Test2 P&OM
Explain the three types of teams effective for job enrichment.
A highly effective approach to job enrichment is to use teams. Some of the more common ones are: natural work teams, which perform entire jobs, rather than specialized, assembly-line work; virtual teams, in which members communicate by computer, take turns as leaders, and join and leave the team as necessary; self-managed teams (SMTs), which are empowered work teams that also assume many traditional management responsibilities.
Discuss some of the issues that a small pizza restaurant might face in inventory management. Would a pizza restaurant use a fixed order quantity or period system for fresh dough (purchased from a bakery on contract)? What would be the advantages and disadvantages of each in this situation?
A pizza restaurant must maintain inventories of dough, toppings, sauce, and cheese, and other supplies such as boxes, napkins, cups, and so on. Because many of these items are perishable, careful decisions must be made on the quantities to purchase. The perish ability of the stock-keeping-unit (SKU) relates to the freshness, safety and quality of the food. Without adequate forecasting, it would be difficult to know how much and when to purchase. Supplier relationships are important to ensure that food and suppliers are delivered on time and fresh. A FPS might be most appropriate for dough so that frequent orders (T) increase inventory to the replenishment level (M). Coupled with higher safety stock levels for a FPS than a FQS, the risk of running out (stockout) of dough is low. However, varying order sizes might be difficult for the supplier to execute unless tied to the pizza restaurant information system. The FQS is easier to implement, carries less inventory, but conceptually could stockout more. A FQS is more appropriate for non-perishable SKUs such as straws, napkins, and boxes. The cost of several days of stock outs can be computed using methods such as the value of a loyal customer (Chapter 2) and the single-period inventory model (Chapter 11).
Describe the ergonomic features in the automobile that you drive most often. If it is an older model, visit a new-car showroom and contrast those features with those found in some newer models.
Automotive designers pay much attention to ergonomics, such as placement of controls and cup holders, ability to reach them safely and comfortably, and the ability to see them without being distracted. The BMW interface wheel (albeit a bit dated) caused a lot of controversy when it was introduced, and you might suggest that students search for articles or reviews that discuss it. Today's "heads up" displays that project information onto the windshield is an example of ergonomic design. Other topics that enter this class discussion are location of controls, cubic space, line of sight, size of the people, safety, etc. Cell phone use in vehicles is a hot topic today with voice-activated controls becoming more available. Self-driving vehicles are another entirely new design issue for automobile manufacturers. Most auto enthusiast magazines have reviews of cars and address these issues (while not formally calling them "ergonomics").
Differentiate between product layout, process layout, cellular layout, and fixed-position layout. State the advantages and disadvantages of each.
A product layout is an arrangement based on the sequence of operations that are performed during the manufacturing of a good or delivery of a service. Product layouts support a smooth and logical flow where all goods or services move in a continuous path from one process stage to the next using the same sequence of work tasks and activities. Advantages of product layouts include lower work-in-process inventories, shorter processing times, less materials handling, lower labor skills, and simple planning and control systems. There are disadvantages associated with product layouts. For example, a breakdown of one piece of equipment can cause the entire process to shut down. In addition, since the layout is determined by the good or service, a change in product design or the introduction of new products may require major changes in the layout, limiting flexibility. Therefore, product layouts are less flexible and expensive to change. Finally, jobs in a product-layout facility (such as those on a mass-production line) may provide little job satisfaction. A process layout consists of a functional grouping of equipment or activities that do similar work. Compared to product layouts, process layouts require a lower investment in equipment. In addition, the equipment in a process layout is normally more general purpose than the equipment in a product layout, which is more specialized. Also, the diversity of jobs inherent in a process layout can lead to increased worker satisfaction. The limitations of process layouts are low equipment utilization, high material handling costs, more complicated planning and control systems, and higher worker skill requirements. A cellular layout's design is determined by self-contained groups of equipment (called cells), which are needed for producing a particular set of goods or services, not by the functional characteristics of equipment. Cellular layouts provide the advantages of both process and product layouts. Cellular layouts use group technology to classify parts into families. The workflow is standardized and centrally located in a cellular layout, materials-handling requirements are reduced, and workers concentrate on production rather than on moving parts between machines. Because workers have greater responsibility in a cellular manufacturing system, they become more aware of their contribution to the final product; this increases their morale and satisfaction and, ultimately, quality and productivity. A fixed-position layout consolidates the resources necessary to manufacture a good or deliver a service such as people, materials, and equipment in one physical location. Rather than moving work-in-process from one work center to another, it remains stationary. Fixed-position layouts usually require a high level of planning and control compared with other types of layouts.
