Operations Management free essay sample

Some of the tools used to determine these constraints include networking and determining the critical path of a project, which is the sequence of activities that forms the longest chain in terms of time to complete. Not until these sequences have been determined can analysts and managers see the effect of various elements on an entire project as seen in the Campus Wedding cases. Network diagram: Case questions: Case A: 1. Given the activities and precedence relationships described in the (A) case, develop a network diagram for the wedding plans. SEE ABOVE) 2. Identify the paths. Which are critical? The main pathways have been identified in the diagram above. The critical pathways are as follows:  ·Start a choose pattern of dress a order and receive lace a sewing the dress a cleaning pressing a fitting a finish  ·Start a choosing invitation a printing by Bob a addressing a mailing a postal time a finish (In both the cases the time taken is 21 days, which is exactly the maximum ti me available for the wedding). ? Use the Worked examples and Problems and applications to improve your use of key quantitative and qualitative techniques, and work your way to better grades in your assignments and exams. ? Follow up on the recommended readings at the end of each chapter. They’re specially selected to enhance your learning and give you an edge in your course work. And in particular, look out for the references to MyOMLab in the text, and log on to www. myomlab. com* where you can ? check and reinforce your understanding of key concepts using self-assessment questions, audio summaries, animations video clips and more; ? practice your problem-solving with feedback, guided solutions and a limitless supply of questions! We want Operations Management to give you what you need: a comprehensive view of the subject, an ambition to put that into practice, and – of course – success in your studies. So, read on and good luck! Nigel Slack Stuart Chambers Robert Johnston * P. S. In order to log in to MyOMLab, you’ll need to register with the access code included with all new copies of the book. Further reading in Operations Management Take your study and interest in operations management further with these leading textbooks written by the same team of expert authors. OPERATIONS MANAGEMENT Sixth Edition Nigel Slack Stuart Chambers Robert Johnston Pearson Education Limited Edinburgh Gate Harlow Essex CM20 2JE England and Associated Companies throughout the world Visit us on the World Wide Web at: www. pearsoned. co. uk First published under the Pitman Publishing imprint 1995 Second edition (Pitman Publishing) 1998 Third edition 2001 Fourth edition 2004 Fifth edition 2007 Sixth edition 2010  © Nigel Slack, Stuart Chambers, Christine Harland, Alan Harrison, Robert Johnston 1995, 1998  © Nigel Slack, Stuart Chambers, and Robert Johnston 2001, 2004, 2007, 2010 The rights of Nigel Slack, Stuart Chambers, and Robert Johnston to be identi? ed as authors of this work have been asserted by them in accordance with the Copyright, Designs and Patents Act 1988. All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without either the prior written permission of the publisher or a licence permitting restricted copying in the United Kingdom issued by the Copyright Licensing Agency Ltd, Saffron House, 6–10 Kirby Street, London EC1N 8TS. All trademarks used herein are the property of their respective owners. The use of any trademark in this text does not vest in the author or publisher any trademark ownership rights in such trademarks, nor does the use of such trademarks imply any af? liation with or endorsement of this book by such owners. ISBN: 978-0-273-73046-0 British Library Cataloguing-in-Publication Data A catalogue record for this book is available from the British Library Library of Congress Cataloging-in-Publication Data Slack, Nigel. Operations management / Nigel Slack, Stuart Chambers, Robert Johnston. – 6th ed. p. cm. ISBN 978-0-273-73046-0 (pbk. ) 1. Production management. I. Chambers, Stuart. II. Johnston, Robert, 1953– III. Title. TS155. S562 2010 658. 5–dc22 10 14 9 8 7 6 5 4 3 2 1 13 12 11 10 Typeset in 10/12pt Minion by 35 Printed and bound by Rotolito Lombarda, Italy The publisher’s policy is to use paper manufactured from sustainable forests. Brief contents Guide to ‘operations in practice’, examples, short cases and case studies Making the most of this book and MyOMLab Preface Part Three PLANNING AND CONTROL xi xiv xviii To the Instructor xx To the Student xxi Ten steps to getting a better grade in operations management xxii About the authors xxiii Acknowledgements xxiv Part One INTRODUCTION 1 1 Operations management 32 3 Operations strategy 60 268 297 333 340 373 406 422 429 457 495 520 2 2 Operations performance 10 The nature of planning and control 11 Capacity planning and control Supplement to Chapter 11 – Analytical queuing models 12 Inventory planning and control 13 Supply chain planning and control 