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Chapter 7—Process Selection, Design, and Analysis

TRUE/FALSE

1. A bottleneck is the work activity that effectively limits throughput of a process.

ANS: T PTS: 1

2. A custom good or service is produced in anticipation of demand.

ANS: F PTS: 1

3. Configurations of standard parts, subassemblies, or services that can be selected by customers from a
limited set are called "make to order" goods and services.

ANS: F PTS: 1

4. The customer has no options from which to choose regarding make to stock goods and services.

ANS: T PTS: 1

5. Because services cannot inventory their output, they must forecast demand more accurately and better
manage the resources needed to provide the service.

ANS: T PTS: 1

6. A legal defense preparation is an example of a project.

ANS: T PTS: 1

7. Flow shop processes are more rigid and specialized than continuous flow processes.

OM3 Test Bank Chapter 7 1

 ANS: F PTS: 1

8. Job shop processes use flexible, general purpose equipment that is capable of customizing work for
individual customers.

ANS: T PTS: 1

9. Once a firm decides on the most appropriate process, they can then determine the type of goods they
need to create.

ANS: F PTS: 1

10. The Product-Process Matrix works well for both goods and services.

ANS: F PTS: 1

11. In using the Product-Process Matrix, the most appropriate match between products and processes
occurs along the diagonal of the matrix.

ANS: T PTS: 1

12. A company can differentiate itself from its competitors by positioning itself along the diagonal of the
Product-Process matrix.

ANS: F PTS: 1

13. In service operations, significant volume increases can and frequently are made without changes in the
service process, as would be expected in manufacturing.

ANS: T PTS: 1

14. A pathway is a route that a product takes in a job shop.

ANS: F PTS: 1

15. In a customer routed service, customers follow a very small number of possible and predetermined
pathways through the service system.

ANS: F PTS: 1

16. The service positioning matrix focuses on the service encounter level rather than the overall design of
the service system.

ANS: T PTS: 1

17. Service encounter repeatability provides a measure analogous to product volume for goods-producing
firms.

ANS: T PTS: 1

18. The service positioning matrix suggests that services should try to position themselves off the diagonal
in order to achieve superior performance.

ANS: F PTS: 1

OM3 Test Bank Chapter 7 2

19. In the introduction phase of the product life cycle, operations managers need to quickly standardize
their processes.

ANS: F PTS: 1

20. In service applications, flowcharts generally highlight the points of contact with the customer.

ANS: T PTS: 1

21. In designing processes, one often starts at the detail level and moves progressively toward the
aggregate.

ANS: F PTS: 1

22. A group of tasks needed to create and deliver an intermediate or final output is called a process.

ANS: F PTS: 1

23. As one moves up the hierarchy of work, the total number of tasks that must be coordinated becomes
larger.

ANS: T PTS: 1

24. A process map and a value stream map are two terms for the same thing.

ANS: F PTS: 1

25. The "line of customer visibility" shows the separation between the back office and front office
activities in a service flowchart.

ANS: T PTS: 1

26. Improving process designs nearly always focus on decreasing costs.

ANS: F PTS: 1

27. Process mapping can be characterized as the fundamental rethinking and radical redesign of business
processes.

ANS: F PTS: 1

28. Service facilities have a greater range of resource utilization than manufacturing.

ANS: T PTS: 1

29. A bottleneck is the work activity that effectively limits throughput of a process.

ANS: T PTS: 1

30. Little's Law states that Throughput = Flow Time x Work-In-Process.

ANS: F PTS: 1

OM3 Test Bank Chapter 7 3

MULTIPLE CHOICE

1. A manufacturing firm that produces a standardized product, not made of discrete parts, with little-to-
no customization, with high demand, is most likely to use this type of process.
a. project
b. job shop
c. flow shop
d. continuous flow
ANS: D PTS: 1