Explain how a product's life cycle has important implications in terms of process design and choice.
A product life cycle is a characterization of product growth, maturity, and decline over time. It is important to understand product life cycles because when goods and services change and mature, so must the processes and value chains that create and deliver them. The four phases of a traditional product's life cycle are: introduction, growth, maturity, and decline and turnaround. As an example, new products with low sales volume might be produced in a job shop process; however, as sales grow and volumes increase, a flow shop process might be more efficient. As another example, a firm might introduce a standard product that is produced with a flow shop process, but as the market matures, the product might become more customized. In this case, a job shop process might be more advantageous. What often happens in many firms is that product strategies change, but managers do not make the necessary changes in the process to reflect the new product characteristics
Define a revenue management system (RMS) and explain how it works. Give several examples of assets that can be managed using RMS.
A revenue management system (RMS) consists of dynamic methods to forecast demand, allocate perishable assets across market segments, decide when to overbook and by how much, and determine what price to charge different customer (price) classes. The ideas and methods surrounding RMS are often called yield management. Modern RMS software simultaneously makes changes in the forecast, allocation, overbooking, and pricing decisions in a real-time operating system. This process does not end until there is no more opportunity to maximize revenue (because the airplane has taken off, the concert has begun, the cruise ship has launched, etc.). Applicable assets might include: a hotel room, an airline seat, a rental car, a concert seat, a room on a cruise ship, and broadcast advertising space.
List some products in your personal or family "inventory." How do you manage them? (For instance, do you constantly run to the store for milk? Do you throw out a lot of milk because of spoilage?) How might the ideas in this chapter change your way of managing these SKUs?
Any food items, printer ink cartridges, audio and video tapes, yard supplies such as fertilizer, pencils and pens, gasoline for a lawnmower and/or automobile, clothes for laundry or dry cleaners, flash drive (number and capacity), bread, DVD disks, printer paper, soda, and so on. Do these items "stock out" frequently? Why? Do you use decision rules as to when to reorder? Are your decision rules similar to a FQS or FPS or do you stock out all the time?
What type of process—project, job shop, flow shop, and continuous flow—would most likely be used to produce the following? Explain your reasoning.
Apple iPads - flow shop (assembly line) Weddings - project Paper - continuous flow Tax preparation - job shop for complex returns or hybrid job/flow shop for simple EZ returns
Explain assembly-line balancing. Discuss the three types of information needed to balance an assembly line.
Assembly-line balancing is a technique to group tasks among workstations so that in the ideal case each workstation has the same amount of work. Typically, one either minimizes the number of workstations for a given production rate or maximizes the production rate for a given number of workstations. The three types of information needed to use this technique are: The set of tasks to be performed and the time required to perform each task The precedence relationships among the tasks—that is, the sequence in which the tasks must be performed The desired output rate or forecast of demand for the assembly line.
Does the EOQ increase or decrease if estimates of setup (order) costs include fixed, semi-variable, and pure variable costs while inventory-holding costs includes only pure variable costs? Vice versa? What are the implications? Explain.
