MGT 3900 Chapter 05 Test Bank KEY

MGT 3900 Chapter 05 Test Bank KEY 1. All flow units should have the same exit point in a production process. FALSE Attrition loss is an example of when flow units exit the process before completion. Therefore, some flow units exit the process earlier than others. 2. A bottleneck resource must have an implied utilization less than 100%. FALSE An implied utilization less than 100% simply means that the resource has capacity to meet demand. It has no bearing on if the resource is a bottleneck. 3. The overall process yield is the sum of the yields of all resources. FALSE The overall process yield is the product of the yields of all resources. 4. When analyzing a process flow with flow unit dependent processing times, the unit of analysis should be a unit of demand. FALSE The unit of analysis for a flow unit becomes a minute or hour of work instead of a unit of demand when analyzing a process flow with flow unit dependent processing times. 5. Rework always lowers the process capacity. FALSE Rework lowers the process capacity only when it involves a bottleneck resource in restoring reworked units. 6. Reworked units consume more time at a resource involved with rework than good units. TRUE Reworked units revisit a resource and therefore consume more time at that resource than good units. 7. Customers at an e-retailer site abandon their shopping carts without completing their purchase. This is an example of . a. attrition loss b. attrition gain c. attention loss d. attention gain Attrition loss refers to flow units leaving the process without completion. 8. A store manager at C&A notices that 20% of customers come to browse but not buy, 5% of them need assistance to complete their purchases, and 3% simply window shop. This is a situation where customers take different paths through the shopping process. a. process mix b. operation mix c. product mix d. market mix A product mix refers to a combination of different flow unit types moving through a process. 9. A store manager at C&A notices that not all customers who walk into the store will make a purchase. About 20% come to browse but not buy, 10% need assistance from an assistant manager, and 5% need assistance from the store manager. C&A has one greeter, two assistant managers, one store manager, and six cashiers. In setting up a demand matrix, how many rows of resource type and columns of customer type does C&A need? a. 10, 3 b. 10, 4 c. 4, 4 d. 5, 5 There are four types of resources and four types of customers. Resources = one greeter, two assistants, one store manager. Cashiers don’t count. 10. Not all the 100 customers who walk into the C&A store per day will make a purchase. About 20% come to browse but not buy, 10% need assistance to complete a purchase, and 5% need assistance but leave without making a purchase. The other 65% purchase something without requiring assistance. C&A has one greeter (who greets every customer), two assistants (who deal with customers who need assistance), and two cashiers (who serve customers who purchase something). What does the demand matrix for C&A look like? Browse Buy Greeter 20 80 Assistant 0 10 Cashier 0 75 Browse Help Buy Greeter 20 15 80 Assistant 0 15 0 Cashier 0 15 75 C. Browse Help Buy Greeter 20 10 65 Assistant 0 10 0 Cashier 0 10 65 Browse Help + Buy Help + Leave Buy Greeter 20 10 5 65 Assistant 0 10 5 0 Cashier 0 10 0 65 11. Not all the 100 customers who walk into the C&A store per day will make a purchase. About 20% come to browse but not buy, 10% need assistance to complete a purchase, and 5% need assistance but leave without making a purchase. The other 65% purchase something without requiring assistance. C&A has one greeter (who greets every customer), two assistants (who deal with customers who need assistance), and two cashiers (who serve customers who purchase something). What is the total demand rate per day for the greeter? A. 100 B. 20 C. 15 D. 10 Demand for greeter = 20 + 10 + 5 + 65 = 100. 12. Not all the 100 customers who walk into the C&A store per day will make a purchase. About 20% come to browse but not buy, 10% need assistance to complete a purchase, and 5% need assistance but leave without making a purchase. The other 65% purchase something without requiring assistance. C&A has one greeter (who greets every customer), two assistants (who deal with customers who need assistance), and two cashiers (who serve customers who purchase something). What is the total demand rate per day for assistants? A. 100 B. 20 C. 15 D. 10 Demand for assistants = 10 + 5 = 15 13. Not all the 100 customers who walk into the C&A store per day will make a purchase. About 20% come to browse but not buy, 10% need assistance to complete a purchase, and 5% need assistance but leave without making a purchase. The other 65% purchase something without requiring assistance. C&A has one greeter (who greets every customer), two assistants (who deal with customers who need assistance), and two cashiers (who serve customers who purchase something). What is the total demand rate per day for cashiers? A. 100 B. 75 C. 65 D. 25 Demand for cashiers = 10 + 65 = 75 14. A is a combination of different flow unit types moving through a process. a. capacity mix b. demand matrix c. product matrix d. product mix A product mix is a combination of different flow unit types moving through a process. 