PROCESS FUNDAMENTALS (Part 2)

Process Fundamentals
• Process Terminology and Process Analysis

• Management Decisions
• Management Complexity
WIP FGI
Bread-Making Packaging
Cycle Time: Cycle Time:

1 hour / 100 loaves 0.75 hour / 100 loaves
PROCESS ANALYSIS
• One hour is the bread-making cycle time while ¾ hour for
packaging
• Packaging will incur idle time of ¼ hour
• Bread-making is the bottleneck of the operation
• Cycle time for the entire process is 1 hour
• The line has a capacity of 100 loaves per hour
• Daily capacity depends on the operating hours per day
PROCESS TERMINOLOGY
• Cycle Time (CT) – the average time for the completion of
successive units
• Bottleneck – limits how quickly products can move
through the process
• Idle Time – time when useful work is not being performed
• Capacity – measure of how much can be produced in a
specified period of time (tons per day, parts per minute,
customers per hour)
• Balance/Imbalance – If every step in a process had the
same cycle time, the process would be in perfect balance
PROCESS TERMINOLOGY
• Manufacturing Lead Time (MLT) – a function of
the way in which a process is managed
PROCESS ANALYSIS
• MLT would be 2 and 3/4 hours, assuming that the batches of
bread do not wait at all between steps
• However, continuous production would show that packaged
bread would wait for 1 /4 hour before pricing and palletizing
and the manufacturing lead time would be 3 hours
PROCESS TERMINOLOGY
• Manufacturing Lead Time (MLT) or Throughput
Time (TPT)
– length of time spent in the process
Cycle time – how often a unit "drops off" the end of the
process
MLT / TPT – how long that unit takes between entering
and leaving the process
PROCESS TERMINOLOGY
• Lot Size (Batch Size) – number of units of a product
type that will be produced before beginning
production of another product type
• Setup Time – any time that is necessary for
production but is independent of the number of units
to be produced
• Run Time – amount of time actually spent
manufacturing the item independent of the time
required to set up the equipment
PROCESS TERMINOLOGY
•• Direct
Labor Content – actual amount of work
"contained" in the product (e.g. 40 minutes of the ¾
packaging hours)
• Direct Labor Utilization – a measure of the percentage of
time that workers are actually working on a product or
performing a service
For the packaging process, Direct Labor Utilization is 40 min

/ 60 min or 67%. Reasons: (1) Imbalance between packaging
and bread-making (15 min) and work design (5 min)
MANAGEMENT DECISIONS
• Three general categories of decisions in managing an
operation
1. Design of the operation, and of the distinct processes
2. Ongoing set of decisions (Operating) made at any point in time
3. Process Improvement decisions
• DESIGN CHOICES
– Selecting a general process type (e.g. high volume continuous line or
more flexible set of equipment)
– Actual technology
– Capacity of the operations (considering future sales projection)
– Process layout, in conjunction with material and information flows
MANAGEMENT DECISIONS
• ONGOING OPERATING DECISIONS
– Main management tasks include order selection, scheduling, setting
batch size, and inventory management
– Complex decisions revolve on handling production capacity, customer
requirements and handling costs
• PROCESS IMPROVEMENT DECISIONS

– Redesigning the physical or information flows, or changing the design
of individual tasks, or improving process management
– Improvements may also be made to make the process more flexible,
allowing production of new outputs
MANAGEMENT COMPLEXITY
• VARIABILITY and UNCERTAINTY in inputs, methods,
outputs, or in demand increases the complexity in
operations
VARIABILITY UNCERTAINTY
Raw materials from different vendors Quality of raw materials and condition
Inputs necessitates adjustments in the of machineries may affect yield or
production outputs
Uncertainty in outputs make it more
Multiple types outputs requires proper difficult for scheduling and additional
Outputs scheduling, proper setup and
equipment maintenance manpower may be needed for quality
inspections
Seasonal demand may entail changes Excess outputs make it easier to fill
Demand uncertainty in demand. However,
in production schedule and volume
inventories may be costly to hold
SUMMARY
• Two useful steps in the analysis designed to address a
management issue
– Define the process; the tasks and flow of information and
goods
– Determine the capacity or range of capacities for the process
• In many instances, determining the cost of inputs and

relating these costs to the value of output is necessary
THANK YOU!!

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PROCESS FUNDAMENTALS (Part 2)

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Process Fundamentals

• Process Terminology and Process Analysis

Cycle Time: Cycle Time:

For the packaging process, Direct Labor Utilization is 40 min

• PROCESS IMPROVEMENT DECISIONS

• In many instances, determining the cost of inputs and

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