Because the EOQ model only depends on the order quantity, fixed costs associated with any ordering or inventory holding are irrelevant (in accounting language, sunk costs). From an economic perspective, the EOQ is a marginal (incremental or pure variable cost) model, and therefore, should use only variable cost estimates for order cost and inventory-holding costs. That is, if inventory is increased "one" more unit what is the revised total order and holding cost. The C0/Ch ratio represents the cost structure of the business. If C0 is estimated using variable and fixed costs, it will be a larger number, that is, a full cost estimate. Likewise, if it is estimated using only pure variable costs (as it should be), it is a variable cost estimate. Similar logic is applicable for Ch. If OM managers ignore these cost accounting issues and do not get good estimates of C0 and Ch, major errors can be made in inventory levels. For example, if C0 is estimated on a full cost basis while Ch is on a pure variable cost basis, the EOQs will be too large. Marketing will like this and will seldom stock out but finance needs more funds to finance inventory. In the reverse situation, the EOQs are too small, and marketing won't like the increase in stock outs but finance will need fewer funds to finance the firm's inventory. If both C0 and Ch are estimated on a full cost basis (apples to apples) the effect is minimal since it is a relative ratio. Also, the square root formula of the EOQ makes it robust with respect to some degree of parameter estimation errors. The ideal way to estimate these two EOQ variables is using a pure variable cost approach. One lesson for students is that process, value chain, and OM managers need to understand cost accounting and exactly what types of costs are used in their inventory models.
Define useful capacity measures for a(n)
Brewery. Barrels of output/month, number of unload/loading docks, bushels of hops Airline. Seats available per flight, number of planes by type and size, number of airport gates Movie theater. Seats available, number of theaters, number of showings, number of customers (attendance). Pizza restaurant. Pizzas made/hour, seats available, number of cash registers, pounds of dough, number of ovens, number of table servers Amusement park. Restaurant seats available, guests/hour on individual rides, number of parking places
An assembly line normally operates two shifts a day, five days per week. Each shift can produce 475 assemblies. What is the weekly capacity?
Capacity = (2 shifts/day) (5 days/week) (475 assemblies/shift) = 4750 assemblies/week. Hence, the weekly capacity is 4,750 assemblies.
Define capacity including the two ways it can be viewed. Provide an example of each way.
Capacity is the capability of a manufacturing or service resource such as a facility process, workstation, or piece of equipment to accomplish its purpose over a specified time period. Capacity can be viewed in one of two ways: as the maximum rate of output per unit of time; or as units of resource availability.
Delta Manufacturing is implementing an economic order quantity (EOQ) inventory control system and needs a good estimate of the cost to process a purchase order (PO). It takes 6 total labor hours to process a PO. The average number of SKUs on a PO is 4.2. The average wage for people working in the purchasing department is $20 per hour, plus employee benefits of $4 per hour. Fixed costs for the purchasing department are $350,000 per year assuming a 2,000 hour per employee per year workweek. Given this information, what is a good estimate of the cost to process one stock-keeping unit (SKU)?
Co = [($20 + $4)(6 hrs.)]/4.2 = $34.28
What are complementary goods and services and why do firms have them?
Complementary goods and services are goods and services that can be produced or delivered using the same resources available to the firm, but whose seasonal demand patterns are out of phase with each other. Complementary goods or services balance seasonal demand cycles and therefore use the excess capacity available. For instance, demand for lawnmowers peaks in the spring and summer; to balance manufacturing capacity, the producer might also produce leaf blowers and vacuums for the autumn season and snowblowers for the winter season.
Question 1: Differentiate between custom, option, and standard goods and services. Also, give a goods and a service example of each.
Custom or make-to-order goods and services are generally produced and delivered as one-of-a-kind or in small quantities, and are designed to meet specific customers' specifications. Examples include ships, weddings, certain jewelry, estate plans, buildings, and surgery. Option or assemble-to-order goods and services are configurations of standard parts, subassemblies, or services that can be selected by customers from a limited set. Common examples are Dell computers, Subway sandwiches, machine tools, and travel agent services. Standard or make-to-stock goods and services are made according to a fixed design, and the customer has no options from which to choose. Appliances, shoes, sporting goods, credit cards, on-line Web-based courses, and bus service are some examples. Standard goods are made in anticipation of customer demand and stocked in inventory and therefore are usually readily available. The customer will have to wait only if the good is out of stock or if service capacity (staff, telephone lines, equipment, and so on) is unavailable. Standard services such as a bank's checking account service must also anticipate future demand, but in a different way from goods-producing firms.
Provide some examples of customer- and provider-routed services that you have encountered that are different from those described in this chapter. Can you identify any improvements to these processes?
