5 Performance Measurement Financial u Net profit – an absolute measurement in dollars u Return on...
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Transcript of 5 Performance Measurement Financial u Net profit – an absolute measurement in dollars u Return on...
5
Performance MeasurementFinancial
Net profit– an absolute measurement in dollars
Return on investment– a relative measure based on investment
Cash flow– a survival measurement
6
Performance MeasurementOperational
1. Throughput– the rate at which money is generated by the system
through sales 2. Inventory
– all the money that the system has invested in purchasing things it intends to sell
3. Operating expenses– all the money that the system spends to turn
inventory into throughput
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Productivity
Does not guarantee profitability
– Has throughput increased?
– Has inventory decreased?
– Have operational expenses decreased?
10
Some Capacity Related Terminology
Capacity– Available time for production
Bottleneck– Capacity is less than demand placed on resource
Nonbottleneck– Capacity is greater than demand placed on resource
Capacity-constrained resource (CCR)– Capacity is close to demand placed on resource
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Components of Production Cycle Time
Setup time– the time that a part spends waiting for a resource to
be set up to work on this same part Process time
– the time that the part is being processed
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Components of Production Cycle Time
Wait time– the time that a part waits not for a resource but for
another part so that they can be assembled together
Idle time– the unused time
» the cycle time less the sum of the setup time, processing time, queue time, and wait time
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Saving Time
Bottleneck Nonbottleneck
What are the consequences of saving time at each process?
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Drum, Buffer, Rope
A B C D E F
Bottleneck (Drum)
Inventorybuffer
(time buffer)Communication
(rope)
Market
Case: Kristen’s Cookies
Mixing
6 min
dishing
2 min
baking
10 min
cooling
5 min
packing
2 min
pay
1 min
(1 dozen)(3 dozen)
1. How long will it take to fill an order?2. How many orders can be filled in a four-hour period?3. What happens if a second oven is added?4. What happens if Kristen does this alone?5. What happens if Kristen sells standardized cookies?
K * *
R * *