14 Enterprise resource planning (ERP) Supplement to Chapter 14 – Materials requirements planning (MRP) 15 Lean synchronization 16 Project planning and control 17 Quality management Supplement to Chapter 17 – Statistical process control (SPC) 267 Part Two DESIGN 4 Process design Part Four IMPROVEMENT 539 18 Operations improvement 540 19 Risk management 571 85 20 Organizing for improvement 601 86 Part Five CORPORATE SOCIAL RESPONSIBILITY 631 21 Operations and corporate social responsibility (CSR) 632 Notes on chapters Glossary Index 652 658 670 5 The design of products and services 112 6 Supply network design 138 Supplement to Chapter 6 – Forecasting 168 7 Layout and ? ow 177 8 Process technology 206 9 People, jobs and organization 233 Supplement to Chapter 9 – Work study 259 Contents Guide to ‘operations in practice’, examples, short cases and case studies Making the most of this book and MyOMLab Preface To the Instructor To the Student Ten steps to getting a better grade in operations management About the authors Acknowledgements xi xiv xviii xx xxi xxii xxiii xxiv Part One INTRODUCTION 1 Chapter 1 Operations management 2 Introduction What is operations management? Operations management is important in all types of organization The input–transformation–output process The process hierarchy Operations processes have different characteristics The activities of operations management Summary answers to key questions Case study: Design house partnerships at Concept Design Services Problems and applications Selected further reading Useful web sites 27 30 30 31 Chapter 2 Operations performance 32 Introduction Operations performance is vital for any organization The quality objective The speed objective The dependability objective The ? exibility objective The cost objective Trade-offs between performance objectives Summary answers to key questions Case study: Operations objectives at the Penang Mutiara Problems and applications Selected further reading Useful web sites 58 59 59 Chapter 3 Operations strategy 60 Introduction What is strategy and what is operations strategy? The ‘top-down’ and ‘bottom-up’ perspectives The market requirements and operations resources perspectives The process of operations strategy Summary answers to key questions Case study: Long Ridge Gliding Club Problems and applications Selected further reading Useful web sites 60 62 65 68 75 79 80 81 82 82 2 4 6 11 15 19 23 25 Part Two DESIGN 85 Chapter 4 Process design 86 Introduction What is process design? What effects should process design have? Process types – the volume–variety effect on process design Detailed process design Summary answers to key questions Case study: The Central Evaluation Unit Problems and applications Selected further reading Useful web sites 86 87 88 91 96 108 109 110 111 111 Chapter 5 The design of products and services 112 32 34 40 42 44 46 48 54 56 57 Introduction Why is good design so important? The bene? ts of interactive design Summary answers to key questions Case study: Chatsworth – the adventure playground decision Problems and applications Selected further reading Useful web sites 112 114 129 134 135 136 137 137 viii Contents Chapter 6 Supply network design 138 Introduction The supply network perspective Con? guring the supply network The location of capacity Long-term capacity management Summary answers to key questions Case study: Disneyland Resort Paris (abridged) Problems and applications Selected further reading Useful web sites 138 140 142 146 155 161 162 166 167 167 Supplement to Chapter 6 Forecasting 168 Introduction Forecasting – knowing the options In essence forecasting is simple Approaches to forecasting Selected further reading 168 168 169 170 176 Chapter 7 Layout and ? ow Introduction What is layout? The basic layout types What type of layout should an operation choose? Detailed design of the layout Summary answers to key questions Case study: Weldon Hand Tools Problems and applications Selected further reading Useful web sites 177 177 179 180 187 189 202 203 204 205 205 Chapter 8 Process technology 206 Introduction What is process technology? Understanding process technologies Evaluating process technologies Implementing process technologies Summary answers to key questions Case study: Rochem Ltd Problems and applications Selected further reading Useful web sites 206 208 209 221 227 229 230 232 232 232 Chapter 9 People, jobs and organization 233 Introduction People in operations Human resource strategy 233 235 236 Organization design Job design Summary answers to key questions Case study: Service Adhesives tries again Problems and applications Selected further reading Useful web sites 238 241 255 256 257 258 258 Supplement to Chapter 9 Work study 259 Introduction Method study in job design Work measurement in job design 259 259 262 Part Three PLANNING AND CONTROL 267 Chapter 10 The nature of planning and control 268 Introduction What is planning and control? Supply and demand affect planning and control Planning