MGT 3900 Final Multiple Choice
The median is
the midpoint of a ranked order set of data.
What is the theoretical flow time of a process?
the minimum amount of time required for processing a typical flow unit without any waiting.
The mode is
the most frequently observed value(s) in a set of data
After their analysis of purchasing using the Newsvendor Model under conditions of uncertainty, the authors summarize the lessons learned as:
the optimal service level increases with the net marginal benefit and decreases with the net marginal cost.
According to our book, cycle service level is best defined as:
the probability that there will be no stockout within an order cycle, where an order cycle is the time between two consecutive replenishment orders
Load batching is defined as:
the processing of several flow units simultaneously by a resource unit
What is the flow-time efficiency?
the ratio between theoretical flow time and the average flow time that indicates the amount of waiting time associated with the process.
The effective capacity of a resource pool is best defined as:
the sum of the effective capacities of all the resource units in that pool.
According to our book, safety time is:
the time margin that we should allow over and above the expected time to deliver service in order to ensure that we will be able to meet the promised date with high probability.
The unit load is best defined as:
the total amount of time the resource works to process each flow unit.
According to our book, Lead time demand (LTD) is best defined as:
the total flow-unit requirment during the replenishment lead time
According to our book, the unit load of a resource unit equals the total amount of time the resource works to process each flow unit. This means that:
the unit load of a resource unit is equal to the sum of the work contents of all activities that utilize that resource unit.
According to the book, an upper specification (US) which is also known as the upper specification limit (USL) is best described as:
the upper specification that the customer is willing to accept in a product.
SuperDoll sells all types of dolls through its chain of stores. One doll that sells 100,000 per year is the SuperBrat. It costs $10 for SuperDoll to purchase and they can sell if for $25 at retail. SuperDoll estimates its costs for holding a doll in inventory for a year to be 20%. They estimate that their cost of capital is 30%. Also, it costs them $100 to place an order. What is their annual cost of ordering if they order 1,000 dolls at a time?
$10,000
SuperDoll sells all types of dolls through its chain of stores. One doll that sells 100,000 per year is the SuperBrat. It costs $10 for SuperDoll to purchase and they can sell if for $25 at retail. SuperDoll estimates its costs for holding a doll in inventory for a year to be 20%. They estimate that their cost of capital is 30%. Also, it costs them $100 to place an order. What is their total annual cost of ordering and holding inventory if they order 1,000 dolls at a time? Do not calculate the procurement costs (i.e., C*R).
$12,500
At XYZ manufacturing, accounts receivable are $200,000. the sales at XYZ are $2,000,000 per year. What is the average amount of time in years for XYZ to collect its receivables?
0.1
The manager of a Dry Cleaners observed the customer service process and found that the 1 server in the process was busy with customers 60% of the time and that the customer interarrivals had a poisson distribution (i.e., Ci=1) and that the service times were exponentially distributed (i.e., Cp=1). On average, how many customers were standing in line to receive service?
0.9 people
In equation 8.9, the book introduces the coefficients of variation. It uses the symbol Ci, Cp, where both are capital C's for the coefficient of variation of interarrival times and processing times respectively. The coefficient of variation for an unmanaged service process (i.e., one without appointments such as McDonald's) has Ci = 1.0. The coefficient of variation for a service process involving the customer as an active participant (e.g., a customer check-out line at the supermarket) has an exponential distribution and the Cp = 1.0. Given this information, the second factor in equation 8.9 on p. 215 for a fast-food restaurant is:
1
A coffee shop has 5 people in line on average. The average time they are in line is 5 minutes. What is the average throughput rate of this process in terms of people per minute?
1 per minute
SuperDoll sells all types of dolls through its chain of stores. One doll that sells 100,000 per year is the SuperBrat. It costs $10 for SuperDoll to purchase and they can sell if for $25 at retail. SuperDoll estimates its costs for holding a doll in inventory for a year to be 20%. They estimate that their cost of capital is 30%. Also, it costs them $100 to place an order. If the demand drops to 50,000 next year, what is the new economic order quantity for the SuperBrat?
1,414
Auto-Moto receives 6 loan applications per day. Its process has an initial review team (IRT)that preprocess all applications and classifies them as A (excellent), B (more detail needed) and C (reject). A & B are forwarded to different groups to evaluate and accept or reject. Currently the IRT classifies 50% of new applications as A, 25% as B, and 25% as C. 50% of As are approved on review and 10% of Bs are approved. Average inventories are I=60 at IRT, I=45 at A, and I=10 at B. The number of customers that GO THROUGH A that are approved per day is: NOTE: Only write in the number, do NOT write any alpha characters.