15. A determines how many flow units of each type are flowing through each . a. demand matrix, process b. demand matrix, resource c. product mix, process d. product mix, resource A demand matrix determines how many flow units of each type are flowing through each resource. 16. All students register with the receptionist upon arrival at the orientation. The receptionist will assign each student to one of four groups for a campus tour. Each campus tour has its designated tour guide. In setting up a demand matrix, how many rows of resource type and columns of flow unit type does the situation have? a. 5, 2 b. 2, 2 c. 5, 4 d. 2, 4 Each student will be assigned to one of the four tour groups. Therefore, there will be four types of students and five types of resources-the receptionist and tour guides 1-4. 17. C&A makes two types of products using four machines. Product A visits machines 1, 2, and 4. Product B only visits machines 1 and 3. The demand per day is 40 units for Product A and 160 units for Product B. What does the demand matrix for C&A look like? All products Machine 1 200 Machine 2 40 Machine 3 160 Machine 4 40 Product A Product B Machine 1 1 1 Machine 2 1 0 Machine 3 0 1 Machine 4 1 0 Product A Product B Machine 1 40 160 Machine 2 40 0 Machine 3 0 160 Machine 4 40 0 Product A Product B All machines 40 160 Demand rate for Product A is 40 units per day. Demand rate for Product B is 160 units per day. Machine 1 is visited by Products A and B. Machine 2 is visited by Product A only. Machine 3 is visited by Product B only. Machine 4 is visited by Product A only. 18. Which of the following statements is TRUE regarding implied utilization? a. A resource with an implied utilization of 1.7 means that capacity exceeds demand by 1.7%. b. A resource with an implied utilization of 1.7 means that demand exceeds capacity by 1.7% c. A resource with an implied utilization of 1.7 means that demand exceeds capacity by 70%. d. A resource with an implied utilization of 1.7 means that capacity exceeds demand by 70%. Implied utilization = Total demand at the resource/Capacity at the resource. Therefore, if implied utilization is 1.7, that means demand exceeds capacity by 1.7 – 1 = 70%. 19. Which of the following statements is TRUE regarding utilization and implied utilization? a. Utilization measures by how much demand exceeds the capacity of the resource. b. Utilization can exceed 1. c. Implied utilization can exceed 1. d. Implied utilization is a measure of demand variability. Implied utilization measures by how much demand exceeds the capacity of the resource. If it exceeds 1, then it means the process is capacity constrained. 20. is constrained if the implied utilization of any resource is above 100%. a. Capacity b. Demand c. Bottleneck d. Inventory Capacity is constrained if the implied utilization of any resource is above 100%. 21. A process is constrained if the highest implied utilization of all resources is less than or equal to 100%. a. capacity b. demand c. bottleneck d. supply Demand is constrained if the implied utilization of the resource is below 100%. 22. The steps involved in finding the bottleneck in a process with a product mix include all the following EXCEPT: a. compute the total demand rate for each resource. b. compute the capacity level for each resource. c. compute the flow rate for each resource. d. compute the implied utilization for each resource. The bottleneck in a process with a product mix is the resource with the highest implied utilization for each process and does not involve the flow rate. Besides, flow rate should be computed in relation to each flow unit type. 23. The resource with the is the bottleneck in a process with multiple types of flow units. a. highest capacity b. lowest capacity c. highest implied utilization d. lowest implied utilization The resource with the highest implied utilization is the bottleneck in a process with multiple types of flow units. 