MGMT 361 Midterm 1 Practice questions

The batch size is tripled on a resource that has a setup time. What is the likely impact on the resource's capacity?

Increase by less than 300 percent; The resource's capacity will increase, but by less than a 3 fold increase.

In 2017, Chevron had revenue of $127,500 million, cost-of-goods sold of $100,300 million, and inventory of $5,585 million. What was their monthly turns?

Monthly turns = (COGS / 12 ) / Inventory = ($100,300 million / 12) / $5,585 million = 1.497.

Little's Law can be used to identify

the average time flow units spend in the process.

A bank has three tellers. It takes a teller 6 minutes to serve one customer. What is the capacity of the bank (in customers per hour) over the course of an 8-hour workday?

Capacity = 3/6 × 60 customers per hour × 8 hours = 240 customers per day.

What would be the best process improvement idea from the following proposals, assuming an unlimited demand?

Physicians are the bottleneck, so increasing their capacity by hiring more of them is the best idea.

One employee is in charge of the following activities at a refreshment stand: Activity times for each step (5 sec, 25 sec, 1.5 min, 30 sec) If the demand rate is 20 customers per hour, what are the flow rate, utilization, and cycle time?

Processing time = 5 + 25 + (1.5 × 60) + 30 = 150 seconds. Process capacity = 1/150 × 60 (seconds/minute) × 60 (minutes/hour) = 24 customers per hour. Flow rate = Min(Demand, Process capacity) = Min(20, 24) = 20 customers per hour. Utilization = Flow rate/Process capacity = 20/24 = 0.83. Cycle time = 1/Flow rate = 1/20 × 60 (minutes/hour) = 3 minutes per customer.

A key process metric is __________.

The three key process metrics are inventory, flow rate, and flow time. (not inputs, outputs, or raw materials)

A grocery chain recently reported annual sales of $80 billion, inventory of $6.2 billion, and annual cost of goods sold of $50 billion. What is the firm's annual inventory turns?

Turns = $50 billion annual COGS / $6.2 billion inventory = 8.1

B) What is the utilization of depositing if the batch size is 75 wafers?

Utilization of Depositing = flow rate × processing time of Depositing = 1.4019 units per minute × 0.18 x 100% = 25.23%.

Which of the following statements about utilization of a resource is TRUE?

Utilization of a resource is at its maximum when it is equal to one, or when flow rate is equal to capacity.

It takes a barber 5 minutes to serve one customer. a) What is the capacity of the barber expressed in customers per hour? b)Assuming the demand for the barber is 6 customers per hour, what is the flow rate? c)Assuming the demand for the barber is 6 customers per hour, what is the utilization? d)Assuming the demand for the barber is 6 customers per hour, what is the cycle time?

a) 60 minutes / 5 minutes = 12 customers per hour b) 6 customers c) 6 demand / 12 capacity = 50.00% d) Cycle time = 1/flow rate, 6/60 minutes = 10.00 minutes per customer

Capacity is constrained when __________ exceeds __________ and the flow rate is equal to __________.

demand, supply, process capacity Flow rate is the minimum of demand or process capacity. Capacity is constrained when demand exceeds supply; flow rate is limited to the process capacity.

Inventory is usually measured in the following units EXCEPT __________.

hours Inventory is usually a physical measurement associated with the flow unit.

Flow rate tells us __________.

how much stuff moves through the process per time unit

Product A's annual inventory turns is 8 and product B's annual inventory turns is 5. Which product spends more time in inventory on average?

product B bc The product with the higher turns spends the least amount of time in inventory.

Which of the following items would be considered an input in the operations of a soft drink manufacturer?

- empty bottles why?: The bottle is a part of the soft drink product.

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, 1,100 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?

1,100 beds divided by 10 days = 110 new skiers per day.

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?

100 minutes; 85 + 15 = 100.

A manufacturer of farm equipment has annual turns of 3, and its Cost of Goods Sold (COGS) is $39 billion. What is the average inventory it holds? (in billion $s)

13.0 billion Average inventory = $39 billion COGS / 3 turns = $13.0 billion

A Rhode Island company produces communion wafers for churches around the country and the world. The little company produces a lot of wafers, several hundred million per year. When in production, the process produces wafers at the rate of 79 per second. During this production process, the wafers must spend 6 minutes passing through a cooling tube. How many wafers does the cooling tube hold, on average, when in production (in other words, don't count the time they are not in production)?

28,440 wafers 79 per second × 60 seconds per minute × 6 minutes = 28,440

One of the chair lifts at a ski resort unloads 1,500 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 given time?

325 skiers 1,500 skiers divided by 60 minutes per hour (flow rate) × 13 minutes (flow time) = 325 skiers

The table below provides the time stamps for the 8 people who called a reservation desk for a ferry service between 8:00 am and 8:40 am. Based on the data in the table, what is the flow rate of callers?

8 calls divided by 40 minutes = 0.2 calls per minute.

When will the utilization of a bottleneck resource be less than 100%?

A process that is demand-constrained will have a flow rate less than the bottleneck capacity, which means there is slack capacity at the bottleneck resources, causing a less than 100% utilization.

A product requires four 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 cycles is most appropriate?

A: 100, B: 200, C: 400, D: 800; 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.

Which of the following pieces of information is needed to compute flow time at a dentist's office?

Arrival and departure times are needed to compute the flow time.

Suppose a retailer turns its inventory of soda 52 times per year. On average, it has 418 bottles of soda on its shelves. What were the average daily sales? (Assume 365 days per year.)

Average daily sales = (418 inventory × 52 turns) / 365 days = 59.6 bottles

On average, a patient spends 5 minutes waiting and 15 minutes being treated at C&A Clinic. The average number of patients waiting and being treated at the clinic is 50. What is the average flow rate of patients per minute on a typical day?