Customer-routed examples include: visiting a bookstore, checking in a major convention hotel, health clubs, Club Med, surfing the Internet, museums, taking a cruise, parks, vacations, etc. They offer the customer broad freedom to select from many possible routes (pathways) through the service delivery system. Provider-routed examples include: Federal Express, simple on-line will, CNN Headline News, most fast food restaurants such as McDonald's, blood tests at a lab or hospital, automatic teller machine (ATM), credit card authorizations, movies, newspaper dispenser (there is no customer discretion or freedom in how to obtain the newspaper), checking in Motel 6, dentist cleaning teeth. They constrain customers to follow a very small number of possible routes (pathways) through the service delivery system.
What are the major activities in designing a goods-producing or service-providing process?
Define the purpose and objectives of the process. Create a detailed process or value stream map that describes how the process is currently performed (sometimes called a current state or baseline map). Of course, if you are designing an entirely new process, this step is skipped. Evaluate alternative process designs. That is, create process or value stream maps (sometimes called future state maps) that describe how the process can best achieve customer and organizational objectives. Identify and define appropriate performance measures for the process. Select the appropriate equipment and technology. Develop an implementation plan to introduce the new or revised process design. This includes developing process performance criteria and standards to monitor and control the process
Define economies of scale and diseconomies of scale. Explain how they relate to capacity decisions.
Economies of scale are achieved when the average unit cost of a good or service decreases as the capacity and/or volume of throughput increases. Economies of Scale support building larger facilities with more capacity. Diseconomies of scale occur when the average unit cost of the good or service begins to increase as the capacity and/or volume of throughput increases. Diseconomies of Scale suggest that some optimal amount of capacity exists where costs are at a minimum.
Provide and discuss some examples of economies and diseconomies of scale in a college environment.
Economies of scale mean that long-run average costs decline as volume increases. Diseconomies of scale happen when size (capacity) increases to the point where long-run average costs begin to increase due to increasing complexity, and communication and coordination efforts. One college example is the instruction cost per student hour declines as class size increases but at some point (say 400 or 500 students in a lecture hall class) costs begin to increase due to diseconomies of scale. University information systems are highly scalable (see Chapter 4) as more and more students are added to the system, the cost per student decreases. Also, Monster.com, Facebook, etc. are highly scalable and exhibit economies of scale. When does a university become too big - 40,000, 60,000 or 100,000 students? Complexity? How do costs behave as student volume changes? Same question with a hospital - 500, 100, 200, 5,000 beds? Same question with an automobile assembly factory?
Explain the role of ergonomics in job design.
Ergonomics is concerned with improving productivity and safety by taking into account the physical capabilities of people when designing workplaces, equipment, instruments, computers, workstations, etc. The objective of ergonomics is to reduce fatigue, the cost of training, human errors, the cost of doing the job, and energy requirements while increasing accuracy, speed, reliability, and flexibility. Although ergonomics has traditionally focused on workers in manufacturing and service, it is also important in designing the servicescape to improve customer interaction in high-contact environments.
Discuss four reasons for conducting a facility layout study.
Facility layout studies are necessary whenever: a new facility is constructed there is a significant change in demand or throughput volume a new good or service is introduced to the customer benefit package different processes, equipment, and/or technology are installed
Differentiate between a flow-blocking delay and lack-of-work delay. How can each be reduced?
Flow-blocking delay occurs when a work center completes a unit but cannot release it because the in-process storage at the next stage is full. The worker must remain idle until storage space becomes available. Lack-of-work delay occurs whenever one stage completes work and no units from the previous stage are awaiting processing. Attempting to balance the process by designing the appropriate level of capacity at each workstation can minimize these sources of delay. This is often done by adding additional workstations in parallel. Product layouts might have workstations in series, in parallel, or in a combination of both.
Explain the difference between a fixed-quantity system and a fixed-period system.
In a fixed-quantity system (FQS), the order quantity or lot size is fixed; that is, the same amount, Q, is ordered every time. A way to manage an FQS is to continuously monitor the inventory level and place orders when the level reaches some "critical" value. A fixed-period system (FPS), sometimes called a periodic review system, is the one in which the inventory position is checked only at fixed intervals of time, T, rather than on a continuous basis. At the time of review, an order is placed for sufficient stock to bring the inventory position up to a predetermined maximum inventory level, M, sometimes called the replenishment level, or "order-up-to" level.
