OPS MIDTERM
What happens to the target manpower if the labor content is doubled? A. The target manpower increases by 50%. b. The target manpower doubles. C. The target manpower decreases by 50%. 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 these is not a waste of time *at a resource*?
Building up inventory before the resource
Customer Utility
*a measure of the customer preference of a product or service.* 1. consumption utility 2. price 3. inconvenience
Muri
An unreasonable amount of work, overburdening a machine or operation
Steps to Process Mapping
1. Define the process boundaries 2. List the steps 3. Sequence the steps 4. Complete the map using appropriate symbols to describe the activities, flow, waiting, etc.
Cost of quality
1. Prevention costs - reducing the potential for defects ◦Training ◦Investments in better equipment ◦Quality improvement projects 2. Appraisal costs - evaluating products to assess quality levels ◦Testing ◦Labs and lab equipment ◦Inspectors 3. Internal failure costs- producing defective parts or service but found prior to shipment to customers ◦Scrap ◦Rework ◦Downtime 4. External costs - defects found after delivery ◦Returns ◦Warranties ◦Loss of goodwill and reputation ◦Complaint settlements ◦Some of these costs hard to quantify but can be extremely expensive
Steps to identify the bottleneck
1.Create a process flow diagram. 2.Define your flow unit. 3.Calculate the capacity for each resource (activity.) 4.The step with the lowest capacity is the bottleneck.*
6 Rules for an Effective Kanban System
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.
Changeover time
A setup time to change production from one type of product to another
A process has low fixed cost 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
Henry Ford proclaimed "You can have any color you want, as long as it is black". Which of the following best reflects his motivation for this position? He believed that customers didn't actually like other colors, so why go through the hassle of making different color cars? A. With more than one color, the process would have switch over times and that could reduce the overall utilization of the process. B. He wanted to establish "black" cars as part of his company's brand image at that time. C. Assembling non-black cars takes longer than black cars. D. He understood that increasing inventory in a process can lead to a longer flow time through the process.
A. With more than one color, the process would have switch over times and that could reduce the overall utilization of the process.
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
What is value?
"Customer value is the customers' perception of what they want to have happen (i.e. the consequences) in a specific use situation, with the help of a product or service offering, in order to accomplish a desired purpose or goal" "Worth, utility, benefit, or reward received in exchange for contributions to an enterprise"
A process is replicated in another country where wages are 50% lower. Staffing and processing times are identical. What would be the effect on the costs of direct labor? A. Costs of direct labor would be 50% lower B. Costs of direct labor would be the same C. Costs of direct labor would be 50% higher D. Cannot determine from the given information
A. Costs of direct labor would be 50% lower
job shop advantages and disadvantages:
Advantages:- Flexibility- General purpose equip. Disadvantages:- Trained personnel- Low equip. utilization
In general, which has the greatest potential for decreasing the flow time?
Cutting the non-value added time
Higher variation = lower sigma
If variation in that metric is a source of quality problems, want low sigma
The U of I hospitals is an example of what process strategy?
Job shop
The flow rate into a process must equal the flow rate out of a process.
true
Mura
unevenness in flow
utilization with setups
utilization = flow rate / output rate when producing
The 4 P's of Toyota
◦Philosophy (based on a long term view) ◦Processes ◦People ◦Problem solving
The best strategic choice of which production process to use depends on:
◦variety of products to produce ◦the quantity required ◦the stage of the product life cycle.
Demand and capacity
*Demand Rate* - The number of flow units that customers want per unit of time. *Capacity-constrained* - The case in which demand exceeds supply and the flow rate is equal to process capacity. *Demand-constrained* - The case in which process capacity exceeds demand and thus the flow rate is equal to the demand rate.
Which of these has the lowest flexibility? A.Job shop B.Batch C.Repetitive/modular D.Continuous
Continuous
Below are a number of slogans used for advertisement. Which dimensions of customer utility do the slogans emphasize? A.We build lenses uniquely to the needs of your eyes Fit Timing Price Location Performance
Fit
the selection of how to make a product should not impact
Functionality
Benefits from improving a process
Increased capacity Lowered utilization Decreased inventory levels
Non-bottleneck
any resource whose capacity is greater than the demand placed on it
An inspector checking parts before shipments leave the factory is an example of:
appraisal cost
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*. Typically used in lean. Differs from process mapping in 4 ways: 1) It gathers and displays a far broader range of information than a typical process map. 2) It tends to be at a higher level (5-10 boxes) than many process maps. 3) It tends to be used at a broader level, i.e. from receiving of raw material to delivery of finished goods. 4) It tends to be used to identify where to focus future projects, subprojects, and/or kaizen events. A value stream map takes into account not only the activity of the product, but the management and information systems that support the basic process. This is especially helpful when working to reduce cycle time, because you gain insight into the decision making flow in addition to the process flow.
System Inhibitors (Inefficiencies)
*waste* -the consumption of inputs and resources that do not add value to the customer *variability* -predictable or unpredictable changes in the demand or the supply process *inflexibility* -the inability to adjust to either changes in supply process or changes in customer demand
It takes a lawyer 120 minutes to serve one customer. Demand is 2 customers per 8 hour day. The lawyer has a wage rate of $200 per hour from a law firm. What is the cost of direct labor for the lawyer expressed in $ per customer? Round to two decimals.
