Operations Management

1. Operations Management Chapter 9 – Layout Strategy PowerPoint presentation to accompany Heizer/Render Principles of Operations Management, 6e Operations Management, 8e © 2006 Prentice Hall, Inc.

2. Innovations at McDonald’s • Indoor seating (1950s) • Drive-through window (1970s) • Adding breakfast to the menu (1980s) • Adding play areas (1990s) Three out of the four are layout decisions!

3. McDonald’s New Kitchen Layout • Fifth major innovation • Sandwiches assembled in order • Elimination of some steps, shortening of others • No food prepared ahead except patty • New bun toasting machine and new bun formulation • Repositioning condiment containers • Savings of $100,000,000 per year in food costs

4. McDonald’s New Kitchen Layout

5. Layout Design Considerations • Higher utilization of space, equipment, and people • Improved flow of information, materials, or people • Improved employee morale and safer working conditions • Improved customer/client interaction • Flexibility

6. Analyzing Service Processes Layout Design Considerations • Process Flowcharts • Process Diagrams

7. Process Flowcharts • Diagramming a process to identify the bottleneck in operations: • Operation • Decision • Wait • Flow

8. Process Flowcharts • Cycle Time – the average time between completions of successive units • Bottleneck – the factor that limits production. A bottleneck is a constraint on the output of the system and could arise from several sources.

9. Process Flowcharts • Capacity – measure of output per unit of time when the system is fully busy • Capacity Utilization – measure of how much output is actually achieved when the system is fully busy

10. Process Flowcharts • Throughput Time – the time it takes to complete a process from time of arrival to time of exit. It is the sum of the critical path and the average time spent waiting. • Rush Order Flow Time – the time it takes to go through the system from beginning to end without the waiting time.

11. Sample Problem • See Handout – Problem 1

12. Process Diagrams • Also used to diagram a process and bottlenecks • Also used to study labor utilization

13. Process Diagrams • Direct Labor Utilization – measure of the percentage of time that workers are actually contributing value to the service • Equal to: Total Direct Labor Content (Process Cycle Time) (Number of Workers)

14. Example • Drivers license office is under pressure to increase productivity to accommodate 120 license renewal applicants per hour • One clerk will be added to the staff • How can the system be changed to meet this goal?

15. Driver’s License Example

16. Example Can only process 60 applications/hr Can process 120 apps/hour With 1 additional staff 130/hr 120/hr

17. Driver’s License Example Can process 120 apps/hour With 1 additional staff 132/hr

18. Servicescapes • Ambient conditions - background characteristics such as lighting, sound, smell, and temperature • Spatial layout and functionality - which involve customer circulation path planning, aisle characteristics, and product grouping • Signs, symbols, and artifacts - characteristics of building design that carry social significance

19. Service Layouts Servicescapes • Operations Sequence Analysis • See handout for example