341 Exam 3 Review
If the firm operates 10 hours per day, 20 days per month, the monthly capacity of the manufacturing process is?
10 x 60 = 600 600 x 20 = 12,000 12,000/33.33 = 360
A work system has five stations that have process times of 5,9,4,6 and 8. What is the throughput time of the system?
5 + 9 + 4 + 6 + 8 = 32
Theoretical maximum output of a system in a given period under ideal conditions
Design Capacity
Why will utilization typically be lower than efficiency?
Effective capacity is less than design capactiy
There are three consecutive steps in a customer service process. The first two steps are each capable of serving 25 customers per hour while the third step can process only 20 customers per hour. Which of the following statements regarding this system is true? IF THE FIRST TWO STEPS ARE RUN AT FULL CAPACITY THEN THE THIRD STEP HAS A WAITING LINE THE ENTIRE SYSTEM IS CAPABLE OF PROCESSING 25 CUSTOMERS PER HOUR THE FIRST AND SECOND STEPS ARE BOTTLENECKS FOR THE SYSTEM THERE ARE FLOATIG BOTTLENECKS IN THE SYSTEM
If the first two steps are run at full capacity then the third step has a waiting line
What is the slowest workstation in a production system?
The bottleneck time
Effective Capacity is the capacity a firm expects to achieve given the current operating constraints. TRUE FALSE
True
When should work be released into the system?
When the bottlenecks need work
Southeastern Oklahoma State University's business program has the facilities and faculty to handle an enrollment of 2,000 new students per semester. However, in an effort to limit class sizes to a "reasonable" level (under 200, generally), Southeastern's dean, Holly Lutze, placed a ceiling on enrollment of 1,600 new students. Although there was ample demand for business courses last semester, conflicting schedules, allowed only 1,440 new students to take business courses. 1. What is the Utilization Rate for Southeastern? 2. What is the Efficiency Rate for Southeastern?
1. 1440/2000 = 0.72 2. 1440/1600 = 0.90
Christopher's Cranks uses a machine that can produce 100 cranks per hour. The firm operates 12 hours per day, five days per week. Due to regularly scheduled preventive maintenance, the firm expects the machine to be running during approximately 95% of the available time. based on experience with other products, the firm expects to achieve an efficiency level for the cranks of 75%. What is the expected weekly output of cranks for this company?
100 x 12 = 1200 1200 x 5 = 6,000 6000 x 0.95 = 5,700 5,700 x 0.75 = 4,275
A work system has five stations that have process times of 5,9,14,9,and 8. What is the bottleneck time?
14 (Always pick the longest process time)
The Academic Computing Center has five trainers available in its computer labs to provide training sessions to students. Assuming that the design capacity of the system is 1900 students per semester and that effective capacity equals 90% of design capacity. If the number of students who actually go their orientation session is 1500, what is the utilization of the system?
1500/1900 = 78.9%
A Product Line at VJ Sugumaran's machine ship has three stations. The first station can process a unit in 5 minutes. The second station has two identical machines, each of which can process a unit in 16 minutes (each unit only needs to be processed on one of the two machines). The third station can process a unit in 6 minutes. Which is the bottleneck?
16/2 = 8 ANSWER: Station 2 with a bottleneck time of 8 mintues per unit (longest process time)
A work cell at the Chris Ellis Commercial Laundry has a workstation with two machines, and each unit produced at the station needs to be processed by both of the machines. (The same unit cannot be worked on by both machines simultaneously.) Each machine has a production capacity of 4 units per hour. What is the throughput time (time is takes for one unit to go through) of the work cell?
4/2 = 2 60/2 = 30 ANSWER: 30 minutes throughput time
Under ideal conditions, a service bay at a Fast Lube can serve 6 cars per hour. The effective capacity of a Fast Lube service bay is 5.5 cars per hour, with efficiency known to be 0.88. What is the minimum number of service bays Fast Lube needs to achieve an anticipated production of 200 cars?
