` Items manufactured Production scheduled Inventory adjusted Invoice prepared Credit check OK? New customer? Order received Order Order entered Order completed and submitted Order Order generated Figure 4.4 –Flowchart of the Order-Filling Process Showing Handoffs Between Departments

8 4 – 8 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall. Process Charts An organized way to document all the activities performed by a person or group Activities are typically organized into five categories Operation, Transportation, Inspection, Delay, Storage,

9 4 – 9 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall. Step No. Time (min) Distance (ft) Step Description 1X 2X 3X 4X 5X 6X 7X 8X 9X 10X 11X 12X 13X 14X 15X 16X 17X 18X 19X Process Charts Figure 4.5 –Process Chart for Emergency Room Admission Sit down and fill out patient history Enter emergency room, approach patient window Nurse escorts patient to ER triage room Nurse inspects injury Return to waiting room Wait for available bed Go to ER bed Wait for doctor Doctor inspects injury and questions patient Nurse takes patient to radiology Technician x-rays patient Return to bed in ER Wait for doctor to return Doctor provides diagnosis and advice Return to emergency entrance area Check out Walk to pharmacy Pick up prescription Leave the building

10 4 – 10 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall. Step No. Time (min) Distance (ft) Step Description 1X 2X 3X 4X 5X 6X 7X 8X 9X 10X 11X 12X 13X 14X 15X 16X 17X 18X 19X Process Charts Figure 4.5 –Process Chart for Emergency Room Admission Sit down and fill out patient history Enter emergency room, approach patient window Nurse escorts patient to ER triage room Nurse inspects injury Return to waiting room Wait for available bed Go to ER bed Wait for doctor Doctor inspects injury and questions patient Nurse takes patient to radiology Technician x-rays patient Return to bed in ER Wait for doctor to return Doctor provides diagnosis and advice Return to emergency entrance area Check out Walk to pharmacy Pick up prescription Leave the building Summary Activity Number of Steps Time (min) Distance (ft) Operation Transport Inspect Delay Store

11 4 – 11 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall. Process Charts The annual cost of an entire process can be estimated It is the product of 1)Time in hours to perform the process each time 2)Variable costs per hour 3)Number of times the process is performed each year Annual labor cost Time to perform the process in hours Variable costs per hour Number of times process performed each year =

12 4 – 12 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall. Process Charts If the average time to serve a customer is 4 hours The variable cost is $25 per hour And 40 customers are served per year The total labor cost is 4 hrs/customer $25/hr 40 customers/yr = $4,000

13 4 – 13 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall. Work Measurement Techniques Used to estimate the average time each step in a process would take 1)Time study method 2)Elemental standard data approach 3)Predetermined data approach 4)Work sampling method Learning curve analysis is appropriate for new products or processes

14 4 – 14 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall. Time Study of Revised Process EXAMPLE 4.1 A process at a watch assembly plant has been changed. The process is divided into three work elements. A time study has been performed with the following results. The time standard for process previously was 14.5 minutes. Based on the new time study, should the time standard be revised? SOLUTION The new time study had an initial sample of four observations, with the results shown in the following table. The performance rating factor (RF) is shown for each element, and the allowance for the whole process is 18 percent of the total normal time.

15 4 – 15 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall. Time Study of Revised Process Obs 1Obs 2Obs 3Obs 4 Average (min) RF Normal Time Element Element Element Total Normal Time = The normal time for an element in the table is its average time, multiplied by the RF. The total normal time for the whole process is the sum of the normal times for the three elements, or minutes. To get the standard time (ST) for the process, just add in the allowance, or ST = ( ) = minutes/watch

16 4 – 16 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall. Work Sampling Figure 4.6 –Work Sampling Study of Admission Clerk at Health Clinic Using OM Explorer

17 4 – 17 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall. Learning Curves 140, ,000 – 100,000 – 80,000 – 60,000 – 40,000 – 20,000 – 0 Labor Hours per Unit Cumulative Units Produced ||||||| Figure 4.7 –Learning Curve with 80% Learning Rate Using OM Explorer

