Process Design

PROCESS DESIGN
One of the important decision points of an operations system concerns the capacity to be
deployed in the system.
A process is the basic building block of operations.
Process design determines the capacity of a system.
It consists of a set of activities that need to be performed by consuming some resources and
time.
Determines the performance of the operations systems in terms of cost, time, productivity,
profit, etc.
PROCESS DESIGN
Consider a fast food restaurant in Kolkata.
•When the customer goes to the counter and places an order for the food items he or she
would like to eat, the outcome is determined by the process employed to satisfy this
customer demand.
•The steps involved in serving the demand, the number of people involved, the nature of
resources consumed and the time taken to serve this customer will all depend on the
process design.
•The performance of the processes dictates the performance of an operations system
itself.
Process Flow-charting
•Every activity that constitutes a process must be identified.
•It is also important to know the time taken for each activity and the nature of flow of
materials/information in the process.
•A pictorial representation of all this information could be developed using process flow-
charting.
•Process flow-charting employs a set of standard symbols and graphical tools to represent
all the information about the process.
Process Flow-Charting
 A process flow chart helps an operations manager in many ways:

◦ It provides a pictorial and compact representation of the process and enables a quicker
and better understanding of the various aspects of the process.

◦ Additional information - the time taken for each stage of the process, certain useful
measures can be computed. For instance, one may be able to estimate the time
required to complete the process. Using this information, one can also identify the
bottlenecks in the process and the productive capacity of the process.
Planning Premises and Process Implication
Three generic planning premises are in use in operations management: make to stock,
make to order, and assemble to order.
 Make-to-Stock:-
◦ The basic approach to planning in the MTS system is to schedule production for the
purpose of replenishing stocks to some predetermined level.
◦ Based on the estimate of the demand and the available inventory of finished goods on
hand, the exact production quantity for the planning period is arrived at.
◦ Such systems are more applicable to organizations with fewer product varieties and
high production volume, as in the case of continuous and streamlined flow systems.
◦ MTS is suitable for mass production systems.
Planning Premises and Process Implication
Make-to-order (MTO)-
• In this approach, no efforts are directed towards production until a firm customer
order is available.
◦ Once a customer order is launched into the production system, the requirement details
are computed and production is planned.
◦ It may be necessary for certain types of organizations to use the MTO planning
methodology. These organizations are typically manufacturers of products with high
variety and low volumes
Planning Premises and Process Implication
 Assemble-to-order-
• Intermediate to MTS and MTO.
◦ The ATO planning framework incorporates some of the features of MTS into the
MTO planning methodology to create a hybrid version.
◦ The system utilizes MTS for the early stages of the manufacturing process.
◦ At the later and final stages of the manufacturing system, the planning changes to that
of MTO.
◦ If there is a high degree of commonality in the parts and sub-assembly level, then the
volume of production and demand will be high. Therefore, typical MTS planning will
be efficient.
◦ More applicable in mid volume and mid variety manufacturing system.
◦ Also applicable in service.
Analyzing the process
Throughput time (flow time):- Throughput time (TPUT) is the elapsed time from the first
stage of the process to the last stage of the process. It is also known as flow time.
Cycle time: Cycle time is the elapsed time between two successive outputs from a process
that is continuously operating in a given period of time.
◦ For instance, in a bread-making process, if a loaf of baked bread comes out of the system
every 20 seconds, then the cycle time for the process is 20 seconds.
 Bottleneck: That stage of the process that dictates the output of a process is the bottleneck.
• Let us assume that in the bread-making example, the baking of the bread in the oven takes
20 seconds and all other processes take less than 20 seconds. In this case, the baking
process is the bottleneck. The processing time at the bottleneck is the cycle time for
the process.
The throughput rate is the output rate that the process is expected to produce over a
period of time. It is the mathematical inversion of the cycle time.
Illustrative Example
A toy manufacturer receives crafted toys from local carpenters and performs the final
operations before stocking it for sale.
The process consists of five steps.
• The first step is to arrange a set of four toys in a pallet.
• After this, the pallet moves to the next station where the toys are pre-treated.
• The next step is to send it to the spray-painting chamber, where it is painted as per the
specifications. At present, there is one spray-painting machine.
• After painting, it is left in an open area for drying. The painting process and the pre-
treatment process are specialized so the paint dries quickly.
• Finally, the toys are inspected and packed.
Illustrative Example
•Step 1 (Preparation of toys): 8 minutes
•Step 2 (Pre-treatment): 12 minutes
•Step 3 (Painting): 20 minutes
•Step 4 (Drying): 10 minutes
•Step 5 (Inspection and packing): 5 minutes
What is the throughput time for this manufacturing process?
Identify the bottleneck for this process.
What is the cycle time for this process?
What is the productive capacity of the process?
Illustrative Example
The throughput time for the process is the sum of all processing times. In this example,
the throughput time is 55 minutes. This implies that if all the required resources are
available, then from the time the job is launched at the first step, a pallet consisting of
four toys will come out of the system after 55 minutes.
The bottleneck is that stage of the process that dictates the output of the process. In our
example, the spray painting is the bottleneck.
 The cycle time is determined by the process time at the bottleneck station in the
process. In this example, cycle time is 20 minutes. The implication of this is that when
the process operates in a continuous manner, then one can expect a pallet of finished
toys to come out every 20 minutes.
 In order to compute the productive capacity of the process, we shall compute the production
rate at each stage of the process.

