Chapter 06 Manufacturing and Service Processes

Lead time

The time needed to respond to a customer order

Total average value of inventory

The total average investment in raw material, work-in process, and finished goods inventory. This is valued at the cost of the firm.

Little's law

A mathematical expression that relates inventory, throughput, and flow time.

Assembly line

A process structure designed to make discrete parts. Parts are moved through a set of specially designed workstations at a controlled rate.

Assume a fixed cost for a process of $120,000. The variable cost to produce each unit of product is $35, and the selling price for the finished product is $50. Which of the following is the number of units that has to be produced and sold to break-even?

A. 5,000 units B. 6,000 units *C. 8,000 units D. 11,000 units E. 12,000 units $50 - $35 = $15. $120,000/$15 = 8,000 units

Assume a fixed cost for a process of $15,000. The variable cost to produce each unit of product is $10 and the selling price for the finished product is $25. Which of the following is the number of units that has to be produced and sold to break-even?

A. 500 units B. 667 units C. 790 units D. 900 units **E. 1,000 units $25 - $10 = $15. $15,000/$15 = 1,000 units.

According to Little's Law, which of the following ratios is used to find throughput rate?

A. Cycle time/Process time B. Throughput time/Process velocity C. Process velocity/Throughput time **D. Inventory/Flow time E. Value added time/Process velocity Simple systems can be analyzed quickly using a principle known as Little's law. Little's law says there is a long-term relationship between the inventory, throughput, and flow time of a production system in steady state. The relationship is: Inventory = Throughput rate × Flow time. Thus, Throughout Rate = Inventory/Flow Time.

When balancing an assembly line, which of the following is not a way to reduce the longest task time below the required workstation cycle time?

A. Upgrade the equipment B. Assign a roaming helper to support the line C. Split the task between two workstations D. Speed up the assembly line transfer mechanism E. Use a more skilled worker There are several ways that we may be able to accommodate a 40-second task in a 36-second cycle. Possibilities are: 1. Split the task. 2. Share the task 3. Use parallel workstations. 4. Use a more skilled worker. 5. Work overtime. 6. Redesign. Other possibilities to reduce the task time include an equipment upgrade, a roaming helper to support the line, a change of materials, and multiskilled workers to operate the line as a team rather than as independent workers.

Which of the following is not considered a major work flow structure?

A. Work Center B. Project C. Assembly line -**D. Fabrication E. Continuous Flow The formats by which a facility is arranged are defined by the general pattern of work flow; there are five basic structures (project, workcenter, manufacturing cell, assembly line, and continuous process).

Product-process matrix

Shows the relationship between different production units and how they are used depending on product volume and the degree of product standardization

One difference between an assembly line process flow and a continuous process flow is that on the assembly line the flow is discrete rather than continuous.

TRUE A continuous process is similar to an assembly line in that production follows a predetermined sequence of steps, but the flow is continuous such as with liquids, rather than discrete.

A high-level map or diagram of a supply chain process can be useful to understand how material flows and where inventory is held.

TRUE A high-level map of a supply chain process can be useful to understand how material flows and where inventory is held.

Break-Even Analysis can be used to help decide whether to perform a task with a special purpose machine or with a general purpose machine.

TRUE A standard approach to choosing among alternative processes or equipment is breakeven Analyze

One methodology used to evaluate equipment investment decisions where the investment entails an initial investment, fixed costs, and variable costs is Break-Even Analysis.

TRUE A standard approach to choosing among alternative processes or equipment is breakeven Analyze.

The term "assembly line" refers to progressive assembly linked by some material handling device.

TRUE An assembly line is a layout design for the special purpose of building a product by going through a progressive set of steps. The assembly steps are done in areas referred to as "stations," and typically the stations are linked by some form of material handling device.

A project layout is characterized by a high degree of task ordering.

TRUE In a project layout, a high degree of task ordering is common.

Process selection refers to the strategic decision of selecting which kind of production processes to use to produce a product or provide a service.

TRUE Process selection refers to the strategic decision of selecting which kind of production processes to use to produce a product or provide a service.

The product-process matrix shows the relationship between process structures and product volume and variety characteristics.

TRUE See Exhibit 6.3, Product-Process Matrix: Framework Describing Layout Strategies

For the purposes of assembly-line balancing, the required workstation cycle time is found by dividing production time per day by the required units of output per day.

TRUE See equation 6.3.

In assembly-line balancing the theoretical minimum number of workstations is found by a ratio of the sum of all task times divided by the cycle time.

TRUE See equation 6.4.

If the sum of the task times required to produce a product is 45 minutes and the cycle time for the same product is 10 minutes. Thus, the theoretical minimum number of workstations is 5 using the assembly-line balancing procedure.

