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Review before Midterm 1

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Announcements Bring calculator, pencil, eraser (these cannot be shared) No open cell phones allowed. Last names Akcay-Kelder in SCI 103 Last names Kilic-Yilmaz in SCI 129 Check your seat number from the list posted on the door before entering the room.

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Problems at the end of chapters 3,4,5 E:\COURSES\UGRADS\OPSM301\SHARE – File containing answers – Can get in touch with me or Damla if you cannot find the answer – If there is no answer for a problem in the file I shares, that means you can skip that problem.

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Overview Hand-in assignments: Universal Pulp and Paper part 2 Process flow and analysis What to study for qualitative portions

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5 Process Flow Wood logs Wood processing capacity = 6.395 M tons / year Wood chips Pulp production: 8M tons / year chips becomes 4M tons / year pulp Pulp Paper production capacity: 4.5M tons / year Paper Delivery to customer

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6 Process Flow Wood processing – Capacity 730 tons/hr x 24hr/day x 365 days/yr = 6,395 tons/yr – Weighing and sorting – Debarking and chipper Pulp production – Kraft process – Dissolving Lignin (ungluing) – Chemical additives Paper production – Wet end – Dry end – 75 technical measurements/30 minutes

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7 Analysis Bottleneck: Wood processing Existing capacity: 6.395/2=3.1975 tons/year Enough capacity for now To produce 3.68 tons/year newsprint, requires 3.68x2=7.36 tons/year wood processing capacity 7.36-6.395 = 0.965 tons/year capacity need

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8 Analysis If firm continues to accept special paper orders then total demand potential becomes 3.68/0.95=3.87 ton/yr Capacity need becomes (3.87 x 2) – 6.395=1.345M tons/year Additional capacity cost (1.345.000/100.000) x $830.000= $11.16M Revenue increase: (1.345.000/2) x $80 = $53.8M Net increase: $53.8M – $11.16 = $42.64M

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9 Quality control software Cost: $450,000 Benefits: – Improved precision, savings from labor cost – Labor savings: $22.65/hrx 8 hrs/day/shift x 3 shifts/day x 365 days/yr x 8 workers= 1,587,312 $/yr – Net savings=1,137,312 $/yr Labor union relationship

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10 Recommendations Need strategic fit between products and processes – Convince upper management to transfer special paper production to another plant – If not, special papers should be grouped to reduce variety and customers convinced for longer lead times – Wood processing capacity should be increased – If labor union relations can be maintained, buy quality software

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Consider the following warehouse process. A new shipment arrives, waits for warehouse staff, staff inspects the shipment and decides whether it should go in the front of the warehouse or in the rear. Depending on this decision the item is stored in the appropriate space. Assume this process is stable. On average 20 new shipments arrive per hour. There are on average two shipments waiting for the warehouse staff. It takes the warehouse staff 10 minutes to inspect the shipment. The decision is taken instantaneously (i.e. decision takes zero time). 10% of all shipments are stored in the front while the rest are stored in the rear. Both shipments stored in the front and rear of the warehouse spend on average two hours in the warehouse. a) How many shipments on average are stored in the front and rear warehouse? b) What is the total flow time between shipment arrival and end of storage? c) What is the total number of shipments within process boundaries?

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Widget production process Step 1=6 min (scissors) Step 2 2 min Step 5 5 min Step 3 4 min Step 4 1 min

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Questions What is the theoretical flow time? How long will a rush order take? Name 2 improvements to reduce the theoretical flow time. Assume you have one worker for each step-how many widgets can you produce in an hour? Assume you have 2 workers. Worker 1 performs steps 1, 4, and 5, Worker 2 performs steps 2 and 3- how many widgets can you produce in an hour?

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Questions continued What are the utilizations of W1 and W2 Suppose you had one more worker. Which worker would you ask her to help, W1 or W2? Now suppose that step 5 is a quality control step. 50% of the widgets need reprocessing at step 5 after the first pass (assume there is never a second pass)-reconsider the same questions

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For qualitative portions Operations strategy – Strategic fit, product and process attributes, product- process matrix, process selection, make-to-stock/order Flow measurement – Little’s Law, flow unit, process boundary, flow chart Flow time – Theoretical flow time, flow time efficiency, levers for improving, critical path, critical activity Flow capacity – Bottleneck, utilization, process capacity, levers for improving

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For qualitative portions In-class cases and activities – Shouldice hospital case, Universal Pulp and Paper, Kristen’s Cookie, House Game

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