IE 503: Operations Analysis

Jayendran Venkateswaran
IE & OR
 Agenda
Course Overview
Why Operations Analysis/ Operations Management?
A brief History of OM
Components of OM
Product, Process, Supply Chain
Manufacturing Shopfloor and some definitions

IEOR @ IITBombay IE503: Operations Analysis

 Overview
Textbooks
S. Nahmias (2009) Production & Operations Analysis, 6th ed, McGraw Hill.
W. Hopp and M. Spearman (2000) Factory Physics, 3rd ed., Tata-McGraw Hill.

Novel: You need to read this book. Start reading today!
The Goal: A process of ongoing improvement,
by Eliyahu M. Goldratt and Jeff Cox (1984, 2014).

Grading (tentative)
Quizzes 25%, Midsem 25%, Finals 40%, Homeworks/ Class participation 10%

Other Classes
We need extra hours to make up 1st week:
Finish late (1pm on Mon) or start early (8am on Tue)
In-class games
I will try to arrange a factory tour!

IEOR @ IITBombay IE503: Operations Analysis

 What is the course about?
Operations Analysis
deals with the study of operational system, with the aim of
understanding, and improving the system performance
The discipline of applying OR tools to specific subsets of functional
processes

Classical Definition: A scientific method of providing

executive departments with a quantitative basis for
decisions regarding the operations under their control
Methods of Operations Research, Morse & Kimball, 1951

OA studies both manufacturing and services

Involves:
Modeling, Data Analysis, Operations Research
Paying attention to details, Common sense

IEOR @ IITBombay IE503: Operations Analysis

 Economic Activity/ Sectors
Primary Tertiary (Services)
Restaurants, Hotels
Agriculture Domestic
Maintenance, Repair
Fishing Services
Laundry, Salon
Forestry Transportation
Mining Retailing
Communication Trade/
Secondary Finance & Insurance Commerce
Real Estate
Manufacturing
Government
Processing Health
Education Refining/
Research Extending
Human
Recreation
Capability
Arts
IEOR @ IITBombay IE503: Operations Analysis

India poised to become the 3rd biggest economy in the world
by 2020

India will have the worlds largest working age population

We will decide what the current trend is!

We face unique challenges and fantastic opportunities

Source: data.gov.in IE503: Operations Analysis
IEOR @ IITBombay
 Trends in Employment

Source: data.gov.in IE503: Operations Analysis

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 Why Operations Management/ Analysis ?
Time On time delivery
Time Development speed
Delivery speed

Fast
Features, performance,
durability, serviceability,
aesthetics, etc
Quality Flexibility
Customization
Low High Variety
Cost Quality Volume Flexibility

Cost

Pick any two!

But remember that it is always possible to Manufacturing cost

Service cost
make improvements, up to a point Profit
Running cost

After that we need to push the boundary

using
* Technology
* Information OM or OA = Strategy Execution
* Innovation

IEOR @ IITBombay IE503: Operations Analysis

 Why Study OM/OA?
Indigo vs. Air India Careers
Ola vs. Meru Business Analyst
Flipkart vs. Crossword SC Analyst
Production Manager
Toyota vs. Ford
Operations Manager
Samsung vs. Apple

Set of Responsibilities
Design
Planning
Control
Improvement
IEOR @ IITBombay IE503: Operations Analysis
 History of OM
Life before organized production
The industrial revolution
Invention of steam engine
Interchangeable parts
2nd Industrial Revolution
Railways and Telegraph
Carnegie: Focus on reducing costs in steel by continuous flow
and vertical integration
Assembly line (Ford)
3rd Industrial Revolution
Computers and Automation
Industry 4.0
Cyber Physical Systems

IEOR @ IITBombay IE503: Operations Analysis

 Scientific Method
The Principles of Scientific Management by
Frederic Taylor
Experiment with methods to find best way to
perform a job
Improve efficiency results in:
Lower costs to companies
Higher wages for laborers
Better and less expensive products for consumers

IEOR @ IITBombay IE503: Operations Analysis

 Operations Research
Also known as Management Science
Use of models, mathematics and statistics to solve
business problems
Objectives, Decision Variables, Constraints
Initially lack of data and computing power and
management skepticism
ERP systems and better trained management
opens possibilities

IEOR @ IITBombay IE503: Operations Analysis

 Recent Trends
Total Quality Management
Flexibility
Global Market Place
eSupply Chain
Environmental concerns
Delighting the customers
Time reduction
Big data analytics

IEOR @ IITBombay IE503: Operations Analysis

 Components of Operations Management

Product
Development

Process Supply
Design Chain

IEOR @ IITBombay IE503: Operations Analysis

 Product
Product Type
Goods or Services

Strategic Positioning
Technology Strategy

Product Development
Product architecture: Integral vs. Modular
Design for manufacturing

IEOR @ IITBombay IE503: Operations Analysis

 Service vs. Goods
Intangibility (Explicit and Implicit)