 Thus, the productive capacity of the process is 3 pallets/hour or 12 toys/hour

Illustrative example
Suppose the preparation process has two parts to it.
◦ The first part is setting up of pallets, which requires 4 minutes.
◦ The second part is the actual time of loading the pallet with toys.
Each pallet consisting of four toys requires 4 minutes to load. Furthermore, the painting
booth can hold up to three pallets during the spraying operation.
Given this additional information, examine the system under the following conditions:
(a) The revised process will paint two pallets at a time.
(b) The revised process will paint three pallets at a time.
(c) There are two pre-treatment units available.
Illustrative example
 Batch Size = two pallets:
•The preparation time will be the total time taken to setup and load toys or
•Therefore, every 12 minutes two pallets of toys will move out of this stage of process.
•This will translate into 10 pallets per hour.
•The pre-treatment stage will continue to be five pallets per hour and the inspection and
pack stage will also continue to be 12 pallets per hour.
•In the case of painting, in 20 minutes, both the pallets will be painted. This means two
pallets will come out every 20 minutes, there by indicating a capacity of six pallets per
hour.
Illustrative example
Batch Size = three pallets:
•The preparation time will be the total time taken to setup and load toys or
•Therefore, every 16 minutes three pallets of toys will move out of this stage of process.
•This will translate into 11.25 pallets per hour.
•The pre-treatment stage will continue to be five pallets per hour and the inspection and
pack stage will also continue to be 12 pallets per hour.
•In the case of painting, in 20 minutes, three pallets will be painted. This means three
pallets will come out every 20 minutes, there by indicating a capacity of nine pallets per
hour.
Buffering, Blocking, and Starving
Buffer: a storage area between stages where the output of a stage is placed prior to being
used in a downstream stage.
Blocking: occurs when the activities in a stage must stop because there is no place to
deposit the item.
Starving: occurs when the activities in a stage must stop because there is no work.
Buffering, Blocking, and Starving
Consider a two-stage process where the first stage has a cycle time of 30 seconds and the
second a cycle time of 45 seconds.
If the process needs to produce 100 units, then each unit produced, the first stage would be
blocked for 15 seconds.
What would happen if an inventory buffer were placed between two stages?
 In this case, the first stage would complete the 100 units in 3000 seconds.
During these 3000 seconds, the second stage would complete only 66 units.
The inventory would build to 34 units (100-66 units) over the first 3000 seconds.
All of the units would be produced in 4530 seconds.
The second stage is considered as a bottleneck because it limits the capacity of the process.
Buffering, Blocking, and Starving
What would happen if the first stage required 45 seconds and the second stage had 30
second cycle time?
In this case, the first stage is considered as a bottleneck and the second stage is starved
for 15 seconds.
 It would still take 4530 seconds to complete all 100 units.
Production Process Mapping and Little law
Material in a process is in one of two states.
- The first state is where material is moving or “in transit”. Actually, we refer to this
material as “work-in-process” inventory.
- The second state is material that is sitting in inventory and acting as a “buffer”
waiting to be used.
This “buffer” inventory allows different entities in the process to operate relatively
independently.
Little's Law says that, under steady state conditions, the average number of items in a
queuing system equals the average rate at which items arrive multiplied by the average
time that an item spends in the system.
There is a long-term relationship between the inventory, throughput, and flow time of a
production system in steady state.
Production Process Mapping and Little law