1.5
An auto-repair shop completes repairs on 20 cars a day. On average, it has an inventory of 30 cars either being repaired, or waiting to be repaired. The average flow time of a car in days is:
1.5 days
Auto-Moto receives 6 loan applications per day. Its process has an initial review team (IRT)that preprocess all applications and classifies them as A (excellent), B (more detail needed) and C (reject). A & B are forwarded to different groups to evaluate and accept or reject. Currently the IRT classifies 50% of new applications as A, 25% as B, and 25% as C. 50% of As are approved on review and 10% of Bs are approved. Average inventories are I=60 at IRT, I=45 at A, and I=10 at B. The flow time at IRT in days is: NOTE: Only write in the number, do NOT write any alpha characters.
10
What is the variance of the data set provided in the Excel_Quiz_SmallDataSet.xls document (to 2 decimal places)?
1132.54
What is the mode of the data set provided in the Excel_Quiz_SmallDataSet.xls document (to 1 decimal place)?
12
Dracula Chocolates produces hand dipped chocolates with cherry centers. Each chocolate is dipped 5 times once at each dipping station that it visits. There are 6 different dipping stations (D1, D2, D3, D4, D5 and D6). Each chocolate goes to each station in sequence (i.e., D1 first, followed by D2). Every chocolate is dipped at stations D1, D2 and D3. 60% of the chocolates are dipped at D4, 80% are dipped at D5 and 60% are dipped at D6. R is 2 chocolates a minute. The dipping time at each station is 20 seconds. The work content at station D5 is:
16 sec.
A contract electronics manufacturer knows that the theoretical flow time for production of one circuit board is 45 minutes. It produces 250 of these an hour. Its average flow time for the production of a circuit board is 180 minutes. The theoretical inventory is:
187.5
Auto-Moto receives 6 loan applications per day. Its process has an initial review team (IRT)that preprocess all applications and classifies them as A (excellent), B (more detail needed) and C (reject). A & B are forwarded to different groups to evaluate and accept or reject. Currently the IRT classifies 50% of new applications as A, 25% as B, and 25% as C. 50% of As are approved on review and 10% of Bs are approved. Average inventories are I=60 at IRT, I=45 at A, and I=10 at B. The average flow time in days from arrival at IRT to completing the process at either A, B or C for an application is: NOTE: Only write in the number, do NOT write any alpha characters.
19.16
On average, a coffee shop has 10 people standing in line to order. These people stand in line for 5 minutes. What is the throughput or flow rate for this person in terms of people per minute.
2 people / min
If there is no uncertainty in demand (i.e., στανδαρδ δεϖιατιον = 0) and the lead time is 2 weeks and the demand per week is 1,000, what is the LTD?
2,000
SuperDoll sells all types of dolls through its chain of stores. One doll that sells 100,000 per year is the SuperBrat. It costs $10 for SuperDoll to purchase and they can sell if for $25 at retail. SuperDoll estimates its costs for holding a doll in inventory for a year to be 20%. They estimate that their cost of capital is 30%. Also, it costs them $100 to place an order. The economic order quantity for the SuperBrat is:
2,000
The manager of a Dry Cleaners is considering installing a web page based system. If customers pay through the web page, at least 30 minutes prior to their arrival and if they give an approximate arrival time, their clothes will be up at the cash registered bagged and ready for them to take them. The manager thinks that at his peak service time with 2 customer service representatives working at 80% utilization levels that the Ci will be reduced to 0.9 and the Cp will be reduced to 0.9 that customer satisfaction can be improved by reducing wait times. Given this data, how many will be waiting in line if this sytem is installed?
2.34 people
A Dry Cleaners uses 2 customer service representatives during its busy periods. During these periods, the server utilization is 80%. The Ci and Cp both equal 1. How many customers are waiting in line?