Describe approaches used for process layout design.
In designing process layouts, the arrangement of departments or work centers relative to each other is given importance. Two major approaches are commonly used. The first approach focuses on the costs associated with moving materials or the inconvenience that customers might experience in moving between physical locations is usually the principal design criteria for process layouts. In general, work centers with a large number of moves between them should be located close to one another. The second approach is used when it is difficult to obtain data on costs or volumes moved between departments. This approach is useful in many service applications such as offices, laboratories, retail stores, and so on. Rather than using materials-handling costs as the primary solution, the user constructs a preference table that specifies how important it is for two departments to be close to one another.
Explain the difference between independent demand and dependent demand.
Independent demand is demand for a stock-keeping unit (SKU) that is unrelated to the demand for other SKUs and needs to be forecasted. This type of demand is directly related to customer (market) demand. Inventories of finished goods have independent demand characteristics. Dependent demand is directly related to the demand of other SKUs and can be calculated without needing to be forecasted. For example, the demand for chandeliers is independent, while the demand for the bulb sockets used in the chandeliers is dependent on the demand for chandeliers.
What is inventory management and why is it important?
Inventory management involves planning, coordinating, and controlling the acquisition, storage, handling, movement, distribution, and possible sale of raw materials, component parts and sub-assemblies, supplies and tools, replacement parts, and other assets that are needed to meet customer wants and needs. The expenses associated with financing and maintaining inventories are a substantial part of the cost of doing business (i.e., cost of goods sold). Managers are faced with the dual challenges of maintaining sufficient inventories to meet demand while at the same time incurring the lowest possible cost.
Explain Little's Law and how it can be used.
Little's Law a simple formula that explains the relationship among flow time (T), throughput (R), and work-in-process (WIP). Work-in-process = Throughput × Flow time Or WIP = R × T Little's Law provides a simple way of evaluating average process performance. If we know any two of the three variables, we can compute the third and evaluate process performance on an aggregate basis.
Describe the layout of a typical fast-food franchise such as McDonald's. What type of layout is it? How does it support productivity? Do different franchises (e.g., Burger King or Wendy's) have different types of layouts? Why?
McDonald's is basically a process layout, while others bear closer similarity to product layouts, but are still basically process layouts. You may argue McDonald's has characteristics of both product and process layouts, and therefore, is a hybrid. This argument is valid. You can also tie in the concept of the servicescape and other service management ideas in Chapter 5. Note that the items being processed are people, physical goods, and information. One key point is that process design and flow should be integrated with facility design and layout!
Discuss each of the four strategies for capacity expansion. Include the risks and benefits of each.
One large capacity increase: The advantage of one large capacity increase is that the fixed costs of construction and operating system setup needs to be incurred only once, enabling the firm to allocate these costs over one large project. However, if aggregate demand exhibits steady growth, the facility will be underutilized. Small capacity increases that match demand: When capacity is above the demand curve, the firm has excess capacity; when it is below, there is a shortage of capacity to meet demand. In this situation, there will be short periods of over and under resource utilization. This is often called a capacity straddle strategy. Small capacity increases that lead demand: Since there is always excess capacity, safety capacity to meet unexpected demand from large orders or new customers is provided. This safety capacity also enables the firm to give good customer service since backorders will rarely occur. Of course, this strategy is expensive. This is often called a capacity lead strategy. Small capacity increases that lag demand: This results in constant capacity shortages. It requires less investment and provides for high capacity utilization and thus a higher rate of return on investment. However, it may also reduce long-term profitability through overtime, subcontracting and productivity losses that occur as the firm scrambles to satisfy demand. In the long run, such a policy can lead to a permanent loss of market position. This is often called a capacity lag strategy.
What are the four categories of inventory costs?
