OIS Final

If the inter-arrival times are fixed (deterministic) then the CV equals

"Fixed" means it is fixed at a certain number -it never deviates from that number. Similarly, "deterministic" means it is "determined;" you are certain what the number is (there is no variability). Having had a statistics course, you know that if there is no variability then the standard deviation is zero. Since the coefficient of variation is the standard deviation divided by the mean, the coefficient of variation will also be zero.

Autoliv in Ogden, Utah creates airbags. The deployment time of an airbag should be between 20 and 24 milliseconds, not faster (that would hurt!), and not slower (that would hurt!). Their current average is 23 milliseconds with a standard deviation of 0.4 milliseconds. We set k at $250, determine the average loss per airbag.

We need to determine k * (𝜎σ2 + (𝜇μ - t)2) = $250 * (0.42 + (23 - 22)2) = $250 * (0.16 + 1) = $290. Note: if the specification limits are 20 and 24, then the target should be right in the middle at 22!

If the processing times in Littlefield are 0.1 day for each of the four process steps, and the specified lead time is 0.5 days, and we are dealing with quite some variability both in demand and in processing times, then:

We need to make sure we have enough capacity to ensure we can meet a 0.5 day throughout time (jt is possible since the sum of the process times at the 4 process steps is 0.4 days)

How is the setting of overbooking flights a Newsvendor setting?

because airlines weigh the costs of overbooking versus empty seats

According to the NewYorker article you read for the Intermountain Healthcare case discussion, Checklist?

can be extremely beneficial for a healthcare setting

Currently, a company is ordering 1,000 units every time they put in an order for a particular product. They have found that their Ordering costs are four times the Inventory holding costs. They have also heard that the Economic Order Quantity can be reached at an equal Ordering and Inventory costs, so they realize they are doing something wrong. How large should their order be to equalize the Ordeing and Inventory costs?

eOQ -2000

If the cost of overage is higher than the cost of underage, then you should...

order fewer than the average expected demand

If we delay the fan-out point to a later stage in the supply chain, then this is called:

postponement

Little's Law describes:

the average performance of a system in terms of inventory, Rate, and Time.

To determine the average quality loss, we DO NOT need which of the following?

the characteristic of a certain output

In the figure below, what happens if the cost of capacity goes down? Assume variability remains unchanged.

the optimal "x value" goes down and the optimal "y-value" goes down

A process capability index (Cpk) of 1 indicates that:

the process is capable at the 3-sigma level

A university has decided to move all printers to one central location for easy maintenance. As a result, all "customers" (i.e., staff, faculty, students) have to go to this central location to get their prints. Which type of waste is this introducing into the organization?

transport or motion

In a system without any variability and a utilization of 99% we pool three queues into one queue. What is the result?

waiting times stay the same and the utilization remains the same as well

Assume a processing system with three separate queues (one in front of each of three resources). Under which of the following conditions would pooling these three separate queues into one queue reap the HIGHEST benefit?

when utilization is relatively high to begin with

How many different types of machines are there in the littlefield simulation?

3

Which of the following statements about the curse of variability is correct?

A reduction in variability can lead to a reduction in inventory

What's the difference between a trend and seasonality?

A trend is a relatively steady increase(or decrease) over time, seasonality is a pattern that repeats

PH produces one version of a product to serve all markets; the USA, Europe, and the UK. In each time period, the demands are normally distributed with the following parameters: USA - average of 10,000 with a standard deviation of 1,000, Europe - average of 10,000 with a standard deviation of 1,000, and the UK - average of 5,000 with a standard deviation of 500. If PH wants a 90% service level, then how much safety stock should they hold? Assume a lead time of one time period.

Approximately 2,000

DiskSan has to order high-end flash transistors ($5 each) to create USB flash memory drives. Their monthly demand is 25,000 units, their holding cost (which is mostly comprised of obsolescence costs) is 20% per month per dollar in inventory, and the setup costs for an order is $10 (mostly paperwork etc.). Determine the economic order quantity for these flash transistors.

Approximately 500

An ice-cream parlor sells 9 flavors. By implementing postponement, they keep a generic vanilla flavor in stock and then create the 9 flavors on the spot when ordered. Based on the costs of underage and overage, the in-stock probability before postponement is set at 90%, and after postponement is set at 95% so more customers will get served. The standard deviation of each flavor of ice cream is 25 gallons per week, and the lead time is one week as well. Determine the reduction in safety stock that postponement can achieve.