24. C&A makes two types of products using four machines from 9 a.m. to 5 p.m. each day. Product A visits machines 1, 2, and 4. Product B only visits machines 1 and 3. The capacity is 0.4 unit per minute at machine 1, 0.12 unit per minute at machine 2, 0.2 unit per minute at machine 3, and 0.3 unit per minute at machine 4. The demand per day is 40 units for Product A and 160 units for Product B. Which is the implied utilization for the bottleneck resource? A. 1.67 B. 1.04 C. 0.69 D. 0.28 Total demand rate for machine 1 = 40 + 160 = 200 units per day. Total demand rate for machine 2 = 40 units per day. Total demand rate for machine 3 = 160 units per day. Total demand rate for machine 4 = 40 units per day. Implied utilization for machine 1 = 200/ (0.4 × 8 × 60) = 1.04. Implied utilization for machine 2 = 40/ (0.12 × 8 × 60) = 0.69. Implied utilization for machine 3 = 160/ (0.2 × 8 × 60) = 1.67. Implied utilization for machine 4 = 40/ (0.3 × 8 × 60) = 0.28. The bottleneck is the resource with the highest implied utilization, which is machine 3. 25. C&A makes two types of products using four machines from 9 a.m. to 5 p.m. each day. Product A visits machines 1, 2, and 4. Product B only visits machines 1 and 3. The capacity is 0.4 unit per minute at machine 1, 0.12 unit per minute at machine 2, 0.2 unit per minute at machine 3, and 0.3 unit per minute at machine 4. The demand per day is 40 units for Product A and 160 units for Product B. What is the implied utilization for machine 1? a. 1.67 b. 1.04 c. 0.69 d. 0.28 Total demand rate for machine 1 = 40 + 160 = 200 units per day. Capacity for machine 1 = 0.4 unit per minute or 0.4 × 8 × 60 units per day. Implied utilization for machine 1 = 200/ (0.4 × 8 × 60) = 1.04. 26. C&A makes two types of products using four machines from 9 a.m. to 5 p.m. each day. Product A visits machines 1, 2, and 4. Product B only visits machines 1 and 3. The capacity is 0.4 unit per minute at machine 1, 0.12 unit per minute at machine 2, 0.2 unit per minute at machine 3, and 0.3 unit per minute at machine 4. The demand per day is 40 units for Product A and 160 units for Product B. Which resource is the bottleneck? a. Machine 1 b. Machine 2 c. Machine 3 d. Machine 4 Total demand rate for machine 1 = 40 + 160 = 200 units per day. Total demand rate for machine 2 = 40 units per day. Total demand rate for machine 3 = 160 units per day. Total demand rate for machine 4 = 40 units per day. Implied utilization for machine 1 = 200/ (0.4 × 8 × 60) = 1.04. Implied utilization for machine 2 = 40/ (0.12 × 8 × 60) = 0.69. Implied utilization for machine 3 = 160/ (0.2 × 8 × 60) = 1.67. Implied utilization for machine 4 = 40/ (0.3 × 8 × 60) = 0.28. The bottleneck is the resource with the highest implied utilization, which is machine 3. 27. C&A makes two types of products using four machines from 9 a.m. to 5 p.m. each day. Product A visits machines 1, 2, and 4. Product B only visits machines 1 and 3. The capacity is 0.4 unit per minute at machine 1, 0.12 unit per minute at machine 2, 0.2 unit per minute at machine 3, and 0.3 unit per minute at machine 4. The demand per day is 40 units for Product A and 160 units for Product B. Assume the relative proportion between the two product types remains constant. What is the flow rate for Product B in units per day? A. 24 B. 96 C. 120 D. Cannot be determined Because the implied utilization is 1.67 (exceeds 1), the process is capacity constrained. Flow rate for Product B = Demand rate/Implied utilization of the bottleneck = 160/1.67 = 96 units per day. 28. About 80% of customers who receive a promotion coupon will visit the store, but only 20% of those in the store will make a purchase. What is the yield of the promotion? a. 80% b. 60% c. 20% d. 16% Process yield = 0.8 × 0.2 = 0.16. 29. About 80% of customers who receive a promotion coupon will visit the store, but only 20% of those in the store will make a purchase. How many promotion coupons must be sent to get 100 customers to make a purchase? a. 1600 b. 625 c. 500 d. 125 Process yield = Number of promotion coupons = 100/0.16 = 625. Number of coupons started to get Q coupons = Q/Process yield = 100/0.16 = 625. 30. Which of the following is an example of attrition loss? a. All customers renew their magazine subscriptions. b. Defective units in a manufacturing process are reworked. c. More loan applications are received than approved. d. The number of students at the beginning of the course is the same as that at the end. Some loan applicants are rejected in their loan application process and are regarded as attrition losses. 31. In a process with attrition loss, all flow units start at resource but then drop out of the process at points. a. the same, different b. a different, the same c. the same, the same d. a different, different In a process with attrition loss, all flow units start at the same resource but then drop out of the process at different points. 