TRUE See equation 6.4: 45 minutes/10 minutes = 4.5, round up to 5.

A project layout is characterized by a relatively low number of production units in comparison with process and product layout formats.

TRUE See exhibit 6.3, Product-Process Matrix: Framework Describing Layout Strategies.

In designing a production layout a flexible line layout might have the shape of a "U".

TRUE See exhibit 6.7, page 190.

The closer the customer is to the customer order decoupling point the more quickly the customer receives the product.

TRUE Selection of decoupling points is a strategic decision that determines customer lead times and can greatly impact inventory investment. The closer this point is to the customer, the quicker the customer can be served

The essential issue in satisfying customers in the make-to-stock environment is to balance the level of finished inventory against the level of service to the customer.

TRUE The essential issue in satisfying customers in the make-to-stock environment is to balance the level of finished inventory against the level of service to the customer

The focus in the make-to-stock environment is on providing finished goods where and when the customers want them.

TRUE The focus in the make-to-stock environment is on providing finished goods where and when the customers want them.

The objective of mixed-model line balancing is to meet the demand for a variety of products and avoid building high inventories.

TRUE The mixed-model line balancing objective is to meet the demand for a variety of products and to avoid building high inventories.

The volume requirements for the product are one determinant of the choice of which process structure to select.

TRUE Two dimensions (of the product/process matrix, exhibit 6.3) are shown. The first dimension relates to the volume of a particular product or group of standardized products. Standardization is shown on the vertical axis and refers to variations in the product that is produced. These variations are measured in terms of geometric differences, material differences, and so on. Standardized products are highly similar from a manufacturing processing point of view, whereas low standardized products require different processes.

Little's law can be thought of as a relationship between units and time.

TRUE We can think of Little's law as a relationship between units and time.

Workstation cycle time is the time between successive units coming off the end of the assembly line.

TRUE Workstation cycle time is the time between successive units coming off the end of an assembly line.

Using the assembly-line balancing procedure, which of the following is the required cycle time in minutes per unit if the daily production time is 480 minutes and the required daily output is 50 units?

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Which of the following is not a basic type of process structure?

**A. Product-process matrix B. Work center C. Manufacturing cell D. Assembly line E. Continuous process The formats by which a facility is arranged are defined by the general pattern of work flow; there are five basic structures (project, work center, manufacturing cell, assembly line, and continuous process).

A difference between project and continuous flow categories of process flow structures is which two of the following?

**A. The size and bulk of the product B. Discrete parts moving from workstation to workstation C. Degree of equipment specialization D. Being a "Virtual Factory" E. Profit per unit In a project layout, the product (by virtue of its bulk or weight) remains in a fixed location. Continuous processes are usually highly automated and, in effect, constitute one integrated machine.

Assemble-to-order

A production environment where pre-assembled components, subassemblies, and modules are out together in response to a specific customer order.

Make-to-stock

A production environment where the customer is served "on-demand" from finished goods inventory.

Make-to-order

A production environment where the product is built directly from raw materials and components in response to a specific customer order.

You have just determined the actual number of workstations that will be used on an assembly line to be 8 using the assembly-line balancing procedure. The cycle time of the line is 10 minutes and the sum of all that tasks required on the line is 60 minutes. Which of the following is the correct value for the resulting line's efficiency?

A. 0.500 B. 0.650 C. 0.750 D. 0.850 E. None of the above Using equation 6.5, [60/(8 x 10)] = 0.750.

You have just determined the actual number of workstations that will be used on an assembly line to be 6 using the assembly-line balancing procedure. The cycle time of the line is 5 minutes and the sum of all that tasks required on the line is 25 minutes. Which of the following is the correct value for the resulting line's efficiency?

A. 0.500 B. 0.833 C. 0.973 D. 0.990 E. None of the above Using equation 6.5, [25/(6 x 5)] = 0.833.

Using the assembly-line balancing procedure, which of the following is the required cycle time if the production time in minutes per day is 1440 and the required output per day in units is 2000?

A. 0.72 B. 1.388 C. 250 D. 500 E. Cannot be determined from the information above Using equation 6.3, 1,440 minutes/2000 units = 0.72 minutes per unit.

Using the assembly-line balancing procedure, which of the following is the theoretical minimum number of workstations if the task times for the six tasks that make up the job are 4, 6, 7, 2, 6, and 5 minutes, and the cycle time is 10 minutes?

A. 3 B. 5 C. 6 D. 8 E. None of the above Using equation 6.4, (4 + 6 + 7 + 2 + 6 + 5)/10 = 3.

Using the assembly-line balancing procedure, which of the following is the theoretical minimum number of workstations if the task times for the eight tasks that make up the job are 7, 4, 7, 8, 9, 4, 3 and 6 minutes, and the cycle time is 8 minutes?