5.5 x 0.88 = 4.84 4.84 x 8 = 38.72 200/38.72 = 5.16 ANSWER: 6 Service Bays
If a plant has an effective capacity of 6500 and an efficiency of 88% then its actual (planned) output = 57,200 73.86 5,720 6,500
5720
Sunclear manufactures and sells natural detergent. The company purchases liquid soap for $3/bottle adds washing soda and borax for a combined $1/bottle and sells this product as detergent for $10/bottle. Sunclear has 20 sales people. The sales people mix the additive into detergent just before the product is sold to customers. The sales people are each paid an average annual salary of $50,000. Managers salaries total $750,000, marketing expenses about $1 million, and all other fixed costs about $3 million per year. At the beginning of 2014 Sunclear had $750,000 in fixed assets. In 2014 the firm sold a piece of equipment for $35,000 and purchased a new machine for $55,000. Sunclear uses an annual depreciation rate of 10%. The firm sold 1 million bottles of detergent in 2-14 and they regularly hold raw material inventories equal to two weeks' worth of demand. Assuming 50 weeks per year: 2. What is the value of Sunclear's I&I at the end of 2014?
910,000 + (55,000-35,000) - (75,000 x 0.10) = 855,000 ANSWER: 855,000
What is the Capacity of a Work Cell formula?
= total work time available / bottleneck time
Sunclear manufactures and sells natural detergent. The company purchases liquid soap for $3/bottle adds washing soda and borax for a combined $1/bottle and sells this product as detergent for $10/bottle. Sunclear has 20 sales people. The sales people mix the additive into detergent just before the product is sold to customers. The sales people are each paid an average annual salary of $50,000. Managers salaries total $750,000, marketing expenses about $1 million, and all other fixed costs about $3 million per year. At the beginning of 2014 Sunclear had $750,000 in fixed assets. In 2014 the firm sold a piece of equipment for $35,000 and purchased a new machine for $55,000. Sunclear uses an annual depreciation rate of 10%. The firm sold 1 million bottles of detergent in 2-14 and they regularly hold raw material inventories equal to two weeks' worth of demand. Assuming 50 weeks per year: 1. How much did sunclear have in I&I at the beginning of 2014?
All Fixed Assets + All Inventory Fixed Assets = 750,000 Raw Material Inventory = 1,000,000/50 = 20,000 20,000 x 2 = 40,000 40,000 x 4 = 160,000 750,000 + 160,000 = 910,000 ANSWER: 910,000
Which of the following techniques in not a technique for dealing with a bottleneck? INCREASE THE CAPACITY OF THE CONSTRAINT SCHEDULE THROUGHPUT TO MATCH THE CAPACITY OF THE BOTTLENECK HAVE CROSS TRAINED EMPLOYEES AVAILABLE TO KEEP THE CONSTRAINT AT FULL OPERATION DEVELOP ALTERNATE ROUTINGS ALL OF THE ABOVE
All of the above
Consider consecutive processes A-B-C where process A has a capacity of 20 units per hour, process B has a capacity of 25 units per hour, and process C has a capacity of 30 units per hour. Where would an operations manager want any inventory?
In front of process A (always want inventory in front of the constraint/bottleneck)
Which of the following is NOT a valid principle of bottleneck management? INCREASING THE CAPACITY OF A NON-BOTTLENECK STATION INCREASES THE CAPACITY FOR THE WHOLE SYSTEM RELEASE WORK ORDERS TO THE SYSTEM AT THE PACE SET BY THE BOTTLENECK'S CAPACITY LOST TIME AT THE BOTTLENECK REPRESENTS LOST CAPACITY FOR THE WHOLE SYSTEM INCREASING THE CAPACITY OF A NONBOTTLENECK STATION IS A MIRAGE
Increasing the capacity of a non-bottleneck station increases the capacity for the whole system
Sunclear manufactures and sells natural detergent. The company purchases liquid soap for $3/bottle adds washing soda and borax for a combined $1/bottle and sells this product as detergent for $10/bottle. Sunclear has 20 sales people. The sales people mix the additive into detergent just before the product is sold to customers. The sales people are each paid an average annual salary of $50,000. Managers salaries total $750,000, marketing expenses about $1 million, and all other fixed costs about $3 million per year. At the beginning of 2014 Sunclear had $750,000 in fixed assets. In 2014 the firm sold a piece of equipment for $35,000 and purchased a new machine for $55,000. Sunclear uses an annual depreciation rate of 10%. The firm sold 1 million bottles of detergent in 2-14 and they regularly hold raw material inventories equal to two weeks' worth of demand. Assuming 50 weeks per year: 3. What was Sunclear's OE in 2014?
