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