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1 Operations Strategy 2 Process Analysis Class 2a + 2b: Process Flow Analysis Class 3a: Capacity Investment The Product PowerPoint Presentation
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Operations Management & Performance Modeling. 1 Operations Strategy 2 Process Analysis Class 2a + 2b: Process Flow Analysis Class 3a: Capacity Investment The Product Mix problem National Cranberry Coop. 3 Lean Operations 4 Supply Chain Management 5 Capacity Management in Services

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Presentation Transcript
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Operations Management & Performance Modeling

1 OperationsStrategy

2 Process Analysis

  • Class 2a + 2b: Process Flow Analysis
  • Class 3a: Capacity Investment
    • The Product Mix problem
    • National Cranberry Coop.

3 Lean Operations

4 Supply Chain Management

5 Capacity Management in Services

6 Total Quality Management

7 Business Process Reengineering

OM&PM/Class 3a

product mix decisions kristen cookies offers 2 products
Product Mix Decisions: Kristen Cookies offers 2 products

Sale Price of Chocolate Chip Cookies: $5.00/dozen

Cost of Materials: $2.50/dozen

Sale Price of Oatmeal Raisin Cookies: $5.50/dozen

Cost of Materials: $2.40/dozen

Maximum weekly demand of

Chocolate Chip Cookies: 100 dozen

Maximum weekly demand of

Oatmeal Raisin Cookies: 50 dozen

Total weekly operating expense $270

OM&PM/Class 3a

product mix decisions
Product Mix Decisions

Total time available in week: 20 hrs

OM&PM/Class 3a

product mix decisions1
Product Mix Decisions

Margin per dozen Chocolate Chip cookies = $2.50

Margin per dozen Oatmeal Raisin cookies = $3.10

Margin per oven minute from Chocolate Chip cookies = $2.50 / 10 = $ 0.250

Margin per oven minute from Oatmeal Raisin cookies = $3.10 / 15 = $ 0.207

OM&PM/Class 3a

lp for optimal product mix selection
LP for Optimal Product Mix Selection

xcc: Dozens of chocolate chip cookies sold.

xor: Dozens of oatmeal raisin cookies sold.

Max 2.5 xcc + 3.1 xor

subject to

8 xcc + 5 xor < 1200

10 xcc + 15 xor < 1200

4 xcc + 4 xor < 1200

xcc < 100

xor < 50

TechnologyConstraints

Market Constraints

OM&PM/Class 3a

national cranberry cooperative1
National Cranberry Cooperative

x bbls/hr

Truck

arrivals

OM&PM/Class 3a

class 3a learning objectives
Class 3a Learning Objectives
  • Effect of product mix decisions on process capacity
    • marginal contribution per unit of bottleneck capacity used
  • Process flow charts with multiple products
  • Backups may not occur in front of a bottleneck
  • Bottleneck may shift on adding capacity
    • diminishing returns to capacity investment

OM&PM/Class 3a