32. defective flow units that are the process. a. Rework is, eliminated from b. Defects are, restored in c. Scrap is, eliminated from d. Scrap is, restored in Scrap is defective flow units that are eliminated from the process. 33. The of a resource measures the percentage of units that are processed at this resource. a. yield, defective. b. yield, non-defective c. capacity, defective d. capacity, non-defective The yield of a resource measures the percentage of nondetective units that are processed at this resource. 34. Which of the following statements about the yield of a process is FALSE? a. A process can have a yield of 100%. b. A process with attrition loss has a lower yield than one without attrition loss. c. A process without attrition loss will have a yield of 100%. d. A process can have a yield that exceeds 100%. The yield of a process is the percentage of units processed correctly. It cannot exceed 100%. 35. A three-step process is used to make a product. The yield of step 1 is 90%; of step 2, 70%; and of step 3 is 50%. What is the yield of the overall process? a. 70% b. 40% c. 31.5% d. Cannot be determined The yield of the overall process = 0.9 × 0.7 × 0.5 = 0.315. 36. A three-step process is used to make a product. The yield of step 1 is 50%; of step 2, 80%; and of step 3, 20%. How many units would the process have to process to get 100 units of good outputs? a. 125 b. 200 c. 167 d. 1250 Process yield = 0.5 × 0.8 × 0.2 = 8%. Number of units = 100/0.08 = 1250. 37. A three-step process is used to make a product. The yield of step 1 is 80%; of step 2, 40%; and of step 3, 50%. Step 1 takes 2 minutes per unit. Step 2 takes 4 minutes per unit. Step 3 takes 5 minutes. Where in the process is the bottleneck and what is its implied utilization? a. Step 3, 0.2 b. Step 3, 10 c. Step 2, 0.25 d. Step 2, 20 To have one good unit at step 3, demand at step 3 is 1/50% = 2; demand at step 2 is 2/40% = 5; demand at step 1 is 5/80% = 6.25. Capacity at step 1 is ½, step 2 is ¼, step 3 is 1/5. Implied utilization at step 1 is 6.25/0.5 = 12.5, step 2 is 5/0.25 = 20, step 3 is 2/0.2 = 10. The highest implied utilization is at step 2. 38. A three-step process is used to make a product. The yield of step 1 is 80%; of step 2, 40%; and of step 3, 50%. Step 1 takes 2 minutes per unit. Step 2 takes 4 minutes per unit. Step 3 takes 5 minutes. How many good units can the process produce per hour? a. 0.05 b. 0.1 c. 3 d. 6 To have one good unit at step 3, demand at step 3 is 1/50% =2; demand at step 2 is 2/40% = 5; demand at step 1 is 5/80% = 6.25. Capacity at step 1 is 1/2; at step 2, 1/4; and at step 3, 1/5. Implied utilization at step 1 is 6.25/0.5 = 12.5; at step 2, 5/0.25 = 20; and at step 3, 2/0.2 = 10. The highest implied utilization is 20. The capacity of the process in good units per hour = 1/20 × 60 = 3 units per hour. 39. When analyzing a process flow with flow unit dependent processing time, the flow unit is changed from using to . a. a minute of work, a unit of demand b. a unit of demand, a minute of work c. a unit of resource, a unit of demand d. a unit of demand, a unit of resource When analyzing a process flow with flow unit dependent processing time, the flow unit is changed from using a unit of demand to a minute of work. 40. A work load matrix has as columns and as rows. a. resource types, load types b. work types, load types c. work types, flow unit types d. flow unit types, resource types A work load matrix has flow unit types as columns and resource types as rows. 41. A work load matrix captures the that each flow unit type requires for each resource. A. amount of work B. amount of demand C. amount of revenue D. amount of supply A work load matrix captures the amount of work that each flow unit type requires for each resource. 42. Which of the following statements is TRUE regarding a process flow with flow unit dependent processing time? a. It is a process where the processing times at a given resource are the same across the products/customers in the product mix. b. It is a process where a unit of demand is used as a flow unit. c. It is a process where the bottleneck is the resource with the highest implied utilization. d. It is a process where the bottleneck is the resource with the highest workload. The bottleneck in a process flow with flow unit dependent processing time is the resource with the highest implied utilization. 43. Which of the following statements is FALSE regarding the workload matrix? a. It has the same number of columns and rows as the demand matrix. b. The total amount of work requested at a resource is computed by adding up the workloads for that resource across all customer types. c. It captures the time available at each resource. d. It has flow unit types as columns and resource types as rows. The workload matrix does not contain information about the time available at each resource. 