Throughput rate is the long-term average rate that items are flowing through the
process, and flow time is the time it takes a unit to flow through the process from
beginning to end.
 Illustrative example:
•An automobile company assembles cars in a plant and purchases batteries from a vendor.
The average cost of each battery is $45. The automobile company takes ownership of the
batteries when they arrive at the plant. It takes exactly 12 hours to make a car in the
plant and the plant assembles 200 cars per 8-hour shift (currently the plant operates one
shift per day). Each car uses one battery. The company holds, on average, 8,000 batteries
in raw material inventory at the plant as a buffer
Production Process Mapping and Little law
oFind the total number of batteries in the plant, on average.
oHow much are these batteries worth?
There are two types of inventory – a. Raw material Inventory and b. Work-in-process
Inventory.
Throughput is the output rate of the production process – 200 cars per 8 shift or 25 cars
per hour.
 One car use one battery. So the throughput rate for the batteries is also 25 per hour and
flow time is 12 hours.
 Work-in-process inventory
Production Process Mapping and Little law
We know from the problem that there are 8,000 batteries in raw material inventory, so
the total number of batteries in the pipeline, on average, is:
Total inventory = 8,000 + 300 = 8,300 batteries.
These batteries are worth 8,300 × $45 = $373,500.
Production Process Mapping and Little law
The throughput rate of the process is equal to average demand, and the process is not
producing any excess or shortage.
If demand averages 1,000 units per day and 20 days are needed for a unit to flow
through the factory, then the expected work-in-process in the factory would be 20,000
units.
We can think of Little’s law as a relationship between units and time.
If we divide inventory by throughput, we get flow time.
EXAMPLE
For the manager of a bakery, a first priority is to understand the products made and the
process steps required.

Two steps are required: a. Bread making b. Packaging the loaves.

Bread is made of batches of 100 loaves every hour, which is the cycle time for the activity.
Packaging needs only 0.75 hour to place 100 loaves in bag.
We can assume that packaging starts up an hour after bread making, otherwise it would be
idle for a full hour before getting any work at the start of the day.
Example (Continue)
 Based on the information, Bread Making is the bottleneck. It limits the overall capacity
of the process.
So, if we assume the bread making and packaging activities both operate the same
amount of time each day, then the bakery has the capacity of 100 loaves per hour.
Over the course of the day the packaging operation will be idle for quarter-hour periods
in which the next batch of bread is still being made.
Now, Instead of one bread making operation, we have now two operations.
Example (Continue)
The Cycle time for each individual bread-making operation is still one hour.
The cycle time of both bread-making lines operating together is half an hour.
 Packaging operation takes 0.75 hours to bag 100 loaves, the packaging operation now
is the bottleneck.
However, if we operated the packaging operation for three eight-hour shifts and bread
making for two shifts each day, then the daily capacity of each would be identical at
3,200 loaves a day.
Doing this requires building up inventory each day as work-in-process. Packaging
would bag this during the third shift. So what is the flow time of our bakery?
Example (Continue)
In the original operation with just the single bread-making process, this is easy to
calculate because inventory would not build between the bread-making and packaging
processes. In this case, the flow time would be 1.75 hours.
In the case where we delay the start of the packing operation for one hour, and then
operate it for three shifts, the average wait in work-in-process inventory needs to be
considered.
This is a case where Little’s law can estimate the time that the bread is sitting in work-
in-process. To apply Little’s law, we need to estimate the average work-in-process
between bread making and packaging.
During the first two shifts, inventory builds from 0 to 1,200 loaves.
We can estimate the average work-in-process over this 16-hour period to be 600 loaves
Example (Continue)
Over the last one hour of packaging in the second shift & the final eight hour shift,
inventory drops from 1200 units to zero units.
 Again, the average WIP inventory is 600 units.
Thus, the overall average WIP over the 24 hours period is 600 units of bread.
The packaging process limits the cycle time for the process to 0.75 hour per 100 pieces
of bread.
The throughput rate =
 According to little’s law, the average time the loaves are in WIP =
The total flow time = (1hr for bread making + 4.5 hrs of WIP + 0.75 hrs packaging) =
6.25 hrs.
Determinants of process characteristics in Operations
Various factors that influence the choice of alternative process.
• Volume: Volume indicates the average quantity of products produced in a
manufacturing system.
- Turnkey project management organizations (BHEL, Larsen & Turbo) will
typically have a production Volume of just one.
- Organizations catering consumer non-durable and FMCG sectors have high
volumes of production.
- We have mid-volume manufacturers in consumer durables, white goods, and
several industrial products. Hindustan Motors, Earth-moving equipment belong to the
mid-volume category.
Determinants of process characteristics in Operations
• Variety: Number of alternative and variants of each product.
- Consider TATA motors. The TATA Indica is available in several models.
Basically Petrol and Diesel models. Within Petrol model and Diesel model, there are
variations such as GLX,VX, VXI, AX and so on.
•Flow: All manufacturing system requires certain input material with which the process
begin. The material undergoes a conversion process from the raw material stage to the
finished goods stage. Flow indicates the nature and intensity of this phenomenon.
•In general, volume and variety will have an inverse relationship
a. High Volume – Low Variety
b. Mid Volume-Mid Variety
c. Low Volume-High Variety.
Determinants of process characteristics in Operations