We manufacture perfume; we sell Hope

PERCEPTION Vs. EXPECTATION, ADVERTISE & MATERIALIZE
Perishability (no inventory buffer)
Cant inventory seats on a plane!
CAPACITY PLANNING/FLEXIBILITY, PREVENTION/CULTURE
Heterogeneity (supply and demand variability)
Consider medical service delivery!
HIRING, TRAINING, PLANNING, CUSTOMIZATION
Simultaneity (of production and consumption)
No safety nets for quality problems
HIRING, TRAINING, HR, PLANNING, CONCURRENT
ENGINEERING

IEOR @ IITBombay IE503: Operations Analysis

 Process Design
Process type
Discrete or Continuous
Process Architecture
Technology (ERP/ Internet/ ..)
Physical Flow, Information Flow, Financial Flow
Process Design Options
Queuing Analysis
Capacity Analysis
Uncertainty analysis
Inventory systems
Production control
Continuous Improvement
Quality Management

IEOR @ IITBombay IE503: Operations Analysis
 Supply Chain
Strategic Supply Chain Design
Make vs. Buy
Supplier Selection, Sourcing
SC Architecture
Physical and information flow
Integral vs. Modular
SC Management
End to End Coordination
Supplier Relations
Customer Relations
Delivery, inventory, information

IEOR @ IITBombay IE503: Operations Analysis

 Timber Depot Packaging Supplier

SC of SOAP

Chemical
Supplier
Warehouse Manufacturer

Supermarket Supermarket
Customer
warehouse

IEOR @ IITBombay IE503: Operations Analysis

 Supply Chain to Supply Network

From supply chains to supply networks

Source: Supply chain for Dummies

IEOR @ IITBombay IE503: Operations Analysis
 ClockSpeed: Dimension of time in OM
Evolution in Natural World In INDUSTRIAL world
Fruitflies Infotainment
evolves faster than evolves faster than
Mammals Microchips
evolves faster than evolves faster than
Reptiles Autos
evolves faster than
Aircrafts
evolves faster than
Mineral Extract
The faster the clockspeed, the shorter the reign
IEOR @ IITBombay IE503: Operations Analysis
 Manufacturing Process

IEOR @ IITBombay IE503: Operations Analysis

 Manufacturing of Solar Panel

Different processes or step
involved in solar panel
manufacturing is shown

Cell
Cell Arraying &
Testing & Stringing Sealing
Cutting soldering
Sorting

Frame &
Final Testing
Panel Trimming Testing Lamination
Assembly

Cleaning &
Packaging

The entire factory floor is called as
shop floor.

IEOR @ IITBombay IE503: Operations Analysis

 Manufacturing of Solar Panel
Cell
Cell 1 Arraying &
2
Testing & Stringing Sealing
Cutting soldering
Sorting

3
Frame &
Final Testing
Panel Trimming Testing Lamination
4, 5 Assembly

Cleaning &
Packaging

IEOR @ IITBombay IE503: Operations Analysis

 Workstations, Buffers
Cell
Cell Arraying &
Testing & Stringing Sealing
Cutting soldering
Sorting
2 Machines Manual Manual Manual Manual

Frame &
Final Testing
Panel Trimming Testing Lamination
Assembly
Manual Manual Machine+ 3 Machines
manual

Cleaning &
Packaging

Workstation is a collection of one or more machines or manual

stations that perform identical operations
a.k.a process centers, station, workcenter
All the square boxes are workcenters!
A buffer or queue is used to store parts in front of workstations
Buffers are not explicitly shown. It can be shown as triangles

IEOR @ IITBombay IE503: Operations Analysis

Part, end item, consumables Glass, film

Solar Cell
Cells Cell Arraying &
Testing & Stringing Sealing
(Raw Cutting soldering
Sorting
Material)

Frame &
Final Testing
Panel Trimming Testing Lamination
Assembly

Aluminum Terminal box

Cleaning & frames (Sub-assembly)
Packaging (Raw
Material)
End Item
(Finished Product)

Part is a piece of raw material, component, sub assembly, or an assembly.

End item or finished product is what is sold to the customer
Consumables are materials used in workstations
e.g. glue, chemicals, gases, lubricants, etc

IEOR @ IITBombay IE503: Operations Analysis

 More Definitions
Inventory: stockpile of parts
Raw material inventory (RMI)
Crib inventory: stockpile at an intermediate location
Finished goods inventory (FGI): stockpile of end items

Work-in-process (WIP):
The inventory in the shop floor between FGI and RMI.

Routing: The sequence of workstations passed through by a part

Throughput: The average output of a production process per unit

time
It can also be for machine, workstations, assembly line
a.k.a throughout rate
Upper limit of throughput of a production process is its capacity.
IEOR @ IITBombay IE503: Operations Analysis
 More Definitions
Flow Time of a routing is the average time taken from
the release of the job at the beginning of the routing
until it reaches an inventory point at the end of its
routing (i.e. time spent as WIP)

Utilization
Fraction of time the workstation or machine is not idle.

Takt time is the average time between the start of production of

one unit and the start of production of the next unit
Can also be viewed the time between end of production of
two successive units.
IEOR @ IITBombay IE503: Operations Analysis
 Summary
Course Overview
Attendance compulsory
Enthusiastic participation in class
Read The Goal

Why Operations Analysis/ Operations Management?

A brief History of OM
Components of OM
Product, Process, Supply Chain
Manufacturing Shopfloor and some definitions

IEOR @ IITBombay IE503: Operations Analysis