Operations Management (HW 4)

It takes a lawyer 139 minutes to serve one customer. Demand is 2 customers per 10 hour day. The lawyer has a wage rate of $175 per hour from a law firm. What is the cost of direct labor for the lawyer expressed in $ per customer? Round to two decimals.

$875 per customer

What is true about takt time and cycle time?

TT only depends on demand CT only depends on capacity

T/F: If the take time is shorter than the cycle time, the process needs to run faster.

True

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?

costs of direct labor would be 50% lower

What happens to the target manpower if the labor content is doubled?

the target manpower doubles

Atlas Inc. is a toy bicycle manufacturing company producing a five-inch small version of the bike that Lance Armstrong rode to win his first Tour de France. The assemblyline at Atlas Inc. consists of seven work stations, each performing a single step. Stations and processing times are summarized here: • Step 1 (25 sec.): The plastic tube for the frame is cut to size. • Step 2 (25 sec.): The tube is put together. • Step 3 (30 sec.): The frame is glued together • Step 4 (20 sec.): The frame is cleaned. • Step 5 (30 sec.): Paint is sprayed onto the frame. • Step 6 (40 sec.): Wheels are assembled. • Step 7 (40 sec.): All other parts are assembled to the frame. Under the current process layout, workers are allocated to the stations as shown here: • Worker 1: Steps 1, 2 • Worker 2: Steps 3, 4 • Worker 3: Step 5 • Worker 4: Step 6 • Worker 5: Step 7 Assume the workers are paid $15 per hour. Each bicycle is sold for $5 and includes parts that are sourced for $0.75. The company has fixed costs of $225 per hour. Despite Lance Armstrong's doping confession, there exists substantially more demand for the bicycle than Atlas can supply. a) What is the cost of direct labor for the bicycle? b) How much profit does the company make per hour? c) What would be the profits per hour if Atlas would be able to source the parts 8% cheaper ($0.69 for the parts of one unit, but the fixed costs and productivity will remain same as before)? d) What would be the profits per hour if Atlas would be able to reduce fixed costs by 9% (to $204.75 per hour)? e) What would be the profits per hour if Atlas would be able to reduce the processing time at the bottleneck by 3 seconds per unit (assume unlimited demand, note that reducing the processing time may cause the bottleneck to shift to a different process or create multiple, identical bottlenecks)?

a) $1.04 per unit b) $6 per hour c) $10.32 per hour d) $26.25 per hour e) $25. 53 per hour

Glenn Dental Clinic provides general dental care to residents of Philadelphia on a walk-in basis. The clinic has started receiving complaints from patients that the waiting time is too long and has asked you to investigate whether this problem can be solved. Upon arrival, customers first receive a series of paperwork from the receptionist and fill out relevant information such as personal health records and insurance provider. The form is then handed back to a receptionist who enters the information into the computer system for the dentist to see. A dental assistant then takes an X-ray from the patient. A dentist then performs the check-up and discusses any issues with the patient.Based on conversations with staff members at the clinic, you have obtained the following information on the process: It takes about 5 minutes for a customer to fill out the paperwork. Entry of information on the paperwork into the system and verification with past records takes another 4 minutes for a receptionist. There are 3 receptionists. It takes 12 minutes on average for the dental assistant to take an X-ray. There are 5 dental assistants on shift at any moment. There are 12 dentists working at the clinic. Each check-up takes 30 minutes on average. Assume that there exists unlimited demand, unless otherwise stated. Assume further that the dentist gets paid $75 per hour while receptionist and dental assistant get paid $30 per hour. a) what is the labor content? b) what is the cost of direct labor?

a) 4+12+30= 46 minutes b) 8*$30=$240 per hr 12*$75=$900 per hr --> $1140/(bottleneckcapacity*60)[24] = $47.50

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?

small

Mr. K's is a very popular hair salon. It offers high-quality hairstyling and physical relaxation services at a reasonable price, so it always has unlimited demand. The service process includes five activities that are conducted in the sequence described below. (The time required for each activity is shown in parenthesis): Activity 1: Welcome a guest and offer homemade herb tea. (12 minutes) Activity 2: Wash and condition hair. (7 minutes) Activity 3: Neck, shoulder, and back stress release massage. (12 minutes) Activity 4: Design the hairstyle and do the hair. (30 minutes) Activity 5: Check out the guest. (9 minutes) Three servers (S1, S2, and S3) offer the services in a worker-paced line. The assignment of tasks to servers is the following: S1 does Activity 1. S2 does activities 2 and 3. S3 does activities 4 and 5. a) what is the labor content? b) what is the average labor utilization? c) at a wage rate of $25 per hour, what is the cost of direct labor per customer? d) Mr. K. considers hiring a new employee to help any one (and only one) of the servers without changing the tasks performed by each server. What would the new direct labor cost be e) Mr. K also contemplates redesigning the assignment of tasks to servers. For this, Mr. K is evaluating the reassignment of Activity 5 from S3 to S1. What would the new direct labor cost be?

a) 70 min. per customer b) 59.83% c) $48.75 per customer d) $32.50 per customer e) $37.50 per customer

Consider a process consisting of three resources. Assume there exists unlimited demand for the product. Resource 1 has a processing time of 9 minutes per unit. Resource 2 has a processing time of 4 minutes per unit. Resource 3 has a processing time of 4 minutes per unit. All three resources are staffed by one worker and each worker gets paid $9 per hour. a) what is the cost of direct labor? b) what is the labor content? c) how much idle time does the worker at r3 have per unit? d) what is the average labor utilization e) assume the demand rate is 25 units per hour. what is the takt time? f) assume the demand rate is 25 units per hour. what is the target manpower?

a. $4.05 per unit b) 17 minutes per unit c) 5 minutes per unit d) 62.96% e) 2.40 minutes per unit f) 7.08 minutes per unit

How does the takt time change as the demand rate increases?

it decreases

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?

it stays the same

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?

it would decrease