MGT 3900-Exam 1 Clemson

Gross margin

Difference between the price at which a product is sold and the cost to purchase the item (in percentage points)

no change

Lowering the labor content (processing times) of a demand constrained process results in _________ ____________ on revenues and profits

Process capacity

Maximum flow rate a process can provide per unit of time

Capacity

Maximum number of flow units that can be processed by the resource per unit of time

off-loading

moving work away from the bottleneck step

balancing for activities with no fixed sequence

no order in which the steps have to be carried out, higher utilization levels

Demand Rate

number of flow units customers want per unit of time

Lead Time

the time between a customer placing their order and the order being filled.

Time through the empty system

# of stations x cycle time The time it takes the first flow unit to flow through an empty process

Capacity of integrate work

# of workers/labor content

Cycle time

1/Flow rate 1/R The time between completing two consecutive flow units

Resource

A group of people/equipment that transforms inputs into outputs.

Process

A set of activities that takes a collection of inputs, performs some work or activities with those inputs, and then yields a set of outputs.

Capacity-constrained process

A situation in which demand exceeds supply and the flow rate is equal to process capacity

Line balancing

Allocating activities across the process resources as evenly as possible so that all resources have a comparable utilization level

Worker-paced

Allows each resource to work at their own rate

Throughput

Another way to say flow rate

Takt time

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

Profits

Flow rate x (Average price - Variable costs) - Fixed costs

Utilization

Flow rate/capacity The ratio between the flow rate and the process capacity

Resources

Help flow units move from being a unit of input to becoming a unit of output

Processing time

How long the resource takes to complete its work on one flow unit

Little's Law

Inventory = Flow rate x Flow time I = R x T

Flow time

Inventory x Cycle time =

Process metrics

Inventory, Flow rate, Flow time are all examples of

Average labor utilization

Labor content/(cycle time x # of employees) Average utilization across resources

Target manpower

Labor content/Takt time Ratio between the labor content and the takt time that determines the minimum number of resources required to meet demand

Leveling demand

Setting an expected demand rate for a given period of time so that one can look for an appropriate staffing plan for that time period

False

Specialization increases labor utilization

True

Specialization reduces processing times by reducing set-ups

Labor content

Sum of the processing times involved with labor

Flow unit

The basic unit that moves through a process

Demand-constrained process

The case in which process capacity exceeds demand and thus the flow rate is equal to the demand rate

Inventory

The number of flow units within a process ex. Dollars, Kilos, people

Flow rate

The rate at which flow units travel through a process. Dollars/week, Kilograms/hour, People/month

Bottleneck

The resource with the lowest capacity in a process

Flow time

The time a flow unit spends in a process, from start to finish Minutes, hours, days, weeks, years

Idle time

The time that a resource is not actually working

Time required to produce given quantity X starting with empty system

Time through empty process + [(X-1) x Cycle time]

costs of direct labor

Wages per unit of time/flow rate The labor cost associated with serving one customer

Machine-paced

all steps must work at the same rate regardless of capacity