+/-1% $800.00 per customer Explanation: The Direct Labor cost is Total dollar wages/flow rate. We will calculate on a daily basis. The daily wage rate = 8*$200 per hour = $1600 per day. The capacity per minute = 1/120 and thus the daily capacity = 8*60*1/120 = 4.00. The daily flow rate is the lesser of the daily capacity, 4.00, and the daily demand rate, 2. So the flow rate is 2.00 per day. Thus the direct labor cost = $1600/2.00 = $800.00 per customer.
Variability
-Variability corresponds to changes in either demand or supply over time Consider the variability associated with customer demand first. We can distinguish between the following forms of demand variability: -Customer arrivals -Customer requests -Customer Behavior
The batch size is tripled on a resource that has a setup time. What is the likely impact on the resource's capacity? A. Decrease by 1/3 B. Decrease by less than 1/3 C. Increase by less than 300% D. Increase by 300%
. Increase by less than 300%
TPS goals
1. Provide world class quality and service to the customer. 2. Develop each employee's potential, based on mutual respect, trust and cooperation. 3. Reduce cost through the elimination of waste and maximize profit 4. Develop flexible production standards based on market demand.
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
Balancing a Process with a Fixed Sequence of Activities
1.Compute the takt time for the process. 2.Starting with the first activity, add activities to a resource (person or workstation) just so long as the resulting processing time stays under the takt time. 3.Go to the next resource and do the same until all of the activities have been assigned to a resource.
Balancing a Process without Fixed Sequence of Activities
1.Determine the takt time and number of resources needed 2.Assign activities to resources to as evenly as possible distribute the processing time. (We will look at the Longest Task Time Rule.) Benefits: improved labor utilization increased capacity faster flow time
Steps to Value Stream Mapping
1.Identify the desired outcomes 2.Define the process boundaries 3.Document the existing process, i.e., the "current state" map ◦List the steps ◦Sequence the steps ◦Complete the map using appropriate symbols to describe the actions, flow, and waiting ◦Add data (WIP, cycle times, throughput, waiting time, etc.) 4.Identify opportunities for improvement ◦Envision the "ideal state" to eliminate barriers to brainstorming 5.Recommend appropriate changes, i.e., the "future state" map
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 1100 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? (Round to nearest integer)
110 skiers Explanation: Use Little's Law: Inventory/Flow Time = Flow Rate = 1100 skiers divided by 10 days = 110 new skiers per day.
Patients take a drug for severe acne for 2 months and there are 130,000 new patients each month. How many patients are taking this drug on average at any given time? (Round to nearest integer)
260,000 patients Explanation: 2 months (flow time) × 130,000 new patients per month = 260,000 patients
One of chair lifts at a ski resort unloads 1500 skiers per hour at the top of the slope. The ride from the bottom to the top takes 13 minutes. How many skiers are riding on the lift at any one time? (Round to nearest integer)
325 skiers Use Little's Law: Inventory = Flow Rate x Flow Time = 1500 skiers divided by 60 minutes per hour (flow rate) × 13 minutes (flow time) = 325 skiers
Consider a four-step serial process with processing times given in the list below. There is one machine at each step of the process, and this is a machine-paced process. Step 1: 31 minutes per unit Step 2: 15 minutes per unit Step 3: 31 minutes per unit Step 4: 25 minutes per unit Assuming that the process starts out empty, how long will it take (in hours) to complete a batch of 105 units? (Do not round intermediate calculations. Round your answer to nearest hour)
56 +/-1 hours Explanation: Step 1 is the bottleneck step of the process, so the machine-paced process will be set at a speed of 0.52 hour per unit at each step. The first unit will take 4 ×0.52 = 2.07 hours to complete. The remaining 104.00 units will have a cycle time of 0.52 hour. The total time required to complete a batch of 105 units is 2.07 + 104.00 × 0.52 = 56 hours.
Last year there were 3800000 visitors to a national park and, on average, each visitor spent 15 hours in the park. Instruction: Do not round your intermediate and round final answer to nearest integer. On average, how many visitors were in the park at any particular time last year? (Round to nearest integer)
6,507 visitors Explanation: Flow rate = 3800000 visitors divided by 365 days = 10410.96 visitors per day Flow time = 15 hours/ 24 hours per day = 0.63 days Inventory = 10410.96 (flow rate) × 0.63 (flow time) = 6507 visitors per day
A consulting company must hire 18 new associates per year to replace those who have left the company for other positions or have retired. The company employs 113 associates overall. Instruction: Round your answer to 1 decimal place. How long is the average associate employed at the consulting company?
6.3 years Explanation: 113 associates (Inventory) = 18 new employees per year (Flow rate) × tenure at company (Flow time). Flow time = 6.3
Which statement is not true about smaller batch sizes? A.Defects are discovered faster. B.Companies are more responsive to changes in demand. C.The utilization of equipment is higher. D.Inventory costs are lower.
??
Consumption utility
A measurement of how much you like a service, ignoring the effects of price and its inconvenience. 1. performance (how much the avg customer desires a product or service) 2. fit (how well the product or service matches with the desires of a given consumer)
Make-to-order
A production system in which a item's production begins after the customer for the item is known. In a make-to-order system, units are generally delivered to a customer immediately after production is completed, thereby not spending time in inventory.
Make-to-stock
A production system in which an item's production begins before the customer for the item is known. In a make-to-stock system, units are generally placed in inventory to await customer demand.
What is a process?
A set of activities that take a collection of inputs, perform some work or activities with those inputs, and then yield a set of outputs Process thinking views activities in an organization as a collection of processes
A company is increasing the percentage value add time in the operation. Their value add time and their flow rate remain unchanged. What will happen to their inventory turns (recall from chapter 2 that inventory turns are computed as flow rate divided by inventory)? A. Inventory turns will go up B. Inventory turns will stay constant C. Inventory turns will go down D. Cannot determine from the given information
A. Inventory turns will go up Explanation: If the percentage value add time is going up and their value add time remains constant, their flow time has to go down. And that means, holding flow rate constant, that the inventory turns have to go up (the inventory level goes down).
