Capacity Measurement

Today's case study from Collier (2015) chapter 10 provided an opportunity to experiment with two capacity measurement formulas:

• capacity required for an individual work order (Ci)
• total capacity required for the shop (sum Ci)

These formulas are detailed on Collier (2015), p. 208.

Applying these formulas to the David Christopher case is a bit tricky, as the "set-up time" used by our orthopedic surgeons actually does vary with volume, unlike the standard set-up time in a factory setting. Most of you caught this variation, and accommodated for it in your calculations. Congratulations! Here's a video detailing the calculations for this case...

Now the question is what to do about the delta between Dr. Christopher's available capacity and demand? Many of you suggested variations on hiring another surgeon (maybe part time), hiring other non-physician staff to free up the doctors, and reducing set-up/changeover time.

Kristen, Michael, and others had an important conversation about the costs associated with hiring another physician, and the hope that increased capacity would generate new revenue. What we don't know from the case are demand trends that might change this hope into a reality. It would be helpful to have that info.

Personally, I'm a fan of having a fully rested physician operating on me, so I'm a supporter of the set-up times between procedures (many of you want to reduce those times). Let me suggest another non-hiring alternative: what about using one Friday per month as a surgery day? Most other Fridays would still be available for conferences, etc. Then if demand warranted additional capacity, another surgeon could be hired after X period of time. Something to think about.

Now, how might you be able to apply these capacity measurement tools to your case study companies?

Capacity Management

Today's discussion board posts provided a number of insights about how different businesses manage their capacity: the ability "to accomplish their purpose over a period of time." (Collier & Evans, 2015, p. 205). We can measure capacity in two ways:

• maximum rate of output per unit of time (e.g., number of pizzas/hour)
• units of resource availability (e.g., number of seats in McInnis Auditorium)

As many of your pointed out through your posts, capacity is relevant to both goods and services producing businesses. It can be impacted by facility size/location, process design, workstation or equipment. Watch this video for a helpful introduction.

It is important to distinguish capacity management from inventory management. When we're talking about capacity management, were talking about maximum rates of output or resources availability based on constraints imposed by the facility, process or workstation design, or equipment. Inventory availability will certainly impact our ability to run our processes at full capacity, but it does not determine capacity. For example, a movie theatre may have 500 seats (its capacity), but the number of customers may not fill the theatre at any one showing. This lower number of customers does not result in lower capacity.

The intent of today's assignment was to give you a head start on case study part 3, item 4: planning and control tools. Today's capacity management topic fits under that umbrella. See these posts in today's discussion board for helpful examples as you continue to develop your own final case study installment:

• Long and/or short term capacity management strategies: Andrew B., Lauren S., Michael G., Katie K. 
• Short-term capacity management via labor skills mix: Jacob S., Mario M.
• Short-term capacity management via labor capacity & schedules: Edem A. & Xia C., then see Ryan's post for thoughts about the down side of this method over the long-term.

Finally, Kyle presents an example of a company that has created a distribution system with a large amount of capacity flexibility. What specific tools from Collier & Evans (2015), chapter 10, do you see at work in Kyle's example?

Lean Operating Systems

Today we were introduced to a successful example of lean operating systems implementation through our case study at the end of Collier and Evans (2015) chapter 17. The videos below are helpful supplements to our reading, highlighting some of lean's key concepts. We'll put these concepts to work in class next week. We'll also apply them in case study, part 3.

An introduction to lean.

This next video captures Collier and Evan's (2015) four principles of lean, but in a slightly different way.

And now a review of the seven types of waste. Note that the narrator adds an eighth type. This video does a particularly good job applying lean to service environments.

Finally, this video highlights some additional lean concepts not captured in today's case study, but that are critical to lean operations. Can you identify the concepts and tools we've discussed earlier in the semester?

Reference

Collier, D.A. & Evans, J.R. (2015). OM5. Boston: Cengage Learning.

Pareto Charts & Fish Bone Diagrams

Xia makes an important connection in today's discussion board between Pareto charts and cause-and-effect (or fish bone) diagrams. She proposes that fish bone diagrams can be used to dig into the top problem(s) identified in a Pareto chart for the purpose of conducting root cause analysis. This is absolutely correct. The combination of Pareto charts and fish bone diagrams is a powerful quality assurance tool.

This video from Jay Arthur (author of Lean Six Sigma Demystified) connects Pareto charts and fish bone diagrams, and succinctly explains how the "5 whys" can be used to complete the cause-and-effect chart.

Process Mapping

Process mapping is an important tool in process design and process improvement. One critical aspect of process improvement is identifying valued-added activities and waste. Waiting time is always a form of waste (we'll talk about this more in our lean module in the coming weeks). We can identify waste in a process by taking process mapping a step further using value stream mapping. Take a look at this video for a helpful introduction to value stream mapping.

Several of your process maps included a number of different parties participating in the process. Xia's map of the "fulfillment by Amazon" (FBA) process is a good example. Sometimes we want to have a clear picture of who's responsible for what step of the process and when. We do this using a swim lane diagram. The approvals swim lane diagram below uses all of the flow charting symbols we used in today's project, but organizes them by responsible party using "swim lanes".

Source: Paul Kerr, Wikimedia Commons, Public Domain

This next video provides a helpful tutorial on how to get started with a swim lane diagram. 

How might you use this tutorial to convert Xia's FBA process map into a swim lane diagram?

The Wedding Wagon

Collier & Evans (2015) characterize four basic process types: project, job shop, flow shop, and continuous flow. How would you classify this process, and where would you place it on their service positioning matrix. How might that be different from more traditional wedding planning?




Reference: Collier, D.A. & Evans, J.R (2015). OM5. Boston: Cengage Learning.

How to Create a Productive Office Space

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Here's a useful article covering the basics of office space design. Check it out and enjoy: How to Create a Productive Office Space