Labor Cost: 20 x 50,000 = 1,000,000 1,000,000 + 750,000 = 1,750,000 Marketing Cost: 1,000,000 Other fixed cost: 3,000,000 Fixed asset depreciation: 750,000 x 0.10 = 75,000 (add all together) ANSWER: 5,825,000
Sunclear manufactures and sells natural detergent. The company purchases liquid soap for $3/bottle adds washing soda and borax for a combined $1/bottle and sells this product as detergent for $10/bottle. Sunclear has 20 sales people. The sales people mix the additive into detergent just before the product is sold to customers. The sales people are each paid an average annual salary of $50,000. Managers salaries total $750,000, marketing expenses about $1 million, and all other fixed costs about $3 million per year. At the beginning of 2014 Sunclear had $750,000 in fixed assets. In 2014 the firm sold a piece of equipment for $35,000 and purchased a new machine for $55,000. Sunclear uses an annual depreciation rate of 10%. The firm sold 1 million bottles of detergent in 2-14 and they regularly hold raw material inventories equal to two weeks' worth of demand. Assuming 50 weeks per year: 5. Sunclear's net profit in 2014 was?
Net profit = throughput - operating expense 6,000,000 - 5,825,000 = 175,000 ANSWER: 175,000
Which of the following is the fourth step in the theory of constraints? REDUCE THE EFFECTS OF THE CONSTRAINTS BY OFFLOADING WORK OR BY EXPANDING CAPABILITY WHEN ONE SET OF CONSTRAINTS IS OVERCOME, GO BACK AND IDENTIFY NEW CONSTRAINTS FOCUS RESOURCES ON ACCOMPLISHING THE PLAN DEVELOP A PLAN FOR OVERCOMING THE IDENTIFIED CONSTRAINTS
Reduce the effects of the constraints by offloading work or by expanding capability
Which of the following is one of the four principles of bottleneck management? INCREASING CAPACITY AT A BOTTLENECK STATIONS IS A MIRAGE LOST TIME AT A NON BOTTLENECK IS LOST SYSTEM CAPACITY INCREASED NON BOTTLENECK CAPACITY IS INCREASED SYSTEM CAPACITY BOTTLENECKS SHOULD BE MOVED TO THE END OF THE SYSTEM PROCESS RELEASE WORK ORDERS TO THE SYSTEM AT THE BOTTLENECKS CAPACITY PACE
Release work orders to the system at the bottleneck's capacity pace
Sunclear manufactures and sells natural detergent. The company purchases liquid soap for $3/bottle adds washing soda and borax for a combined $1/bottle and sells this product as detergent for $10/bottle. Sunclear has 20 sales people. The sales people mix the additive into detergent just before the product is sold to customers. The sales people are each paid an average annual salary of $50,000. Managers salaries total $750,000, marketing expenses about $1 million, and all other fixed costs about $3 million per year. At the beginning of 2014 Sunclear had $750,000 in fixed assets. In 2014 the firm sold a piece of equipment for $35,000 and purchased a new machine for $55,000. Sunclear uses an annual depreciation rate of 10%. The firm sold 1 million bottles of detergent in 2-14 and they regularly hold raw material inventories equal to two weeks' worth of demand. Assuming 50 weeks per year: 4. What was Sunclears throughput in 2014?
Throughput = Sales - Direct Materials Sales = 1,000,000 x 10 = 10,000,000 Direct material cost = 3 + 1 = 4 4 x 1,000,000 = 4,000,000 10,000,000 - 4,000,000 = 6,000,000 ANSWER: 6,000,000
The Theory of Constraints strives to reduce the effect of constraints by: OFFLOADING WORK FROM CONSTRAINED WORKSTATIONS INCREASING CONSTRAINED WORKSTATION CAPABILITY CHANGING WORKSTATION ORDER TO REDUCE THROUGHPUT TIME A & B
a & b
What is the Expected Output Formula?
effective capacity x efficiency
Design Capacity: the theoretical average output of a system in a given period under ideal conditions TRUE FALSE
false
The second step in Theory of Constraints application "exploit the bottlenecks" means what?
the analyst should create a schedule that maximizes the throughput of the bottlenecks
The third step in the Theory of Constraints application "subordinate all other decisions to Step 2" means what?
the analyst should schedule non-bottleneck processes to support the bottleneck schedule