18 4 – 18 Learning Curves Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall. Prof. Dr. Ali ŞEN Definition of Leaning Curves Definition of Leaning Curves Importance of LC. Importance of LC. LC Fog Linear Function LC Fog Linear Function Operational Application of a Leaning Curve Operational Application of a Leaning Curve

19 4 – Learning Curve

20 4 – Example Consider a product with the following data about the hours of labor required to produce a unit: Hours required to produce 1-st unit:100 Hours required to produce 10-th unit: 48 Hours required to produce 25-th unit: 35 Hours required to produce 75-th unit: 25 Hours required to produce 200-th unit: 18 As more and more units are produced, the hours of labor required to produce the most recent unit is lower and lower.

21 4 – Graph for Example

22 4 – Reasons for Continual Decease in the Number of Hours Required to Produce the Most Recent Unit On the previous slide, we observed that, as more and more units are produced, the hours required to produce the most recent unit is lower and lower. What are some potential reasons why this occurs?

23 4 – What happens when cumulative production doubles? The concept of a Learning Curve is motivated by the observation (in many diverse production environments) that, each time the cumulative production doubles, the hours required to produce the most recent unit decreases by approximately the same percentage. For example, for an 80% learning curve, If cumulative production doubles from 50 to 100, then the hours required to produce the 100-th unit is 80% of that for the 50-th unit. If cumulative production doubles from 100 to 200, then the hours required to produce the 200-th unit is 80% of that for the 100-th unit.

24 4 – The Functional Form of a Learning Curve To model the behavior described in the previous slides, we proceed as follows: Letx = cumulative production y = hours required to produce the x-th unit Then, y = ax -b where a and b are parameters defined as follows: a = hours required to produce the 1-st unit b = a value related to the percentage associated with the Learning Curve

25 4 – An 80% Learning Curve Assume that production of the first unit required 100 hours and that there is an 80% Learning Curve. Again, let x = cumulative production y = hours required to produce the x-th unit Then, mathematicians can show that the Learning Curve is y = 100x

26 4 – An 80% Learning Curve (continued)

27 4 – A 70% Learning Curve Assume that production of the first unit required 100 hours and that there is an 70% Learning Curve. Again, let x = cumulative production y = hours required to produce the x-th unit Then, mathematicians can show that the Learning Curve is y= 100x

28 4 – A 70% Learning Curve (continued)

29 4 – The Relationship Between b and p The table below shows the relationship between the exponent b and p, the percentage associated with the Learning Curve: Recall that the functional form for a Learning Curve is y = ax -b

30 4 – The Relationship Between b and p (continued) There is a direct mathematical relationship between the exponent b in the equation y = ax -b and (p/100)%, where p is the percentage associated with the learning curve: For example, if p=75%, then For example, if b=0.737, then NOTE:e=2.7183… (never ending, like ¶) ln(x) is the exponent of e that yields x. That is, e ln(x) =x

31 4 – Operational Application of the Leaning Curve Assume that production of the 1-st unit required 100 hours, and assume that there is an 80% learning curve. Then, y = 100x Also, assume that cumulative production to date is 150 units. The learning curve can be used to provide estimates of answers to questions about the production of the next 100 units.

32 4 – Operational Application of a Leaning Curve (continued) Question 1: To produce the next 100 units, how many hours of labor will be required? Question 2: With a labor force of 6 workers each working 40 hours per week, how long will it take to produce then next 100 units? Question 3: To produce 100 units in 5 weeks with each worker working 40 hours per week, what should be the size of the labor force? Question 4: To produce 100 units in 5 weeks using a work force of 60 workers, how many hours per week should each worker work?

33 4 – Effect of Sales Annual Growth Rate Assume that: Three firms have the same 80% learning curve: y=100x During Year 1, all three firms sold 5000 units. The three firms have respective annual growth rates in sales of 5%, 10%, and 20%. Compare the three firms at the end of Year 4. Conclusion?

