Mission College The Henry Ford of Heart Surgery In India Discussion

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DA 2: Review the following news item to motivate your discussion.

News Item: The Henry Ford of Heart Surgery

For our discussion, I am including below links to two articles. The first one is an article in Wall Street Journal titled The Henry Ford of Heart Surgery and the second is an editorial related to it. These offer insights on how an doctor in India is sustainably performing state-of-the-art open heart surgeries, a complex procedure, at high volume assembly line mode but with low costs, something considered hard to accomplish in the product-process matrix framework. Provide your opinion on what you learned from it in context of implications for operations management in healthcare industry.

The Henry Ford of Heart Surgery (clicking this link will download the article as a PDF file)

Editorial High Volume Efficient (clicking this link will download the article as a PDF file)

In addition to contributing to discussion, you are expected to reply to at least one of your classmates. Note that you must post your discussion blog before you will be able to see other students' replies.

The requirement is a minimum of one original post (minimum 350 words) and one peer response (minimum 100 words) per discussion assignment.

Again, I will send you the peer response after I posted my original post.

Please do not contain too much outside resources and relate to my lecture notes (below).

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CHAPTER 5 Service Design Lecture Outline • Service Economy • Characteristics of Services • Service Design Process • Tools for Service Design • Waiting Line Analysis for Service Improvement Dr. Loomba Class Notes Chapter 5 5-1 Service Economy U.S. Economy Dr. Loomba Class Notes Chapter 5 5-2 Characteristics of Services • Services • acts, deeds, or performances • Goods • tangible objects • Facilitating services • accompany almost all purchases of goods • Facilitating goods • accompany almost all service purchases Continuum From Goods to Services Source: Adapted from Earl W. Sasser, R.P. Olsen, and D. Daryl Wyckoff, Management of Service Operations (Boston: Allyn Bacon, 1978), p.11. Dr. Loomba Class Notes Chapter 5 5-3 Characteristics of Services • Service are inseparable from delivery • Services tend to be decentralized and dispersed • Services S i are consumed d more often ft than th products d t • Services can be easily emulated • Services are intangible • Service output is variable • Services have higher customer contact • Services are perishable Service Design Process Dr. Loomba Class Notes Chapter 5 5-4 Service Design Process • Service concept • purpose of a service; it defines target market and customer custo e e experience pe e ce • Service package • mixture of physical items, sensual benefits, and psychological benefits • Service specifications • performance specifications • design g specifications p • delivery specifications Service Process Matrix Dr. Loomba Class Notes Chapter 5 5-5 High vs. Low Contact Services Design Decision High-Contact Service Low-Contact Service  Facility  Convenient to customer  Facility layout  Must look presentable,  Designed for accommodate efficiency customer needs, and facilitate interaction with customer location  Near labor or transportation source High vs. Low Contact Services Design Decision  Quality control  Capacity Dr. Loomba High-Contact Service Low-Contact Service  More variable since  Measured against established standards; testing and rework possible to correct defects  Excess capacity required to handle peaks in demand  Planned for average demand customer is involved in process; customer expectations and perceptions of quality may differ; customer present when defects occur Class Notes Chapter 5 5-6 High vs. Low Contact Services Design Decision  Worker skills High-Contact Service Low-Contact Service  Must be able to interact  Technical skills well with customers and use judgment in decision making  Scheduling  Must accommodate customer schedule  Customer concerned only with completion date High vs. Low Contact Services Design Decision High-Contact Service  Service process   Service package Dr. Loomba Low-Contact Service  Mostly backMostly front-room room activities; activities; service may planned and change during delivery executed with in response to minimal customer interference  Varies with customer; includes environment as well as actual service Class Notes  Fixed Fixed, less extensive Chapter 5 5-7 Tools for Service Design • Service blueprinting • line of influence • line li off iinteraction t ti • line of visibility • line of support • Servicescapes • space and function • ambient bi t conditions diti • signs, symbols, and artifacts • Front-office/Back-office • Quantitative activities techniques Service Blueprinting Dr. Loomba Class Notes Chapter 5 5-8 Service Blueprinting Elements of Waiting Line Analysis • Operating characteristics • average values for characteristics that describe performance of waiting p g line system y • Queue • a single waiting line • Waiting line system • consists of arrivals, servers, and waiting line structure • Calling population • source of customers; infinite or finite Dr. Loomba Class Notes Chapter 5 5-9 Elements of Waiting Line Analysis • Arrival rate (λ) • frequency at which customers arrive at a waiting line according to a probability distribution, usually Poisson • Service rate (μ) • time required to serve a customer, usually described by negative exponential distribution • Service rate must be higher than arrival rate (λ < μ) • Queue discipline • order in which customers are served • Infinite queue • can be of any length; length of a finite queue is limited Dr. Loomba Class Notes Chapter 5 5-10 Customer Arrivals Finite Population Infinite Constant Distribution Exponential (or Poisson) Other Controllable Pattern Uncontrollable Single Si off Arrival Size A i l Batch Patient Degree of Patience Jockey Impatient Balk Renege Elements of Waiting Line Analysis • Channels • number of parallel servers for servicing i i customers • Phases • number of servers in sequence a customer must go through Dr. Loomba Class Notes Chapter 5 5-11 Waiting Line Structure Single phase Single channel Multiphase Single phase Multi-channel Mixed Multiphase Single to Multichannel Single phase Multi- to Single channel Single phase Multiphase Multiphase Alternative Paths (jumbled) Served customers Low probability of repeat service Return to source population Examples of Waiting Line Structures Single g Phase Dr. Loomba M lti h Multiphase Single Channel One-person barber shop Car wash Multichannel Bank tellers’ tellers windows Hospital admissions Class Notes Chapter 5 5-12 Service System Infinite potential Line Length Limited capacity Number of Lines Multiple Service Process Single Self-service Static Machine-paced Varied service rate Dynamic Opening /Closing lines Fi come, fi First first served d Shortest