Ordering costs or setup costs are incurred as a result of the work involved in placing orders with suppliers or configuring tools, equipment, and machines within a factory to produce an item. Order and setup costs do not depend on the number of items purchased or manufactured, but rather on the number of orders that are placed. Inventory-holding or inventory-carrying costs are the expenses associated with carrying inventory. Holding costs are typically defined as a percentage of the dollar value of inventory per unit of time (generally one year). They include costs associated with maintaining storage facilities, such as gas and electricity, taxes, insurance, and labor and equipment necessary to handle, move, and retrieve inventory items. Shortage or stockout costs are costs associated with an inventory being unavailable when needed to meet demand. These costs can reflect backorders, lost sales, or service interruptions for external customers, or costs associated with interruptions to manufacturing and assembly lines for internal customers. Unit cost is the price paid for purchased goods or the internal cost of producing them. In most situations, the units cost is a "sunk cost" because the total purchase cost is not affected by the order quantity.
Explain the different types of inventories maintained throughout a value chain.
Raw materials, component parts, subassemblies, and supplies are inputs to manufacturing and service-delivery processes. Work-in-process (WIP) inventory consists of partially finished products in various stages of completion that are awaiting further processing. WIP inventory also acts as a buffer between workstations in flow shops or departments in job shops to enable the operating process to continue when equipment might fail at one stage or supplier shipments are late. Finished-goods inventory are completed products ready for distribution or sale to customers. To reduce the risk associated with not having enough inventory, firms often maintain additional stock beyond their normal estimates. Safety stock inventory is an additional amount that is kept over and above the average amount required to meet demand.
Briefly describe a business you are familiar with and explain how it might use each of the five ways to adjust its short-term capacity levels.
Short-term adjustments to capacity can be done in a variety of ways and are summarized below. Add or Share Equipment: Capacity levels that are limited by machine and equipment availability are more difficult to change in the short run because of high capital expense. However, leasing equipment as needed, can accomplish this in a cost-effective manner. Another way is through innovative partnership arrangements and capacity sharing. For example, a consortium of several hospitals might be set up in which each hospital focuses on a particular specialty and shares services. Sell Unused Capacity: Some firms might sell idle capacity, such as computer storage space and computing capacity, to outside buyers and even to competitors. For example, hotels often develop partnership arrangements to accommodate their competitor's guests when they are overbooked. Change Labor Capacity and Schedules: Labor capacity can usually be managed easily through short-term changes in workforce levels and schedules. Overtime, extra shifts, temporary employees, and outsourcing are common ways of increasing capacity. Adjusting workforce schedules to better coincide with demand patterns is another. Many quick-service restaurants employ large numbers of part-time employees with varying work schedules. Change Labor Skill Mix: Hiring the right people who can learn quickly and adjust to changing job requirements and cross-training them to perform different tasks provides the flexibility to meet fluctuating demand. In supermarkets, for example, it is common for employees to work as cashiers during busy periods and to assist with stocking shelves during slow periods. Shift Work to Slack Periods: Another strategy is to shift work to slack periods. For example, hotel clerks prepare bills and perform other paperwork at night, when check-in and checkout activity is light. This allows more time during the daytime hours to service customers. Manufacturers often build up inventory during slack periods and hold the goods for peak demand periods.
Discuss the concept of safety stock in a fixed-order quantity system with uncertain demand.
Stockouts occur whenever the lead-time demand exceeds the reorder point. When demand is uncertain, using economic order quantity (EOQ) based solely on the average demand will result in a high probability of a stockout. One way to reduce this risk is to increase the reorder point by adding additional stock, called safety stock, to the average lead-time demand. Safety stock is additional planned on-hand inventory that acts as a buffer to reduce the risk of a stockout.
What sustainability issues are present in the example restaurant order fulfillment process example (Exhibits 7.6 to 7.11)? What other restaurant processes need to include sustainability criteria in their design and day-to-day management?