34 4 – Effect of Sales Annual Growth Rate (continued)

35 4 – Strategic Applications of a Learning Curve Frequent Decreases in Selling Price. Each decrease in selling price increases your market share, which in turn leads to a faster ride down the learning curve, which in turn makes it tougher for your competitors. Reinvest Increased Profits As the hours required to produce the most recent unit continually decreases, the cost to produce the unit continually decreases. Therefore, your profits increase. You can reinvest the incremental profit to improve the product or the production process, or you can reinvest the incremental profit in another area of the firm. As the hours required to produce the most recent unit continually decreases, the cost to produce the unit continually decreases. Therefore, you can frequently decrease the selling price without decreasing total profit.

36 4 – How do we determine the parameters of a Learning Curve? From previous slides, we know that, to model a learning curve, we proceed as follows: Letx = cumulative production y = hours required to produce the x-th unit Then, y = ax -b where a and b are parameters defined as follows: a = hours required to produce the 1-st unit b = a value related to the percentage associated with the learning curve For a given set of data, how do we determine the specific values of a and b?

37 4 – Example For the Learning curve y=ax -b, how do we determine the specific values of a and b? We begin by taking the natural logs of both sides of y=ax -b. Note the linear relationship between ln(x) and ln(y). This suggests taking the natural logs of the data.

38 4 – Example (continued) Note the approximate linear relationship between ln(Cumulative Production) and ln (Hours Required). We can use the statistical technique of Regression to determine the straight line that best fits the data.

39 4 – Example (continued) Using Excels Regression Tool, we obtain ln(y) = – ln(x) Intercept= Negative of Slope =

40 4 – Example (continued) From the previous slide, we know ln(y) = – ln(x) So, e ln(y) = e [ – ln(x)] or, equivalently, the equation for the Learning Curve is y = x

41 4 – Example (continued) y = x

42 4 – Example (continued) y = x So, in our example, we have a Learning Curve that is close to but just below an 85% learning curve.

43 4 – Excel Template for a Learning Curve

44 4 – A Not So Nice Example In our example, there was a very close linear relationship between ln(Cumulative Production) and ln(Hours Required) This is NOT the typical situation. A more typical situation is shown on the next slide.

45 4 – A Not So Nice Example (continued)

46 4 – A Not So Nice Example (continued) Although the linear relationship in this example is not as strong as in the previous example, we proceed in the same manner.

47 4 – A Not So Nice Example (continued) An approximate linear relationship such as the one below occurs for many products and services.

48 4 – 48 Tools & Techniques Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall.

49 4 – 49 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall. Evaluating Performance Chapter 6, Capacity Planning; Supplement C, Waiting Lines; Supplement H, Measuring Output Rates; Supplement I, Learning Curve Analysis Processing time Total time from start to finish (throughput time) Setup time Operating expenses Capacity utilization Average waiting time Average number of customers or jobs waiting in line Chapter 5, Quality and Performance Customer satisfaction measures Error rate Rework or scrap rate Internal failure costs Figure 4.8 –Metrics for Flowcharts, Process Charts, and Accompanying Tables

50 4 – 50 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall. Evaluating Performance Chapter 8, Lean Systems Setup time Average waiting time Total time from start to finish (throughput time) Waste Chapter 7, Constraint Management Cycle time Idle time Figure 4.8 –Metrics for Flowcharts, Process Charts, and Accompanying Tables

51 4 – 51 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall. Data Analysis Tools Help identify causes of problems 1)Checklists 2)Histograms and bar charts 3)Pareto charts 4)Scatter diagrams 5)Cause-and-effect diagrams 6)Graphs

52 4 – 52 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall. Pareto Chart for a Restaurant EXAMPLE 4.2 The manager of a neighborhood restaurant is concerned about the smaller numbers of customers patronizing his eatery. Complaints have been rising, and he would like to find out what issues to address and present the findings in a way his employees can understand. SOLUTION The manager surveyed his customers over several weeks and collected the following data: ComplaintFrequency Discourteous server12 Slow service42 Cold dinner5 Cramped table20 Atmosphere10