processing time Priority Rules Reservation first Emergencies first Limited needs Other Operating Characteristics • Operating characteristics are assumed to approach a steady state Dr. Loomba Class Notes Chapter 5 5-13 Traditional Cost Relationships • As service improves, cost increases Ways to Control Customer Waiting • Animate: Disneyland distractions, elevator mirror, recorded music • Discriminate: Avis frequent renter treatment (out of sight) • Automate: Use computer scripts to address 75% of questions • Obfuscate: Disneyland staged waits (e.g. House of Horrors) Dr. Loomba Class Notes Chapter 5 5-14 Psychology of Waiting • That Old Empty Feeling: Unoccupied time goes slowly • A Foot in the Door: Pre-service waits seem longer that in-service waits • The Light at the End of the Tunnel: Reduce anxiety with attention • Excuse Me,, But I Was First: Social jjustice with FCFS queue discipline • They Also Serve, Who Sit and Wait: Do not ignore the existing customers Psychology of Waiting • Waiting rooms • magazines and newspapers • televisions • Bank of America • mirrors • Supermarkets • magazines • “impulse purchases” Dr. Loomba Class Notes Chapter 5 5-15 Psychology of Waiting • Preferential treatment • Grocery stores: express lanes for customers with few p purchases • Airlines/Car rental agencies: special cards available to frequent-users or for an additional fee • Phone retailers: route calls to more or less experienced salespeople based on customer’s sales history • Critical service providers • services of police department, fire department, etc. • waiting iti iis unacceptable; t bl costt iis nott iimportant t t Waiting Line Models • Single-server model • simplest, most basic waiting line structure • Frequent variations (all with Poisson arrival rate) • exponential service times • general (unknown) distribution of service times • constant service times • exponential service times with finite queue • exponential ti l service i titimes with ith fifinite it calling lli population l ti Dr. Loomba Class Notes Chapter 5 5-16 Basic Single-Server Model • Assumptions • Poisson arrival rate • exponential service times • first-come, first-served queue discipline • infinite queue length • infinite calling population • Computations • λ = mean arrival rate • μ = mean service rate • n = number of customers in line Basic Single-Server Model • probability that no customers are in queuing system P0 = queuing system ( ) λ 1– L= μ • probability of n customers in queuing system Pn = Dr. Loomba μ n · P0 = λ μ –λ • average number of customers in waiting line ( ) ( )( ) λ • average number of customers in λ μ n λ 1– μ Class Notes Lq = λ2 μ (μ – λ) Chapter 5 5-17 Basic Single-Server Model • average time customer spends in queuing system W= and a customer has to wait (utilization factor) 1 = μ–λ λ L • average time customer spends waiting in line Wq = • probability that server is busy λ μ (μ – λ) ρ= λ μ • probability that server is idle and customer can be served I=1– ρ =1– λ μ = P0 Basic Single-Server Model Example  = 24  = 30 Dr. Loomba Class Notes Chapter 5 5-18 Basic Single-Server Model Example Service Improvement Analysis • Waiting time (8 min.) is too long • hire assistant for cashier? • increased service rate • hire another cashier? • reduced arrival rate • Is improved service worth the cost? Dr. Loomba Class Notes Chapter 5 5-19 Advanced Single-Server Models • Constant service times • occur most often when automated equipment or machinery performs service • Finite queue lengths • occur when there is a physical limitation to length of waiting line • Finite calling population • number of “customers” customers that can arrive is limited Basic Multiple-Server Model • Single waiting line and service facility with several independent servers in parallel • Same assumptions ass mptions as single single-server ser er model • sμ > λ • s = number of servers • servers must be able to serve customers faster than they arrive Dr. Loomba Class Notes Chapter 5 5-20 Advanced Single-Server Models Basic Multiple-Server Model • probability that there are no customers in system P0 = 1 n=s–1 ∑ n=0 1 ( ) ( )( ) λ n + n! μ 1 λ s! μ s sμ μ sμ - λ • probability of n customers in system Pn = { () () 1 λ s!sn – s μ 1 λ n! μ Dr. Loomba Class Notes n P0, for n > s n P0, for n ≤ s Chapter 5 5-21 Basic Multiple-Server Model • probability that customer must wait Pw = L= W= () 1 λ s!! μ sμ s sμ –λ λ λμ (λ/μ)s (s – 1)! (sμ – λ)2 Lq = L – P0 λ P0 + μ L Wq = W – ρ= λ λ μ 1 μ = Lq λ λ sμ Basic Multiple-Server Model Example • Three-server system Dr. Loomba Class Notes Chapter 5 5-22 Basic Multiple-Server Model Example Basic Multiple-Server Model Example Dr. Loomba Class Notes Chapter 5 5-23 Basic Multiple-Server Model Example • To cut waiting time, add another service rep • Four-server System The Flaw of Averages Plans based on averages Increased variation in capacity Waiting guaranteed Prioritization & Carving Out Cost cutting Waiting list initiatives Increased cost Dr. Loomba Class Notes Chapter 5 5-24 Erlang’s Rule Service Failure: Queue or Demand defaults 20 40 60 80 % utilization of a fixed 100 capacity Rule of Thumb: In the presence of a varying demand, it is impossible to run a service beyond 85% utilization (occupancy) without a queue. Suggestions for Managing Waiting Lines 1. Determine an acceptable waiting time for your customers 2 T 2. Try tto divert di t your customer’s t ’ attention tt ti when h waiting 3. Inform your customers of what to expect 4. Keep employees not serving the customers out of sight 5. Segment customers 6. Train your servers to be friendly 7. Encourage customers to come during the slack periods 8. Take a long-term perspective toward getting rid of the queues Dr. Loomba Class Notes Chapter 5 5-25 CHAPTER 6 Processes and Technology Lecture Outline • Process Planning • Process Analysis • Process Innovation • Technology Decisions Dr. Loomba Class Notes Chapter 6 6-1 The Duality of Work Principle Everyone has two jobs: Working in the Process” Process “Working (delivering results) “Working on the Process” ((improving p g how we do the work)) Management has the special responsibility of providing a work environment that enables, encourages, and rewards this behavior. Tucker Automobile (circa 1940s) • One of the most celebrated failures in the annals of American business. • The prototype “Tucker 48” shown to public in 1947 generated quite a bit of excitement. • aerodynamic sheet metal, rear- mounted engine, and a Cyclops headlight that turned in tandem with the steering wheel. • But the Tucker 48 never made it into mass production. • Only 51 models were produced, all largely fabricated by hand at tremendous expense. • Existing equipment and processes were not capable of executing the relatively sophisticated Tucker 48 design on a large scale. • Thus the Tucker 48 provides an object lesson in the need for design for manufacturing (DFM) and the need to incorporate the perspective of manufacturing process into the earliest stages of product design. Dr. Loomba