Before postponement: safety stock of each flavor = 32 gallons, so 288 gallons in total. After postponement: 123 gallons of safety stock in total. Thus: a reduction of 165 gallons

Mass customization strives to:

Blend the benefits of the flow shop (high volume) with those of the job shop (customization)

When comparing two companies, we notice that they are very similar in setup. However, the time it takes company A to pay for raw materials is longer than it takes company B, while the time it takes customers of company A to pay for the finished goods is shorter than it takes company B. Which of these companies has a shorter cash flow cycle?

Company A

The lean tool "5S" is mainly about:

Creating a clean and organized workspace

Interpret the picture below: is the process capable at the 3-sigma level; that is, is the cpk > 1?

Definitely Yes

What should be considered when a process is NOT in control?

Determine what the cause of not being in control was.

As a product matures in its life-cycle, the production process typically moves down the product-process spectrum, toward the end represented by a:

Flow shop

A production facility faces a rather stable demand and has a fixed capacity, which is based on the number of IGN-99 machines. The average demand is 100 unites per week, and each of the four IGN-99 machines can deliver 99 units per week. These IGN-99 machines are rather expensive to operate, Which statement is most correct?

Given the current low utilization, the should sell (or at-least not run) two of these IGN-99 machines.

What is the effect of double marginalization

Higher customer price, lower sales, lower supply chain profits

Which of the four potential problems described as TIRP is the main cause for the difference in cost of providing healthcare between Al Paso and McAllen's?

Incentive

In which supply chain will the sales be higher?

Integrated supply chain because the price will be lower since there is no "double marginalization". Since the demand is decreasing in the price, a lower price means higher sales.

In which supply chain is the retail price lower?

Integrated supply chain because there is no double marginalization

If the holding costs increase (for example: the warehousing costs increase due to a new labor agreement), keeping everything else the same, then the effect on the economic order quantity is:

It decreases - we should order less each time we order-the EOQ depends on several inputs, one of these being the holding cost. As the holding cost increases, it makes sense to not have as much inventory since this would be more expensive. Therefore, we need to order less each time we order. The next slide shows a more elaborate answer.

What is the Bullwhip effect?

It describes how the variability in demand increases when orders "move" "upstream" in a Supply Chain

When pooling several servers, while keeping everything else (arrival rate, processing times, variability in arrivals and services times) the same, what happens to the average utilization?

Nothing- when we pool the servers, the average U doesn't change since we still have the same TOTAL number of customers served by the same TOTAL number of serves.

What is the best strategy to avoid forward buying?

Offer Every Day Low Pricing

if it is more costly to have leftovers than to not have enough units to satisfy unstable demand, then you should:

Order less than the expected (or average) demand

For which of the following settings/scenarios would the cost constant (i.e., for the quality loss function) be the HIGHEST?

Pacemaker Chips

What is the difference between the control limits and the specification limits?

Specification limits identify the maximum and minimum "tolerable" results, while control limits are based on what is actually realized (which is hopefully, but not necessarily, within the limits of what is "tolerable").

Consider these two quality related statements: 1) Process capability is something you check before you start producing 2) Statistical Process Control is something you check before you start producing

Statement 1 is TRUE, Statement 2 is FALSE

MSE

Sum of Square of forcasting error/# forcast

MAPE

Sum of forecasting errors/demand/(#forcasts)

MAD

Sum of forescasting error/# of forcasts

If all the forecasting errors are greater than 1, then:

The MSE will be higher than the MAD

A process can be said to be in control when:

The averages of the samples are all within the Lower and the Upper Control Limit

When a time series is extremely stable, then which forecasting method is most appropriate?

The averaging method

Pc is less than 50% (this can be seen by the shaded area which is less than half of the area under the graph). Does this mean that the cost of overage or the cost of underage is higher?

The cost of overage is higher- since Pc is <50%, CO has to be larger than CU

Which is harder to determine, the cost of overage or the cost of underage?

The cost of underage- the loss of goodwill is hard to determine.

Most often, the MAD, MSE, and MAPE all point to the same forecasting method as the best one. Of they would all point to a different "best" forecasting method, then which forecasting method should we choose?