SmartPhones are made on a 40-step assembly process. All 40 steps are connected through a conveyor belt and all of the 40 steps must 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
The primary purpose of the "Single minute exchange of die" philosophy is to: A. Reduce the setup time for a resource B. Increase the flow rate of a process C. Decrease the utilization of a process D. Eliminate resources that have setup times
A. Reduce the setup time for a resource
Which of the following statements about takt time and cycle time is true? A. Takt time only depends on demand, not capacity. Cycle time does depend on capacity. B. Takt time only depends on capacity, not demand. Cycle time does depend on demand. C. Takt time and cycle time only depend on capacity. D. Takt time and cycle time only depend on demand.
A. Takt time only depends on demand, not capacity. Cycle time does depend on capacity.
A worker in charge of assembling a bicycle finds a faster way to mount the pedals. He turns to his supervisor. The supervisor explains that the process had been optimized by the engineering department and so the worker should make sure to stick with the existing procedures. The work of which management scholar does this fit best? A. Taylor B. Ohno C. Womack D. Fujimoto
A. Taylor Explanation: Ohno and other scholars of lean would not be pleased by how the intelligence of the worker is wasted by rejecting improvement ideas.
A non-bottleneck worker currently has an idle time of 20 seconds per unit. Because of the large demand, the company improves the process by adding more capacity to the bottleneck. How does this impact the idle time of the worker? A. The idle time would decrease B. The idle time would stay the same C. The idle time would increase D. Cannot determine from the given information
A. The idle time would decrease
A product requires 4 parts that are made on the same lathe. Call the parts, A, B, C and D. The product requires 1 unit of A, 2 of B, 4 of C and 8 of D. Which of the following production cycle is most appropriate? A:100, B:100, C:100, D:100 A:101, B:102, C:104, D:108 A:100, B:150, C:200, D:400 A:100, B:200, C:400, D:800
A:100, B:200, C:400, D:800 Explanation: The ratios of the quantities among the parts should match the ratios of the parts needed for the product. For example, twice as many B parts should be made as A parts.
Repetitive Process (Assembly Line) advantages and disadvantages
Advantages: •Individual unit of output do not have to be monitored and controlled. •Less skilled workers can be utilized. Disadvantages: •Capital investment•Repetitive and often monotonous work
batch processing advantages and disadvantages
Advantages:- More efficient and lower cost than Job Shop Disadvantages:- Process flow is not as smooth as Repetitive Processing
Continuous processing advantages and disadvantages
Advantages:-lower variable cost-lower labor needs Disadvantages:-low flexibility-high investment
Assemble To Order - ATO
Assemble to order (ATO) is a business production strategy where products ordered by customers are produced quickly and are customizable to a certain extent. The assemble-to-order (ATO) strategy requires that the basic parts for the product are already manufactured but not yet assembled. Once an order is received, the parts are assembled quickly and sent to the customer. The assemble-to-order (ATO) strategy is a hybrid between a make-to-stock strategy - where products are fully produced in advance - and the make-to-order strategy - where products are manufactured once the order has been received. The ATO strategy attempts to combine the benefits of both strategies - getting products into customers' hands quickly while allowing for the product to be customizable.
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 operational decisions correspond to the price component of the consumer utility function? Instructions: You may select more than one answer. A. When will the demand be fulfilled? B. How efficiently will the products or the services be delivered? C. What is the product or service to be delivered? D. Where will the demand be fulfilled?
B. How efficiently will the products or the services be delivered? Explanation: The operational efficiency will affect the price that the firm is able to charge for its product and service to maximize its profitability.
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?
Which of the following statements about Kanban are accurate? I. Deploying the Kanban system leads to pulling work through the system instead of pushing work. II. Deploying the Kanban system leads to pushing work through the system instead of pulling work. III. The Kanban system controls the work in process inventory. IV. Kanban will always reduce the amount of inventory in the process V. Kanban requires cross-training all workers. A. I and II B. I and III C. I and IV
B. I and III
Each day QBlitz, a Seattle based startup, offers a single product through its website. The product is available for order only on one day and no other product is available during that day. To add to this odd selling strategy, QBlitz does not post prices for its products. Instead, for each product there is a reserve price. On the day a product is available, customers can submit bids. All of the bids that exceed the reserve price are told at the end of the day that they "won" the product and they pay the price they bid. QBlitz then adds up all of the winning bids and submits an order to a supplier for the needed quantity, which is shipped to customers when the product arrives. The QBlitz system is best described as: A. make-to-stock B. make-to-order C. assemble to order D. mass customization
B. Made to Order
An orthopedic surgeon has read an article about the Toyota Production System and now wants to organize her surgery operation based on lean principles. To eliminate all idle time in the operating room, she decides to call in patients six hours before the scheduled surgery time. Is this a lean process? A. Yes B. No C. Cannot be determined
B. No Explanation: The surgeon emphasizes the reduction of the waste of the resources (doctor and operating room). However, she does this at the expense of the patient who now wastes six hours of the flow time waiting.