2. Ships, weddings and estate planning are examples of ____ goods and services
a. Make-to-order
b. Assemble-to-order
c. Make-to-stock
d. Continuous flow
ANS: A PTS: 1

3. Dell computers and Subway sandwiches are examples of ____ goods.

a. Custom
b. Option
c. Standard
d. Job shop
ANS: B PTS: 1

4. Appliances and iPods are examples of ____ goods.

a. Custom
b. Option
c. Standard
d. Assemble to order
ANS: C PTS: 1

5. The terms, "general purpose equipment," "flexible and capable of customizing work" and "wide
variety of goods or services" best relate to
a. Projects
b. Job shops
c. Flow shop processes
d. Continuous flow processes
ANS: B PTS: 1

6. Automobile factories and hospital laboratory work are examples of

a. Projects
b. Job shop
c. Flow shop processes
d. Continuous flow processes
ANS: C PTS: 1

7. What type of process would a paper mill most likely use?

a. Project

OM3 Test Bank Chapter 7 4

 b. Job shop
c. Flow shop process
d. Continuous flow process
ANS: D PTS: 1

8. Marketing Product Characteristics/Decisions for the Product-Process Matrix include all the following
except
a. Demand volume
b. Degree of customization
c. Pathways
d. Type of good
ANS: C PTS: 1

9. ____ offer customers broad freedom to select the pathways that are best suited for their immediate
needs and wants from many possible pathways through the service delivery system.
a. Provider-routed pathways
b. Customer-routed pathways
c. Highly repeatable service encounter activity sequences
d. ATMs
ANS: B PTS: 1

10. Using the Service Positioning Matrix, a limited number of customer pathways and highly repeatable
service encounter activity sequences would best relate to
a. Being below the diagonal
b. Continuous flow
c. Customer routed
d. Provider routed
ANS: D PTS: 1

11. During which phase of a product's life cycle does low unit cost become a top competitive priority?
a. Introduction
b. Growth
c. Maturity
d. Decline
ANS: C PTS: 1

12. Which of the following is not a major activity in designing a goods-producing or service-providing
process?
a. Utilize reengineering
b. Flowchart the current process
c. Flowchart future state
d. Define appropriate performance measures
ANS: A PTS: 1

13. A process map (flowchart)

a. Is boundary-less
b. Does not include information flow
c. Is often used as a baseline to describe how a process is performed
d. Must include a line of customer visibility

OM3 Test Bank Chapter 7 5

 ANS: C PTS: 1

14. A(n) ____ is a group of ____ needed to create and deliver an intermediate or final output.
a. Process; value chains
b. Activity; tasks
c. Task; activities
d. Activity; processes
ANS: B PTS: 1

15. Which is the correct order of hierarchy?

a. Activity, task, process, value chain
b. Value chain, process, task, activity
c. Process, value chain, activity, task
d. Value chain, process, activity, task
ANS: D PTS: 1

OM3 Test Bank Chapter 7 6

16. Transferring material between two non-adjacent workstations, waiting for service and requiring
multiple approvals are examples of
a. A value stream
b. A process map
c. Non-value-added activities
d. Little’s Law
ANS: C PTS: 1

17. Which of the following is least related to Value Stream Mapping?

a. Non-value activity
b. Time
c. Cost
d. Reengineering
ANS: D PTS: 1

18. Which of the following is not a common process design improvement strategy?
a. Increasing revenue
b. Decreasing agility
c. Decreasing cost
d. Decreasing flow time
ANS: B PTS: 1

19. Which one of the following best describes reengineering?

a. Radical redesign
b. Incremental, continuous improvement
c. Engineering-based value analysis
d. Repeatability
ANS: A PTS: 1

20. The lowest resource utilization is usually found in

a. A job shop
b. A flow shop
c. A continuous flow
d. An assembly line
ANS: A PTS: 1

21. The average number of entities completed per unit time -- the output rate -- from a process is
called ____.
a. Utilization
b. Throughput
c. Service rate
d. Work–in-process
ANS: B PTS: 1

