Operations Management Exam 1

Process Flow Diagram

Boxes = Resources Arrows = Flows Triangles = Inventory Location

Which of the following items would be considered an input in the operations of a soft drink manufacturer? A) Brand image B) Bottling machines C) Empty bottles D) Workers

C) Empty bottles The bottle is a part of the soft drink product.

Which of the following actions does not relate to off-loading the bottleneck? A) Reassigning activities to other, non bottleneck resources B) Automating some of the activities at the bottleneck C) Increasing wages for production workers D) Outsourcing some of the bottleneck activities

C) Increasing wages for production workers

A key process metric is __________________. A) Raw materials B) Inputs C) Inventory D) Outputs

C) Inventory

What are the subcomponents of inconvenience in a customer utility function? A) Location and price B) Price and volume C) Location and time D) Time and performance

C) Location and Time

Which of the following items would be considered an input in the operations of a doctor's office? A) Examination table B) Nurse C) Needle D) Stethoscope

C) Needle The only item in the list that is a material used in the doctor's office operations is a needle. The rest of the items would be considered resources.

From the perspective of process analysis, which of the following could be appropriate flow units for a hardware store? A) Number of workers B) Number of cash registers C) Number of customers D) Number of suppliers

C) Number of customers The number of workers, cash registers, and suppliers are unlikely to change much over the course of a month and do not "flow" through the process of the hardware store.

You are sitting in a restaurant and the waiter brings you the food you ordered a while ago. If you think about you being the flow unit in the process of the restaurant, which step of this process will be downstream relative to your current position in the process? A) Waiting to order B) Being seated at a table C) Paying the bill D) Reviewing the menu

C) Paying the bill

You observe a bank and notice that a customer leaves the bank about every five minutes. These five minutes between customers are.... A) The capacity of the process B) The processing time of the last resource C) The cycle time D) The lead time

C) The cycle time

If ________________ is the constraint, we should_________________ the staffing level to raise capacity. A) demand, lower B) demand, raise C) capacity, raise D) capacity, lower

C) capacity, raise

Muri

An unreasonable amount of work, overburdening a machine or operation

Utility is composed of three components

1. Consumption Utility 2. Price 3. Inconvenience

Three major functions in any firm

1. Marketing 2. Operations 3. Finance

6 Rules for an Effective Kanban Syetem

1. Never pass on defective products 2. Take only what is needed 3. Produce the exact quantity required 4. Level the production 5. Fine-tune production 6. Stabilize and rationalize the process.

Eight Wastes

1. Over production 2. Inventory 3. Transportation 4. Motion 5. Waiting 6. Defects 7. Over processing 8. Human potential

Drivers of Consumption Utility

1. Price 2. Inconvenience

5 Step Lean Process

1. Specify value: Value is defined by customer in terms of specific products and services 2. Identify the value stream: Map out all end-to-end linked actions, processes and functions necessary for transforming inputs to outputs to identify and eliminate waste 3. Make value flow continuously: Having eliminated waste, make remaining value-creating steps "flow" 4. Let customers pull value: Customer's "pull" cascades all the way back to the lowest level supplier, enabling just-in-time production 5. Pursue perfection: Pursue continuous process of improvement striving for perfection

Three System Inhibitors

1. Waste 2. Variability 3. Inflexibility

Statistical process control (SPC)

A framework in operations management built around empirical measurement, statistical analysis of output, and outcome variables.

Resources

A group of people or equipment that transforms inputs into outputs - Help flow units move from being a unit of input to being a unit of output

Utility

A measure of the customer preference of a product or service

Consumption Utility

A measurement of how much you like a service, ignoring the effects of price and its inconvenience

Make to order

A production system in which a item's production begins after the customer for the item is known. Ex: Subway Sandwich

Make to stock

A production system in which an item's production begins before the customer for the item is known. Ex: Nike Sneakers

A Process

A set of activities that take collection of inputs, perform some work or activities with those inputs, and then yield a set of outputs

Throughput

A synonym for flow rate

Andon

A system consisting of a visible board and a cord running adjacent to the assembly line. Any employee detecting a problem can pull the cord to stop the line.