Class Notes Chapter 6 6-2 Process Planning • Process • Group of related tasks with specific inputs & outputs • Process design • tasks to be done & how they are coordinated among functions, people, & organizations • Process strategy • an organization’s overall approach for physically producing goods and services • Process planning • converts designs into workable instructions for manufacture or delivery Dr. Loomba Class Notes Chapter 6 6-3 Process Planning and Design System Inputs: • Product/Service Information • Production System Information • Operations Strategy Process Planning & Design: • Process-Type Selection • Vertical Integration Studies • Process/Product P /P d t Studies St di • Equipment Studies • Production Procedures Studies • Facilities Studies Outputs: • Process Technology • Facilities • Personnel Estimates Major Factors Affecting Process Designs • Nature of product/service demand • Degree D off vertical ti l iintegration t ti • Production flexibility • Degree of automation • Product/Service quality Dr. Loomba Class Notes Chapter 6 6-4 Nature of Product/Service Demand • Production processes must have adequate capacity to produce the volume of the products/services that customers t need. d • Provisions must be made for expanding or contracting capacity to keep pace with demand patterns. • Some types of processes are more easily expanded and contracted than others. • Product/service price affects demand, so pricing decisions and the choice of processes must be synchronized. Degree of Vertical Integration • Vertical integration is the amount of the production and distribution chain that is brought under the ownership of a company. • This determines how many production processes need to be planned and designed. • Decision of integration is based on cost, availability of capital, quality, technological capability, and more. • Strategic outsourcing (lower degree of integration) is the outsourcing of processes in order to react quicker to changes in customer needs needs, competitor actions actions, and technology. Dr. Loomba Class Notes Chapter 6 6-5 Outsourcing • Cost • Speed • Capacity • Reliability • Quality • Expertise Sourcing Continuum Dr. Loomba Class Notes Chapter 6 6-6 Production Flexibility • Product flexibility -- ability of the production (or delivery) system to quickly change from producing (delivering) one product (or service) to another. • Volume flexibility -- ability to quickly increase or reduce the volume of product( or service) produced (or delivered). Degree of Automation • Advantages of automation • Improves product quality • Improves product flexibility • Reduces labor and related costs • Disadvantages of automation • Equipment can be very expensive • Integration into existing operations can be difficult Dr. Loomba Class Notes Chapter 6 6-7 Product/Service Quality • Old viewpoint – high-quality products must be made in small quantities by expert craftsmen • New viewpoint – high-quality products can be massproduced using automated machinery • Automated machinery can produce products of incredible uniformity • The choice of design of production processes is affected by the need for superior quality quality. Process Strategy • Vertical integration • extent to which firm will produce inputs and control outputs of each stage of production process • Capital intensity • mix of capital (i.e., equipment, automation) and labor resources used in production process • Process flexibility • ease with which resources can be adjusted in response to changes in demand, technology, products or services, and resource availability • Customer involvement • role of customer in production process Dr. Loomba Class Notes Chapter 6 6-8 Process Selection • Projects • one-of-a-kind production of a product to customer order • Batch production • process many different jobs at the same time in groups or batches • Mass production • produce large volumes of a standard product for a mass market • Continuous production • used for very-high volume commodity products Product-Process Matrix Dr. Loomba Class Notes Chapter 6 6-9 Types of Processes PROJECT Type of product Unique BATCH MASS CONT. Made to Made-toorder Made to Made-tostock Commodity (customized) (standardized ) Type of customer One-at-atime Few individual customers Mass market Mass market Product demand Infrequent Fluctuates Stable Very stable Types of Processes Demand volume Dr. Loomba PROJECT BATCH MASS CONT. Very low Low to medium High Very high No. of different products Infinite variety Many, varied Few Very few Production system Long-term project Repetitive, Discrete, job assembly shops lines Continuous, process industries Class Notes Chapter 6 6-10 Types of Processes PROJECT BATCH MASS CONT. Generalpurpose Specialpurpose Highly automated Primary type Specialized Fabrication of work contracts Assembly Mixing, treating, refining Experts, Worker skills craftspersons Limited range of skills Equipment monitors BATCH MASS CONT. Flexibility, quality Efficiency Efficiency, speed, low cost Highly efficient, efficient large capacity, ease of control Equipment Varied Wide range of skills Types of Processes PROJECT Advantages Custom work, latest technology Disadvantages Non-repetitive, small customer base, expensive Costly, slow, difficult to manage Capital investment; lack of responsiveness Difficult to change, far-reaching errors, limited variety Examples Construction, shipbuilding, spacecraft Machine shops shops, print shops, bakeries, education Automobiles Automobiles, televisions, computers, fast food Paint, chemicals, foodstuffs Dr. Loomba Class Notes Chapter 6 6-11 Product Life Cycle affect Process Decisions • Product life cycle – series of changing product demand • Consider product • life cycle stages • • • • Introduction Growth Maturity Decline • Facility & process investment depends on life cycle Life Stage Early Late Maturity Growth Growth Slightly Highly Product Custom Standard Standard Standard Very Very Volume Low High Low High Focus Intro. Process Process Product Product Fin.Gds. To-Order To-Order To-Stock To-Stock Batch Size Very Small Small Large Very Large Concept of Production Process Life Cycle • Production Systems tend to evolve as products move through their product life cycles, • ‘Product life cycle’ and ‘production process life cycle’ are interdependent; each affects the other. Production Processes Production Cost, Quality, and Production C Capacity it Type Of Production Processes That Can Be Justified Dr. Loomba Class Notes Volume Of Products That Can Be Sold Volume Of Products That Are Sold Chapter 6 6-12 Process Design in Services • Three schemes for producing and delivering services • Quasi-Manufacturing • • • • • • Physical goods are dominant over intangible service P d ti off goods Production d ttakes k place l along l a production d ti liline Operations can be highly automated Almost no customer interaction Little regard for customer relations Example – bank’s checking encoding operation • Customer-as-Participant • Physical goods may