1. Process Analysis and Applications Module
Operations Management:
Process Analysis and Applications Module
Operational Measures: Time T, Inventory I, Throughput rate R
Capacity and Flow Time Analysis
Pizza Pazza / Bariatric Surgery
Levers for Improvement
Multi-product Capacity Management and Investment
Joint Marketing & Production Decisions
Optimal Capacity Investment
S. Chopra/Operations/Process Analysis & Apps
S. Chopra/Operations/Process Analysis & Apps

2. Operational Performance Measures
How to measure and decrease flow times?
How to measure and increase throughput?
S. Chopra/Operations/Process Analysis & Apps
S. Chopra/Operations/Process Analysis & Apps

3. Process Architecture is defined and represented by a process flow chart:
Process = network of activities performed by resources
1. Process Boundaries:
input
output
2. Flow unit: the unit of analysis
3. Network of Activities & Storage/Buffers
activities with activity times
routes: precedence relationships (solid lines)
4. Resources & Allocation
5. Information Structure & flow (dashed lines)
S. Chopra/Operations/Process Analysis & Apps
S. Chopra/Operations/Process Analysis & Apps

4. Pizza Pazza Flow Chart
S. Chopra/Operations/Process Analysis & Apps

5. Operational Measure: Flow Time Driver: Activity Times
(Theoretical) Flow Time
Critical Activity
Flow Time efficiency
S. Chopra/Operations/Process Analysis & Apps
S. Chopra/Operations/Process Analysis & Apps

6. Most time inefficiency comes from waiting: E. g
Most time inefficiency comes from waiting: E.g.: Flow Times in White Collar Processes
S. Chopra/Operations/Process Analysis & Apps
S. Chopra/Operations/Process Analysis & Apps

7. Levers for Reducing Flow Time
Decrease the work content of critical activities
work smarter
work faster
do it right the first time
change product mix
Move work content from critical to non-critical activities
to non-critical path or to ``outer loop’’
Reduce waiting time.
S. Chopra/Operations/Process Analysis & Apps
S. Chopra/Operations/Process Analysis & Apps

8. Operational Measure: Capacity Drivers: Resource Loads
(Theoretical) Capacity of a Resource
Bottleneck Resource
(Theoretical) Capacity of the Process
Capacity Utilization of a Resource/Process =
throughput [units/hr]
capacity [units/hr]
S. Chopra/Operations/Process Analysis & Apps
S. Chopra/Operations/Process Analysis & Apps

9. A Recipe for Capacity Measurements
* assuming system is processing at full capacity
S. Chopra/Operations/Process Analysis & Apps
S. Chopra/Operations/Process Analysis & Apps

10. Bariatric Surgery : Flow Chart
S. Chopra/Operations/Process Analysis & Apps
S. Chopra/Operations/Process Analysis & Apps

11. Bariatric Clinic Capacity – Open Surgeries & Cash Payment
S. Chopra/Operations/Process Analysis & Apps

12. Bariatric Clinic Capacity – Laparoscopic Surgeries & Cash Payment
S. Chopra/Operations/Process Analysis & Apps

13. Bariatric Clinic Capacity – Open Surgeries & Insurance Payment
S. Chopra/Operations/Process Analysis & Apps

14. Bariatric Clinic Capacity – Laparoscopic Surgeries & Insurance Payment
S. Chopra/Operations/Process Analysis & Apps

15. Levers for Increasing Process Capacity
Decrease the work content of bottleneck activities
work smarter, work faster
do it right the first time
eliminate non-value added work from bottlenecks
reduce/eliminate setups and changeovers
synchronize flows to & from bottleneck
reduce starvation & blockage
Move work content from bottlenecks to non-bottlenecks
to non-critical resource or to third party
Increase Net Availability
work longer
increase scale (invest)
increase size of load batches
eliminate availability waste
S. Chopra/Operations/Process Analysis & Apps
S. Chopra/Operations/Process Analysis & Apps

16. Increasing Process Capacity in The Goal
“is to increase the capacity of only the bottlenecks”
“ensure the bottlenecks’ time is not wasted”
increase availability of bottleneck resources
eliminate non-value added work from bottlenecks
reduce/eliminate setups and changeovers
synchronize flows to & from bottleneck
reduce starvation & blockage
“ the load of the bottlenecks (give it to non-bottlenecks)”
move work from bottlenecks to non-bottlenecks
need resource flexibility
unit capacity and/or #of units.
invest
S. Chopra/Operations/Process Analysis & Apps
S. Chopra/Operations/Process Analysis & Apps

17. Other factors affecting Process Capacity
Batch (Order) Sizes
Product Mix
other managerial policies ...
S. Chopra/Operations/Process Analysis & Apps
S. Chopra/Operations/Process Analysis & Apps

18. Product Mix Decisions: Open or Laparoscopic Surgery
Revenue per open surgery: $15,000
Variable Cost of Materials: $1,000
Revenue per Laparoscopic surgery:$18,000
Variable Cost of Materials: $2,000
S. Chopra/Operations/Process Analysis & Apps
S. Chopra/Operations/Process Analysis & Apps

19. Product Mix Decisions
Open and Laparoscopic have exactly the same process. The
only difference is in surgery (laparoscopic takes 30 minutes
extra) and in the rooms (laparoscopic uses rooms for 2 days
whereas open uses rooms for 4 days.
S. Chopra/Operations/Process Analysis & Apps
S. Chopra/Operations/Process Analysis & Apps

20. Product Mix Decisions Margin per Open surgery = $14,000
Margin per Laparoscopic surgery = $16,000
Margin per week from Open surgery = 72.72*(15, ,000) = $1,018,055 / week
Margin per week from Laparoscopic surgery = 63.15*(18, ,000) = $1,010,400 / week
S. Chopra/Operations/Process Analysis & Apps
S. Chopra/Operations/Process Analysis & Apps

21. Learning Objectives: Process Analysis
Manage better with the three key operational measures and an inter-functional macro process view of the organization
Process measures:
Flow time  manage critical activities
Capacity  manage bottleneck resources
Levers for improving
Capacity & Throughput
Many marketing and financial decisions are linked to process
Effect of product mix decisions on process capacity
marginal contribution per unit of bottleneck capacity used
Bottleneck may shift on adding capacity
diminishing returns to capacity investment
S. Chopra/Operations/Process Analysis & Apps
S. Chopra/Operations/Process Analysis & Apps