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Process Analysis

BY: D E N N IS ART H U R S. L E ON OR
INTRODUCTION

Understanding the processing work is essential to


ensuring the competitiveness of a company.
A process that does not match the need of the
firm will punish the firm every minute that the firm
operates.
Ex. Two fast food restaurants. One can deliver a quarter-
pounder hamburger to the customer for $ .50 in direct
cost and a second restaurant costs $ .75
No matter what the second restaurant does, it will lose $
.25 profit for every hamburger it sells compared with the
first restaurant
INTRODUCTION

Many factors need to be considered


when one sets up the process to make
those hamburgers such as;
Raw materials, the cost associated with the
hamburger is prepared and the cost of
taking the order and delivering it to the
customer.
What is a process?

A process is any part of an organization that


takes inputs and transforms them into outputs
that are greater value than the original inputs.

A process is a series of independent tasks


that transforms an input into output material
of higher value for the organization
What is a process?

Examples:
1. Honda transforms steel, rubber, and plastic into
cars
2. McDonalds transforms meat, potatoes, and sauces
into packaged food
3. Dell transforms customer orders into PCs
What is a process?

Examples:
1. Honda transforms steel, rubber, and plastic into
cars
2. McDonalds transforms meat, potatoes, and sauces
into packaged food
3. Dell transforms customer orders into PCs
Why do we need to analyze the
process?

- To identify inefficient tasks


- To spot possible effectiveness improvement
tasks
- To understand where value can be added
PROCESS FLOWCHARTING

A good way to start analyzing a process is


with a diagram showing the basic elements
of a process.
The typical processes are tasks, flows and
storage.
Decision points.
PROCESS FLOWCHARTING

A good way to start analyzing a process is


with a diagram showing the basic elements
of a process.
The typical processes are tasks, flows and
storage.
Decision points.
Process Flow Charts
Process Flowcharts for Making Hamburgers
Process Flowcharts for Making Hamburgers
Relative Comparison of Hamburger Preparation
Processes
Process Analysis: the performance
measures

Assume a process is in place. What do we


need to measure in order to understand
how efficient it is?
Task 1 Task 2 Task 3

What is its capacity? How many units per unit time go through each task?
What is the bottleneck? Which production step limits the process capacity?
What is the throughput time? How long does it take to get through the
system?
How do we measure capacity?
Capacity of a task is the physical limitation in
terms of how much can be processed at this
task
Cycle Time: Average time for completion of a unit at a
production step or process. Does not include
waiting. Measured as time/unit

Throughput Rate: Average number of units processed


over a time interval. Measured as
units/time
1
Throughput Capacity = throughput rate
rate = Cycle Time
Cycle Times

Processing a fixed amount of work or the average time


between completion of successive units

Example: Producing 100 cars. On average, production takes


5 hours per car. It takes 50 hours to set up the production
line.

Set-up Time + (Batch size) x (Time per unit)


Cycle Time =
Batch size
Computing Cycle Times

Setup time: Production Time:


15 min 25min/unit

A B

Question: What is the cycle time between points A and B


of the process, if we work in batches of 10?
What is a bottleneck?

Bottleneck is the
process stage with
the
smallest throughput
rate
Which task is(longest
the cycle time)
bottleneck?

3 units/hr 5 units/hr 2 units/hr


Capacity of a process

The capacity of the process is:


minimum throughput rate at any of the stages

What is the capacity of this process?

3 units/hr 5 units/hr 2 units/hr


How do we measure throughput time?

Throughput Time: Average time that a unit takes to go through


the entire process (including waiting time).
Measured as time
Work in Process(WIP): Average number of units in system
over a time interval.
Measured as units

WIP
Throughput
time = Throughput rate
(Littles Law)