be a significant part of the service • Services may be either standardized or custom • High degree of customer involvement in the process • Examples: ATM, ATM self-service self service gas station • Customer-as-Product • Service is provided through personal attention to the customer • Customized service on the customer • High degree of customer contact • There is a perception of high quality • Customer becomes the central focus of the process design • Examples: medical clinic, hair salon Process Selection With Break-Even Analysis • Study cost trade-offs based on demand volume • Cost • Fixed costs • constant regardless of the number of units produced • Variable costs • vary with the volume of units produced • Revenue • price at which an item is sold • Total revenue • price times volume sold • Profit • difference between total revenue and total cost Dr. Loomba Class Notes Chapter 6 6-13 Process Selection With Break-Even Analysis Total cost = fixed cost + total variable cost TC = cf + vccv Total revenue = volume x price TR = vp Profit = total revenue - total cost Z = TR – TC = vp - (cf + vcv) cf = fixed fi d costt V = volume (i.e., number of units produced and sold) cv = variable cost per unit p = price per unit Process Selection With Break-Even Analysis TR = TC vp = cf + vcv vp - vcv = cf v(p - cv) = cf cf v= p-c v Solving for Break-Even Point (Volume) Dr. Loomba Class Notes Chapter 6 6-14 Break-Even Analysis Example Fixed cost = cf = $2,000 Variable cost = cv = $50 per unit P i = p = $100 per unit Price it Break-even point is cf 2000 v= p-c = = 40 units v 100 - 50 Break-Even Analysis: Graph Dollars Total cost line $3,000 — $2,000 — $1,000 — T t l Total revenue line 40 Break-even point Dr. Loomba Class Notes Units Chapter 6 6-15 Process Selection – Multiple Processes Process A Process B $2,000 + $50v = $10,000 + $30v$20v= $8,000 v = 400 units Below or equal to 400, choose A Above or equal to 400, choose B Process Plans • Set of documents that detail manufacturing and service delivery specifications • assembly charts • operations sheets • quality-control check-sheets Dr. Loomba Class Notes Chapter 6 6-16 Assembly Charts • Often called Gozinto charts • from the word ‘goes into’ • Used to provide overall micro-view of how materials and subassemblies are put together to form finished products. • Offer a schematic model that defines how parts go together, the order of assembly, and the overall structure of the product. • Ideal for getting a bird’s eye view of the process for producing most assembled products. • It lists all major materials and components, subassembly operations, inspections and assembly operations. Operations Sheet for Plastic Part Part name Crevice Tool Part No. 52074 Usage Hand-Vac Assembly No. 520 Oper. No. Dr. Loomba Machine/Tools Time 10 Description Pour in plastic bits 041 Injection molding 2 min 20 Insert mold 041 #076 2 min 30 Check settings & start machine 041 113, 67, 650 20 min 40 Collect parts & lay flat 051 Plastics finishing 10 min 50 Remove & clean mold 042 Parts washer 15 min 60 Break off rough edges 051 Plastics finishing 10 min Class Notes Dept. Chapter 6 6-17 Process Analysis • Systematic study of all aspects of a process • make it faster • more efficient • less costly • more responsive • Basic tools • process flowcharts • diagrams • maps p Flow Charts in Microsoft Visio Dr. Loomba Class Notes Chapter 6 6-18 Process Flowcharts • Look at manufacture of product or delivery of service from broad perspective • Incorporate • nonproductive activities (inspection, transportation, delay, storage) • productive activities (operations) • Building a Flowchart • Determine objectives • Define process boundaries • Define units of flow • Choose type of chart • Observe process and collect data • Map out process • Validate chart Process Flowchart Details • Process Flowchart Symbols • Apple Processing Flowchart O Operation ti Inspection Transportation D l Delay Storage Dr. Loomba Class Notes Chapter 6 6-19 Flowcharts in Excel Process Map or Swimlane Chart of Restaurant Service Dr. Loomba Class Notes Chapter 6 6-20 Simple Value Chain Flowchart Process Innovation Total redesign of a process for breakthrough improvements Continuous improvement refines the breakthrough Breakthrough Improvement Continuous improvement activities peak; time to reengineer process Dr. Loomba Class Notes Chapter 6 6-21 From Function to Process Order Fulfillment Sales Manufacturin ng g Purchasing Accounting g Product Development Supply Chain Management Customer Service Process Function Process Innovation Customer Requirements Strategic Directives Goals for Process Performance Baseline Data Benchmark Data High - level Process map Innovative Ideas Detailed Process Map Model Validation Pilot Study of New Design No Dr. Loomba Goals Met? Class Notes Yes Design Principles Key Performance Measures Full Scale Implementation Chapter 6 6-22 High-Level Process Map Principles for Redesigning Processes • Remove waste, simplify, and consolidate similar activities • Link Li k processes tto create t value l • Let the swiftest and most capable enterprise execute the process • Flex process for any time, any place, any way • Capture information digitally at the source and propagate it through process Dr. Loomba Class Notes Chapter 6 6-23 Principles for Redesigning Processes • Provide visibility through fresher and richer information about process status • Fit Fi process with i h sensors and d feedback f db k lloops that h can prompt action • Add analytic capabilities to the process • Connect, collect, and create knowledge around process through all who touch it • Personalize process with preferences and habits of participants Techniques for Generating Innovative Ideas • Vary the entry point to a problem • in trying y g to untangle g fishing g lines,, it’s best to start from the fish, not the poles • Draw analogies • a previous solution to an old problem might work • Change your perspective • think like a customer • bring b i iin persons who h h have no kknowledge l d off process Dr. Loomba Class Notes Chapter 6 6-24 Techniques for Generating Innovative Ideas • Try inverse brainstorming • what would increase cost • what would displease the customer • Chain forward as far as possible • if I solve this problem, what is the next problem • Use attribute brainstorming • how would this process operate if if. . . • our workers were mobile and flexible • there were no monetary constraints • we had perfect knowledge Technology Decisions • Financial justification of technology • Purchase cost • Includes I l d add-ons dd t make to k technology t h l workk • Operating Costs • Visualize how the technology will be used • Annual Savings • Better quality and efficiency save money • Revenue Enhancement • New N ttechnology h l can enhance h revenur Dr. Loomba Class Notes Chapter 6 6-25 Technology Decisions • Financial justification of technology • Replacement Analysis • When to upgrade to new technology depends on competitive environment • Risk and Uncertainty • It is