Sustainability refers to an organization's ability to strategically address current business needs and successfully develop a long-term strategy that embraces opportunities and manages risk for all products, systems, supply chains, and processes to preserve resources for future generations. Sustainability can be viewed from three perspectives: environmental, social, and economic. Exhibit 1.6 is best suited to provide a framework to answer this question on the board with student inputs. Many students take their first jobs in the restaurant business so expect some interesting issues, examples, and solutions. Exhibit 1.12 Examples of Sustainability Practices Environmental Sustainability Waste management: Reduce waste and manage recycling efforts Energy optimization: Reduce consumption during peak energy demand times Transportation optimization: Design efficient vehicles and routes to save fuel Technology upgrades: Improvements to save energy and clean and reuse water in manufacturing processes Air quality: Reduce greenhouse gas emissions Sustainable product design: Design goods whose parts can be recycled or safely disposed of Social Sustainability Product safety: Ensure consumer safety in using goods and services Workforce health and safety: Ensure a healthy and safe work environment Ethics and governance: Ensure compliance with legal and regulatory requirements and transparency in management decisions Community: Improve the quality of life through industry-community partnerships Economic Sustainability Performance excellence: Build a high-performing organization with a capable leadership and workforce Financial management: Make sound financial plans to ensure long-term organizational survival Resource management: Acquire and manage all resources effectively and efficiently Emergency preparedness: Have plans in place for business, environmental, and social emergencies. Clearly, restaurant purchasing/sourcing, energy use, facility design, emergency and disaster plans and training, food inspections, employee safety, animal rights (see Chapter 3 on McDonald's and sustainability), waste management such as cooking oils, water and air quality, and so on.
Explain the ABC inventory classification.
The ABC analysis consists of categorizing inventory items or stock-keeping units (SKUs) into three groups according to their total annual dollar usage. It is based on the Pareto principle. ""A" items account for a large dollar value but a relatively small percentage of total items. Typically, "A" items comprise 60 to 80 percent of the total dollar usage, but only 10 to 30 percent of the items. "C" items account for a small dollar value but a large percentage of total items. Typically, "C" items account for 5 to 15 percent of the total dollar value and about 50 percent of the items. "B" items are between "A" and "C"
Define the Theory of Constraints (TOC). How does TOC view throughput differently from the traditional OM perspective?
The Theory of Constraints (TOC) is a set of principles that focus on increasing total process throughput by maximizing the utilization of all bottleneck work activities and workstations. The traditional OM definition of throughput is the average number of goods or services completed per time period by a process. TOC views throughput differently: throughput is the amount of money generated per time period through actual sales. For most business organizations the goal is to maximize throughput, thereby maximizing cash flow.
identify at least two other practical examples of a single period inventory model different from those in the book.
The book cites examples for Christmas trees, perishable food such as dough, fruit, fashion and seasonal clothing items, and newspapers. More examples are one time promotion items such as concert t-shirts, golf clubs, flash drives, iPads, lawnmowers and other seasonal items such as outside grills and snow blowers, notebooks, special cell phone models, perishable food such as fruit and bread, magazines, flowers, airline seat deals for a specific flight, and so on.
Define the economic order quantity (EOQ) model and explain its major assumptions.
The economic order quantity (EOQ) model is a classic economic model that minimizes total cost, which is the sum of the inventory-holding cost and the ordering cost. Several key assumptions underlie the development of this quantitative model. Only a single item (SKU) is considered. The entire order quantity (Q) arrives in the inventory at one time. Only two types of costs are relevantorder/setup and inventory-holding costs. No stockouts are allowed. The demand for the item is deterministic and continuous over time. Lead time is constant.
Explain and differentiate between the characteristics of a project, job shop, flow shop, and continuous flow process.
The following characteristics describe a project: One-of-a-kind Large scale Complex Wide variation in specifications or tasks Resources brought to the site The following characteristics describe a job shop: Significant setup and/or changeover time Low to moderate volume Batching (small to large jobs) Many process routes with some repetitive steps Customizes design to customer's specifications High level of skills The following characteristics describe a flow shop: Little or no setup or changeover time Dedicated to a small range of goods or services that are highly similar Similar sequence of process steps Moderate to high volumes Specialized skills The following characteristics describe continuous flow: Very high volumes in a fixed processing sequence Not made from discrete parts High investment in equipment and facilities Dedicated to a small range of goods and services Automated movement of goods or information between process steps 24-hour/7-day continuous operation
Compare and contrast a product-process matrix with a service-positioning matrix.
The goods-producing product-process matrix helps managers select a type of process given certain characteristics of the market and physical good (volume, number of products, and degree of customization). The service-positioning matrix focuses on customer wants and needs defined by the degree of customer freedom and the repeatability of the service-encounter activity sequence that drives management to select broad design characteristics of the service delivery system (number of possible pathways and degree of management control).