C & A Museum has three million visitors per year. Each visitor spends on average of 1 hour in the museum. What is the average number of visitors in the museum on a given day if the museum is open 300 days a year from 9 a.m. to 5 p.m.? A) 1250 B) 2400 C) 7500 D) 8000

A) 1250

You observe a long line at the airport security. The process currently is: A) Capacity-constrained B) Demand constrained C) Unconstrained D) Linearly constrained

A) Capacity-constrained

Utility is composed of the following components EXCEPT __________. A) Customer loyalty B) Price C) Inconvenience D) Consumption Utility

A) Customer loyalty

Little's Law states there is a relationship between: (Choose all that apply) A) Inventory B) Flow time C) Output D) Throughput

A) Inventory B) Flow time D) Throughput

It is election day and 1800 voters vote in their precinct's library during the 10 hours the polls are open. On average, there are 15 voters in the library and they spend on average 5 minutes in the library to complete their voting. What is the inventory of voters, the flow rate, and the flow time for each voter? A) Inventory of voters_____________________voter B) Flow rate _________________per hour C) Flow time_________________minutes

A) Inventory of voters___15___voters B) Flow rate ___180___ per hour C) Flow time ____5______minutes The flow rate is 1,800 / 10 = 180 per hour, or 180 / 60 = 3 per minute. The flow time is 5 minutes

SmartPhones are made on a 40-step assembly process. All 40 steps are connected through a conveyor belt and all of the 40 steps much work at the same rate even if some of them have more capacity than others. Is this process a machine-paced process or a worker-paced process? A) Machine-paced B) Worker-paced

A) Machine-paced

A car manufacturer has designed a "special edition" version of its popular two-door coupe. This special edition has increase horsepower compared to the standard model and a sports suspension. Which dimension of the customer utility function is particularly emphasized with the special edition coupe? A) Performance B) Fit C) Price D) Timing

A) Performance

A process has low fixed costs and high variable costs. It is currently capacity-constrained. Will the impact of an efficiency improvement be small or large? A) Small B) Large

A) Small High variable costs result in a low unit margin, which reduces the impact of each additional; customer on profitability

How does the target manpower change as the demand rate increases? A) The target manpower increases B) The target manpower stays the same C) The target manpower decreases D) Cannot determine from the given information

A) The target manpower increases

A campus deli serves 350 customers over its busy lunch period from 11:30 a.m. to 1:30 p.m. A quick count of the number of customers waiting in line and being served by the sandwich markers shows that an average of 14 customers are in the process at any point in time. What is the average amount of time that a customer spends in process? Average amount of time ____________minutes

Average amount of time __4.8____minutes Inventory = Flow rate x Flow time The flow rate is 350 customers divided by 120 minutes = 2.9167 customers/minutes 14 people in line (average inventory) = 2.9167 flow rate x flow time Flow time = 14/2.9167 = 4.8 minutes

Over the course of a 24-hour period a call center handled 1200 different calls and at noon there were 50 callers "in" the center (talking or waiting to talk to a representative). The sixth caller of the day spend 2.5 minutes with a representative. Which of the given numbers is an inventory? A) 1200 B) 50 C) 2.5

B) 50

Which of the following statements about process efficiency is FALSE? A) A process is efficient if it is able to achieve a high flow rate with few resources B) Cost of direct labor goes up if flow rate goes up C) Revenue goes up if flow rate goes up D) Cycle time goes up if flow rate goes down

B) Cost of direct labor goes up if flow rate goes up

If you maintain inventory at a constant level and keep the throughput rate constant: A) Cycle time will decrease B) Customer delivery dates become more reliable C) You are following a push operating system D) Your processes are operating under normal conditions

B) Customer delivery dates become more reliable

Is the capacity of the bottleneck larger than, equal to, or smaller than the capacity of the process? A) Larger than B) Equal to C) Smaller than D) The answer depends on the specific process under consideration

B) Equal to

Which of the following questions would be asked in a process analysis of a college admissions office? A) When was the college founded? B) How long does it take the office to process an application? C) How much is the yearly tuition at the college? D) How long does it take the average student to complete a degree program at the college?

B) How long does it take the office to process an application?

