Processes

Question 1

Flow Unit

Answer 1

The basic unit that moves through a process, starting as input and later leaving the process as outputs

Question 2

Flow Rate

Answer 2

The average rate at which flow units travel through a process.

The minimum of capacity and demand.

In the long run, flow rate cannot be producing more than the demand.

Question 3

Flow Time

Answer 3

The time a flow unit spends in a process from start to finish

Question 4

Process Analysis

Answer 4

A rigorous framework for understanding the detailed operations of a business. Among other things, process analysis determines process capacity (units processed per unit time) and utilization (how busy resources are)

Question 5

Process Flow Diagram

Answer 5

A graphical way to describe the process

Question 6

Processing Time

Answer 6

• The time it takes a resource to complete processing of one flow unit.
• Processing Time = 1 / Capacity of resource

Question 7

Resource Capacity

Answer 7

• The maximum number of flow units that can flow through that resource per unit of time.
• Max flow rate of resource
• Resource capacity = 1 / p, where p is processing time.

Question 8

Process Capacity

Answer 8

The maximum flow rate a process can provide.

Determines the maximum supply of the process.

Process capacity is the smallest capacity of all resources in the process. Assuming all resources are identical.

Maximum flow rate of the process.

Process capacity
= 1 / p(max) , where p is processing time
= 1 / p (bottleneck).

It is equal to the minimum of all resource capacities.

It is equal to the bottleneck capacity.

Question 9

Demand Rate

Answer 9

The number of flow units that customers want per unit of time.

Question 10

Capacity-Constrained

Answer 10

The case in which demand exceeds supply and the flow rate is equal to process capacity.

We cannot produce more than the constrain

Question 11

Demand Constrain

Answer 11

The case in which process capacity exceeds demand and thus the flow rate is equal to the demand rate.

We cannot produce more than the constrain.

Question 12

Throughput Rate/Throughput Time

Answer 12

Throughput Rate: Synonyms for flow rate
Throughput Time: Synonyms for flow time

Question 13

Utilization

Answer 13

The ratio between the flow rate (how fast the process is currently operating) and the process/resource capacity (capturing how fast the process could be operating if there was sufficient demand)

Utilization = Flow Rate / Capacity

Reflects how much a resource is utilized over time.

Question 14

Cycle Time

Answer 14

The time between completing two consecutive flow units.

Cycle Time = 1 / Flow Rate

Cycle Time depends on process capacity.

Question 15

Lead Time

Answer 15

The time between when an order is placed and when it is received.

It depends on what the start and end of the process.

Question 16

Bottleneck

Answer 16

Resource with the lowest capacity in a process.

Bottleneck needs to be a resource and not an activity.

Knowing where the bottleneck is located at is crucial for improving a process.

If the bottleneck is not improved, a process will never improve.

Question 17

Worker Paced

Answer 17

A process in which each resource is free to work at its own pace: If the first resource finishes before the next one is ready to accept the flow unit, then the first resource puts the completed flow unit in the inventory between the two resources.

Question 18

Machine Paced

Answer 18

A process in which all steps are connected through a conveyor belt and all of the steps must work at the same rate even if some of them have more capacity than others.

If one machine works faster than the other, inventory might pile up. A breakdown of the conveyor belt might happen.

Question 19

Time through empty process

Answer 19

The time it takes the first flow unit to flow through an empty process i.e., for a process that has no inventory.

Time for X units = Time through empty process + (X-1) * Cycle Time

Question 20

Efficiency

Answer 20

A process is efficient if it is able to achieve a high flow rate with few resources.

Question 21

Cost of direct labor

Answer 21

The labor cost associated with serving one customer, which is the total wages paid per unit of time divided by the flow rate.

Cost of direct labor = Wages per unit of time / Flow rate

*If there are multiple employees, don’t forget to add up all the wages.

Question 22

Labor Content

Answer 22

The amount of work that goes into serving one customer (generally one flow unit) which is the sum of the processing times involving labor.

The productive time of our resources.

Question 23

Average Labor Utilization

Answer 23

The average utilization across labor resources.

Based on Idle Time:
Average Labor Utilization = Labor Content / (Labor Content + Total Idle Time of all labor resources)

Based on Cycle Time:
Average Labor Utilization = (Labor Content / Number of employees) / Cycle Time

Question 24

Idle Time

Answer 24

The amount of time per flow unit for which a resource is paid but is not actually working.

Creates unnecessary expenses.

Expressed in units of time.

Idle Time = Cycle time - Processing time of resource

Question 25

Total Idle Time

Answer 25

The amount of idle time per flow unit added up across all resources.

Question 26

Takt Time

Answer 26

The ratio between the time available and the quantity that has to be produced to serve demand.

Takt Time
= Available Time / Required Time
= 1 / Demand Rate

It is a measure driven by demand.

Output rate should be = demand rate. If it is not equal, it should be as close to the demand rate as possible.

Takt Time does not depend on process capacity. It is driven by demand rate.

Question 27

Target Manpower

Answer 27

The ratio between the labor content and the takt time determines the minimum number of resources required to meet demand. This minimum doe not have to be an integer number and it is assumes all resources are perfectly utilized.

Target Manpower = Labor Content / Takt Time

Target Manpower can be expressed as a fraction/decimal. Does not need to be an integer.

More demand means shorter takt time. Shorter takt time requires more employees to handle the same amount of labor content.

Question 28

What is a process?

Answer 28

A set of activities that takes a collection of inputs, performs some work or activities with those inputs, and then yields a set of output.

Question 29

What is inventory?

Answer 29

It is the number of units within a process at any given time.

Question 30

Production (Output) rate

Answer 30

FR(out)
- Number of flow units produced per unit time.

Question 31

Supply Rate

Answer 31

FR(in)
- Number of flow units supplied to the processed per unit of time.

Question 32

What is steady state equilibrium? (SSE)

Answer 32

States that FR(in) = FR(out).

Question 33

Process Utilization

Answer 33

Reflects how much a process is utilized over time

FR(p)/C(p)
= flow rate of process / process capacity
= flow rate of bottleneck / process capacity

Question 34

The short the production time, the better. Is this always true?

Answer 34

No. It depends on the industry. For services, it really depends on quality over time. For production, if all else are the same, then we will prefer a shorter production time.