and control activities Summary answers to key questions Case study: Air traf? c control – a world-class juggling act Problems and applications Selected further reading Useful web sites 268 270 272 277 293 294 295 296 296 Chapter 11 Capacity planning and control 297 Introduction What is capacity management? Measuring demand and capacity The alternative capacity plans Choosing a capacity planning and control approach Capacity planning as a queuing problem Summary answers to key questions Case study: Holly Farm Problems and applications Selected further reading Useful web sites 297 299 301 309 317 322 327 328 331 332 332 Supplement to Chapter 11 Analytical queuing models 333 Introduction Notation Variability Incorporating Little’s law Types of queuing system 333 333 334 335 336 Contents Chapter 12 Inventory planning and control 340 Introduction What is inventory? Why is inventory necessary? Some disadvantages of holding inventory The volume decision – how much to order The timing decision – when to place an order Inventory analysis and control systems Summary answers to key questions Case study: Trans-European Plastics Problems and applications Selected further reading Useful web sites 340 342 342 345 346 357 362 368 369 371 371 372 Chapter 15 Lean synchronization Introduction What is lean synchronization? Eliminate waste Lean synchronization applied throughout the supply network Lean synchronization and other approaches Summary answers to key questions Case study: Boys and Boden (BB) Problems and applications Selected further reading Useful web sites Chapter 16 Project planning and control Chapter 13 Supply chain planning and control 373 Introduction What is supply chain management? The activities of supply chain management Types of relationships in supply chains Supply chain behaviour Supply chain improvement Summary answers to key questions Case study: Supplying fast fashion Problems and applications Selected further reading Useful web sites 373 375 377 386 391 394 400 401 404 405 405 Chapter 14 Enterprise resource planning (ERP) 406 Introduction What is ERP? How did ERP develop? Implementation of ERP systems Summary answers to key questions Case study: Psycho Sports Ltd Problems and applications Selected further reading Useful web sites 406 408 408 415 417 418 420 421 421 Supplement to Chapter 14 Materials requirements planning (MRP) 422 Introduction Master production schedule The bill of materials (BOM) Inventory records The MRP netting process MRP capacity checks Summary 422 422 424 425 425 428 428 429 429 431 435 447 449 452 453 455 456 456 457 Introduction 457 What is a project? 459 Successful project management 461 The project planning and control process 462 Network planning 475 Summary answers to key questions 487 Case study: United Photonics Malaysia Sdn Bhd 488 Problems and applications 493 Selected further reading 494 Useful web sites 494 Chapter 17 Quality management 495 Introduction What is quality and why is it so important? Diagnosing quality problems Conformance to speci? cation Total quality management (TQM) Summary answers to key questions Case study: Turnround at the Preston plant Problems and applications Selected further reading Useful web sites 495 497 501 502 508 515 516 518 519 519 Supplement to Chapter 17 Statistical process control (SPC) 520 Introduction Control charts Variation in process quality Control charts for attributes Control chart for variables Process control, learning and knowledge Acceptance sampling Sampling plans Summary Selected further reading Useful web sites 520 520 521 527 528 532 533 533 535 536 536 ix x Contents Part Four IMPROVEMENT Chapter 18 Operations improvement 539 540 Introduction Why improvement is so important Elements of improvement Approaches to improvement Improvement techniques Summary answers to key questions Case study: Geneva Construction and Risk Problems and applications Selected further reading Useful web sites 565 569 570 570 Chapter 19 Risk management 571 Introduction What is risk management? Assess the potential causes of and risks from failure Preventing failure occurring Mitigating the effects of failure Recovering from the effects of failure Summary answers to key questions Case study: The Chernobyl failure Problems and applications Selected further reading Useful web sites 540 542 542 549 558 564 571 573 573 586 592 593 596 597 599 600 600 Chapter 20 Organizing for improvement 601 Introduction Why the improvement effort needs organizing Linking improvements to strategy Information for improvement Improvement priorities – what to start on? Improvement culture Implementing improvement Summary answers to key questions Case study: Re-inventing Singapore’s libraries Problems and applications Selected further reading Useful web sites 601 603 603 606 612 617 620 624 626 628 628 629 Part Five CORPORATE SOCIAL RESPONSIBILITY 631 Chapter 21 Operations and corporate social responsibility (CSR) 632 Introduction What is corporate social responsibility? How does