53 4 – 53 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall. Pareto Chart for a Restaurant 50 – 45 – 40 – 35 – 30 – 25 – 20 – 10 – 5 – 0 – Failures Discourteous server Slow service Cold dinner Cramped tables Atmosphere Failure Name Figure 4.9 –Bar Chart Figure 4.9 is a bar chart and Figure 4.10 is a Pareto chart, both created with OM Explorers Bar, Pareto, and Line Charts solver. They present the data in a way that shows which complaints are more prevalent (the vital few).

54 4 – 54 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall. Pareto Chart for a Restaurant Figure 4.10 – Pareto Chart 100% = 69.7% ( ) 89 – 100.0% – 80.0% – 60.0% – 40.0% – 20.0% – 0.0% 45 – 40 – 35 – 30 – 25 – 20 – 10 – 5 – 0 – Failures Discourteous server Slow service Cold dinner Cramped tables Atmosphere Failure Name Percent of Total

55 4 – 55 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall. Analysis of Flight Departure Delays EXAMPLE 4.3 The operations manager for Checker Board Airlines at Port Columbus International Airport noticed an increase in the number of delayed flight departures. SOLUTION To analyze all the possible causes of that problem, the manager constructed a cause-and-effect diagram, shown in Figure The main problem, delayed flight departures, is the head of the diagram. He brainstormed all possible causes with his staff, and together they identified several major categories: equipment, personnel, materials, procedures, and other factors that are beyond managerial control. Several suspected causes were identified for each major category.

56 4 – 56 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall. Analysis of Flight Departure Delays Delayed flight departures Weather Air traffic delays Other Aircraft late to gate Mechanical failures Equipment Passenger processing at gate Late cabin cleaners Unavailable cockpit crew Late cabin crew Personnel Poor announcement of departures Weight/balance sheet late Delayed check-in procedure Waiting for late passengers Procedures Late baggage to aircraft Late fuel Late food service Contractor not provided with updated schedule Materials Figure 4.11 – Cause-and-Effect Diagram for Flight Departure Delays

57 4 – 57 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall. Data Analysis Tools Tools can be used together for data snooping to analyze data and determine causes Simulation can show how a process changes over time Process simulation is the act of reproducing the behavior of a process using a model that describes each step

58 4 – 58 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall. Causes of Headliner Process Failures EXAMPLE 4.4 The Wellington Fiber Board Company produces headliners, the fiberglass components that form the inner roof of passenger cars. Management wanted to identify which process failures were most prevalent and to find the cause. SOLUTION Step 1:A checklist of different types of process failures is constructed from last months production records. Step 2:A Pareto chart is prepared from the checklist data. Step 3:A cause-and-effect diagram for identifies several potential causes for the problem. Step 4:The manager reorganizes the production reports into a bar chart according to shift because the personnel on the three shifts had varied amounts of experience.

59 4 – 59 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall. Causes of Headliner Process Failures Defect typeTallyTotal A. Tears in fabric4 B. Discolored fabric3 C. Broken fiber board 36 D. Ragged edges7 Total50 | | | | || | ||| || | |||| |||| |||| ||| |||||||| | ||| || C D A B 50 – 40 – 30 – 20 – 10 – 0 – – 100 – 80 – 60 – 40 – 20 – 0 Number of Failures Cumulative Percentage Defect Failure SOLUTION Figure 4.12 shows the sequential application of several tools for improving quality Step 1. Checklist Step 2. Pareto Chart Figure 4.12 –Application of the Tools for Improving Quality