22. The work activity that effectively limits throughput of a process is called a ____.
a. Process boundary
b. Make-to-order
c. Bottleneck
d. Throughput

OM3 Test Bank Chapter 7 7

 ANS: C PTS: 1

23. Little's Law

a. Removes process bottlenecks
b. Is a form of simulation
c. Focuses on finished goods inventory
d. Evaluates average process performance
ANS: D PTS: 1

24. Which one of the following major activities is not one of the six major activities to design a goods-
producing or service-providing process?
a. Define the purpose and objectives of the process.
b. Create a detailed process or value stream map that baselines current performance.
c. Use the product life cycle for each good or service to create a future state process map.
d. Select the appropriate equipment and technology.
ANS: C PTS: 1

SHORT ANSWER

1. Differentiate among custom, option and standard goods and services. Also give a goods and a service
example of each.

ANS:
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.

PTS: 1

2. Explain and differentiate the characteristics of a project, job shop, flow shop and continuous flow
process.

ANS:
The following characteristics describe a project:
• One-of-a-kind
• Large scale
• Complex
• Wide variation in specifications or tasks

OM3 Test Bank Chapter 7 8

 • 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
• General 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

PTS: 1

3. Give three examples of goods or services associated with each of the process types: project, job shop,
flow shop and continuous flow.

ANS:
Examples for project process:
• Skyscrapers (good)
• Cruise ships (good)
• Wedding (service)
• Surgery (service)

Examples for job shop process:

• Machine tools (good)
• Bulldozers/heavy equipment (good)
• Hospital care (service)
• Beauty salon (service)

Examples for flow shop process:

• Refrigerators (good)
• Furniture (good)
• Insurance policies (service)
• Stock trades (service)

Examples for continuous flow process:

• Paper (good)

OM3 Test Bank Chapter 7 9

 • Steel (good)
• Automated car wash (service)
• Broadcasting (service)

PTS: 1

4. Explain the relationship between custom, option and standard goods and services as they relate to
project, job shop, flow shop and continuous flow processes.

ANS:
Custom goods or services require job shop and project types of processes. Option goods and services
typically use flow shop and job shop processes. Standardized goods or services normally adopt a flow
shop or continuous flow type of process.

PTS: 1

5. Explain how a product’s life cycle has important implications in terms of process design and choice.

ANS:
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.

PTS: 1

6. 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.

ANS:
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.

PTS: 1

7 Some argue that modern technology invalidates the application of the product-process matrix. Explain
their logic.

OM3 Test Bank Chapter 7 10

 ANS:
The theory of the product-process matrix has been challenged by some who suggest that advanced
manufacturing technologies may allow firms to be successful even when they position themselves
off the diagonal. These new technologies provide manufacturers with the capability to be highly
flexible and produce lower volumes of products in greater varieties at lower costs. Therefore, off-
diagonal positioning strategies are becoming more and more viable for many organizations and
allow for "mass customization" strategies and capabilities.

PTS: 1

8. Explain why the product-process matrix does not transfer well to services.

ANS:
The product-process matrix does not transfer well to service businesses and processes. In the
product-process matrix, product volume, the number of products and the degree of
standardization determine the manufacturing process that should be used. This relationship
between volume and process is not found in many service businesses. To meet increased volume,
service businesses such as retail outlets, banks and hotels have historically added capacity in the
form of new stores, branch banks and hotels to meet demand, i.e., bricks and mortar, but do not
change their processes.

PTS: 1

9. Differentiate between a customer-routed service and a provider-routed service. Include examples of

each.

ANS:
Customer-routed services are those that offer the customer broad freedom to select the pathways that
are best suited for their immediate needs and wants from many possible pathways through the service
delivery system. The customer decides what path to take through the service delivery system with only
minimal guidance from management. Searching the Internet to purchase some item is one example.
There are virtually an infinite number of possible pathways to select because the customer has almost
complete freedom to self-design the service experience. Amusement parks, museums and health clubs
are other examples of customer-routed services with an essentially endless number of possible
pathways.