2.9
At a hotel, a guest who wants room service calls the manager. The manager takes the order and submits it simultaneously to the kitchen, the wine steward and to the waiter. This takes the manager 5 minutes. In the kitchen one cook works on the meal for 15 minutes on average. The wine steward prepares all alcoholic drinks while the kitchen is preparing the meal. This takes 5 minutes on average, but only 50% of the orders require alcoholic drinks. The waiter prepares the serving table, obtains eating utensils etc. while the kitchen and wine steward are working. It takes the waiter 10 minutes to do this. When everything is complete, the waiter delivers the food to the room, returns to the kitchen and bills the room, which takes 10 minutes. Sometimes the waiter discovers that s/he has forgotten something and must return to the kitchen after leaving the food in the room to get something else and return with it to the room, which takes a total of 10 minutes. This occurs 10% of the time. The unit load of the waiter for this process is:
21
Steel Inc. manufacturers steel from scrap steel and pig iron. The steel goes through 5 major processes in its process. The average flow rate (i.e., throughput) is 20 tons an hour. The average inventory of steel in the process that is not actually undergoing a step such as being melted and not including steel in finished goods inventory or scrap steel & pig iron that have not yet been put into the melt furnace is 400 tons. The theoretical flow time for a ton of steel is 2 hours. What is the average flow time for a ton of steel?
22 hours
At the Big Dip, it takes 3 minutes to scoop a single dip ice cream cone. Customers stand in line to get the cone an average of 5 minutes. The cashier spends 1 minute taking the customer's name and their order. The work content in minutes of the dipping activity is:
3
Paper4U is a chain of office supply stores. Their competitive advantage is that they stock a full line of office papers. They try to stay in stock on every type of paper they have, so their service level is 90% (z=1.281, p. 319). Their demand for one type of recycled paper is 1,000 boxes a week. Their lead time for this paper is 3 weeks. The standard deviation of demand is 150 a week. Their ROP is:
3,330
At the Big Dip, it takes 3 minutes to scoop a single dip ice cream cone. Customers stand in line to get the cone an average of 5 minutes. The cashier spends 1 minute taking the customer's name and their order. About 10% of the cones have to be re-dipped because of problems. The work content in minutes of the dipping activity is:
3.3
What is the median of the data set provided in the Excel_Quiz_SmallDataSet.xls document (to 1 decimal place)?
31.5
A wine steward at a restaurant is scheduled to work 8 hours a shift and is given two breaks of 15 minutes each and a 30 minute unpaid lunch break. The wine steward is also not available to work the 1st 15 minutes of the shift while s/he checks inventory and submit the inventory report to the manager. And, the wine steward is not available to work the last 15 minutes of the shift, when the wine steward is locking up, and reconciling accounts. In addition, the wine steward only prepares drinks for 50% of the orders that the kitchen receives. The net scheduled availability of the wine steward in a shift is closest to: (give your answer in minutes.)
420
What is the average of the data set provided in the Excel_Quiz_SmallDataSet.xls document (to 1 decimal place)?
44.9
George's bean store stocks every type of bean grown in the world. George's is proud of their wide selection of beans. They want a service level of 85% (i.e., z=1.037 on p. 319). The lead time for George's Own Beans is 2 weeks. The standard deviation of demand is 50 cans a week. The order quantity is 1,000 cans. the average weekly demand is 200 cans. What is the reorder point (ROP) for George's Own Beans? (select the closest number below)
473
The theoretical flow time for the counter person to make a batch of popcorn at the movie theater (including the actual popping of the corn) is 4 minutes. If the average flow time at a theater is 8 minutes, the flow time efficiency is:
50%
Auto-Moto receives 6 loan applications per day. Its process has an initial review team (IRT)that preprocess all applications and classifies them as A (excellent), B (more detail needed) and C (reject). A & B are forwarded to different groups to evaluate and accept or reject. Currently the IRT classifies 50% of new applications as A, 25% as B, and 25% as C. 50% of As are approved on review and 10% of Bs are approved. Average inventories are I=60 at IRT, I=45 at A, and I=10 at B. The number of days that an application stays in inventory in B is: NOTE: Only write in the number, do NOT write any alpha characters.
6.67
A process has four resource pools labeled: A, B, C and D. Resource A has a theoretical capacity of 700 widgets per day. Resource B has a theoretical capacity of 800 widgets per day. Resource C has a theoretical capacity of 600 widgets per day. Resource D has a theoretical capacity of 650 widgets per day. If the throughput of this system is 500 widgets per day, what is the utilization of resource A?
71%
A process has four resource pools labeled: A, B, C and D. Resource A has a theoretical capacity of 700 widgets per day. Resource B has a theoretical capacity of 800 widgets per day. Resource C has a theoretical capacity of 600 widgets per day. Resource D has a theoretical capacity of 650 widgets per day. If the throughput of this system is 500 widgets per day, what is the system utilization?