The one with the lowest MSE

If we increased our order quantities such that we order less frequently, then which of the following would NOT occur?

The ordering costs increase

On which of the following measures does the average cost of low quality, as determined by the quality loss function, NOT depend on directly?

The upper and lower specification limits-The only thing not contained in this average loss function are the specification limits

If a company has a negative cash conversion cycle, then this indicates that?

This company gets paid for the purchased good BEFORE it pays for the delivered goods.

What does TIRP stand for?

Transparency, Incentive compatibility, Robustness, and Pinch-Point

The quality loss function is based on the premise that:

Unless a product exactly hits the target, it creates a negative consequence of some magnitude (a very minor magnitude if only slightly off target; a major magnitude if significantly off target).

Which of the following measures does not achieve a reduction in the variability of inter-arrival times? -Turning away peak demand (the would decrease the peaks) -Scheduling of appointments( to smooth the demand) -Setting a constant takt time (taktzeit is about the rate of output and if we smooth that, then we automatically smooth the rate of input, since the rate of input is equal to the rate of output) -Using a push system (it just means that as soon as a customer arrives, we take it through all the steps of the process)

Using a push machine

Which of the following phenomena is the best description of the Bullwhip effect?

Variability increases in the supply chain when moving from the customer "upstream"

Operations processes use "resources" to transform inputs into outputs. Which of these is a resources for a restaurant? -satisfied customers -Waiters -Hungry customers -competitors

Waiters

Which of the following combination of measures would improve the process capability index?

Centering the mean and decreasing the standard deviation

If we want to achieve mass customization, then we should really try to:

Bring the fan-out point as close as possible to the push-pull point

When a process has a capability index of 1, it is said to be able to meet the specification limits in 99.74% of the time. If a process is currently meeting the specification limits in 99.95% of the time, then the capability index must be:

Larger than 1

A process has a setup time of 10 minutes (every bath, or "lot" of items, incurs exactly one setup). Which lot size will result in the lowest implied? -Lot size of 1 -Lot size of 5 -Lot size of 2 -Lot size of 10

Lot size of 10 because the larger the lot size, the few setups which results lower implied utilization

PH produces many electronics products for the USA, Europe, and the UK. The plugs required for each of these geographical areas are different, so originally PH had produced three different versions of each product. Recently, they decided to create one version, and then ship these with three different plugs (i.e., of which two are redundant for the customer). What is the most likely result of this decision?

Lower safety stock costs, higher production costs

If the forecast based on the data series below turned out to be 20.0 for the month of September, then which forecasting method was used? JanuaryFebruaryMarchAprilMayJuneJulyAugust1821202221202118

Moving average (n = 4)

Double marginalization is caused by:

Multiple stages in a supply chain that all add a margin to the product

Utilization higher than 100% is:

Referred to as "implied utilization"

We are facing unpredictable demand and we currently offer a service level of 90%. If we want to increase our service level to 95%, then what would be the effect on the reorder point?

Safety stock increases, so we should order sooner (ie when the inventory position is higher) when we increase the service level, the safety stock will increase (since the z‐value will increase from 1.28 to 1.645). Therefore, the reorder point will increase, so we need to order sooner.

A chef at Benihana can best be described as

an entertainer

Why does double marginalization lead to lower sales?

When all parties in the supply chain add a margin, the final price is higher, so fewer people are willing to buy the product/service

Due to a trader who has "gone rogue," an investment bank unknowingly experiences a shift in one of its output measures, as depicted in the figure below. (The rogue trader knows the distribution has shifted, but the investment bank does not yet know it.) The red curve shows the distribution of output of the "old" process (it has mean mu-old and std dev sigma) while the purple curve (with mean mu-new and the same std dev sigma) shows the distribution of the new output. Which of the following will almost assuredly alert the investment bank to the fact that its process has changed?

X-bar chart

Can a process be in control but not capable?

Yes - for example when the averages of the samples are all very close together, but all outside the specification limits.

Through the application of control charts, we are trying to detect which of the following?

assignable cause variation

A production process stage takes a generic product and differentiates this into several different versions. When this happens, this is called

a Fan out point - is where a process separates (or "fans out") into multiple product types or customizations.

If you last visit to your favorite Zara store was 3 months ago, and you walk into this store today, then you are most likely going to find?

a refreshed assortment of cloths (many new items)