 Two key questions in process selection:

1. How much variety will the process need to be able to handle?
2. How much volume will the process need to be able to handle?
Types of Manufacturing Process
A. Projects:
The product remains in a fixed location.
Manufacturing equipment is moved to the product
rather than vice versa.
The flow pattern is non-standard and complex
because there are unique process designs for each
and every customer order
Jumbled flow
It take a long time to complete, involve a large
investment of funds and resources, and produce one
item at a time to consumer order.
Types of Manufacturing Process
B. Workcenter: (referred to as a job shop)
Similar equipment or functions are grouped together,
such as all drilling machines in one area and all
stamping machines in another.
A part being worked on travels, according to the
established sequence of operations, from workcenter
to workcenter, where the proper machines are
located for each operation.
Processing is intermittent.
A workcenter sometimes is referred to as a
department and is focused on a particular type of
operation.
Dept. A Dept. C Dept. E

Dept. B Dept. D Dept. F

Intermittent Flow
Types of Manufacturing Process
C. Manufacturing Cell: (Batch Processing)
Batch processing is used when a moderate volume of goods or services is desired, and it can
handle a moderate variety in products or services.
A manufacturing cell layout is a dedicated area where products that are similar in processing
requirements are produced.
These cells are designed to perform a specific set of processes, and the cell are dedicated to a
limited range of products.
processing is still intermittent
It processes many different jobs through the production system at the same time in groups or
batches.
 Examples of batch systems include bakeries, which make bread, cakes, or cookies in batches
Types of Manufacturing Process
D. Assembly line: (Repetitive)
 An assembly line is where work processes are arranged according to the progressive
steps by which the product is made.
It produces large volumes of a standard product for a mass market.
The assembly line steps are done in areas (“stations”) and typically the stations are
linked by some form of material handling device.
Process design for streamlined flow can be visualized at two levels in a mass production
system. At the overall level, each product will flow across departments in a streamlined
fashion. Furthermore, within each department, there will be an orderly flow of
components and materials.
•This type of arrangement of manufacturing resources for mass production in known as
flow shop.
Types of Manufacturing Process
 Product demand is stable, and product volume is high. Goods that are mass produced include
automobiles, televisions, personal computers, fast food, and most consumer goods.
Types of Manufacturing Process
E. Continuous Production: is used for very high-volume commodity products that are
very standardized. The system is highly automated and is typically in operation
continuously 24 hours a day. Refined oil, treated water, paints, chemicals, and foodstuffs
are produced by continuous production.
Difference among the manufacturing process
Repetitive/
Job Shop Batch Assembly Continuous
Description Customized Semi- Standardized Highly
goods or standardized goods or standardized
services goods or services Goods or
services services
Advantages Able to handle a Flexibility; easy Low unit Very efficient, very
wide variety to add or change cost, high high volume
of work products or volume, efficient
services
Disadvantages Slow, high cost Moderate cost Low flexibility, Very rigid, lack of
per unit, per unit, high cost of variety, costly to
complex moderate downtime change, very
planning and scheduling high cost of
scheduling complexity downtime
Process Selection With Break-Even Analysis
Several Quantitative techniques are available for selecting a process.
The choice of which specific equipment to use in a process often can be based on an
analysis of cost trade-offs.
For example, if we need to drill holes in a piece of metal, the general-purpose option
may be to use a simple hand drill. An alternative special-purpose drill is a drill press.
The trade-offs involve the cost of the equipment (the manual drill is inexpensive, and
the drill press expensive), the setup time (the manual drill is quick, while the drill press
takes some time), and the time per unit (the manual drill is slow, and the drill press
quick).
 A standard approach to choosing among alternative processes or equipment is break-
even analysis.
Process Selection With Break-Even Analysis
The ‘best’ method depends on the anticipated volume of demand for the product and the
trade off between fixed costs and variable costs.
Example: Suppose a manufacturer has identified the following options for obtaining a
machined part: It can buy the part at $200 per unit (including materials); it can make the
part on a numerically controlled semiautomatic lathe at $75 per unit (including
materials); or it can make the part on a machining center at $15 per unit (including