83%
At a hotel, a guest who wants room service calls the manager. The manager takes the order and submits it simultaneously to the kitchen, the wine steward and to the waiter. This takes the manager 5 minutes. In the kitchen one cook works on the meal for 15 minutes on average. The wine steward prepares all alcoholic drinks while the kitchen is preparing the meal. This takes 5 minutes on average, but only 50% of the orders require alcoholic drinks. The waiter prepares the serving table, obtains eating utensils etc. while the kitchen and wine steward are working. It takes the waiter 10 minutes to do this. When everything is complete, the waiter delivers the food to the room, returns to the kitchen and bills the room, which takes 10 minutes. Sometimes the waiter discovers that s/he has forgotten something and must return to the kitchen after leaving the food in the room to get something else and return with it to the room, which takes a total of 10 minutes. This occurs 10% of the time. If there are 5 waiters, 1 wine steward, 1 manager, and 6 cooks, what is the utilization of the waiters if there is an average of 12 orders an hour? (Assume the waiter can work on only 1 order at a time).
84%
Overall the process at the Vancouver International Airport is stable. But, there are periods where the inflow rate is 15 passengers/minute, while the outflow rate is 12 passengers/minute. If this continues for 30 minutes, the number in inventory will be: Note that ΔR(t)=Ri(t)-Ro(t) and I(t)=(t2-t1)ΔR
90
The effective capacity of a resource unit is best defined as:
= 1/Ti
Many quality managers say that reducing variance is quality improvement. Our book states that statistics is the science of variability. One tool the book suggests using is a Pareto Chart. According to our book, the best description of how a Pareto Chart works is:
A bar chart that plots frequencies of occurrences of problem types in decreasing order.
Materials requirements planning (MRP) talks about the 'offset'. The best explanation of what the term 'offset' means is:
An item is produced in a time bucket that is the item's lead time in advance of the time bucket within which the item is needed to produce its parent in the BOM.
Six-Sigma Capability is a third equivalent measure of process capability (i.e., it is a measure of the fraction of thre process output that meets customer specifications). The other two measures of process capability were Cp and Cpk. In table 9.5 it shows that S=6 is equivalent to Cp=2. (Note, compare formula 9.6 to formula 9.7 in the book). According to our book, the best explanation of why a higher Sigma (S) leads to higher capability is:
As the Sigma (S) value increases, more standard deviations of the process have to fit within the upper and lower specifications desired by the customer, so the standard deviation of the process must be smaller.
Takt time comes from the German word for pace or beat. It is a measure of the customer demand per time unit. The relationship between takt time and capacity is best described as:
Both takt time and capacity are measured in the same units (i.e., flow units per unit time), but takt time is a measure of the customer demand and capacity is a measure of ability of a process to produce flow units per unit time.
The manager of the customer fulfillment center at CornFib is trying to determine whether to use cycle service level or fill rate as the performance measure for the fulfillment center. CornFib stocks an assortment of fiber optic cables and connectors. Its customers are computer installers, who are very sensitive about order fulfillment. Many customers will place orders for a large number of items, but if any cannot be shipped within 48 hours of the order, they will place the entire order (including items that are in stock at CornFib) with one of CornFib's competitors. They state that there are fewer compatability issues when the connectors and cables all come from one supplier. Based on the discussion in our book, select the best performance measure and the reason it should be used below.
Fill rate, since the actual demand is known and can be easily captured by the customer fulfillment center. The fill rate will give the manager information about what types of order combinations are not unfilled.
The book states that to evaluate the profitability of a product or service, it is useful to measure capacity and throughput of the process that is providing these products or services by examining their financial flows. The assumption is that as managers we would like to maximize the profitability of our processes and that the contribution margin is important in accomplishing this. The contribution margin of a flow unit is its revenue less all of its variable costs. The book concludes that products which have the highest contribution per unit of time on the bottleneck resource are the most profitable. Scenario: the bottleneck is resource A. It takes 5 minutes to produce product X on A, and 10 minutes to produce product Y on A. The contribution margin of product X is $10. The contribution margin of product Y is $18. Which of the following is the most accurate statement?
If there is not sufficient capacity to produce both X and Y, then X should be produced before Y, since the contribution margin per unit time for X is $2/minute on the bottleneck, while the contribution margin per unit time for Y is $1.80/minute on the bottleneck.