Provider-routed services constrain customers to follow a very small number of possible predefined
pathways through the service system. An automatic teller machine (ATM) is an example. A limited
number of pathways exist; for example, getting cash, making a deposit, checking an account balance,
and moving money from one account to another. Another familiar example of a provider-routed is an
automobile license bureau. To renew your driver's license at a state licensing office, you might follow
a structured set of steps depending on the type of vehicle you want to drive, your physical capabilities
such as eyesight and hearing, and your age.

PTS: 1

10. Compare and contrast a product-process matrix with a service positioning matrix.

ANS:

OM3 Test Bank Chapter 7 11

 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 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).

PTS: 1

11. What are the major activities in designing a goods-producing or service-providing process?

ANS:
1. Define the purpose and objectives of the process.
2. 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.
3. 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.
4. Identify and define appropriate performance measures for the process.
5. Select the appropriate equipment and technology.
6. 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.

PTS: 1

12. Explain the concept of hierarchy of work. Why is it useful in process design activities?

ANS:
Process maps can be drawn at different levels of detail and aggregation depending upon the objective
of the design. These levels can be described along a hierarchy of work:
1. Task
2. Activity
3. Process
4. Value chain

In this hierarchy, a process is a subset of a value chain, an activity is a subset of a process and a task is
a subset of an activity. A task is a specific unit of work required to create an output. One example is
drilling a hole in a steel part or completing an invoice. An activity is a group of tasks needed to create
and deliver an intermediate or final output. Tasks are grouped together to form a work activity, and are
usually accomplished together at a workstation -- a location where activities are performed -- to gain
job and equipment efficiencies. Workstations might be a position on an assembly line, a manufacturing
cell or an office cubicle. As we move down the hierarchy, process maps become more detailed.

PTS: 1

13. Define a value stream map. How does this differ from a regular process map?

ANS:

OM3 Test Bank Chapter 7 12

 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.

PTS: 1

14. What are some management strategies to improve process designs?

ANS:
• increasing revenue by improving process efficiency in creating goods and services and
delivery of the customer benefit package;
• increasing agility by improving flexibility and response to changes in demand and
customer expectations;
• increasing product and/or service quality by reducing defects, mistakes, failures, or
service upsets;
• decreasing costs through better technology or elimination of non-value-added activities;
and
• decreasing process flow time by reducing waiting time or speeding up movement
through the process and value chain.
• decreasing the carbon footprint of the task, activity, process, and/or value chain.

PTS: 1

15. Define reengineering. How does it differ from other approaches to process improvement?

ANS:
Reengineering has been defined as "the fundamental rethinking and radical redesign of business
processes to achieve dramatic improvements in critical, contemporary measures of performance such
as cost, quality, service and speed." Re-engineering was spawned by the revolution in information
technology and involves asking basic questions about business processes: "Why do we do it?" and
"Why is it done this way?" Such questioning often uncovers obsolete, erroneous or inappropriate
assumptions. Radical redesign involves tossing out existing procedures and reinventing the process,
not just incrementally improving it. The goal of re-engineering is to achieve quantum leaps in
performance.

PTS: 1

16. Explain Little's Law and how it can be used.

ANS:
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 x Flow time

or WIP = R x 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.

PTS: 1

OM3 Test Bank Chapter 7 13

PROBLEM

1. An automobile emissions testing center has six (6) inspectors and tests 50 autos per hour. Each
inspector can inspect twelve (12) autos per hour. What is the center's utilization?

ANS:
Utilization (U) = Demand Rate/[Service Rate x Number of Servers]
U = 50/[6(12)] = 0.694 or 69.4%

PTS: 1

2. An automobile emissions testing center has six (6) inspectors and tests 50 autos per hour. Each
inspector can inspect twelve (12) autos per hour. If the center wants a utilization of 90%, how many
inspectors are required?