Discuss the two types of stockouts.
The two types of stockouts are: backorder and lost sale. A backorder occurs when a customer is willing to wait for the item. Backorders result in additional costs for transportation, expediting, or perhaps buying from another supplier at a higher price. A lost sale occurs when the customer is unwilling to wait and purchases the item elsewhere. A lost sale has an associated opportunity cost which might include loss of goodwill and potential future revenue.
Explain each axis of the product-process matrix. Where is the most appropriate match? Also, discuss the importance of the matrix to a company's life cycle.
The vertical axis classifies different process types (projects, job shops, flow shops, and continuous flow processes); the horizontal axis classifies different manufactured good characteristics in terms of volume, degree of customization, and the number and range of goods produced. The most appropriate match between type of product and type of process occurs along the diagonal in the product-process matrix. As one moves down the diagonal, the emphasis on both product and process structure shifts from low volume and high flexibility to higher volumes and more standardization. This also suggests that as products evolve, particularly from entrepreneurial startups to larger and more mature companies, process changes must occur to keep pace. What often happens in many firms is that product strategies change but managers do not make the necessary changes in the process to reflect the new product characteristics. If product and process characteristics are not well matched, the firm will be unable to achieve its competitive priorities effectively. By selectively and consciously positioning a business off the diagonal of the product-process matrix (often called a "positioning strategy"), a company can differentiate itself from its competitors.
How would you apply the Theory of Constraints to a quick-service automobile oil change service? Explain.
To meet the time guarantees of many quick service automobile stores such as an oil change in 10-20 minutes or less the store must know where the BN and NBN workstations and associated activities are. Assume the bottleneck workstation is defined as (1) draining the oil, (2) taking the oil filter off, (3) installing a new filter, and (4) refilling with oil. All parallel activities such as checking tire pressure and cleaning the windshield are non-bottleneck activities and if rushed the auto technician still must wait for the vehicle to leave the service rack. See Exhibit 10.7 in text.
An automobile emissions testing center has six (6) inspectors and tests 40 vehicles per hour. Each inspector can inspect ten (10) vehicles per hour. If the center wants a utilization of 95%, how many inspectors are required?
Utilization (U) = Demand Rate / [Service Rate × Number of Servers] 0.95 = 40/[10 × N] N = 4.21 so they would require 5 inspectors.
Define a value stream map. How does this differ from a regular process map?
Value stream refers to all value-added activities involved in designing, producing, and delivering goods and services to customers. A value stream map shows the process flows in a manner similar to an ordinary process map. The difference, however, is that value stream maps highlight value-added versus non-value-added activities, and include costs associated with work activities for both value- and non-value-added activities.
How might sustainability issues be incorporated into the design of facilities and workplaces? Provide examples and explain your reasoning.
You may focus on what you know about such as restaurants, hotels, retail stores, universities, airlines, parks, beaches, utilities, and so on. Exhibit 1.12 in Chapter 1 is a good place to begin (frame) this discussion as follows: Exhibit 1.12 Examples of Sustainability Practices Environmental Sustainability Waste management: Reduce waste and manage recycling efforts Energy optimization: Reduce consumption during peak energy demand times Transportation optimization: Design efficient vehicles and routes to save fuel Technology upgrades: Improvements to save energy and clean and reuse water in manufacturing processes Air quality: Reduce greenhouse gas emissions Sustainable product design: Design goods whose parts can be recycled or safely disposed of Social Sustainability Product safety: Ensure consumer safety in using goods and services Workforce health and safety: Ensure a healthy and safe work environment Ethics and governance: Ensure compliance with legal and regulatory requirements and transparency in management decisions Community: Improve the quality of life through industry-community partnerships Economic Sustainability Performance excellence: Build a high-performing organization with a capable leadership and workforce Financial management: Make sound financial plans to ensure long-term organizational survival Resource management: Acquire and manage all resources effectively and efficiently Emergency preparedness: Have plans in place for business, environmental, and social emergencies.
Discuss the type of facility layout that would be most appropriate for:
printing books---Product layout performing hospital laboratory tests---Process layout or cellular manufacturing home furniture---Process layout. a hospital---Process layout a photography studio---Product layout a library---Process layout