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 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
You and three of your friends run a car wash for a fundraiser. Between interior and exterior cleaning, you spend about 40 minutes per vehicle. You are so successful that the next day, you invite four more friends to help. How does this impact the labor content? A. The labor content goes up B. The labor content stays the same C. The labor content goes down D. Cannot determine from the given information
B. The labor content stays the same
What is the relationship between the number of Kanban cards in a process and the inventory level? A. There is no relationship between the two B. There never can be more inventory in the process than what was authorized via Kanban cards C. The inventory of the process grows with the square root of the number of Kanban cards D. The inventory of the process can be reduced by adding more Kanban cards
B. There never can be more inventory in the process than what was authorized via Kanban cards
Over the course of a day, fans pour into a NASCAR venue at the rate of 8,000 people per hour. The rate at which fans leave the venue A. must be less than 8,000 people per hour. B. must be exactly 8,000 people per hour. C. must be more than 8,000 people per hour. D. could be more or less than 8,000 people per hour.
B. must be exactly 8,000 people per hour. Explanation: The flow rate into a process must equal the flow rate out of a process.
A chemical process involves adding various agents to a vat and then waiting for the agents to react to make a final compound. The vat holds up to 1000 gallons. Chemical agents are added to the vat at a rate of 4.5 gallons per minute. Once the agents have been added to the vat, the reaction takes 85 minutes no matter the actual number of gallons in the batch. After the batch is complete, the vat must be cleaned. Cleaning always takes 15 minutes. What is the setup time of this process? A. 15 minutes B. 85 minutes C. 100 minutes D. 222.22 minutes
C. 100 minutes Explanation: It might seem that pouring the chemical agents into the vat is the "setup process," but that process actually depends on the amount of agent added to the vat. The reaction time of 85 minutes is independent of the volume in the batch, so it is the setup time. In addition, the 15 minutes of cleaning is also required and is independent of the amount added to the vat. Hence, the total setup time for each production cycle is 85 + 15 = 100.
A manager is concerned that there isn't enough time spent on production and too much time spent on setups. The manager decides to double all production batch sizes. This change has no impact on demand. What impact will this likely have on the average inventory in the process? A. Average inventory will decrease because the capacity of the resources will increase. B. Average inventory will remain the same because demand has not changed. C. Average inventory will increase because larger batches require more time to be completed. D. Cannot determine from the given information.
C. Average inventory will increase because larger batches require more time to be completed
Which of the following is most likely to be a concern if batches are very large? A. The flow rate will be too high. b. Utilization will be too high. C. Inventory will be too high. D. Too much time will be spent on product change overs.
C. Inventory will be too high.
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
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 Explanation: 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 that 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
The information turnaround time is driven primarily by: A. The number of workers B. The IT system C. The inventory in the process D. The amount of waste in the process
C. The inventory in the process
How does the takt time change as the demand rate increases? A. The takt time increases B. The takt time stays the same C. The takt time decreases D. Cannot determine from the given information
C. The takt time decreases
Which of the following operational decisions correspond to the consumption utility component of the consumer utility function? Instructions: You may select more than one answer. A. When will the demand be fulfilled? B. How efficiently will the products or the services be delivered? C. What is the product or service to be delivered? D. Where will the demand be fulfilled?
C. What is the product or service to be delivered? Explanation: The product or service characteristics will affect how much each consumer will like the overall product or service, which is measured by consumption utility.
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
Cellular manufacturing
Cellular manufacturing is a manufacturing process that produces families of parts within a single line or cell of machines operated by machinists who work only within the line or cell. A *cell* is a small scale, clearly-defined production unit within a larger factory. This unit has complete responsibility for producing a family of like parts or a product. All necessary machines and manpower are contained within this cell, thus giving it a degree of operational autonomy. Each worker is expected to have mastered a full range of operating skills required by his or her cell. Therefore, systematic job rotation and training are necessary conditions for effective cell development. Complete worker training is needed to ensure that flexible worker assignments can be fulfilled. *advantages* -links advantages of job shop with the product layout of the repetitive process line -quick and efficient flow and high productivity associated with assembly lines -flexibility of the job shop, allowing both similar and diverse products to be added to the line without slowing the process. *differences* More efficient than a process layout More flexible than a product layout.
Cellular Layout (Work Cells)
Consists of different machines brought together to make a product Example: Assembly line set up to produce 3000 identical parts in a job shop
Crossdocking
Crossdocking seeks to eliminate the expensive functions of inventory holding and order picking from modern distribution centers by taking advantage of the information system infrastructure in modern supply chains. Hence, at a crossdock, incoming material is already assigned to a destination, and therefore, the only required functions are consolidation and shipping. In this way, material is staged at the facility for less than 24 hours. Just-In-Time for distribution
Which of the following is not a dimension or sub-dimension in a customer's utility function? Convenience Price Location Customer Satisfaction Performance
Customer Satisfaction
Which of the following inefficiencies in a bank's operations results from variability? A. Customers directed to the wrong associate for a particular service B. Associates read the terms and conditions of each -account to the customer C. Customers incorrectly list information on forms D. Employee work schedules set a week in advance
Customers incorrectly list information on forms
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 inefficiencies in a grocery store's operations results 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 Explanation: Mismatch costs for green shirts include the mark-down (discount) that is now necessary to get rid of the green shirts. Mismatch costs for red shirts include the lost sales that were not made because the store ran out of red shirts.
Over the course of a month, which of the following is most likely to describe an appropriate flow unit for a process analysis of a hospital? The number of physicians The number of beds The square footage of the building The number of patients
D. Number of patients Explanation: Physicians, beds, and square footage are unlikely to change much over the course of a month and do not "flow" through the process of a hospital.