risky to invest and risky to • Piecemeal Analysis • Make sure new and existing technology are compatible Components of e-Manufacturing Dr. Loomba Class Notes Chapter 6 6-26 Product Technology • Computer-aided design (CAD) • Creates and communicates designs electronically • Group technology (GT) • Classifies designs into families for easy retrieval and modification • Computer-aided engineering (CAE) • Tests functionality of CAD designs electronically • Collaborative C ll b ti product d t commerce (CPC) • Facilitates electronic communication and exchange of information among designers and suppliers Product Technology • Product data management (PDM) • Keeps track of design specs and revisions for the life of the product • Product life cycle management (PLM) • Integrates decisions of those involved in product development, manufacturing, sales, customer service, recycling, and disposal • Product configuration • Defines products “configured” by customers who have selected among g various options, p , usually y from a Web site Dr. Loomba Class Notes Chapter 6 6-27 Process Technology • Standard for exchange of product model data (STEP) • Set standards for communication among different CAD vendors; translates CAD data into requirements q for automated inspection p and manufacture • Computer-aided design and manufacture (CAD/CAM) • Electronic link between automated design (CAD) and automated manufacture (CAM) • Computer aided process (CAPP) • Generates process plans based on database of similar requirements • E-procurement • Electronic purchasing of items from e-marketplaces, auctions, or company websites Manufacturing Technology • Computer numerically control (CNC) • Machines controlled by software to perform a range of operations with the help p of automated tool changers; g ; collects p processing g information and quality data • Flexible manufacturing system (FMS) • A collection of CNC machines connected by an automated material handling system to produce a wide variety of parts • Robots • Programmable manipulators that can perform repetitive tasks; more consistent than workers but less flexible • Conveyors • Fixed-path material handling; move items along a belt or chain; “reads” package labels and diverts them to correct destination Dr. Loomba Class Notes Chapter 6 6-28 Manufacturing Technology • Automatic guided vehicle (AGV) • Driverless trucks that move material along a specified path; directed byy wire or tape p embedded in floor or by y radio frequencies q • Automated storage and retrieval system (ASRS) • An automated warehouse; items placed in a storage system and retrieved by fast-moving stacker cranes; controlled by computer • Process Control • Continuous monitoring of automated equipment; makes real-time decisions on ongoing operation, maintenance, and quality • Computer-integrated manufacturing (CIM) • Automated manufacturing systems integrated through computer technology; also called e-manufacturing Information Technology • Business – to –Business (B2B) • E-transactions between businesses usually via the Internet • Business – to –Consumer (B2C) ( ) • E-transactions between businesses and their customers usually via the Internet • Internet • A global information system of computer networks that facilitates communication and data transfer • Intranet • Communication networks internal to an organization; g can also be password (i.e., firewall) protected sites on the Internet Dr. Loomba Class Notes Chapter 6 6-29 Information Technology • Extranet • Intranets connected to the Internet for shared access with select suppliers, customers, and trading partners • Bar Codes • Series of vertical lines printed on packages that identify item and other information • Radio Frequency Identification tags (RFID) • Integrated circuit embedded in a tag; can send and receive information; a “twenty-first century bar code” with read/write capabilities • Electronic data interchange (EDI) • Computer-to-computer Comp ter to comp ter e exchange change of b business siness doc documents ments o over er a proprietar proprietary network; very expensive and inflexible Information Technology • Extensible markup language (XML) • A markup language that facilitates computer–to–computer communication over the Internet by tagging data before its is sent • Enterprise resource planning (ERP) • Software for managing key functions of an enterprise, including sales, marketing, finance, accounting, production, materials management & human resources • Supply chain management (SCM) • Software to manage flow of goods and information among a network of suppliers, manufacturers and distributors • Customer relationship management (CRM) • Software to manage interactions with customers; compiling and analyzing customer data Dr. Loomba Class Notes Chapter 6 6-30 Information Technology • Decision support systems (DSS) • Information system to help managers make decisions; includes quantitative modeling components and interactive components for what-if analysis • Expert systems (ES) • A computer system that uses the knowledge of experts to diagnose or solve a problem • Artificial intelligence (AI) • Field of study replicating elements of human thought and natural processes in software; includes expert systems, genetic algorithms, neural networks, and fuzzy logic Dr. Loomba Class Notes Chapter 6 6-31 CHAPTER 7 Capacity and Facilities Lecture Outline • Capacity Planning • Basic Layouts • Designing Process Layouts • Designing Service Layouts • Designing Product Layouts • Hybrid Layouts Dr. Loomba Class Notes Chapter 7 7-1 Capacity • Maximum capability to produce • Capacity planning • establishes overall level of productive resources for a firm • 3 basic strategies for timing of capacity expansion in relation to steady growth in demand (lead, lag, and average) Capacity Expansion Strategies Dr. Loomba Class Notes Chapter 7 7-2 Capacity • Capacity increase depends on • volume and certainty of anticipated demand • strategic objectives • costs of expansion and operation • Best operating level • % of capacity utilization that minimizes unit costs • Capacity cushion • % of capacity p y held in reserve for unexpected p occurrences Economies of Scale • Unit cost decreases as output volume increases • fixed costs can be spread over a larger number of units • production or operating costs do not increase linearly with output levels • quantity discounts are available for material purchases • operating efficiency increases as workers gain experience Dr. Loomba Class Notes Chapter 7 7-3 Best Operating Level for a Hotel Objectives of Facility Layout • Minimize material-handling costs • Utilize space efficiently • Utilize U ili llabor b efficiently ffi i l • Eliminate bottlenecks • Facilitate communication and interaction • Reduce manufacturing cycle time • Reduce customer service time • Eliminate wasted or redundant movement Dr. Loomba Class Notes Chapter 7 7-4 Objectives of Facility Layout • Facilitate entry, exit, and placement of material, products, and people • Incorporate