44. Two types of customers are served by a two-step process. Each resource is staffed by one employee. Customer A spends two minutes at resource X and five minutes at resource Y. Customer B spends five minutes at resource X and two minutes at resource Y. The demand rate per hour is 10 customer A and 15 customer B. Which of the following is the workload matrix for this situation? A. 45. All customers Resource X 95 Resource Y 80 Customer A Customer B Resource X 2 5 Resource Y 5 2 Customer A Customer B Resource X 20 75 Resource Y 50 30 Customer A Customer B All resources 70 105 Workload for customer A at resource X = 10 × 2; Workload for customer A at resource Y = 10 × 5; Workload for customer B at resource X = 15 × 5; Workload for customer B at resource Y = 15 × 2. 45. Two types of customers are served by a two-step process. Each resource is staffed by one employee. Customer A spends two minutes at resource X and five minutes at resource Y. Customer B spends five minutes at resource X and two minutes at resource Y. The demand rate per hour is 10 customer A and 15 customer B. What is the workload for resource X across all customer types? a. 70 minutes per hour b. 80 minutes per hour c. 95 minutes per hour d. 105 minutes per hour Workload for resource X = (10 × 2) + (15 × 5) = 95 minutes per hour. 46. Two types of customers are served by a two-step process. Each resource is staffed by one employee. Customer A spends two minutes at resource X and five minutes at resource Y. Customer B spends five minutes at resource X and two minutes at resource Y. The demand rate per hour is 10 customer A and 15 customer B. What is the workload for resource Y across all customer types? A. 70 minutes per hour b. 80 minutes per hour c. 95 minutes per hour d. 105 minutes per hour Workload for resource Y = (10 × 5) + (15 × 2) = 80 minutes per hour. 47. Two types of customers are served by a two-step process. Each resource is staffed by one employee. Customer A spends two minutes at resource X and five minutes at resource Y. Customer B spends five minutes at resource X and two minutes at resource Y. The demand rate per hour is 10 customer A and 15 customer B. Where in the process is the bottleneck and what is its implied utilization? a. Resource X, 1.58 b. Resource X, 1.33 c. Resource Y, 1.33 d. Resource Y, 1.58 Workload for resource X = (10 × 2) + (15 × 5) = 95 minutes per hour; Implied utilization for resource X = 95/60 = 1.58. Workload for resource Y = (10 × 5) + (15 × 2) = 80 minutes per hour; Implied utilization for resource Y = 80/60 = 1.33. Resource X has the higher implied utilization and therefore is the bottleneck. 48. Two types of customers are served by a two-step process. Each resource is staffed by one employee. Customer A spends two minutes at resource X and five minutes at resource Y. Customer B spends five minutes at resource X and two minutes at resource Y. The demand rate per hour is 10 customer A and 15 customer B. What is the flow rate for customer A holding the mix of A and B constant? a. Cannot be determined b. 6.3 customers per hour c. 7.5 customers per hour d. 9.5 customers per hour Workload for resource X = (10 × 2) + (15 × 5) = 95 minutes per hour; Implied utilization for resource X = 95/60 = 1.58. Workload for resource Y = (10 × 5) + (15 × 2) = 80 minutes per hour; Implied utilization for resource Y = 80/60 = 1.33. Resource X has the higher implied utilization of 1.58, which is greater than 1. The process is capacity constrained. Flow rate for customer A = 10/1.58 = 6.3 customers per hour. 49. Two types of customers are served by a two-step process. Each resource is staffed by one employee. Customer A spends two minutes at resource X and five minutes at resource Y. Customer B spends five minutes at resource X and two minutes at resource Y. The demand rate per hour is 10 customer A and 15 customer B. What is the flow rate for customer B holding the mix of A and B constant? a. Cannot be determined b. 6.3 customers per hour c. 9.5 customers per hour d. 11.25 customers per hour Workload for resource X = (10 × 2) + (15 × 5) = 95 minutes per hour; Implied utilization for resource X = 95/60 = 1.58. Workload for resource Y = (10 × 5) + (15 × 2) = 80 minutes per hour; Implied utilization for resource Y = 80/60 = 1.33. Resource X has the higher implied utilization of 1.58, which is greater than 1. The process is capacity constrained. Flow rate for customer B = 15/1.58 = 9.5 customers per hour. 50. Rework is a of activities that must be completed by a flow unit to be restored to a good flow unit. a. reduction, defective b. reduction, nondefective c. repetition, defective d. repetition, nondefective Rework is to repeat activities that must be completed by a defective flow unit to be restored to a good flow unit. 52. Which of the following statements concerning rework is TRUE? a. Rework does not involve performing an extra set of activities. b. Rework does not involve inventories. c. Rework can never return a process yield to 100%. d. Rework increases the demand rate for a resource. Rework revisits a resource and thus increases the demand rate for that resource. 