Operation Management

Little’s Law:

Inventory = Throughput rate X Flowtime

The throughput rate

The output rate that the process is expected to produce over a period of time.

is the output rate that the process is expected to produce over a period of time. The throughput rate of the assembly line is 120 units per hour (60 minutes/hour × 60 seconds/minute ÷ 30 seconds/unit). In this case, the throughput rate is the mathematical inverse of the cycle time.

Flow time includes the time that the unit spends actually being worked on together with the time spent waiting in a queue.

A bottleneck

Any resource whose capacity is less than the demand placed upon it (Goldratt's definition).

is defined as any resource whose capacity is less than the demand placed upon it. A bottleneck is a constraint within the system that limits throughput. It is that point in the manufacturing process where flow thins to a narrow stream. A bottleneck may be a machine, scarce or highly skilled labor, or a specialized tool. Observations in industry have shown that most plants have very few bottleneck operations.

Case Highlights

Who -

What -

Where -

When –

Firm’s strategic Position

* Cost efficient which leads to offering better rates

* Same day Processing

* We go after basic customers (not a lot of deposits, doesn’t require a lot of work on our end)

Analysis

* Process flowcharts

* Key calculations – capacity, work that is needed (basic calculations)

* Decision criteria

Impact of variability?

-Marketing (don’t know when new accounts will come in)

- 4 different ways to open an account

Where is the bottleneck? (need to calculate the numbers to tell)

-What options exist (assume CIF is bottleneck)

Bottleneck = where we are using the most overtime. _______ is higher than the capacity we have

What options exist: - short term, - long term

relax same day processing policy, better training for staff (cross training, since some people are...