The book states that the only way to increase the throughput of a process is to identify its bottleneck (external or internal) and to increase the capacity of the bottleneck. However, the manager must recognize that as the capacity of the bottleneck increases, a new bottleneck will emerge and the manager must be prepared to shift his / her attention to the new bottleneck. If a manager wants to continuously improve, which of the following is the most appropriate?
Improvement is achieved by first identifying the bottleneck, increasing the capacity of this bottleneck until it is not a bottleneck, and then identifying the new bottleneck and repeating the process.
Materials requirements planning (MRP) uses the inventory records, the bill-of-materials (BOM) and the master production schedule (MPS) to produce a plan for either procuring or producing items required in the production of the end item. MRP refers to the end item in the BOM as the parent. The level of the BOM at which the parent is located is:
Level 0
According to the class discussion, Shewart was the inventor of:
Plan-Do-Check-Act (PDCA) cycle
n a bill-of-materials (BOM), A is the parent of C and it takes 2 Cs to make each A. The gross requirements (GR) for A is 50 in both periods 2 and 4. There are no other GR for A. The lead time for A is 1 week. The lead time for C is 1 week. The safety stock level for both A and C is 0. The order quantity for both A and C is lot-for-lot. There are no scheduled receipts for either A or C. There are 10 As on hand and 100 Cs on hand at the beginning of period 1. What are the planned order releases for A?
Planned order releases for A are 40 in week 1, 0 in week 2, 50 in week 3 and 0 in week 4.
The book argues that the basic concept of aggregation (i.e., pooling demand for several similar products) improves forecasts because of the statistical properties involved and that operations can exploit these statistical properties. (p. 187) The reason that physical centralization can be effective is best stated as:
Stocking N items with independent demand in one location (where N is the number of items stocked) increases the average lead time demand by a multiple of N, but increases the standard deviation by a factor of the square root of N. So, less safety stock is needed when independent demands are pooled.
A is the parent of B in the bill-of-materials (BOM) and 1 B is needed for each A. The lead time for both A and B is 1 week. The order quantity for both A and B is lot-for-lot (LFL or L4L). The only gross requirements for A are 10 in week 1 and 40 in week 2. There is a scheduled receipt for A of 50 in week 1. There are no scheduled receipts for B. The on-hand for A and B at the beginning of week 1 is 20 and 10 respectively. The gross requirements for A are:
The gross requirements for A are 10, 40 and 0 in weeks 1, 2 and 3 respectively.
A is the parent of B in the bill-of-materials (BOM) and 1 B is needed for each A. The lead time for both A and B is 1 week. The order quantity for both A and B is lot-for-lot (LFL or L4L). The only gross requirements for A are 10 in week 1 and 40 in week 2. There is a scheduled receipt for A of 50 in week 1. There are no scheduled receipts for B. The on-hand for A and B at the beginning of week 1 is 20 and 10 respectively. The gross requirements for B are:
The gross requirements for B are 0, 0 and 0 in weeks 1, 2 and 3 respectively.
In a bill-of-materials (BOM), A is the parent of C and it takes 2 Cs to make each A. The gross requirements (GR) for A is 50 in both periods 2 and 4. There are no other GR for A. The lead time for A is 1 week. The lead time for C is 1 week. The safety stock level for both A and C is 0. The order quantity for both A and C is lot-for-lot. There are no scheduled receipts for either A or C. There are 10 As on hand and 100 Cs on hand at the beginning of period 1. What are the gross requirements for C?
The gross requirements for C are 80, 0, 100 and 0 in weeks 1, 2, 3 and 4 respectively.
In materials requirements planning (MRP), the saying that: 'The gross requirements of the child are n*the planned order release of the parent' means:
The immediate parent(s) of an item within the bill-of-materials (BOM) determines the gross number of that item that will be required. The number is calculated by multiplying the planned order release of the parent by the number of items that are needed to produce each parent.
The resource pool is best defined as:
a collection of interchangeable resources that can perform an identical set of activities, where each unit in a resource pool is called a resource unit.