safety and security measures • Promote product and service quality • Encourage proper maintenance activities • Provide a visual control of activities • Provide flexibility to adapt to changing conditions • Increase capacity Basic Layouts • Process layouts • group similar activities together according to process or function they perform • Product layouts • arrange activities in line according to sequence of operations for a particular product or service • Fixed-position layouts • are used for projects in which product cannot be moved d Dr. Loomba Class Notes Chapter 7 7-5 Process Layout in Services Women’s lingerie Shoes Housewares Women’s dresses Cosmetics and jewelry Women’s sportswear Entry and display area Children’s department Men’s department Manufacturing Process Layout Dr. Loomba Class Notes Chapter 7 7-6 A Product Layout In Out Comparison of Product and Process Layouts • Description D i ti • Type of process • Product • Demand • Volume • Equipment Dr. Loomba Product Process  S Sequential arrangement of activities  Continuous, mass production, mainly assembly  Functional grouping of activities  Intermittent, job shop, batch production, mainly fabrication  Varied, Varied made to order  Fluctuating  Low  General purpose  Standardized Standardized, made to stock  Stable  High  Special purpose Class Notes Chapter 7 7-7 Comparison of Product and Process Layouts • Workers • Inventory • • • • • • Storage space Material handling Aisles Scheduling Layout decision Goal • Advantage Product Process  Limited skills  Low in-process, high finished goods  Small  Fixed path (conveyor)  Narrow  Part of balancing  Line balancing  Equalize work at each station  Efficiency  Varied skills  High in-process, low finished goods  Large  Variable path (forklift)  Wide  Dynamic  Machine location  Minimize material handling cost  Flexibility Fixed-Position Layouts • • • • • • • Dr. Loomba Typical of projects Fragile, bulky, heavy items Equipment workers & materials brought to site Equipment, Low equipment utilization Highly skilled labor Typically low fixed cost Often high variable costs Class Notes Chapter 7 7-8 Designing Process Layouts • Goal: minimize material handling costs • Block Diagramming • minimize i i i nonadjacent dj t lloads d • use when quantitative data is available • Relationship Diagramming • based on location preference between areas • use when quantitative data is not available Block Diagramming • Unit load • quantity in which material is normally moved • Steps • create load summary chart • calculate l l composite i ((two way)) movements • Nonadjacent load • develop trial layouts minimizing number of nonadjacent loads • distance farther than the next block Dr. Loomba Class Notes Chapter 7 7-9 Block Diagramming: Example Load Summary Chart 2 1 3 FROM/TO Department 1 2 3 1 2 3 4 5 — 100 — 50 200 — 5 4 DEPARTMENT 60 4 50 40 — 100 50 5 50 60 — Block Diagramming: Example 2 2 1 1 4 3 2 3 1 1 Dr. Loomba 3 4 3 2 5 5 5 4 4 5 200 loads 150 loads 110 loads 100 loads 60 loads 50 loads 50 loads 40 loads 0 loads 0 loads Class Notes Nonadjacent Loads 110+40=150 110 1 100 150 4 60 2 50 200 3 50 5 Grid 1 Chapter 7 40 7-10 Block Diagramming: Example 2 2 1 1 4 3 2 3 1 1 3 4 3 2 5 5 5 4 4 5 200 loads 150 loads 110 lloads d 100 loads 60 loads 50 loads 50 loads 40 loads 0 loads 0 loads Nonadjacent Loads: 0 1 100 150 2 200 50 40 60 110 50 3 4 5 Grid 2 Block Diagramming: Example • Block Diagram • type of schematic layout diagram; includes space requirements ( ) IInitial (a) i i l bl block k di diagram 1 Dr. Loomba (b) Fi Finall bl block k di diagram 2 4 3 5 Class Notes 1 4 2 3 Chapter 7 5 7-11 Relationship Diagramming Schematic diagram that uses weighted lines to denote location preference • Muther’s grid • format for displaying manager preferences for department locations Relationship Diagramming A E I O U X Production O A Offices U Shipping and receiving I E O Stockroom Absolutely necessary Especially important Important Okay Unimportant Undesirable A A X U U U O O Locker room O Toolroom Dr. Loomba Class Notes Chapter 7 7-12 Relationship Diagramming (a) Relationship diagram of original layout Offices Stockroom Locker room Toolroom Shipping and receiving Production Key: A E I O U X Relationship Diagramming (b) Relationship diagram of revised layout Stockroom Shipping and receiving Offices Toolroom Dr. Loomba Production Class Notes Locker room Key: y A E I O U X Chapter 7 7-13 Computerized Layout Solutions • CRAFT • Computerized Relative Allocation of Facilities Technique • CORELAP • Computerized Relationship Layout Planning • PROMODEL and EXTEND • visual feedback • allow user to quickly test a variety of scenarios • Three-D modeling and CAD • integrated i d llayout analysis l i • available in VisFactory and similar software Designing Service Layouts • Must be both attractive and functional • Free flow layouts • encourage browsing browsing, increase impulse purchasing purchasing, are flexible and visually appealing • Grid layouts • encourage customer familiarity, are low cost, easy to clean and secure, and good for repeat customers • Loop and Spine layouts • both b th iincrease customer t sightlines i htli and d exposure tto products, while encouraging customer to circulate through the entire store Dr. Loomba Class Notes Chapter 7 7-14 Types of Store Layouts Designing Product Layouts • Objective • Balance the assembly line • Line balancing • tries to equalize the amount of work at each workstation • Precedence requirements • physical restrictions on the order in which operations are performed • Cycle time • maximum amount of time a product is allowed to spend at each workstation Dr. Loomba Class Notes Chapter 7 7-15 Cycle Time Example Cd = production time available desired units of output (8 hours x 60 minutes / hour) (120 units) Cd = 480 Cd = 120 = 4 minutes Flow Time vs Cycle Time • Cycle time = max time spent at any station • Flow time = time to complete all stations 1 2 3 4 minutes 4 minutes 4 minutes Flow time = 4 + 4 + 4 = 12 minutes Cycle time = max (4, 4, 4) = 4 minutes Dr. Loomba Class Notes Chapter 7 7-16 Efficiency of Line and Balance Delay Efficiency Min# of workstations j  E= where j nCa ti j n Ca Cd  ti i=1 ti i=1 N= Cd = completion time for element i = number of work elements = actual number of workstations = actual cycle time = desired cycle time Balance delay total idle time of line = nCa - j  i=1 ti Line Balancing Procedure 1. Draw and label a precedence diagram 2. Calculate desired cycle time required for line 3 Calculate theoretical minimum number of workstations 3. 