the wider view of corporate social responsibility in? uence operations management? How can operations managers analyse CSR issues? Summary answers to key questions Case study: CSR as it is presented Problems and applications Selected further reading Useful web sites 632 633 646 648 649 650 651 651 Notes on chapters Glossary Index 652 658 670 637 Guide to ‘operations in practice’, examples, short cases and case studies Chapter Location Company/example Region Sector/activity Company size Chapter 1 Operations management p. p. p. p. p. p. p. 3 8 9 14 21 21 27 IKEA Acme Whistles Oxfam Pret A Manger Formule 1 Mwagusi Safari Lodge Concept Design Services Global UK Global Europe/USA Europe Tanzania UK Retail Manufacturing Charity Retail Hospitality Hospitality Design/manufacturing/ distribution Large Small Large Medium Large Small Medium Chapter 2 Operations performance p. p. p. p. 33 41 43 44 Dubai and UK UK General India Transport Agricultural Healthcare General service Large Small Medium Large p. p. p. p. 47 49 51 57 A tale of two terminals Lower Hurst Farm Accident recovery Dabbawalas hit 99. 9999% dependability BBC Aldi Hon Hai Precision Industry Mutiara Beach Resort, Penang Global Europe Taiwan/China Malaysia Media Retail Manufacturing Hospitality Large Large Large Medium Global/Europe Large Large Large Europe Manufacturing service/ transport Retail Retail/business services Military UK Sport Small Chapter 3 Operations strategy p. 61 p. 68 p. 74 p. 77 p. 80 Two operations strategies: Flextronics and Ryanair Giordano Amazon what exactly is your core competence? Sometimes any plan is better than no plan Long Ridge Gliding Club Asia Global Large Chapter 4 Process design p. p. p. p. 87 90 107 109 McDonalds Daimler-Chrysler, Smart car Heathrow The Central Evaluation Unit (European Union Directorate) USA France UK Belgium Quick service Auto manufacturing Transport Non-governmental organization Large Large Large Large Chapter 5 The design of products and services p. p. p. p. p. p. 113 116 120 122 125 135 Airbus A380 Dyson Square water melons Daniel Hersheson Art Attack! Chatsworth House Europe Global Japan UK UK UK Aerospace Design/manufacturing Retail/Agriculture Hairdressing Media Tourism Large Large Various Small Small Medium Chapter 6 Supply network design p. 139 Dell Global Large p. 145 Hon Hai, Quanta and Compal Taiwan p. 147 p. 149 p. 151 Tata Nano Tesco High-tech subcontracting India Thailand India/China p. 162 Disneyland Paris France Computer manufacturing Computer manufacturing Manufacturing Retail Research and development Entertainment Large Large Large Medium/large Large xii Guide to ‘operations in practice’, examples, short cases and case studies Chapter Location Company/example Region Sector/activity Company size Chapter 7 Layout and ? ow p. p. p. p. Tesco Surgery Yamaha Cadbury Global UK Japan UK Large Medium Large Large 178 180 185 186 p. 203 Weldon Hand Tools UK Retail Healthcare Piano manufacturing Entertainment and manufacturing Manufacturing Chapter 8 Process technology p. p. p. p. p. p. p. p. Airlines Robots Yo! Sushi IBM Farming QB House SVT (Sveriges Television) Rochem Ltd All All UK USA Netherlands Asia Sweden UK Airlines Security Restaurants Disaster recovery Agriculture Hairdressing Media Food processing Large Various Medium Large Medium Medium Large Medium Chapter 9 People, jobs and organization p. 234 W. L. Gore and Associates Global Large p. p. p. p. 237 247 250 256 Google McDonalds Lloyds TSB Service Adhesives Global UK Europe Europe Manufacturing and research e-services Restaurants Banking Manufacturing Large Large Large Large Chapter 10 The nature of planning and control p. p. p. p. 269 273 281 286 UK Global All All Service and repair Airline Healthcare Food processing Medium Large Large Large p. 292 p. 294 BMW dealership Air France Accident and Emergency Chicken salad sandwich (Part 1) Robert Wiseman Dairies Air traf? c control UK All Milk distribution Air travel Large Medium Chapter 11 Capacity planning and control p. p. p. p. p. p. p. p. 298 304 309 310 315 317 326 328 Britvic Seasonal products and services British Airways London Eye Lettuce growing Seasonal products and services Greetings cards Madame Tussauds, Amsterdam Holly Farm Europe All UK Europe UK/Global All Netherlands UK Distribution Various Tourism Agriculture Food processing/media Design Tourism Agriculture/ entertainment Large Various Medium Large Large Large Medium Small Chapter 12 Inventory planning and control p. p. p. p. 341 348 356 369 UK National Blood Service Croft Port The Howard Smith Paper Group Trans-European Plastic UK Europe UK France Healthcare Beverages Distribution service Manufacturing Large Large Large Large Chapter 13 Supply chain planning and control p. 374 Siemens Europe Large p. 379 p. 384 Ford Motor Company Levi Straus Co Global Global p. p. p. p. TDG Northern Foods Seven-Eleven Japan HM, Benetton and Zara Europe Europe Japan Global Service and manufacturing Auto manufacturing Garment design/ retailing Logistics