A. 3 B. 5 C. 6 D. 8 E. None of the above Using equation 6.4, (7 + 4 + 7 + 8 + 9 + 4 + 3 + 6)/8 = 6.

In a workcenter, machine A has a ten minute set-up time per batch and a two minute per unit run time. Machine B performs the identical function but has a set-up time of thirty minutes and a one minute run time per unit. The workcenter makes products in batches ranging from one unit to one hundred units. Assuming capacity is not a limitation on either machine, on which batches should machine B be used?

A. All batches should be run on machine B **B. Batches of more than 20 units should be run on machine B C. Batches of fewer than 80 units should be run on machine B D. Batches with up to 50 units should be run on machine B E. No batches should be run on machine B Machine A: 10 + 2Q. Machine B: 30 + 1Q. Point of indifference is where 10 + 2Q = 30 + Q or Q = 20. Thus, B is the most correct answer.

The placement of which of the following is not determined by production process organization decisions?

A. Departments B. Workgroups C. Workstations D. Machines **E. Emergency exits Emergency exits are determined by safety concerns, not by production process organization decisions.

Which of the following is not a step in developing a manufacturing cell layout?

A. Grouping parts into families that follow a common sequence of steps B. Identifying dominant flow patterns of parts families as a basis for location of processes C. Physically grouping machines and processes into cells **D. Disposing of left-over machinery and outsourcing ungrouped processes E. None of the above

Which of the following is a basic type of process structure?

A. Process flow diagram B. Product matrix C. Process matrix **D. Work center E. Manual assembly The formats by which a facility is arranged are defined by the general pattern of work flow; there are five basic structures (project, work center, manufacturing cell, assembly line, and continuous process).

According to Little's law, which of the following can be used to estimate work-in-process inventory?

A. Process time/Cycle time **B. Throughput rate times Flow time C. Process velocity/Flow time D. Set up time/Throughput rate E. Value added time/Process velocity Simple systems can be analyzed quickly using a principle known as Little's law. Little's law says there is a long-term relationship between the inventory, throughput, and flow time of a production system in steady state. The relationship is: Inventory = Throughput rate × Flow time

Which of the following basic types of process structures is one which similar equipment or functions are grouped together?

A. Project **B. Work center C. Manufacturing cell D. Assembly line E. Continuous process A work center layout is where similar equipment or functions are grouped together.

Which of the following basic types of process structures is one which equipment or work processes are arranged according to the progressive steps by which the product is made?

A. Project B. Work center C. Manufacturing cell **D. Assembly line E. Continuous process An assembly line is where work processes are arranged according to the progressive steps by which the product is made.

You are hired as a consultant to decide if your client should purchase a new, highly specialized, piece of equipment. The product to be produced by this equipment is forecast to have a total worldwide demand of 15,000 units over the entire product life. The initial investment to acquire and install the equipment is $256,000. The variable cost to produce each unit will be $15 and the selling price for the finished product will be $30. Which of the following best describes the situation the firm is facing?

A. The company will recover its initial investment **B. The company's total margin will be less than its investment C. It is a good investment D. The break-even is lower than the 15,000 units that are expected to sell E. All of the above Margin per unit = $30 - $15 = $15. $15 x 15,000 units = $225,000. Since $225,000 < $256,000 the total projected margin for this product will be less than the investment required

In balancing an assembly line, workstation cycle time has to be less than the time between successive units coming off the end of the line.

FALSE Workstation cycle time: the time between successive units coming off the end of an assembly line.

Manufacturing cell

An area where simple items that are similar in processing requirements are produced

Continuous process

An often automated process that converts raw materials into a finished product in one contiguous process,

Break-Even Analysis can only be used in production equipment decision making when dealing solely with fixed costs, no variable costs.

FALSE (Break-Even Analysis) is most suitable when processes and equipment entail a large initial investment and fixed cost, and when variable costs are reasonably proportional to the number of units produced.

A continuous process indicates production of discrete parts moving from workstation to workstation at a controlled rate.

FALSE A continuous process is similar to an assembly line in that production follows a predetermined sequence of steps, but the flow is continuous such as with liquids, rather than discrete

Workcenter layouts allocate dissimilar machines into cells to work on products that have dissimilar processing requirements.

FALSE A work center layout, sometimes referred to as a job shop, is where similar equipment or functions are grouped together.

A make-to-order firm will work with the customer to design the product, and then make it from purchased materials, parts, and components.

FALSE Firms that make the customer's product from raw materials, parts, and components are make-to-order firms.

Process selection refers to the strategic decision of choosing the volume of output to produce in a manufacturing facility depending upon the way that facility produces.

FALSE Process selection refers to the strategic decision of selecting which kind of production processes to use to produce a product or provide a service.