4. Group elements into workstations, recognizing cycle time and precedence constraints 5. Calculate efficiency of line 6. Determine if theoretical minimum number of workstations or an acceptable efficiency level has been reached. If not, go back to step 4. Dr. Loomba Class Notes Chapter 7 7-17 Line Balancing Work Element A B C D Precedence Time (Min) — A A B, C 0.1 02 0.2 0.4 0.3 Press out sheet of fruit Cut into strips Outline fun shapes Roll up and package 0.2 B 01 A 0.1 03 D 0.3 C 0.4 Line Balancing Work Element A B C D Time (Min) — A A B, C 0.1 02 0.2 0.4 0.3 Press out sheet of fruit Cut into strips Outline fun shapes Roll up and package Cd = N= Dr. Loomba Precedence 40 hours x 60 minutes / hour 6,000 units = 2400 = 0.4 minute 6000 0.1 + 0.2 + 0.3 + 0.4 1.0 = = 2.5  3 workstations 0.4 0.4 Class Notes Chapter 7 7-18 Line Balancing Workstation Element 1 Remaining Time Remaining Elements 0.3 01 0.1 0.0 0.1 B, C C, D C D none A B C D 2 3 0.2 B A 0.1 Cd = 0.4 N = 2.5 0.3 D C 0.4 Line Balancing E= Dr. Loomba Work station 1 Work station 2 Work station 3 A B A, C D 0.3 minute 0.4 minute 0.3 minute Cd = 0.4 N = 2.5 1.0 0.1 + 0.2 + 0.3 + 0.4 = = 0.833 = 83.3% 1.2 3(0.4) ( ) Class Notes Chapter 7 7-19 Computerized Line Balancing • Use heuristics to assign tasks to workstations • Longest operation time • Shortest operation time • Most number of following tasks • Least number of following tasks • Ranked positional weight Hybrid Layouts • Cellular layouts • group dissimilar machines into work centers (called cells) that process families of parts with similar shapes or processing requirements • Production flow analysis (PFA) • reorders part routing matrices to identify families of parts with similar processing requirements • Flexible manufacturing system • automated machining and material handling systems which can produce an enormous variety of items • Mixed-model assembly line • processes more than one product model in one line Dr. Loomba Class Notes Chapter 7 7-20 Cellular Layouts 1. 2. 3. 4. Identify families of parts with similar flow paths Group machines into cells based on part f ili families Arrange cells so material movement is minimized Locate large shared machines at point of use Parts Families A family of similar parts Dr. Loomba Class Notes A family of related grocery items Chapter 7 7-21 Original Process Layout Assembly 4 7 6 9 8 5 2 12 10 3 1 A B C 11 Raw materials Part Routing Matrix Dr. Loomba Parts 1 2 A B C D E F G H x x 3 Machines 4 5 6 7 8 9 10 11 12 x x x x x x x x x x x x x x x x x x x x x x x x Class Notes x Chapter 7 x x x 7-22 Revised Cellular Layout Assembly 8 10 9 12 11 4 Cell 1 Cell 2 6 Cell 3 7 2 1 3 5 A B C Raw materials Reordered Routing Matrix Dr. Loomba Parts 1 2 4 Machines 8 10 3 6 A D F C G B H E x x x x x x x x x x x 9 5 x x x x x x x x x x Class Notes 7 11 12 x x x Chapter 7 x x x x x x 7-23 Cellular Layouts • Advantages • Reduced material handling and transit time • Reduced setup time • Reduced work-in- process inventory • Better use of human resources • Easier to control • Easier E i tto automate t t Dr. Loomba Class Notes • Disadvantages • Inadequate part families • Poorly balanced cells • Expanded training and scheduling of workers • Increased capital investment Chapter 7 7-24 Automated Manufacturing Cell Flexible Manufacturing Systems (FMS) • Consists of • programmable machine tools • automated tool changing • automated material handling system • controlled by computer network • Combines flexibility with efficiency • Layouts differ based on • variety of parts the system can process • size of parts processed • average processing time required for part completion Dr. Loomba Class Notes Chapter 7 7-25 Fully-Implemented FMS Mixed Model Assembly Lines Produce multiple models in any order on one assembly line • Factors in mixed model lines • Line balancing • U-shaped lines • Flexible workforce • Model sequencing • Dr. Loomba Class Notes Chapter 7 7-26 Balancing U-Shaped Lines Precedence diagram: A B C D E Cycle time = 12 min (a) Balanced for a straight line (b) Balanced for a U-shaped line A,B C,D E 9 min 12 min 3 min Efficiency = A,B 24 24 = = .6666 6666 = 66 66.7 7% 3(12) 36 C,D E Efficiency = 24 24 = = 100 % 2(12) 24 Copyright 2011 John Wiley & Sons, Inc. Dr. Loomba Class Notes 12 min 12 min 7-54 Chapter 7 7-27 CHAPTER 12 Forecasting Lecture Outline • Strategic Role of Forecasting in Supply Chain • • • • • Dr. Loomba Management Forecasting g Time Horizon Qualitative vs. Qualitative Forecasts Components of Forecasting Demand Time Series Methods Forecast Accuracy, etc. Class Notes Chapter 12 12-1 Forecasting • Definition: Process of predicting a future event • Underlying basis of all business decisions • Production, Inventory, Personnel, Facilities • Forecasting Time Horizons • Indicates how far into the future is forecast • Short-range forecast • daily up to 1 year, generally less than 3 months • typically encompasses the immediate future • purchasing, job scheduling, workforce levels, job assignments, production levels • Medium-range forecast • up to two years • sales and production planning, budgeting • Long Long-range range forecast • usually encompasses a period of time longer than two years • new product planning, facility location, research and development • Distinguishing Differences • Medium/long range forecasts deal with more comprehensive issues and support management decisions regarding planning and products, plants and processes • Short-term forecasting usually employs different methodologies than longerterm forecasting • Short-term forecasts tend to be more accurate than longer-term forecasts Importance of Forecasting • Influence of Product Life Cycle • Introduction and growth require longer forecasts than maturity and decline • As product passes through life cycle, forecasts are useful in projecting • Staffing levels levels, Inventory levels levels, Factory capacity • Types of Forecasts • Economic forecasts • Address business cycle – inflation rate, money supply, housing starts, etc. • Technological forecasts • Predict rate of technological progress • Impacts development of new products • Demand forecasts • Predict sales of existing product • Strategic St t i Importance I t off Forecasting F ti • Human Resources • Hiring, training, laying off workers • Capacity • Capacity shortages can result in undependable delivery, loss of customers, loss of market share • Supply-Chain Management • Good supplier relations and price advance Dr. Loomba Class Notes Chapter 12 12-2 The Effect of Inaccurate Forecasting Qualitative Forecasts • Used when situation is vague and little data exist • New products, New technology • Management, marketing, purchasing, and engineering are sources for internal qualitative forecasts • Based on intuition, experience, management judgment, knowledge, expertise, and opinion to predict future demand; • e.g., forecasting sales on Internet • Jury of executive opinion • Pool opinions of high-level executives, sometimes augment by statistical models • Delphi method • involves soliciting forecasts about technological advances from panel of experts queried iteratively experts, • Sales force composite • Estimates from individual salespersons are reviewed for reasonableness, then aggregated • Consumer Market Survey • Ask the customer Dr. Loomba Class Notes Chapter 12 12-3 Quantitative Forecasts • Quantitative Forecasting • Used when situation is ‘stable’ and historical data exist • Existing products, Current technology • Based on data, statistics, involves mathematical techniques • e.g., forecasting sales of color televisions • Methods of Forecasting • Naive approach (eye-balling the numbers) • Formal Time-Series Methods • statistical techniques that use historical demand data to predict future demand; focus on systematically reducing forecasting errors • Moving averages; Exponential smoothing; Trend projection • Associative (or Causal) Model • attempt to develop a mathematical relationship between demand and factors that cause its behavior • Linear regression Patterns of Demand • Depend on • time frame • demand behavior • causes of behavior • Various patterns: • Horizontal Period Week Month Month Year Year Year Length Day Week Day Quarter Month Week Number of Seasons 7 4-4.5 28-31 4 12 52 • Steady state demand • data ‘moving sideways’ • Trend • a gradual, long-term up or down movement of demand • Changes due to population, technology, age, culture, etc. • Typically several years duration • Seasonal p pattern • an up-and-down repetitive movement in demand • occurring periodically usually within a year • Cyclical pattern • an up-and-down repetitive movement in demand • Multiple year duration • Affected by business cycle, political, and economic factors • Random variations • movements in demand that do not follow a pattern Dr. Loomba Class Notes Chapter 12 12-4 Components of Forecasting Demand Deman nd for product or serviice Trend component Seasonal peaks Actual demand Average demand over four years Random variation | 1 | 2 | 3 | 4 Year Deemand Deemand Forms of Forecast Movement Random movement Demaand Time (c) Seasonal pattern Dr. Loomba Time (b) Cycle Demaand Time (a) Trend Class Notes Time (d) Trend with seasonal pattern Chapter 12 12-5 Forecasting and Supply Chain Management • Accurate forecasting determines inventory levels in the supply chain • Continuous replenishment • • • • supplier & customer share continuously updated data typically managed by the supplier reduces inventory for the company speeds customer delivery • Variations of continuous replenishment • • • • quick response JIT (just-in-time) VMI (vendor-managed inventory) stockless inventory • Quality y Management g • Accurately forecasting customer demand is a key to providing good quality service • Strategic Planning • Successful strategic planning requires accurate forecasts of future products and markets Forecasting Process 1. Identify the purpose of forecast 2. Collect historical data 3. Plot data and identify patterns 6. Check forecast accuracy with one or more measures 5. Develop/compute forecast for period of historical data 4. Select a forecast model that seems appropriate for data 7. Is accuracy of forecast acceptable? No 8b. Select new forecast model or adjust parameters of existing model Yes 8a. Forecast over planning horizon Dr. Loomba 9. Adjust forecast based on additional qualitative information and insight Class Notes 10. Monitor results and measure forecast accuracy Chapter 12 12-6 Time Series • Assumptions of Time Series Models • There is information about the past • This Thi information i f ti can be b quantified tifi d in i the th form f off data d t • The pattern of the past will continue into the future • Relate the forecast to only one factor - time • Include • moving average • exponential smoothing • linear trend line Moving Average • Naive forecast • demand in current period is used as next period’s forecast • Simple moving average • uses average demand for a fixed sequence of periods • stable demand with no pronounced behavioral patterns • Weighted moving average • weights are assigned to most recent data Dr. Loomba Class Notes Chapter 12 12-7 Moving Average: Naïve Approach ORDERS MONTH PER MONTH Ja Jan Feb Mar Apr May June July Aug S t Sept Oct Nov FORECAST 1200 90 100 75 110 50 75 130 110 90 - 120 90 100 75 110 50 75 130 110 90 Simple Moving Average n  Di MAn = i=1 n where n = number of periods in the moving average Di = demand in period i Dr. Loomba Class Notes Chapter 12 12-8 Simple Moving Average (SMA) • SMA Forecast, Ft is average of n previous observations of actual demand, Dt : 1 Ft1  (Dt  Dt1  Dt1n ) n 1 t Ft1   Di n it1n • Note that the n past observations are equally weighted. • Issues with moving average forecasts: • All n pastt observations b ti ttreated t d equally; ll • Observations older than n are not included at all; • Requires that n past observations be retained; • Problem when 1000's of items are being forecast. 3-month Simple Moving Average MONTH Jan Feb Mar Apr May June July Aug p Sept Oct Nov Dr. Loomba ORDERS/ MONTH MOVING AVERAGE 120 90 100 75 110 50 75 130 110 90 - Class Notes – – – 103.3 88.3 95.0 78.3 78.3 85.0 105.0 110.0 3  MA3 = = i=1 Di 3 90 + 110 + 130 3 = 110 orders for Nov Chapter 12 12-9 5-month Simple Moving Average ORDERS/ MONTH MONTH Jan Feb Mar Apr May June July Aug Sept p Oct Nov MOVING AVERAGE – – – – – 99.0 85.0 82.0 88.0 95.0 91.0 120 90 100 75 110 50 75 130 110 90 - 5 MA5 = =  Di i=1 5 90 + 110 + 130+75+50 5 = 91 orders for Nov Smoothing Effects 150 – 5-month 125 – Orders 100 – 75 – 3-month 50 – Actual 25 – 0– | Jan | Feb | Mar | | Apr May | | June July | | Aug Sept | Oct | Nov Month Dr. Loomba Class Notes Chapter 12 12-10 Weighted Moving Average • Adjusts moving average method to more closely reflect data fluctuations WMAn = n  Wi Di i=1 where Wi = the weight for period i, between 0 and 100 percent  Wi = 1.00 Weighted Moving Average Example MONTH WEIGHT DATA August S t b September October 17% 33% 50% 130 110 90 November Forecast 3 WMA3 =  Wi Di i=1 = (0.50)(90) + (0.33)(110) + (0.17)(130) = 103.4 orders Dr. Loomba Class Notes Chapter 12 12-11 Exponential Smoothing: Concept • Averaging method that includes all past w weight observations • Widely used, accurate method • Reacts more to recent changes • Weight recent observations much more heavily than older observations 0
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Running Head: HEART OF SURGERY

Heart of Surgery
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HEART OF SURGERY

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Health care requires process innovation and not product innovation. Services are
inseparable from delivery, and as such, quality in hospitals increases when hospitals can perform
more surgeries. It is because in so doing, the doctors can get more experience. Services are also
consumed more compared to products. India's Narayan Hrudayalaya hospital uses this concept and
uses its high volumes to reduce healthcare costs. The hospital also specializes in finding low-cost
versions of the most expensive medical equipment (Anand, 2009). However, they face a challenge
since the Chinese makers who bring about sound quality and cheaper machines lack sufficient
local service centers to guarantee regular maintenance. Using an insurance plan, patients can pay
for surgeries in the hospital, which they would have otherwise not been able to afford. This is due
to the r...


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