ANS:
Utilization (U) = Demand Rate/[Service Rate x Number of Servers]
.90 = 50/[12 x N]
N = 4.63 so they would require 5 inspectors.

PTS: 1

3. An automobile emissions testing center has six (6) inspectors and tests 50 autos per hour. Each
inspector can inspect twelve (12) autos per hour. What would the service rate need to be in order to
achieve 90% utilization?

ANS:
Utilization (U) = Demand Rate/[Service Rate x Number of Servers]
.90 = 50/[SR x 6]
SR = 9.26 per hour

PTS: 1

4. What is the implied service rate per service-counter employee at an airport automobile rental counter if
customer demand is 36 customers per hour, two service counter employees are on duty, and their labor
utilization is 75%?

ANS:
Utilization (U) = Demand Rate/[Service Rate x Number of Servers]
.75 = 36/[SR x 2]
SR = 24 customers per hour

PTS: 1

5. What is the implied service rate at a bank teller's window if demand is 26 customers per hour and the
bank staffs 3 tellers with an average utilization of 80%?

ANS:
Utilization (U) = Demand Rate/[Service Rate x Number of Servers]
.80 = 26/[SR x 3]
SR = 10.83 customers per hour

PTS: 1

OM3 Test Bank Chapter 7 14

 6. How many computer repair troubleshooters should be on duty from 8:00 p.m. to midnight if total
demand during that period is 60 calls? The service rate is five (5) calls per hour and the target
utilization is 90%.

ANS:
Utilization (U) = Demand Rate/[Service Rate x Number of Servers]
.90 = 60/[5 x N]
N = 13.33 people

PTS: 1

7. A company is able to process 100 customer statements (bills) per day per processing clerk. It has 250
customer statements to process per day. How many full-time processing clerks are needed if the
company wants a processing-clerk utilization rate as close to .80 as possible?
ANS:
.80 = 250/(100 x N) => 100N = 250/.8 => 100N = 312.5 => N = 3.125 = 3 clerks

PTS: 1

8. A company is able to process 300 customer statements (bills) per day. The average processing time is
six (6) days. What is the average number of statements (bills) the company has in process at any time?

ANS:
WIP = R x T = 300(6) = 1,800

PTS: 1

9. A custom machine shop is able to process 25 orders per day. The average processing time is 4 days.
What is the average number of orders that are in process at any time?

ANS:
WIP = R x T = 25(4) = 100

PTS: 1

10. An accounting firm is capable of processing 20 EZ tax forms per day and the average number of forms
on-hand in the office is 64 forms. The average processing time per EZ tax form is
ANS:
WIP = R x T => 64 = 20T => T= 64/20 = 3.2 days

PTS: 1

11. A Department of Motor Vehicle (DMV) testing center has ten (10) testers who test 75 drivers per day.
Each tester can test eight (8) drivers per day. What would the service rate need to be in order to
achieve 85% utilization?
ANS:
Utilization (U) = Demand Rate/[Service Rate x Number of Servers]
.85 = 75/[SR x 10] => SR = 8.824 = 9
9 drivers or more per day per tester

PTS: 1

OM3 Test Bank Chapter 7 15

12. A Department of Motor Vehicle (DMV) testing center has six (6) testers who test 50 drivers in total
per day. Each tester can test twelve (10) drivers per day. What is the center's utilization?
ANS:
Utilization (U) = Demand Rate/[Service Rate x Number of Servers]
Utilization = 50/[10 x 6] = 50/60 = .8333 = 83.33%

PTS: 1

13. A Department of Motor Vehicle (DMV) testing center currently has six (6) testers who test 68 drivers
per day. Each tester can test twelve (12) drivers per day. Testers are complaining about being too busy
and the center being understaffed. In order for there to be 80% utilization of the testers, how many
testers should be added at the center?
ANS: 3
Utilization (U) = Demand Rate/[Service Rate x Number of Servers]
.80 = 68/[12 x N] => 12N = 68/.80 => N = 7.08 = 7 testers. One tester should be added.