If the demand rate increases, the takt time: Increases Decreases
Decreases
Warehouse Layout
Design balances space (cube) utilization & handling cost Similar to process layout ◦Items moved between dock & various storage areas Optimum layout depends on ◦Variety of items stored ◦No. of items picked *Principles of warehouse layout design*: Use one-story facilities Move goods in a straight line Use efficient materials-handling equipment Use an effective storage plan Minimize aisle space
Fixed position layout
Design is for stationary project Workers & equipment come to site Complicating factors ◦Limited space at site ◦Changing material needs Examples ◦Ship building ◦Highway construction
Retail/ service layout
Design maximizes product exposure to customers Decision variables ◦Store flow pattern ◦Allocation of (shelf) space to products Types ◦Grid design ◦Free-flow design
Fredrick Taylor
Designed the concept of scientific management - a management framework that emphasizes efficiency and optimization. ◦Efficiency comes from the elimination of wasted worker time and motion. ◦Worker productivity was key.
Theory of Constraints (TOC)
Every process has a constraint Every process has variance that consumes capacity Every process must be managed as a system Process measures are crucial to the process's success Every process must continually improve Each work area can have its own unique capacity. Capacity analysis determines the throughput capacity (i.e. flow rate, output rate) of workstations in a system. A bottleneck is a limiting factor or constraint. A bottleneck has the lowest effective capacity in a system.
Pareto dominated
Ex: A is pareto dominated by B if B is better in every category
A campus deli serves 275 customers over its busy lunch period from 11:30 am to 1:30 pm. A quick count of the number of customers waiting in line and being served by the sandwich makers shows that an average of 11 customers are in process at any point in time. What is the average amount of time that a customer spends in process? Instruction: Round your intermediate and final answer to 1 decimal place. Average amount of time (Round to one decimal) +/-1%4.8 minutes
Explanation: To solve this problem, use Little's Law. Inventory = Flow rate × Flow time. 11 people in line (average inventory) = 2.3 flow rate × flow time Flow time = 4.8 minutes The flow rate is 275 customers divided by 120 minutes = 2.3
Product-Oriented Layout
Facility organized around product Design minimizes line imbalance ◦Delay between work stations Types: Fabrication line; assembly line Examples ◦Auto assembly line ◦Brewery ◦Paper mfg.
A single inspection system with experts testing the output of the process will help reduce the information turnaround time. True False
False
Implementing product changes (e.g. adding features) may be a good strategy to manage demand (i.e. to increase demand) when demand exceeds capacity.
False
Increasing the batch size on a resource with setups always increases the capacity of the process. True False
False
Specialization increases the costs of labor as specialists will command a higher wage rate. True False
False
Taiichi Ohno built the Toyota Production System with the metaphor of a tiger in mind. Rapid and decisive movements were in his view the best way to match supply with demand. True False
False
The efficient frontier is given by the cheapest company in the industry. True False
False
There can be no more than two firms on the efficient frontier. True False
False
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 False
False Little's Law applies even if there are fluctuations in inventory, flow rates, and flow times.
Which of the following is not one of the three system inhibitors? Waste Variability Fatigue Inflexibility
Fatigue
The main purpose of a warehouse layout is:
Find the optimal trade-off between handling costs and space costs.
Batch processing
Firms utilizing batch processes provide similar items on a repeat basis, usually in larger volumes than that associated with job shops. The higher volume and repetition of requirements can make more efficient use of capacity and result in significantly lower costs. Compared to job shops, batch processing has a much smoother flow of work-in-process throughout the shop. While the flow is smoother, the work-in-process still moves around to the various machine groupings throughout the shop in a somewhat jumbled fashion. This is described as a disconnected line flow or intermittent flow.
Why is VSM a Useful Tool?
Helps visualize interactions and flows Shows linkages between information and product flows Provides a common language for talking about a process Helps to identify: ◦the constraint(s) - any resource whose capacity is less than customer demand; ◦wastes as well as their sources
There are four hotels competing with otherwise very similar products on the dimensions of price ($ per night) and amenities (measured by the number of stars (*) awarded by customer reviews). Which of these hotels are on the efficient frontier? Hotel A: price = $200 per night; rating: *** Hotel B: price = $150 per night; rating: **** Hotel C: price = $300 per night; rating ***** Hotel D: price = $80 per night; rating **
Hotels B, C, and D are on the efficient frontier
Which of the following questions is not related to Operations Management? When will the demand be fulfilled? How much do we pay the CEO? Who are the customers? How efficiently are the products or services delivered? Where will the demand be fulfilled? What is the product or service?
How much do we pay the CEO?
Functional (Process-Oriented) Layout
Ideal for customized, low-volume products that may require different processing requirements and sequences of operations Process goods or provide services that involve a variety of processing requirements. This type of layout gives the firm the flexibility needed to handle a variety of routes and process requirements. Design places departments with large flows of material or people together Dept. areas have similar processes ◦e.g., All x-ray machines in same area Examples ◦Hospitals ◦Machine shops
Job shop
In a job shop, the outputs differ significantly in form, structure, materials and/or processing required. Each unique job travels from one functional area to another according to its own unique routing, requiring different operations, using different inputs, and requiring varying amounts of time. This causes the flow of the product through the shop to be jumbled, following no repetitive pattern.Job shops are usually organized around the function of the individual machines. In other words, machinery is grouped according to the purpose it serves or the capabilities it possesses. This is labeled a process layout.