53. Which of the following statements concerning rework is TRUE? a. Rework involves only bottleneck resources. b. Rework does not affect overall process capacity. c. Rework leads a lower overall process yield than scrap. d. Rework leads to a higher overall process yield than scrap. Rework attempts to restore the overall process yield to 1. Scrap, on the other hand, simply exits the process according to the yield at a resource. 54. Students who failed a course last semester are retaking it this semester. This is an example of . a. attrition loss b. rework c. compliance d. process reengineering Rework refers to a repetition of activities or an extra set of activities that must be completed by a defective unit to be restored to a good flow unit. 55. refers to a of activities or an extra set of activities that must be completed by a defective unit to be restored to a good flow unit. a. Rework, removal b. Reduce, removal c. Rework, repetition d. Reduce, repetition Rework refers to a repetition of activities or an extra set of activities that must be completed by a defective unit to be restored to a good flow unit. 56. A four-step process is used to make a product. The first resource takes 8 minutes per unit, the second takes 7 minutes per unit, the third takes 2 minutes per unit, and the fourth takes 10 minutes per unit. 20% of all units must be reworked. For that, they must revisit the third and fourth resources. Each resource is staffed by one worker. Rework takes the same processing times as the first pass and always fixes the problem. Where is the bottleneck? A. Resource 1 B. Resource 2 C. Resource 3 D. Resource 4 Workload for resource 1 = (0.8 × 8) + (0.2 × 8) = 8 minutes per unit; Workload for resource 2 = (0.8 × 7) + (0.2 × 7) = 7 minutes per unit; Workload for resource 3 = (0.8 × 2) + [0.2 × (2 + 2)] = 2.4 minutes per unit; Workload for resource 4 = (0.8 × 10) + [0.2 × (10 + 10)] = 12 minutes per unit. Each resource has one worker who can provide one minute of work each minute. The implied utilization for resource 1 is 8; for resource 2, 7; for resource 3, 2.4; and for resource 4, 12. The highest implied utilization is 12 at resource 4. 57. A four-step process is used to make a product. The first resource takes 8 minutes per unit, the second takes 7 minutes per unit, the third takes 2 minutes per unit, and the fourth takes 10 minutes per unit. 20% of all units must be reworked. For that, they must revisit the third and fourth resources. Each resource is staffed by one worker. Rework takes the same processing times as the first pass and always fixes the problem. What is the capacity of the process in units per minute? A. 0.08 B. 0.125 C. 0.143 D. 0.417 Workload for resource 1 = (0.8 × 8) + (0.2 × 8) = 8 minutes per unit; Workload for resource 2 = (0.8 × 7) + (0.2 × 7) = 7 minutes per unit; Workload for resource 3 = (0.8 × 2) + [0.2 × (2 + 2)] = 2.4 minutes per unit; Workload for resource 4 = (0.8 × 10) + [0.2 × (10 + 10)] = 12 minutes per unit. Each resource has one worker who can provide one minute of work each minute. The implied utilization for resource 1 is 8; for resource 2, 7; for resource 3, 2.4; and for resource 4, 12. The highest implied utilization is 12. Capacity = 1/12 = 0.08 unit per minute. 58. The salesforce of Small Travel Company (STC) is selling cultural immersion programs to U.S. college students that allow them to spend 3 months in Europe. STC advertises in various college newspapers, as well as via social media. Potential customers fill out an online application form expressing their interest in more information about this experience. The form also includes their phone number for follow-up discussion, which sometimes, but not always, leads to the customer purchasing the package (more details below). On 60 consecutive days in the winter, STC’s employees work hard to sell these programs to elite university students. The goal of the company is to sell, on average, two packages per day, leading to a total of 120 sold packages. The sales process works in four steps: 1. One salesperson reaches out to the potential customer by phone to put together a full profile of the customer, including skills and location preferences (Germany, Italy, France, etc.). The call takes on average 20 minutes. After the call, each profile is forwarded to a language teacher. 