60 4 – 60 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall. Causes of Headliner Process Failures SOLUTION Figure 4.12 shows the sequential application of several tools for improving quality Step 3. Cause-and-Effect Diagram Step 4. Bar Chart Humidity Schedule change Other Out of specification Not available Materials Training Absenteeism Communication People Machine maintenance Machine speed Wrong setup Process Broken fiber board 20 – – 15 – – 10 – – 5 – – 0 – Number of Broken Fiber Boards Shift FirstSecondThird Figure 4.12 –Application of the Tools for Improving Quality

61 4 – 61 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall. Redesigning the Process After a process is documented, metrics are collected, and disconnects are identified, the process analyst determines what changes should be made People directly involved in the process are brought in to get their ideas and inputs

62 4 – 62 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall. Generating Ideas Ideas can be uncovered by asking six questions 1.What is being done? 2.When is it being done? 3.Who is doing it? 4.Where is it being done? 5.How is it being done? 6.How well does it do on the various metrics of importance?

63 4 – 63 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall. Generating Ideas Brainstorming involves a group of people knowledgeable about the process proposing ideas for change by saying whatever comes to mind After brainstorming the design team evaluates ideas and identifies those with the highest payoff

64 4 – 64 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall. Generating Ideas Benchmarking is a systematic procedure that measures a firms processes, services, and products against another firm Competitive benchmarking is based on comparisons with a direct competitor Functional benchmarking compares areas with those of outstanding firms in any industry Internal benchmarking compares an organizational unit with superior performance with other units

65 4 – 65 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall. Benchmarking There are four basic steps Step 1. Planning Step 2. Analysis Step 3. Integration Step 4. Action Collecting data can be a challenge Some corporations and government organizations have agreed to share data

66 4 – 66 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall. Benchmarking Customer Relationship Process Total cost of enter, process, and track orders per $1,000 revenue System costs of processes per $100,000 revenue Value of sales order line item not fulfilled due to stockout, as percentage of revenue Average time from sales order receipt until manufacturing logistics is notified Average time in direct contact with customer per sales order line item Order Fulfillment Process Value of plant shipments per employee Finished goods inventory turnover Reject rate as percentage of total orders processed Percentage of orders returned by customers due to quality problems Standard customer lead time from order entry to shipment Percentage of orders shipped on time Figure 4.13 –Illustrative Benchmarking Metrics by Type of Process

67 4 – 67 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall. Benchmarking New Service/Product Development Process Percentage of sales due to services/products launched last year Cost of generate new services/products process per $1,000 revenue Ratio of projects entering the process to projects completing the process Time to market for existing service/product improvement project Time to market for new service/product project Time to profitability for existing service/product improvement project Supplier Relationship Process Cost of select suppliers and develop/maintain contracts process per $1,000 revenue Number of employees per $1,000 of purchases Percentage of purchase orders approved electronically Average time to place a purchase order Total number of active vendors per $1,000 of purchases Percentage of value of purchased material that is supplier certified Figure 4.13 –Illustrative Benchmarking Metrics by Type of Process

68 4 – 68 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall. Benchmarking Customer Relationship Process Systems cost of finance function per $1,000 revenue Percentage of finance staff devoted to internal audit Total cost of payroll processes per $1,000 revenue Number of accepted jobs as percentage of job offers Total cost of source, recruit, and select process per $1,000 revenue Average employee turnover rate Figure 4.13 –Illustrative Benchmarking Metrics by Type of Process

69 4 – 69 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall. Managing Processes Failure to manage processes is failure to manage the business Seven common mistakes 1.Not connecting with strategic issues 2.Not involving the right people in the right way 3.Not giving the design teams and process analysts a clear charter and then holding them accountable

70 4 – 70 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall. Managing Processes Seven common mistakes 4.Not being satisfied unless fundamental reengineering changes are made 5.Not considering the impact on people 6.Not giving attention to implementation 7.Not creating an infrastructure for continuous process improvement

71 4 – 71 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall. Solved Problem 1 Create a flowchart for the following telephone-ordering process at a retail chain that specializes in selling books and music CDs. It provides an ordering system via the telephone to its time-sensitive customers besides its regular store sales. The automated system greets customers, asks them to choose a tone or pulse phone, and routes them accordingly. The system checks to see whether customers have an existing account. They can wait for the service representative to open a new account. Customers choose between order options and are routed accordingly. Customers can cancel the order. Finally, the system asks whether the customer has additional requests; if not, the process terminates.