Continuous processing
In continuous manufacturing involves the product flows continuously rather than being divided into discrete units. A basic material is passed through successive operations (i.e., refining or processing) and eventually emerges as one or more products. This process is used to produce highly standardized outputs in extremely large volumes. Considerable capital investment is required, so demand for continuous process products must be extremely high. Starting and stopping the process can be prohibitively expensive. As a result, the processes usually run 24 hours a day with minimum downtime (hence, continuous flow). This also allows the firm to spread their enormous fixed cost over as large a base as possible.
Taiichi Ohno
In contrast to Taylor, Ohno focused on waste of time of a flow unit. For Ohno, a worker or other resource being idle was not necessarily a waste as long as the flow unit was moving smoothly through the system. His "Seven Wastes" has become a major tool for the way organizations identified waste in their processes.
Reducing set up time
Internal setups - Activities that can only be done during the actual setup, for example, when the machine is not producing External setups - Activities that be done while production continues to occur. Setup time can be reduced if all external tasks are done outside of the setup.
Little's Law
Inventory (I) = Flow Rate (R) x Flow Time (T) ex flow rate = a facility produces 200 units per week reducing inventory = reducing flow time
Three important metrics for a process
Inventory - The number of flow units within our process Flow Time - The time a flow unit spends in the process, from start to finish Flow Rate (Throughput) - The rate at which the flow units travel through the process.
Heijunka (Demand leveling) (TPS)
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. This results in a stable workload for all workers involved in the process.
Kanban
Japanese word meaning "signboard or billboard" - a scheduling system to ensure that only what is needed is produced Production and inventory control system in which production instructions and parts delivery instructions are triggered by consumption downstream.
TPS pillar 2: Jidoka
Jidoka - Japanese word meaning "automation" - Toyota defines it as "automation with a human touch" and uses it to describe giving the power to the workers to stop the line when a problem occurs. 1. Jidoka - Upon detection of a problem, shutting down the machine to focus on a human intervention, which in turn triggers process involvement. 2. Poka-yoke - Fool proofing an operation to avoid the recurrence of defects. 3. 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.
Which of these requires the highest skilled workers? A.Job shop B.Batch processing C.Repetitive/modular D.Continuous
Job shop
D.Our dealership network provides service, wherever in the country you may be Fit Timing Price Location
Location
Identifying Customer Value - Passive
Low cost ex: customer complaints, website stats, online feedback, suggestion box
Make-to-Order Advantages
Make-to-order is opposite of make-to-stock Make-to-order system will not have leftover inventory requiring to be salvaged Make-to-order systems help to reduce stockouts Make-to-order system customers wait to receive their units Production is reasonably quick ◦Production could begin after demand is observed ◦Yields maximum profit
Increasing Capacity
Managerial insight: to increase capacity, address the bottleneck Make sure the bottleneck process is never idle. Decrease cycle time on the machine. Add another duplicate machine. Outsource that step to another vendor. Redesign the process so it requires less of the bottleneck step. Inspect part quality before bottleneck to make sure bottleneck only works on good parts. Reduce waste and reworks from the bottleneck step.
The main purpose of a retail layout is:
Maximize the profitability per square foot of space.
Inventory calculations
Maximum Inventory = Batch Size * (1 - Flow rate * Processing time) Average Inventory = Maximum Inventory / 2
conformance
Measure of whether or not a delivered product or service meets its design specifications
Make-to-Order Disadvantages
Need good queuing systems Wait times Wait times growing exponentially as utilization increases Leftover inventory is expensive Times is Achilles heel of make-to-order ◦Consumers prefer "now" versus "later" ◦How long will consumers wait before going to another supplie
Is having a bottleneck a bad thing?
Not necessarily, all plants have to have a bottleneck. A bottleneck is only bad if it restricts capacity to less than customer demand.
Calculating the Number of Kanban Cards
Number of kanban cards = (demand during replenishment time + safety stock) / container size demand during replenishment time = replenishment time x demand rate
Which of the following does not belong to the seven sources of waste? Rework Over time Transportation Inventory
Over Time
Eight Wastes (Muda)
Over production inventory transportation motion waiting defects over-processing human potential
E.The fastest internet in the nation Fit Timing Price Location Performance
Performance
C.We match any price in town Fit Timing Price Location Performance
Price
Kanban Benefits
Problem: Bottlenecks / Multitasking / Task-switching -> Helps process users to do one-piece-flow, which cuts down on WIP Problem: People stressed because too much is demanded on them -> Makes work visual, which naturally creates more accountability, and allows employees to better level out the work Problem: Communication breakdowns -> Manages the communication task itself, so there's much lower risk of forgetting to notify the people who need updates
Mass customization
Production of personalized or custom-tailored goods or services to meet consumers' diverse and changing needs at near mass production prices. Enabled by technologies such as computerization, internet, product modularization, and lean production, it portends the ultimate stage in market segmentation where every customer can have exactly what he or she wants. ex (dell computers, m&ms)
The main objective of a functional (process) layout is:
Provide the flexibility to produce a variety of products or services.
Six Sigma: An Approach to QM
Six Sigma is a program to improve the quality of outputs by identifying and removing defects and variation in processes. The idea of six sigma is that if we consider important metrics and look at their distribution, six standard deviations on each side of the mean should be within the product's design specification and considered not defective.
Can you find a bottleneck by just observing?
Sometimes. Go out on the shop floor and find the operation with the most inventory sitting in front of it. In the service sector, a bottleneck can often be identified by the queue in front of it. The bottleneck may not always be accurately identified in this fashion though.
Standard work
Standard work: work instructions that describe all essential steps of an activity as clearly specified by ◦Content ◦Sequence ◦Timing ◦Outcome improvements must be standardized to be maintained. This can greatly reduce variability and waste.
