Performance Measurement Financial

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Presentation transcript:

Performance Measurement Financial Net profit an absolute measurement in dollars Return on investment a relative measure based on investment Cash flow a survival measurement 5 5

Performance Measurement Operational 1. Throughput the rate at which money is generated by the system through sales 2. Inventory all the money that the system has invested in purchasing things it intends to sell 3. Operating expenses all the money that the system spends to turn inventory into throughput 6 6

Productivity Does not guarantee profitability Has throughput increased? Has inventory decreased? Have operational expenses decreased? 7 7

Some Capacity Related Terminology Available time for production Bottleneck Capacity is less than demand placed on resource Nonbottleneck Capacity is greater than demand placed on resource Capacity-constrained resource (CCR) Capacity is close to demand placed on resource 10 10

Components of Production Cycle Time Setup time the time that a part spends waiting for a resource to be set up to work on this same part Process time the time that the part is being processed 15 15

Components of Production Cycle Time Wait time the time that a part waits not for a resource but for another part so that they can be assembled together Idle time the unused time the cycle time less the sum of the setup time, processing time, queue time, and wait time 16 16

What are the consequences of saving Saving Time Bottleneck Nonbottleneck What are the consequences of saving time at each process? 17 17

Drum, Buffer, Rope A B C D E F Bottleneck (Drum) Market Inventory (time buffer) Communication (rope) Market 18 18

Case: Kristen’s Cookies Mixing dishing baking cooling packing pay 6 min 2 min 10 min 5 min 2 min 1 min (3 dozen) (1 dozen) K * * R * * How long will it take to fill an order? How many orders can be filled in a four-hour period? What happens if a second oven is added? What happens if Kristen does this alone? What happens if Kristen sells standardized cookies?