A group of workers works really hard. In fact, they work so hard that one of them claims to have an average labor utilization of 120 percent. Is that possible? A) Yes B) No

B) No

You observe a vehicle registration department at your local township. Assume that all employees are ready to work at 9 a.m. You arrive at 9 a.m. sharp and are the first customer. Is your time through the empty process longer or shorter than the flow time averaged across all customers that arrive over the course of the day? A) Longer than the average flow time B) Shorter than the average flow time

B) Shorter than the average flow time

What happens to the target manpower if the labor content is doubled? A) The target manpower increases by 50 percent B) The target manpower doubles C) The target manpower decreases by 50 percent D) The target manpower decreases by a factor of 2

B) The target manpower doubles

What is the relationship between the processing time at a resource and its capacity? A) They are the same B) They are reciprocals of each other C) They are multiples of each other D) They are not related

B) They are reciprocals of each other

Which of the following operational decisions correspond(S) to the price component of the customer utility function? A) When will the demand be fulfilled? B) What are the shipping charges to the customer? C) What is the product or service to be delivered? D) Where will the demand be fulfilled?

B) What are the shipping charges to the customer? The operational efficiency will affect the price that the firm is able to charge for it product and service to maximize its profitability.

Value of Flow Diagram

- Understand key steps to define process capacity - Evaluate lead time of product - Indentify why and how inventory accumulates

Little's Law

Inventory = Flow Rate x Flow Time

What is the maximum utilization a resource can achieve? A) A value equal to the demand B) A value equal to the capacity C) There is no maximum utilization D) 1.00

D) 1.00

Which of the following items would be considered resources in a restaurant? A) Recipes B) Food C) Brand image D) Chefs

D) Chefs

Which of the following statements about process analysis if TRUE? A) Process analysis is the backbone of a company's accounting system B) Process analysis tracks an organization's revenue and costs C) Process analysis enables a business to create demand D) Process analysis is a framework to understand an organization's detailed operations

D) Process analysis is a framework to understand an organization's detailed operations

A national restaurant chain has just opened a sit-down location at Chicago's O'Hare International Airport. Next to the sit-down location, it has also established a "to-go" section where travelers can purchase premade sandwiches and salads, as well as drinks and snacks. Which dimension of the customer utility functions is particularly emphasized with the "to-go" section? A) Performance B) Fit C) Price D) Timing

D) Timing

Which of the following inefficiencies in a grocery store's operations result from inflexibility? A) leftover fruits and vegetables B) Delivery delays from the warehouse C) A surge in customer arrivals at one time D) Employee work schedules set a week in advance

D) employee work schedules set a week in advance

Warehouse layout

Design balances space utilization and handling costs

Fixed-position layout

Design is for stationary project Ex: Ship building, Highway construction

Retail/service layout

Design maximizes product exposure to customers

Process-oriented layout

Design places departments with large flows of material or people together Ex: Hospitals, machine shops

Product-oriented layout

Facility organized around product, design minimizes line imbalance Ex: auto assembly line, brewery, paper manufacturer

"Firm A Pareto dominates Firm B" means that Firm A's product or service is inferior to that of Firm B on all dimensions of the customer utility function. True or False

False

A flow unit is generally associated with the inputs of a process True or False

False

A resource with a utilization of less than 100% cannot be the bottleneck True or False

False

A resource with setups can achieve a flow rate that is equal to its capacity True or False

False

Balancing a process with a fixed sequence of activities will achieve a higher average labor utilization than balancing a process with no fixed sequence of activities. True or False

False

Costs of direct labor goes up whenever labor content goes up True or False

False

Cycle time is the time between when an order is placed and when it is completed True or False

False

Setup involves different amounts of time depending on the actual number of units to be made True or False

False

Throughput, sometimes referred to as output rate, is expressed in units produced per hour. True or False

False

When an operation improves its efficiency, its revenue will always stay constant, while its costs will go down. True or False

False Efficiency can result in higher revenue as well because the operation can serve more customers

A computer server experiences large fluctuations in the amount of data requests it receives throughout the day. Because of this variation, Little's Law does not apply. True or False

False Little's Law applies even if there are fluctuations in inventory, flow rates, and flow times

Little's Law is very general, so it is not necessary that flow rate and flow time use the same time units True or False

False The same time units must be used for the flow rate and the flow time.