PTS: 1

14. An order fulfillment process normally operates two shifts a day, six days per week. Under normal
conditions, 380 orders can be processed per shift. What is the weekly capacity?
ANS:
Capacity = (380/shift)(2 shifts/day)(6 days/week) = 4560 orders/week

PTS: 1

15. A manufacturer’s average work-in-process inventory for Part 1234 is 1,250 parts. The workstation
produces parts at the rate of 150 parts per day. What is the average amount of time a part spends at this
workstation?

ANS:
WIP = R x T
1250 = 150(T)
T = 8.33 days

PTS: 1

16. The average number of hotel rooms occupied per day during the month of March is 225. Rooms are
booked on average for 2.5 days. On average, how many new bookings occur each day?

ANS:
WIP = R x T
225 = R(2.5)
R = 90 rooms/day

PTS: 1

17. A car rental company at a major airport has 70% of its fleet of 200 cars rented each day on average.
Cars are rented for an average of 4 days. How many rentals are processed each day on average?

ANS:
WIP = R x T
0.7(200) = R(4)

OM3 Test Bank Chapter 7 16

 R = 35 cars/day.

PTS: 1

18. For a Marriott hotel call center the expected service rate was 3.0 minutes per telephone call per
customer service representative (CSR). With 3 telephone CSRs on-duty during the 6:30 to 7:00 am
time period, and assuming a 90% target CSR labor utilization rate, how many telephone calls can
these 3 CSRs handle during this time period.

ANS:
Utilization (U) = Demand Rate/[Service Rate x Number of Servers]
SR = 30 min./3 min. = 10 telephone calls
.90 = DR/[10 x 3] => DR = .90(30) = 27 telephone calls for the 6:30-7:00 am time slot.

PTS: 1

19. You were just promoted to manage the process defined by the four stages A to D below. This process
could be a human resource management, marketing, accounting, finance, or engineering process and
you are the manager. This is your chance to impress your boss and be promoted again. After three
months on the job you realize something is not right with the process because your employees
experience big pile ups of work, things take too long to be processed, the opportunity for error is
increasing, and the entire process is approaching chaos. Do a process and capacity analysis of this
process. The numbers in parentheses (#) are the times in minutes to complete one unit of work.
Demand on the process averages 30 units per hour and each unit must be worked on by all four stages.
Administrative clerk(s) do Stage A work. The assistant manager(s) do Stages C and D work. The
coding specialist(s) do Stage B work.

Currently, there are 3 administrative clerks, 2 coding specialist, and 3 assistant managers on duty.
Each assistant manager is cross-trained so he/she can do Stage C or Stage D work.

a. Which stage of work is the bottleneck? What is the capacity (in units per hour) at the bottleneck
stage?
b. What should the throughput rate be set at so that the utilization at the bottleneck stage is 90%?
c. Based on your throughput rate found in question b above, what will be the utilization at each of the
work stages?

ANS:

OM3 Test Bank Chapter 7 17

a. Stage B. Capacity is 20 units per hour.
b. 18 units/hour
c. Utilization: Stage 1 = .50, Stage 2 = .90, Stage 3 = .80, Stage 4 = .80

A B C D
Time/job 5 min. 6 min. 4 min. 4 min.
No. of resources 3 adm. clerks 2 coding spec. 1.5 asst. mgr. 1.5 asst. mgr.
Theor. capacity 36 units/hour 20 units/hour 22.5 units/hour 22.5 units/hour
Actual output 18/hour .9(20) = 18/hour 18/hour
18/hour
Actual 18/36 = .50 18/20 = .90 18/22.5 = .80 18/22.5 = .80
Utilization

PTS: 1

OM3 Test Bank Chapter 7 18