Just-in-time Production (JIT)
Supplying a unit of demand when and where it is needed, avoiding unnecessary inventory.
Flow unit
The basic unit that moves through a process (patients at clinic, meals at a restaurant)
What is effective capacity?
The capacity a firm can expect to achieve given its product mix, methods of scheduling, maintenance and standards of quality.
Batch size
The goal is to fine a batch size that minimizes inventory without constraining the flow through a process. Target batch size = (Target Capacity * Total Setup Time) / 1- (Target Capacity * Processing Time) Where Target Capacity is the minimum of the demand rate and the maximum flow rate of the system.
Process capacity
The maximum flow rate a process can provide per unit of time. The process capacity determines the maximum flow rate a process can provide per unit of time. It thus determines the maximum supply of the process. The process capacity is minimum capacity of all of the steps.
Value added percentage
The percentage of flow time used for value-added work. =value added time of a flow unit/ flow time
Overall equipment effectiveness (OEE)
The percentage of the total available time that is used in a way that adds value to the customer =value added time/ total available time
Kaizen
The process of making small changes to the process with the goal of eliminating waste A gradual approach to ever higher standards in quality enhancement and waste reduction, through small but continual improvements involving everyone from the chief executive to the lowest level workers. (We will talk about the tools used here in a later lecture.)
Product process matrix
The product-process matrix is a tool for analyzing the relationship between the product life cycle and the technological life cycle. It is used facilitate the understanding of the strategic options available to a company. The matrix consists of two dimensions, product structure/product life cycle and process structure/process life cycle. The production process used to manufacture a product moves through a series of stages, much like the stages of products and markets, which begins with a highly flexible, high-cost process and progresses toward increasing standardization, mechanization, and automation, culminating in an inflexible but cost-effective process.
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. ◦An operating system in which the production of a unit is only initiated when a demand occurs
Efficiency frontier
The set of firms that are not pareto dominated. Aka a firm is on the efficiency frontier if there is nothing to its upper right/ they are better in every category.
Cycle time
The time between completing two consecutive flow units expressed in units of time per unit =1/ Flow rate
Lead time
The time between when an order is placed and when it is received.
Processing time
The time it takes a resource to complete one unit flow.
Price as a driver of customer utility
The total cost of owning a product or receiving the service. Included expenses such as shipping and financing etc.
Why are bottlenecks a concern?
They limit the throughput. They cause piles of parts to build up between the processes. They can cause other operators to wait and be unproductive.
Which dimensions of customer utility do the slogans emphasize? B. Get your burger in 1 minute or less - otherwise, you eat free Fit Timing Price Location
Timing
The objective of lean
To increase value added work and *reduce waste* to increase throughput, lower cost and improve quality.
Which car company is most often associated with the term lean operations? General Motors Ford Toyota Honda
Toyota Explanation: Toyota was the birthplace of lean and the Toyota Production System is synonymous with lean operations.
Activities on a VSM are color coded to identify of value-added, needed (enabling), and waste activities.
True
If the batch size is increased, inventory increases, which implies that flow units are likely to spend more time in the process. True False
True
If the flow rate of a process increases, then the utilization of a resource with a setup time must also increase. True False
True
If the takt time is shorter than the cycle time, the process needs to run faster. True False
True
The capacity of two parallel steps with different outputs is the minimum of the two.
True
To increase process capacity, better to focus on set-up time reduction rather than increasing the batch size
True
When activities in parallel have the same output, add their capacities for that step
True
Larger batches result in higher capacity and utilization.
True. Capacity and utilization increase as the batch size gets larger.
Decreasing variability of a process can increase its effective capacity
True. Variability can come from inputs, resources, or activity times
What is the roof in the "house-shaped" representation of the Toyota Production System? Just-in-Time Waste reduction Built in quality Process improvement
Waste Reduction Explanation: The roof is the reduction of waste by better matching supply with demand. This includes the waste of time of the flow units and the waste of resources.
Two forms of waste
Waste of time at a resource - The waste of time from the perspective of a resource, which reduces the capacity of the resource Waste of time of a flow unit - Waste from the perspective of a flow unit making the flow time of that flow unit longer than what is needed from the customer's perspective
Assembly lines (repetitive processes)
When product demand is high enough, the appropriate process is the assembly line (also referred to as mass production.) Laborers generally perform the same operations for each production run in a standard and hopefully uninterrupted flow. These processes are generally heavily automated, utilizing special-purpose equipmentand often some form of conveyor system connecting the operations in a single route through the process. Less skilled workers can be utilized. The product created by the assembly-line process is discrete; that is, it can be visually counted (as opposed to continuous processes which produce a product that is not naturally divisible). Firms in the lower-right quadrant (line and continuous) are classified as having a product layout.
