Learn to analyze and improve business processes in services or in manufacturing by learning how to increase productivity and deliver higher quality standards. Key concepts include process analysis, bottlenecks, flows rates, and inventory levels, and more. After successfully completing this course, you can apply these skills to a real-world business challenge as part of the Wharton Business Foundations Specialization.
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Process Analysis
In this module, you'll learn how to identify key elements of process analysis: flow rates, and flow times, how to uncover bottlenecks, how to optimize labor and inventory, and how to handle the complexities of multiple flow units. At the end of this module, you'll be able to break down operations into processes which can then be improved to maximize profits and efficiency.
Andrew M. Heller Professor at the Wharton School, Senior Fellow Leonard Davis Institute for Health Economics Co-Director, Mack Institute of Innovation Management The Wharton School
This is the process analysis with multiple flow units question for
the process analysis module practice problems.
There are three products produced by five resources, and
each resource works eight hours per day.
Product A has a demand of 40 units per day.
40 units per day divided by eight hours per day equals five units per day.
So each resource must produce five units per hour to satisfy demand.
Similarly product B has a demand of 50 units per day.
50 divided by eight is 6.25 so demand is 6.25 units per hour.
Finally Product C has a demand of 60 units per day.
60 divided by 8 is 7.5, so demand is 7.5 units per hour.
The first question asks us to find the bottle neck.
To do this, we create a generic flow unit, which is one minute of work.
Then we must find the capacity and total work load of each resource.
Now the capacity of each resource is determined by the number of workers.
It is simply the number of workers times 60,
since we are looking at the capacity in one hour.
The total workload is the processing time for
product A times the hourly demand for product A, plus the processing time for
product B times the hourly demand for product B, plus the processing time for
product C times the hourly demand for product C.
Once we have the capacity and the total workload, we can calculate the implied
utilization, which is simply total workload divided by capacity.
The resource with the highest implied utilization is our bottle neck.
Let's calculate these values for each resource.
For resource one, capacity is two workers,
x 60 minutes per hour, which equals 120.
For resource two, a similar calculation gives us 120.
And we can do the same calculations for the remaining resources.
Now lets calculate the total work load.
For resource one the total workload is a processing time of five
minutes per unit for product A, times five units per hour,
plus five minutes per unit for product B, times 6.25 units per hour,
plus five minutes per unit for product C, times 7.5 units per hour.
Summing this gives us 93.75.
For resource 2,
the total workload is 4 minutes per unit for product a, times 5 units per hour,
plus four minutes per unit for product b, times 6.25 units per hour.
Plus five minutes per unit for product C times 7.5 units per hour.
Summing this gives us 82.5.
For resource three, the total workload is 12 minutes per unit for
product A times five units per hour plus zero for the other values.
This gives us 60.
For resource 4, the total workload is 3 times 6.25 for
product B, plus 3 times 7.5 for product C,
plus 0 for product A, which sums to 41.25 And
finally for resource 5 the total work load is 6 times 5 for product a,
plus 6 times 6.25 for product b, plus 4 times 7.25 for product c.
And this sums to 97.5.
Finally, we can calculate the implied utilization for each resource.
For resource one, 93.75 divided by
120 is 0.78125, or 78%.
For resource two, 82.5 divided by 120 is .6875 or 69%.
For resource three, 60 divided by 60 is simply 1, or 100%.
For resource 4, 41.25 divided by 60 is 0.6875 or 69%.
And for resource 5 97.5 divided by 120 is 0.8125 or 81%.
Then the highest implied utilization is 100% at resource 3.
So resource three is our bottleneck.
Finally, to determine the flow rate for each unit, note that the highest
utilization is less than or equal to 100%, so this process is demand constrained.
This means that the flow rate is determined by demand.
So, as we calculated above, the flow rate for product A is 5 units per hour.
Christian TerwieschAndrew M. Heller Professor at the Wharton School, Senior Fellow Leonard Davis Institute for Health Economics Co-Director, Mack Institute of Innovation Management