If the sum of the task times required to produce a product is 80 minutes and the cycle time for the same product is 15 minutes, the theoretical minimum number of workstations is 8 using the assembly-line balancing procedure.

FALSE See equation 6.4: 80 minutes/15 minutes = 5.3, round up to 6.

The efficiency of an assembly-line is found by a ratio of the sum of all task times divided by the cycle time.

FALSE See equation 6.5.

A process map shows the physical location of the various processes within a supply chain.

FALSE See exhibit 6.2, Make-to-Stock Process Map

The closer the customer is to the customer order decoupling point the longer it takes the customer to receive the product.

FALSE Selection of decoupling points is a strategic decision that determines customer lead times and can greatly impact inventory investment. The closer this point is to the customer, the quicker the customer can be served.

The assembly-line balancing procedure determines the precedence relationships of manufacturing tasks.

FALSE The assembly-line balancing problem is one of assigning all tasks to a series of workstations so that each workstation has no more than can be done in the workstation cycle time, and so that the unassigned (that is, idle) time across all workstations is minimized. The problem is complicated by the relationships among tasks imposed by product design and process technologies. This is called the precedence relationship, which specifies the order in which tasks must be performed in the assembly process.

The essential issue in satisfying customers in the make-to-stock environment is to balance the cost of the finished item against the willingness of the consumer to pay for it.

FALSE The essential issue in satisfying customers in the make-to-stock environment is to balance the level of finished inventory against the level of service to the customer.

The time needed to respond to a customer's order is called the customer response time.

FALSE The time needed to respond to a customer order is called the lead time.

Little's law states that supply chain processes can be regarded as unrelated and thus treated and analyzed separately.

FALSE We can think of Little's law as a relationship between units and time.

Engineer-to-order

Here the firm works with the customer to design the product, which is then made from purchased materials, parts, and components.

Workcenter

Often referred to as a job shop, a process structure suited for low-volume production of a great variety of non-standard products. Workcenters sometimes are referred to as departments and are focused on a particular type of operations.

Engineer-to-order firms will work with the customer to design the product, and then make it from purchased materials, parts, and components.

TRUE An engineer-to-order firm will work with the customer to design the product, and then make it from purchased materials, parts, and components.

Assembling-to-order means moving the customer order decoupling point from finished goods to components.

TRUE Assembling-to-order derives significant advantages from moving the customer order decoupling point from finished goods to components.

An example of an assemble-to-order firm is Dell Computer.

TRUE In the assemble-to-order environment, a primary task is to define a customer's order in terms of alternative components and options since it is these components that are carried in inventory. A good example is the way Dell Computer makes desktop computers

A general purpose machine is less capable than a special purpose machine in certain tasks but can perform a broader variety of tasks.

TRUE Less specialized equipment is referred to as "general-purpose," meaning that it can be used easily in many different ways if it is set up in the proper way. More specialized equipment, referred to as "special-purpose," is often available as an alternative to a general-purpose machine. For example, if we need to drill holes in a piece of metal, the general-purpose option may be to use a simple hand drill. An alternative special-purpose drill is a drill press. Given the proper setup, the drill press can drill holes much quicker than the hand drill can.

In designing a production line mixed-model line balancing might be used by JIT manufacturers.

TRUE Mixed-model line balancing is used by JIT manufacturers such as Toyota.

The first step in balancing an assembly line is to specify the precedence relationships among tasks to be performed on the line.

TRUE The steps in balancing an assembly line are straightforward: 1. Specify the sequential relationships among tasks using a precedence diagram.

One trade-off illustrated by the product-process matrix is between flexibility and cost.

TRUE To produce nonstandard products at relatively low volumes, work centers (flexible) should be used. A highly standardized product (low-cost commodity) produced at high volumes should be produced using an assembly line or a continuous process

Lean manufacturing

The attempt to achieve high customer service with minimum levels of inventory investment

Inventory turn

The cost of goods sold divided by the total average value of inventory

Throughput

The long-term average rate that items flow through a process

Days-of-supply

The number of days of inventory of an item. If an item were not replenished, this would be the numbers of days until the firm would run out of the item -on average- Also, the inverse of inventory turn expressed in days.

Precedence relationship

The order in which tasks must be performed in the assembly process.

Customer order decoupling point

The place where inventory is positioned to allow processes or entities in the supply chain to operate independently.

Assembly-line balancing

The problem of assigning all the tasks to a series of workstations so that each workstation has no more than can be done in the workstation cycle time and so that idle time across all workstations is minimized.

Project layout

The product, because of its sheer bulk or weight, remains fixed in a location. Equipment is moved to the product rather than vice versa.

Workstation cycle time

The time between successive units coming off the end of an assembly line.

Flow time

The time it takes a unit to flow through a process from beginning to end.