Pareto Dominated

Firms product is inferior to one or multiple competitors on all dimensions of the customer utility function

Poka-yoke

Fool proofing an operation to avoid the recurrence of defects.

Consider the baggage check-in process of a small airline. Check-in data indicates that from 9-10am, 240 passengers checked in. Moreover, based on counting the number of passengers waiting in line, airport management found that the average number of passengers waiting for check-in was 25. How long did the average passenger have to wait in line?

How long does the average passenger have to wait in line?__6.3_____minutes Inventory = Flow rate x Flow time 25 people in line (average inventory) = 240 customers / 60 minutes (flow rate) x flow time Flow time = 6.3 minutes

LaVilla is a village in the Italian Alps. Given its enormous popularity among Swiss, German, Austrian, and Italian skiers, all of its beds are always booked in the winter season and there are on average 1200 skiers in the village. On average, skiers stay in LaVilla for 10 days. How many new skiers are arriving, on average, in LaVilla every day?

How many new skiers are arriving, on average, in LaVilla every day?___120______skiers 1,200 beds divided by 10 days = 120 new skiers per day

Patients take a drug for severe acne for 6 months and there are 60,000 new patients each month. How many patients are taking this drug on average at any given time?

How many patients are taking this drug on average at any given time? ___360,000______patients 6 months (flow time) x 60,000 new patients per month = 360,000 patients

One of the chair lifts at a ski resort unloads 1900 skiers per hour at the top of the slope. The ride from the bottom to the top takes 19 minutes. How many skiers are riding on the lift at any given time?

How many skiers are riding on the lift at any given time? ____602___skiers 1,900 skiers divided by 60 minutes per hour (flow rate) x 19 minutes (flow time) = 602 skiers

Inflexibility

Inability to adjust to either changes in the supply process or changes in customer demand

Inefficient

Inefficiency is the gab between the firms current position and the efficient frontier

Heijunka

Japanese technique of achieving level output flow by coordinated sequencing of very small production batches throughout the manufacturing line in a lean production or just in time (JIT) system.

CodeDeskInc matches programmers with freelance jobs. It has 34 employees who staff its online chat room. It receives, on average, 235 chat requests per hour, and the average chat session takes 5 minutes to complete. On average, how many chat sessions are active (i.e., started but not completed)?

On average, how many chat sessions are active? ____20_____chat sessions Flow rate = 235 chats divided by 34 employees = 6.91 Flow time = 5 minutes divided by 60 minutes = 0.083 hour Inventory = Flow Rate x Flow Time, 6.91 x 0.083 = 0.5760 x 34 employees = 20 chats

Downnstream

Parts of the process at the END of the process flow

Upstream

Parts of the process that are at the BEGINNING of the process flow

The 4 - P's of Toyota

Philosophy, Process, People/Partners, and Problem Solving

Variability

Predictable or unpredictable changes in the demand or the supply process -customer arrivals, requests, behaviors - Time to serve a customer, disruptions, defects

Kanban

Production and inventory control system in which production instructions and parts delivery instructions are triggered by consumption downstream.

Mass Customization

Production of personalized or custom-tailored goods or services to meet consumers' diverse and changing needs at near mass production prices. Ex: Paris Miki Eyeglasses, Dell Computers, M&Ms

6S

Sort, Safe, Straighten, Scrub, Standardize, Sustain

Robust

The ability of a process to tolerate changes in input and environmental variables without causing the outcomes to be defective.

Waste

The consumption of inputs and resources that do not add value to the customer - wasting food - wasting employees time - giving consumers something they don't value

Capabilities

The dimensions of the customers utility function a firm is able to satisfy

Process Capacity

The maximum flow rate a process can provide per unit of time. It determines the maximum flow rate a process can provide per unit of time. Thus it determines the maximum supply of the process.