2. The language teacher looks at the student’s profile and organizes a quick follow-up call. This takes, on average, 40 minutes per profile. The teacher rejects 60% of the profiles as the student would not have the language skills to benefit from an STC trip. From the remaining 40% of the profiles, half tell the teacher that they are no longer interested in participating. The teacher then forwards the remaining profiles to the STC accountant. 3. STC’s accountant then contacts the student to make a 10% down payment. This takes about 20 minutes per customer. 4. Finally, the teacher’s assistant contacts the customer to confirm the trip and start working on a travel schedule. At this point, an average of one-third of the students decide that they will not participate in the trip (in which case, STC and the student agree to give the 10% down payment to a charitable cause). This takes on average 50 minutes per student. All employees work 8 hours per day. How many students does STC must contact each day through its call center to fill, on average, its target of 120 students per season (2 students per day)? 1. 5 students/day 2. 15 students/day 3. 35 students/day 4. 120 students/day Step 1 passes 100%. Step 2 passes 20%. Step 3 passes 100%. Step 4 passes 67%. Starting with step 4, 1/0.667 = 1.5 (rounded). For step 3, 1.5/1 = 1.5. For step 2, 1.5/0.2 = 7.5. For step 1, 7.5/1 = 7.5. To get 1 customer through the process takes 7.5 starts. To get 2 good units per day, 7.5 × 2 = 15. 59. The salesforce of Small Travel Company (STC) is selling cultural immersion programs to U.S. college students that allow them to spend 3 months in Europe. STC advertises in various college newspapers, as well as via social media. Potential customers fill out an online application form expressing their interest in more information about this experience. The form also includes their phone number for follow-up discussion, which sometimes, but not always, leads to the customer purchasing the package (more details below). On 60 consecutive days in the winter, STC’s employees work hard to sell these programs to elite university students. The goal of the company is to sell, on average, two packages per day, leading to a total of 120 sold packages. The sales process works in four steps: 1. One salesperson reaches out to the potential customer by phone to put together a full profile of the customer, including skills and location preferences (Germany, Italy, France, etc.). The call takes on average 20 minutes. After the call, each profile is forwarded to a language teacher. 2. The language teacher looks at the student’s profile and organizes a quick follow-up call. This takes, on average, 40 minutes per profile. The teacher rejects 60% of the profiles as the student would not have the language skills to benefit from an STC trip. From the remaining 40% of the profiles, half tell the teacher that they are no longer interested in participating. The teacher then forwards the remaining profiles to the STC accountant. 3. STC’s accountant then contacts the student to make a 10% down payment. This takes about 20 minutes per customer. 4. Finally, the teacher’s assistant contacts the customer to confirm the trip and start working on a travel schedule. At this point, an average of one-third of the students decide that they will not participate in the trip (in which case, STC and the student agree to give the 10% down payment to a charitable cause). This takes on average 50 minutes per student. All employees work 8 hours per day. Which resource is the bottleneck? 1. The salesperson 2. The language teacher 3. The accountant 4. The teacher’s assistant Calculation of implied utilization Yield is based on “1 good output.” Since the goal is “2 good outputs” per day, demand has been doubled. Demand is calculated in reverse order, starting with teacher’s assistant and finishing with salesperson. 60. Consider the following four-step assembly operation with quality problems. All resources are staffed by one employee. 1. The first resource has a processing time of 5 minutes per unit. 2. The second resource has a processing time of 6 minutes per unit. 3. The third resource has a processing time of 3 minutes per unit. With a 30% probability, the flow unit coming out of the third resource must be reworked. In that case, the operations at the first, second, and third resources are repeated. You can assume that (a) rework always succeeds (i.e., a unit going through the rework loop will always work after the third resource) and (b) the processing times for units in rework are the same as for regular units. 4. The fourth resource has a processing time of 4 minutes per unit. Which resource in the process is the bottleneck? a. The first resource b. The second resource c. The third resource d. The fourth resource Good Rework Total per unit IU per minute [ 5 6 Re + . sou 0 5 rce . 