services Food services Retail Design/manufacturing/ distribution/retail 207 210 211 213 218 220 224 230 385 397 398 401 Large Large Large Large Large Large Large Guide to ‘operations in practice’, examples, short cases and case studies Chapter Location Company/example Region Sector/activity Company size Chapter 14 Enterprise Resource Planning p. 407 p. 410 p. 411 Global Global All Aerospace IT services Food processing Large Large Small p. 414 p. 417 p. 418 Rolls Royce SAP Chicken salad sandwich (Part 2) SAP What a waste Psycho Sports Ltd Global US All IT services Waste management Manufacturing Large Large Small Chapter 15 Lean synchronization p. 430 p. 440 Toyota Motor Company Hospitals Global UK Auto manufacturing Healthcare Large Medium/large Chapter 16 Project planning and control p. p. p. p. 458 465 47 488 The Millau Bridge The National Trust Access HK United Photonics Malaysia Sdn Bhd France UK Hong Kong Malaysia Construction Heritage Charity Research and development Large Various Small Medium Chapter 17 Quality management p. p. p. p. p. p. p. 496 499 500 505 507 512 516 Four Seasons Hotel Tea and Sympathy Magic Moments Vitacress Surgical Statistics IBM Rendall Graphics Global/UK USA UK Europe US Canada Canada Hospitality Hospitality Photography services Agriculture Healthcare IT services Manufacturing Large Small Small Large Various Large Medium Chapter 18 Improvement p. p. p. p. 541 548 556 565 Heineken International (Part I) Erdington Xchanging Geneva Construction and Risk (GCR) Netherlands UK Europe Europe Brewery Beverage Process outsourcing Insurance Large Large Large Large Chapter 19 Risk management p. 572 p. 575 p. 577 Global USA Global Confectionary Airline Internet Large Large Various p. 592 p. 597 Cadburys Salmonella outbreak Not what you want to hear Viruses, threats and 30 years of spam Otis Elevators Chernobyl Global Ukraine Facilities services Power generation Large Large Chapter 20 Organizing for improvement p. p. p. p. 602 620 622 626 Taxing Quality Heineken International (Part II) Work-Out at GE Singapore Libraries Denmark Netherlands Global Singapore Public service Brewery Various ? Large Large ?Large ? Chapter 21 Corporate social responsibility (CSR) p. 635 p. 638 p. 642 Ecological footprints HP Recycling Program The Gap between perception, reality and intention CSR as it is presented All Global Global All Manufacturing Retail All Large Large Various Various Various p. 649 xiii Making the most of this book and MyOMLab Check your understanding Each chapter opens with a set of Key questions to identify major topics. Summary answers conclude the chapter. You can check your understanding of each chapter by taking the Sample tests of self-assessment questions on MyOMLab at www. myomlab. com. 56 Chapter 2 Part One Introduction Summary answers to key questions Check and improve your understanding of this chapter using self assessment questions and a personalised study plan, audio and video downloads, and an eBook – all at www. myomlab. com. Operations performance ? Why is operations performance important in any organization? Introduction Key questions ? Why is operations performance important in any organization? ? How does the operations function incorporate all stakeholders’ objectives? ? What does top management expect from the operations function? ? What are the performance objectives of operations and what are the internal and external bene? ts which derive from excelling in each of them? ? How do operations performance objectives trade off against each other? Operations are judged by the way they perform. There are many individuals and groups doing the judging and there are many different aspects of performance on which the assessment is being made. The people doing the judging are called ‘stakeholders’ and the aspects of performance they are using are called ‘performance objectives’. And if we want to understand the strategic contribution of the operations function, it is important to understand how we can measure its performance. So this chapter starts by illustrating how operations performance can impact on the success of the whole organization. Second, we look at various perspectives on, and aspects of performance. Finally, we examine how performance objectives trade off against each other. On our general model of operations management the topics covered in this chapter are represented by the area marked on Figure 2. 1.  ¦ Operations management can either ‘make or break’ any business. It is large and, in most businesses, represents the bulk of its assets, but also because the operations function gives the ability to compete by providing the ability to respond to customers and by developing the capabilities that will keep it ahead of its competitors in the future. ? How does the operations function incorporate all stakeholders objectives?  ¦ At a strategic level, performance objectives relate to the interests of the operation’s stakeholders. They relate to the company’s responsibility to customers, suppliers, shareholders, employees, and society in general. ? What does top management expect from the operations function?  ¦ Operations can contribute to the organization as a whole by: – reducing the costs – achieving customer satisfaction – reducing the risk of operational failure – reducing the amount of investment – providing the basis for future innovation. ? What are the performance objectives of operations and what are the internal and external bene? ts which derive from excelling in each of them?  ¦ By ‘doing things right’, operations seek to in? uence the quality of the company’s goods and services. Externally, quality is an important aspect of customer satisfaction or dissatisfaction. Internally, quality operations both reduce costs and increase dependability.  ¦ By ‘doing things fast’, operations seek to in? uence the speed with which goods and services are delivered. Externally, speed is an important aspect of customer service. Internally, speed both reduces inventories by decreasing internal throughput time and reduces risks by delaying the commitment of resources.  ¦ By ‘doing things on time’, operations seek to in? uence the dependability of the delivery of goods and services. Externally, dependability is an important aspect of customer service. Internally, dependability within operations increases operational reliability, thus saving the time and money that would otherwise be taken up in solving reliability problems and also giving stability to the operation.  ¦ By ‘changing what they do’, operations seek to in? uence the ? exibility with which the company produces goods and services. Externally, ? exibility can: – produce new products and services (product/service ? exibility); – produce a wide range or mix of products and services (mix ? exibility); – produce different quantities or volumes of products and services (volume ?exibility); – produce products and services at different times (delivery ? exibility). Figure 2. 1 This chapter examines operations performance Check and improve your understanding of this chapter using self assessment questions and a personalised study plan, audio and video downloads, and an eBook – all at www. myomlab. com. Making the most of this book and MyOMLab Practice makes perfect Worked examples show how quantitative and qualitative techniques can be used in operations management. Problems and applications at the end of the chapter allow you to apply these techniques, and you can get more practice as well as guided solutions from the Study plan on MyOMLab at www. myomlab. com. 306 Part Three Planning and control Effective capacity Utilization Ef? ciency Chapter 11 Capacity planning and control run continuously at its maximum rate. Different products will have different coating requirements, so the line will need to be stopped while it is changed over. Maintenance will need to be performed on the line, which will take out further productive time. Technical scheduling dif? culties might mean further lost time. Not all of these losses are the operations manager’s fault; they have occurred because of the market and technical demands on the operation. The actual capacity which remains, after such losses are accounted for, is called the effective capacity of operation. These causes of reduction in capacity will not be the only losses in the operation. Such factors as quality problems, machine breakdowns, absenteeism and other avoidable problems will all take their toll. This means that the actual output of the line will be even lower than the effective capacity. The ratio of the output actually achieved by an operation to its design capacity, and the ratio of output to effective capacity are called, respectively, the utilization and the ef? ciency of the plant: Utilization = Ef? ciency = Problems and applications These problems and applications will help to improve your analysis of operations. You can ? nd more practice problems as well as worked examples and guided solutions on MyOMLab at www. myomlab. com. 1 actual output design capacity actual output effective capacity 2 Worked example Suppose the photographic paper manufacturer has a coating line with a design capacity of 200 square metres per minute, and the line is operated on a 24-hour day, 7 days per week (168 hours per week) basis. Design capacity is 200 ? 60 ? 24 ? 7 = 2. 016 million square metres per week. The records for a week’s production show the following lost production time: 1 2 3 4 5 6 7 8 9 10 Product changeovers (set-ups) Regular preventative maintenance No work scheduled Quality sampling checks Shift change times Maintenance breakdown Quality failure investigation Coating material stockouts Labour shortages Waiting for paper rolls 20 hrs 16 hrs 8 hrs 8 hrs 7 hrs 18 hrs 20 hrs 8 hrs 6 hrs 6 hrs 3 4 Design capacity = 168 hours per week Effective capacity = 168 ? 59 = 109 hrs Actual output = 168 ? 59 ? 58 = 51 hrs Utilization = actual output 51 hrs = = 0. 304(30%) design capacity 168 hrs Ef? ciency = actual output 51