72 4 – 72 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall. Figure 4.14 –Flowchart of Telephone Ordering Process Solved Problem 1 SOLUTION

73 4 – 73 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall. Solved Problem 1 Figure 4.14 –Flowchart of Telephone Ordering Process SOLUTION

74 4 – 74 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall. Solved Problem 2 An automobile service is having difficulty providing oil changes in the 29 minutes or less mentioned in its advertising. You are to analyze the process of changing automobile engine oil. The subject of the study is the service mechanic. The process begins when the mechanic directs the customers arrival and ends when the customer pays for the services. SOLUTION Figure 4.15 shows the completed process chart. The process is broken into 21 steps. A summary of the times and distances traveled is shown in the upper right-hand corner of the process chart. The times add up to 28 minutes, which does not allow much room for error if the 29-minute guarantee is to be met and the mechanic travels a total of 420 feet.

75 4 – 75 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall. Solved Problem 2 Step No. Time (min) Distance (ft) Step Description XDirect customer into service bay 21.80XRecord name and desired service 32.30XOpen hood, verify engine type, inspect hoses, check fluids XWalk to customer in waiting area 50.60XRecommend additional services 60.70XWait for customer decision XWalk to storeroom 81.90XLook up filter number(s) 90.40XCheck filter number(s) XCarry filter(s) to service pit XPerform under-car services XClimb from pit, walk to automobile XFill engine with oil, start engine XInspect for leaks XWalk to pit XInspect for leaks XClean and organize work area XReturn to auto, drive from bay XPark the car XWalk to customer waiting area XTotal charges, receive payment Summary Activity Number of Steps Time (min) Distance (ft) Operation Transport Inspect Delay Store Figure 4.15 –Process Chart for Changing Engine Oil

76 4 – 76 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall. Solved Problem 3 What improvement can you make in the process shown in Figure 4.14? SOLUTION Your analysis should verify the following three ideas for improvement. You may also be able to come up with others. a.Move Step 17 to Step 21. Customers should not have to wait while the mechanic cleans the work area. b.Store small inventories of frequently used filters in the pit. Steps 7 and 10 involve travel to the storeroom. c.Use two mechanics. Steps 10, 12, 15, and 17 involve running up and down the steps to the pit. Much of this travel could be eliminated.

77 4 – 77 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall. Solved Problem 4 DefectFrequency Lumps of unmixed product7 Over- or underfilled jars18 Jar lids did not seal6 Labels rumpled or missing29 Total60 Vera Johnson and Merris Williams manufacture vanishing cream. Their packaging process has four steps: (1) mix, (2) fill, (3) cap, and (4) label. They have had the reported defects analyzed, which shows the following: Draw a Pareto chart to identify the vital defects.

78 4 – 78 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall. Solved Problem 4 SOLUTION Defective labels account for percent of the total number of defects: 100% = 48.33% Improperly filled jars account for 30 percent of the total number of defects: The cumulative percent for the two most frequent defects is 100% = 30.00% % % = 78.33%

79 4 – 79 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall. Solved Problem 4 10% + 90% = % Defective seals represent of defects; the cumulative percentage is % = 10.00% The Pareto chart is shown in Figure % % = 90.00% % = 11.67% Lumps represent of defects; the cumulative percentage is

80 4 – 80 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall. Solved Problem 4 40 – 36 – 32 – 28 – 24 – 20 – 16 – 12 – 8 – 4 – 0 – – 100 – 90 – 80 – 70 – 60 – 50 – 40 – 30 – 20 – 10 – 0 Frequency of Defects LabelFillMixSeal Cumulative Percentage of Defects 100% 90% 78% 48% Figure 4.16 –Pareto Chart

81 4 – 81 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall.


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