Trade-offs

The need to sacrifice one capability in order to increase another one

Inventory

The number of flow units within our process Ex: 12.5 mothers in the hospital at any given time

Kaizen

The process of making small changes to the process with the goal of eliminating waste

Flow Rate

The rate at which the flow units travel through the process. Must have per unit of time Ex: The average stay in the hospital for a woman is 2.5 days - people per month - dollars per week - kilograms per hour

Target manpower

The ratio between the labor content and the takt time determines the minimum number of resources required to meet demand. This minimum does not have to be an integer number and it is assumes all resources are perfectly utilized. = Labor Content / Takt Time

Takt time

The ratio between the time available and the quantity that has to be produced to serve demand. = Available time / required quantity

Pull system

The resource furthest downstream (closest to the market) is paced by market demand. In addition to its own production, it also relays the demand information to the next station upstream, thus ensuring that the upstream resource also is paced by demand.

Efficient Frontier

The set of firms that are NOT Pareto Dominated

Flow Time

The time a flow unit spends in the process, from start to finish Ex: The average birth rate at a local hospital is 5 births per day

Processing Time

The time it takes a resource to complete one flow unit

The Objective of Lean

To increase value added work and reduce waste to increase throughput, lower cost and improve quality

A batch size should be chosen for a process with setups to make a trade-off between capacity and inventory True or False

True

A bottleneck is the resource with the lowest capacity in a multistep process True or False

True

Automating some activities at a non bottleneck resource increases the amount of idle time for that resource without making the process more efficient True or False

True

C & A Bakery serves 200 customers in 10 hours. On average there are five customers in the bakery. This means each customers spends on average 15 minutes in the bakery. True or False

True

If the takt time is shorter than the cycle time, the process needs to run faster. True or False

True

Revenue cannot be increased with an efficiency improvement on a demand-constrained process True or False

True

Takt time matches cycle time if supply matches demand True or False

True

The capacity of a resource with setups is dependent on the batch size True or False

True

Mura

Unevenness in flow

Jidoka

Upon detection of a problem, shutting down the machine to focus on a human intervention, which in turn triggers process involvement.

Visual Controls

Visual control are means, devices, or mechanizms that were designed to manage or control our operations (process) Ex: Signs, Shadow Board, Visual Task Management

Process Analysis

a rigorous framework for understanding the detailed operations of a business that can be used for everyone running a business.

Product Process Matrix

a tool for analyzing the relationship between the product life cycle and the technological life cycle

Value Stream Mapping (VSM)

a tool used to see and understand the flow of material and information as a product or service makes its way through the value stream

Effective capacity

achievable level under normal conditions, for an extended time

Capacity

amount of input that can go into or the amount of output that can be created by a process, at a given level of resources over a given time period - (For One-Step Process) Maximum number of flow units that can flow through that resource per unit of time Capacity = 1/Processing Time

Bottleneck

any resource whose capacity is equal to or less than the demand placed upon it

Maximum Capacity (Designed or Rated Capacity)

highest achievable level under ideal conditions, for a limited time

Utilization

how much available capacity is actually used - Measures how busy the resources of the process are

Efficiency

how much of effective capacity is actually used

Continuous Processing

involves the product flows continuously rather than being divided into discrete units. A basic material is passed through successive operations and eventually emerges as one or more products. Ex: Soft drinks, granola bars

Assembly Line Processing

laborers generally perform the same operations for each production run in a standard and hopefully uninterrupted flow. Generally heavily automated. Ex: Car Manufacturer, Pancheros, Subway

Cellular Manufacturing

produces families of parts within a single line or cell of machines Ex: Electronics Manufacturing, Pella Windows

Batch Processing

provide similar items on a repeat basis, usually in larger volumes than that associated with job shops. Ex: Classrooms, Bakery, Cinema

Just in time production

supplying a unit of demand when and where it is needed avoiding unnecessary inventory

Flow Unit

the basic unit that moves through a process Ex: Births per day - calls at a call center - patients in a hospital

Operations Management

the management of processes used to design, supply, produce, and deliver valuable goods and services to customers

Demand Rate

the number of flow units that customers want per unit of time

Job Shop Production

the producer of unique products. Ex: Machine shop, Hospital, Bank

Cycle time

the time between completing two consecutive flow units

Lead time

the time between when an order is placed and when it is received

Processing Time

the time it takes a resources to complete one unit flow