Two retailers compete on costs and ambience of the retail store. They are identical on all other dimensions of customer utility. Retailer A is cheaper than retailer B. Retailer A also has the better ambience. Does this mean that retailer A is on the efficient frontier? Yes No
Yes
A community health system's nurse team consists of 17 nurses working in the local community. It takes a nurse 1.5 hours to complete one patient visit (including travel times and breaks). Round "Utilization" to a whole percent, and "Cycle Time" to 1 decimal. a. What is the capacity of the nurse team over the course of a 9 hour work day? b. Assuming the demand for the nurses is 60 patients per day, what is the utilization of the nurse team? c. Assuming the demand for the nurses is 60 patients per day, what is the cycle time?
a. 102 per 9 hour work day b. +/-1% 59% c. +/-0.5% 9.0 minutes per patient Explanation: a. Hourly capacity with 17 nurses is 17/1.5 hours per patient = 11.33 patients per hour. In a 9 hour day, capacity is 11.33 * 9 = 102.0 patients per day. b. Utilization = flow rate/capacity. Utilization = 60 patients per day/102.0 patients per day = .59 or 59%. c. Cycle time in minutes = 1/flow rate in minutes. Capacity per minute = 17/(1.5*60) = 0.19 patients per minute. Demand per minute = 60/(9 *60) = 0.11 patients per minute. Flow rate in minutes = min(0.19, 0.11) = 0.1111 patients per minute. Cycle time in minutes = 1/0.1111 = 9.0
It takes a barber 5 minutes to serve one customer. Round your answers to two decimal places. a. What is the capacity of the barber expressed in customers per hour? b. Assuming the demand for the barber is 12 customers per hour, what is the flow rate? c. Assuming the demand for the barber is 12 customers per hour, what is the utilization? d. Assuming the demand for the barber is 12 customers per hour, what is the cycle time?
a. 12.00 customers per hour b. 12.00 customers per hour c. 100.00 percent d. 5.00 minutes per customer Explanation: a. 60 minutes / 5 minutes = 12 customers per hour b. Flow rate is the lesser of demand and capacity = min(12 customers per hour, 12 customers per hour) = 12 customers per hour c. Utilization = flow rate /capacity = 12 customers per hour / 12 customers per hour = 100.00% d. Cycle time (in minutes) = 60* 1 / flow rate in customers per hour, 60*(1/12) = 5.00 minutes per customer
The local driver's license center processes applications for driver's license renewals through the following three steps. First, the customer registers with one of 3 receptionist(s), who updates the customer's information in the database. This first step takes 4 minutes per customer. Then the customer visits one of 2 cashiers to pay the associated fees for the license renewal. This takes 8 minutes per customer because several forms must be printed from the computer and signed by the customer. Finally, the customer visits one of 4 license processing stations where the customer's picture is taken and the license is printed. This final step takes 6 minutes per customer. a. Assuming unlimited demand, what is the flow rate of the process in customers per hour? (Round to nearest integer) b. Assuming unlimited demand, what would the new flow rate be if the center added one server to the bottleneck resource? (Round to nearest integer)
a. 15 per hour b. 23 per hour Explanation: a. The bottleneck resource is the cashier with capacity 60*2/8=15.00 customers per hour. All of the other steps have higher capacities. b. The current bottleneck is the cashier. Adding one more resource to this setp would increase the capacity of this station to 22.50 customers per hour. With this new capacity, the flow rate of the process is 22.50 customers per hour.
Capacity (and max capacity, effective capacity, utilization, efficiency)
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. = 1/ processing time Maximum capacity: highest achievable level under ideal conditions, for a limited time (also known as design or rated capacity) Effective capacity: achievable level under normal conditions, for an extended time
Bottleneck
anyplace demand ≥ capacity; this limits the ability of the process to generate output -defines the maximum capacity of a system
Switchover time
can be used in same context with changeover time. It is the time needed to change over, or switch, production from one type of part to the other
Capacity with setups
capacity = batch size/ (total setup time+ processing time * batch size)
A machine makes 3 different components that are used in a gyroscope. Call these components, A, B, and C. The following repeating schedule is used to make components: make 100 units of A, make 50 units of B, and then make 200 units of C. How many components are made in the production cycle? A. 50 B. 100 C. 200 D. 350
d. 350 Explanation: The production cycle is the repeating sequence of A, B, and C.
A system producing a wider variety of outputs will have less variability
false
Variability in demand has little impact on capacity
false. Variability reduces capacity and increases wait times.
Process flow diagram
graphical way to describe the process/ steps square= process flows= arrow inventory= triangle
Utilization
how much available (max) capacity is actually used =Actual output/ design capacity
Efficiency
how much of effective capacity is actually used =capacity used/ effective capacity
Total Quality Management (TQM)
idea: everyone in the company has an impact on quality, so quality improvement depends on everyone
U-shaped line
locating resources in a U-shaped layout, which increases the flexibility of workers to perform multiple tasks
Identifying Customer Value - Proactive
more expensive customer interviews, focus groups, surveys, mystery shopping
Process
series of actions, changes, or functions to bring about a result
TPS pillar 1
takt time single unit flow
Customer value
the customers' perception of what they want to have happen in a specific use situation in order to accomplish a desired purpose or goal.
operations management
the management of processes used to design, supply, produce, and deliver valuable goods and services to customers (manufacturing, production control, quality control, purchasing) How to produce good/services? How do we measure quality? How much do we make and when do we make it?What suppliers do we use and when should we order?How do we deliver our products to our customers? gives us a systematic approach to analyzing business processes across corporate functions.
Baton passing zone
the process can absorb variations in speed and starting time
SMED (Single Minute Exchange of Dies)
the process improvement goal of reducing setup times to less than 10 minutes.
Target manpower
the ratio between the labor content and the takt time determines the minimum number of resources required to meet demand target staffing=labor content/ takt time *More demand means a shorter takt time* - shorter takt time requires more employees to handle the same amount of labor content.
Takt time
the ratio between the time available and the quantity that has to be produced to serve demand =available time/ required quantity =1/ demand rate does not depend on process capacity. Is driven by demand rate. *the goal is to have a cycle time that is as close to the Takt time as possible*
Inconvenience
the reduction in utility that results from the effort of obtaining the product or service -location -timing
Set-up time is like overhead. it is independent of the volume produced.
true