Average flow rate = 50 patients/(5 + 15) minutes = 2.5 patients per minute.

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

Patients are arriving at a clinic at a rate of two per minute. Each patient's visit consists of four steps: check in, record vital signs, receive treatment, and check out. A receptionist takes 1 minute to check a patient in. A nurse takes 2 minutes to record the patient's vital signs. A doctor spends 10 minutes with a patient. A staff member takes 3 minutes to check a patient out. What is the cycle time of the process in minutes?

Capacity = 1 / Processing time. Capacity at check in, record vital signs, receive treatment, and check out is 1, 0.5, 0.1, and 0.333 patient per minute respectively. The lowest capacity is the bottleneck and is Process capacity = 0.1 patient per minute = 0.1 × 60 (minutes/hour) = 6 patients per hour. Flow rate = Min(Demand, Process capacity) = Min(2, 0.1) = 0.1. Cycle time = 1 / Flow rate = 1 / 0.1 = 10 minutes.

One employee is in charge of the following activities at a bank's drive-through: Activity time per customer per activity: 2 sec, 2 sec, 2 min, 10 sec. What is the capacity (in customers per hour) of the employee?

Capacity = 1/[2 + 3 + (2 × 60) + 10] = 0.007 customer per second = 0.007 ×60 (seconds/minute) ×60 (minutes/hour) = 26.67 customers per hour.

There are four steps in the manufacturing process of a stuffed toy: cutting, stuffing, sealing, and packaging. There are two employees each for cutting and stuffing but one each for sealing and packaging. The processing times of cutting, stuffing, sealing, and packaging are 8, 5, 3, and 2 seconds per toy. What is the bottleneck in the process?

Capacity = Number of workers/Processing time. Capacity = 2/8, 2/5, 1/3, and 1/2 for cutting, stuffing, sealing, and packaging. The bottleneck is the lowest capacity = 2/8, which is cutting.

A process is replicated in another country where wages are 50 percent lower. Staffing and processing times are identical. What would be the effect on the costs of direct labor?

Costs of direct labor would be 50 percent lower.

Ten customers visit C&A Bakery from 8 a.m. to 10 a.m. The customers spend 10, 15, 20, 11, 8, 12, 5, 18, 29, and 32 minutes in the bakery. What is the average flow rate of customers in this bakery per hour?

Flow rate = 10 customers/2 hours = 5 customers per hour.

It takes a lawyer 120 minutes to serve one customer. Demand is 4 customers per 10-hour day. The lawyer has a wage rate of $250 per hour. a. What is the cost of direct labor for the lawyer expressed in $ per customer? b. What is the labor utilization of the lawyer?

The Direct Labor cost is 10 hours × $250 per hour) / 4 customers = $625 per customer. Flow rate = 1/5 customers per hour. Capacity is 1/4 customer per hour. Labor utilization = Flow rate / Capacity = 1/5 / 1/4 = 0.80

Customers are served in a process with two resources. The first resource has a capacity of 14 customers per hour. The capacity of the second resource is 18 customers per hour. The first resource has 6 workers and the second resource has 6 workers. Demand for this process is 10 customers per hour. Wages are $11 per hour.What is the cost of direct labor (in $s)?

The first resource is the bottleneck. The process capacity is equal to that of the bottleneck and is, therefore, 14 units per hour. The process is demand constrained (demand is less than capacity) so the throughput rate is equal to 10 units per hour (0.167 units per minute). With 12 workers, the direct labor cost per hour is 12 × $11 = $132 per hour. The cost of direct labor is $132 / 10 = 13.2000 per unit.

The table below provides the time stamps for the 8 people who called a reservation desk for a ferry service between 8:00 am and 8:42 am. Based on the data in the table, what is the flow time of callers?

To calculate the flow time of the callers, subtract the callers departure time from his or her arrival time. 128 total minutes divided by 8 callers = 16.0 minutes.

A) What is the process capacity in units per hour with a batch size of 75 wafers?

To compute process capacity, we must identify the operation with the minimum capacity (i.e., the bottleneck) using the formula: Capacity = Batch size / [Setup time + (Processing time x Batch size)].The capacity of Depositing is 75 / (40 + (0.18 × 75)) = 1.4019 units per minute.The capacity of Patterning is 75 / (26 + (0.22 × 75)) = 1.7647 units per minute.The capacity of Etching is 75 / (18 + (0.16 × 75)) = 2.5000 units per minute.Thus, Depositing is the bottleneck and the process capacity (i.e., flow rate) is 1.4019 units per minute x 60 minutes per hour = 84.11 units per hour.

A campus deli serves 250 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 makers shows that an average of 15 customers are in process at any point in time. What is the average amount of time that a customer spends in process?

To solve this problem, use Little's Law. Inventory = Flow rate × Flow time. 15 people in line (average inventory) = 2.0833 flow rate × flow time The flow rate is 250 customers divided by 120 minutes = 2.0833 customers/minute Flow time = 15 / 2.0833 = 7.2 minutes

Consider the baggage check-in process of a small airline. Check-in data indicate that from 9 a.m. to 10 a.m., 230 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 33. How long did the average passenger have to wait in line?

To solve this problem, use Little's Law. Inventory = Flow rate × Flow time. 33 people in line (average inventory) = 230 customers / 60 minutes (flow rate) × flow time. Flow time = 8.6 minutes

Customers drive away after failing to find a place to park at a supermarket. The current process is _________.

capacity -constrained --->Customers leaving without being served means that the demand exceeds supply, or that the supermarket is capacity-constrained.