Materials requirements planning is best described as:
a method to determine the number of a dependent item that are needed during a time bucket
In Chapter 8, the authors (Anupindi et al.) argue that it is not enough to consider only the average value of performance measures such as the 'average queue length' and the 'average waiting time.' The reason(s) they give for this are:
a. customer's tolerance for waiting decreases with the duration of the wait. b. those who wait longer are more dissatisfied than those who wait for shorter times. c. it would help manage the process to know the probability that a customer may have to wait longer than a specified duration of time that is considered acceptable. Correctd. All of the above
The book discusses how to define the flow unit in a process. It argues that while for an individual manager it might make sense to have the flow unit be an individual product or service,but for a company it makes more sense if the flow unit is an aggregate unit. All of the reasons below for assigning different weights to each different type of flow unit to create this aggregate unit are true except:
all flow units require the same amount of work
In chapter 8, the term blocking refers to:
arrivals cannot get into the process because input buffers have only limited capacity to accommodate them.
The variance is
how far off the data values are from the mean overall
Our book states that the 'Newsvendor' problem is concerned with:
making purchasing/production decisions when there is uncertainty and there is perishability due to short product life cycles or spoilage.
The best explanation of how rework affects the theoretical flow time is that:
rework increases the theoretical flow time, since it increases the number of visits for at least one of the activities in the process.
If there is one server at a dry cleaners taking clothes from the customer and getting the cleaned clothes from the clean rack, giving them to the customer and taking payments, this service is referred to as:
single-phase service process
According to our book, manufacturing and services often produce a variety of goods and services and not just one good or service. When the firm produces a variety of goods and services a resource unit that performs one or more activities to produce that good or service will have different unit loads for each of the goods or services produced. For example, the time for a hospital clerk to register a patient with a valid insurance policy will be shorter than the time to register a patient who does not have insurance coverage. To calculate the theoretical capacity for a product mix, the book suggests:
that a unit load be calculated for the product mix that is the weighted unit loads of the products within the mix and then this weighted unit load be used to calculate the theoretical capacity.
The process capability ratio (Cp) is the ratio of the voice of the customer to the voice of the process. Our book suggests calculating this as: Cp=(US-LS)/(6s) where s = standard deviation = sigma. According to our book the best explanation of why the voice of the customer is divided by 6 standard deviations is:
that since 6 sigma (or 6 standard deviations) represents 99.73% of the process output if the output is distributed normally, that this is the natural tolerance of the process
According to our book, process capability is best defined as:
the ability of the process to meet customer specifications.
What is the work content of an activity?
the activity time multiplied by the average number of visits at that activity.
The scheduled availability of a resource is best defined as:
the amount of time that a resource is scheduled for operation.
The mean is
the arithmetic average of a set of data
The standard deviation is
the average distance from each data point to the mean
According to our book, marginal analysis is:
the comparison of expected costs and benefits of purchasing each incremental or additional unit.
The cashier at a local Deli checks out customers after they have selected their sandwiches or pizza, soft drinks or helped themselves to self-serve coffee drinks. There are three major ways that customers come to the cashier. An average of ten (10) an hour stand in line for pizza and get soft drinks and then go to the cashier. An average of 20 an hour stand in line for sandwiches, get soft drinks and then go to the cashier. Another 30 an hour only get coffee and then go to the cashier. The flow-unit to calculate the flow rate at the cashier is:
the customer
Capacity utilization of a resource pool is best defined as:
the degree to which resources are effectively utilized by a process.
The range is
the difference between the largest and smallest values in a data set.
The effective capacity of a process is best defined as:
the effective capacity of the bottleneck.
Safety capacity is defined by our book as:
the excess processing capacity (supply) available to handle the customer inflows (demand) Rs=Rp-Ri
According to our book, takt time comes from the German word for pace or beat. Takt time is the beat or pace of customer demand. The takt time is the time at which services or products must be produced for the firm to keep pace with customer demand. If a firm produces at takt time, then:
the flow time equals the takt time.
Our book defines process capacity as:
the maximum sustainable flow rate of a process.
In a service process, the flow unit is the customer or a job order. When a server is not immediately available to process a customer, the customer waits in a queue. Since a customer is not 'inventory' the cost of the customer waiting is not the cost of storage or the cost of inventory holding, it is rather the cost of customer dissatisfaction. But, even when average capacity exceeds demand by 20%, there are often queues. The explanation given by our book for this is that:
there is variability in the arrival of customers and variability in the processing times of customers.
According to our class discussion and the book an Ishikawa diagram (also known as fishbone diagram or cause-and-effect diagram) is used to:
to identify the root cause(s) of the observed variability by asking a sequence of 5 whys.
According to our book and class discussion, Juran was known for:
use of the Pareto chart b. emphasizing the role of the manager in creating a quality product c. helping to establish the Deming prize in Japan Correct. A and B