materials). There is negligible fixed cost if the item is purchased; a semiautomatic lathe
costs $80,000; and a machining center costs $200,000.
 Process Selection With Break-Even Analysis
Purchase cost =
Production cost on Semiautomatic lathe =
Production cost on Machining Center =
Process Selection With Break-Even Analysis
If demand is expected to be more than 2,000 units (point A), the machine center is the
best choice because this would result in the lowest total cost.
If demand is between 640 (point B) and 2,000 units, the semiautomatic lathe is the
cheapest.
If demand is less than 640 (between 0 and point B), the most economical course is to
buy the product.
Consider the effect of revenue, assuming the part sells for $300 each.
Profit (or loss) is the vertical distance between the revenue line and the alternative
process cost at a given number of units.
At 1,000 units, for example, maximum profit is the difference between the $300,000
revenue (point C) and the semiautomatic lathe cost of $155,000 (point D)
Process Selection with Break-Even Part
Example 2: Travis and Jef, the owner of Up Right Paddlers, a new startup company with
the goal of designing, making, and marketing stand-up paddle boards for streams and
rivers. The boards are constructed from heavy duty raft material that is inflatable, rather
than the fiberglass material used in surfboards. Travis design a process (semiautomatic)
the fixed cost for equipment and space will be $2,000, and the material and labor costs
will run $50 per unit. Jeff, the more optimistic owners, believes that demand for paddle
boards will exceed the breakeven point of 40 units He proposes spending $10,000 in
fixed costs to buy more automated equipment that would reduce the materials and labor
cost to $30 per board. The boards would sell for $100, regardless of which
manufacturing process is chosen. Compare the two processes and determine for what
level of demand each process would be preferred. Label Travis’ proposal as Process A,
and Jeff’s proposal as Process B.
Manufacturing Process Analysis
A company supplies a component from our emerging plant to several large auto manufacturers.
This component is assembled in a shop by 15 workers working an eight-hour shift on an
assembly line that moves at the rate of 150 components per hour. The workers receive their pay
in the form of a group incentive amounting to $0.30 per completed good part. This wage is
distributed equally among the workers. Management believes that it can hire 15 more workers
for a second shift if necessary.
Parts for the final assembly come from two sources. The molding department makes one very
critical part, and the rest come from outside suppliers.
o 11 Machines are capable of doing the one part done in-house.
o One machine is being overhauled or repaired at any given time.
o Each Machines requires one full time operator.
o Machine can produce 25 parts per hour.
o Workers are paid $0.20 for each good parts.
o Overtime is $0.30 for each good parts.
o Employment is flexible. Currently 6 workers are available and 4 more are available from the
labor pool of the company.
o The raw materials for each part molded cost $ 0.10 per part; a detailed analysis by the
accounting department has concluded that $ 0.02 of electricity is used in making each part.
o The parts purchased from the outside cost $ 0.3 for each final component produced.
o This entire operation is located in a rented building costing $100 per week. Supervision,
maintenance, and clerical employees receive $1,000 per week. The accounting department
charges depreciation for equipment against this operation at $50 per week.
Manufacturing Process Analysis
a) Determine the capacity of the entire process
◦ Are the capacities balanced?
b) If the molding process were to use 10 machines instead of 6, what would be the
capacity of the entire process?
c) If the company went to a second shift of eight more hours on the assembly task, what
would be the new capacity?
d) Determine the cost per unit output when the capacity is 6,000 per week or 10,000 per
week
Manufacturing Process Analysis
A. Molding capacity =
Capacity of the Assembly Process = .
Because capacity of both the tasks is 6,000 units per week, they are balanced.
B. If the molding process were to use 10 machines instead of 6 machines.
Molding capacity =
Because no change has been made in the final assembly task, the capacity of the
assembly process remains 6,000 components per week. Thus, even though the
molding capacity is 10,000 per week, the capacity of the entire process is only
6,000 per week because in the long run the overall capacity cannot exceed the
slowest task.
Manufacturing Process Analysis
C. If the company went to a second shift
Capacity of the Assembly Process = .
If the capacity of the molding is 10,000 parts per week, then the capacity of the entire
process will remain 10,000 parts per week.
Manufacturing Process Analysis
D.1. Cost Per unit when the output = 6000 units

Cost per unit part =

Manufacturing Process Analysis
Cost per unit when output =10,000 units.