5 / 1 7 × 5 0 × ] 3 + 3 = 6 1 = 6 [ 6 7 W Re + . L sou 0 8 rce . 6 / = 2 7 × 6 0 × ] 4 + 3 = 7 1 = 7 [ 3 4 Re + . sou 0 8 rce . 3 / 3 7 × 3 0 × ] 2 + 2 = 4 1 = 4 Re 1 sou . 4 rce 0 / 4 0 × 4 4 1 = 4 The second resource is the bottleneck since it has the highest implied utilization. 61. Consider the following four-step assembly operation with quality problems. All resources are staffed by one employee. 1. The first resource has a processing time of 5 minutes per unit. 2. The second resource has a processing time of 6 minutes per unit. 3. The third resource has a processing time of 3 minutes per unit. With a 30% probability, the flow unit coming out of the third resource must be reworked. In that case, the operations at the first, second, and third resources are repeated. You can assume that (a) rework always succeeds (i.e., a unit going through the rework loop will always work after the third resource) and (b) the processing times for units in rework are the same as for regular units. 4. The fourth resource has a processing time of 4 minutes per unit. What is the capacity of the process (in units per hour)? What is the capacity of the process (in units per hour)? The second resource is the bottleneck since it has the highest implied utilization. The capacity is 1/7.8 = 0.1282 unit per minute, × 60 = 7.7 units per hour. 62. Consider a process that has multiple flow units with different demand rates and different paths through the process flow diagram. Consider the following statements: 1. The resource with the largest total demand rate is the bottleneck. 2. The implied utilization can never be bigger than 100%. III. The resource that has the highest implied utilization is the bottleneck. Which of the following choices identifies the correct statement(s)? a. III only b. I and II c. I and III d. None of these are correct Implied utilization can be higher than 100%. Total demand and capacity at the resource must be considered in determining where the bottleneck is located. The resource with the highest implied utilization is the bottleneck. 63. GV is a small accounting firm supporting wealthy individuals in their preparation of annual income tax statements. Every December, GV sends out a short survey to its customers, asking for the information required for preparing tax statements. Based on 50 years of experience, GV categorizes its cases into the following two groups: ▪ Group 1 (new customers): 20 percent of cases ▪ Group 2 (repeat customers): 80 percent of cases This year, there are 35 income tax statements arriving each week. To prepare the income tax statement, GV has three resources, or employees. The following activities are carried out by employees: ▪ An administrative support person processes every tax statement. ▪ A senior accountant (the owner of GV) processes only tax statements for new customers. ▪ A junior accountant processes tax statements for repeat customers. The administrative support person can process 40 statements per week. The senior accountant can process 10 statements per week. The junior accountant can process 30 statements per week; these statements can be completed more quickly given past information on file about the clients. What is the implied utilization for the junior accountant? A. 33.3% B. 66.7% C. 83.3% D. 93.3% Implied utilization is Total demand at the resource/Capacity at the resource. Demand for the junior accountant is 80% of the 35 statements arriving weekly, or 28 statements. The capacity is 30 statements per week. IU = 28/30 = 93.3%. Which resource is the bottleneck? 1. The administrative support person 2. The senior accountant 3. The junior accountant 4. There is no bottleneck The bottleneck is the resource with the highest implied utilization. Administrative support person IU = 35/40 = 87.5%. Senior accountant IU = 7/10 = 70%. Junior accountant IU = 35/40 = 93.3%. Therefore, the junior accountant is the bottleneck resource. 65. Which of the following statements about the concepts of “labor utilization” and “implied utilization” is correct? a. Labor utilization is above 100% if the process is capacity constrained. b. Labor utilization is above 100% if the process is demand constrained. c. Labor utilization is always the same as implied utilization. d. If the process is capacity constrained, then implied utilization is bigger than the labor utilization. e. If the process is demand constrained, then implied utilization is bigger than the labor utilization. f. None of these are correct. Labor utilization cannot be above 100%. Implied utilization can exceed 100%, as it includes additional information about how much demand exceeds capacity of the resource. In a capacity-constrained process, implied utilization will be bigger than utilization.