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business
principles of operations

Managing Business Process Flows Principles Of Operations Management 3rd Edition Anupindi, Raví - Solutions

10 What actions can a firm like P&G take to help diminish the bullwhip effect in its supply chain?
9 What actions can a firm like Walmart take to help diminish the bullwhip effect on its supply chain?
8 Why do price promotions exacerbate the bullwhip effect? What countermeasures can improve the situation?
7 At each stage of a supply chain, why do forecasts based on orders received lead to the bullwhip effect, especially if lead times are long? What countermeasures can improve the situation?
6 What are some advantages of heijunka, or level production?Why are short changeover times essential if heijunka is to succeed?
5 What are some mechanisms to implement a pull system in a multiproduct plant? What are the pros and cons of each mechanism?
4 List conditions under which a cellular layout is most beneficial. Under what conditions is a functional layout to be preferred?
3 Taiichi Ohno, architect of the Toyota Production System, claims to have been inspired by U.S. supermarkets in his use of kanban cards. Describe how a supermarket dairy section fits in with use of kanbans in the Toyota Production System.
2 A manufacturer of auto parts has just learned about the Toyota Production System and is trying to implement lean operations. Traditionally, there has been no control on the amount of work-in-process inventory between stages (it has been known to exceed 500 parts between some stages). As a first
1 How does the use of kanbans result in a pull system?
10 Specify appropriate control chart to monitor performance in the following instances in assessing performance of an airline.a. Flight delay from the announced arrival timeb. Fraction of flights delayed out of twenty flownc. Number of bags lost per 1000 flownd. Number of customer complaints
9 Evaluate with explanation the following statements, circle the appropriate response, and explain briefly.a. Suppose the control limits for a process are set at 3 standard deviations from the mean. If the process is in control, 99.73% of its output will meet the specifications. True or false?b. As
8 Balding Inc. is the official producer of basketballs used in NBA tournaments. The Dallas Mavericks have placed a large order for Balding’s Fusion basketballs of 29.5-inch diameter, which feature exclusive micropump technology. Jennifer Boling, the Mavericks’ head of basketball operations,
7 A bank has recently taken over the billing function of a company. An agreement stipulates that the bank should process 99.2% of the bills within 4 hours. A study of the current process indicates that the processing time averages 2.2 hours per bill with a standard deviation of 0.8. A process
6 If product specifications remain unchanged, as the sigma capability of a process improves from being a 1-sigma to a 4-sigma process, what is the effect on the range between the control limits (UCL – LCL)? Does it become narrower, wider, or remain unchanged? Why?
*5 Consider a machine producing drive shafts with a mean diameter of 6 cm and a standard deviation of 0.01 centimeters. To see if the process is in control, we take samples of size 10 and evaluate the average diameter over the entire sample. Customer specifications require drive shafts to be
4 Government regulations mandate that Belgian chocolate bars sold in packages of 1⁄2 kilogram cannot weigh less than 1⁄2 kilogram, the specified weight on the package. If regulations are violated, the company is fined. The chocolate machine at the Cote d’Or chocolate company fills packages
*3 In measuring and evaluating the quality of banking services, analysts have found that customers regard accuracy, timeliness, and responsiveness as the most important characteristics. Accordingly, First Chicago Bank constantly monitors and charts almost 500 performance measures of these quality
2 Natural Foods sells Takeoff, a breakfast cereal, in onepound boxes. According to Food and Drug Administration (FDA) regulations, a one-pound box must contain at least 15.5 ounces of cereal. However, Natural Food’s box-filling process is not perfect: its precision, expressed in terms of the
*1 Costello Labs supplies 500-cc bottles of treated Elixir plasma solution to Mercy Hospital. Several factors are important in assessing plasma quality, such as purity, absence of AIDS or hepatitis virus, and bacterial count.The most important quality characteristic, however, is protein
12 Give three examples of improving process capability through better design.
11 It has been observed that in the airline industry, baggage handling is about a four-sigma process, whereas frequency of airline fatalities corresponds to a sevensigma capability. How can two processes within the same industry be so different?
10 What does six-sigma capability mean? Why is it important to insist on such high standards?
9 What are two concrete ways of measuring process capability? How are they related? How can they be improved?
8 How can the process be “in control” but have dissatisfied customers? It sounds like “the operation was successful, but the patient died.” Comment on this apparent paradox.
7 What factors should one consider in setting control limits? What are the trade-offs involved in determining the width of a control band?
6 What are two main types of process variability?How can we identify and remove the sources of this variability?
5 Give three everyday life examples of situations where the feedback control principle can be applied for collecting information and making decisions.
4 What information do run charts, multi-vari charts, and control charts provide in addition to that contained in a histogram that shows variability in process performance?
3 In operating an airline, on-time performance is a critical measure that customers value. Suppose you plot a histogram of actual arrival and departure times in relation to the scheduled times. What information will it provide that you can use to improve the process?
2 Suppose you are managing a grocery store and would like to provide a first-rate shopping experience to your customers. Outline how you would go about determining factors that are important to them, how well you are doing in meeting their needs and expectations, and how you can improve your
1 Discuss with three examples from everyday life where variability in product or process performance leads to customer dissatisfaction even though the average performance is considered good.
13 Drive-through window operations are becoming an increasing source of competitive advantage for the fast-food restaurant business. McBerger’s has performed poorly in this area compared to Mandy’s, the leader in drive-through operations. The service from a drive-through window is staged. At
12 BizTravel.com is a travel Web site that recently announced “BizTravel Guarantee,” putting money behind customer-service guarantees.a. One of the items in the BizTravel guarantee states,“If your customer service e-mail is not responded to within two hours, we’ll pay you $10.” Customers
*11 Master Karr is a supplier of industrial parts. All orders are received at a call center. The call center has 15 phone lines, so that a maximum of 15 callers may be in the system at a time. Calls arrive at an average of 4 calls per minute. The call center currently has 5 customer service
10 V.V. Ranger is a seller of industrial products. All purchases by customers are made through call centers where Ranger representatives take orders. Currently, Ranger has over 350 warehouses in the United States, each with its own call center. Customers call one of the call centers and wait on
*9 Burrito King, a new fast-food franchise, has had problems with its drive-through window operations.Customers arrive at an average rate of one every 30 seconds. Current service time has averaged 25 seconds with a standard deviation of 20 seconds. A suggested process change, when tested, results
8 When customers of Henniker Bank believe a mistake has been made on their account statements, their claims are forwarded to the bank’s research department, whose trained clerks carefully research and document the transactions in question. On completing her investigation, a clerk phones the
*7 Since deregulation of the airline industry, increased traffic and fierce competition have forced Global Airlines to reexamine the efficiency and economy of its operations. As part of a campaign to improve customer service in a cost-effective manner, Global has focused on passenger check-in
6 First Local Bank would like to improve customer service at its drive-in facility by reducing waiting and transaction times. On the basis of a pilot study, the bank’s process manager estimates the average rate of customer arrivals at 30 per hour. All arriving cars line up in a single file and
*5 Heavenly Mercy Hospital wants to improve the efficiency of its radiology department and its responsiveness to doctors’ needs. Administrators have observed that, every hour, doctors submit an average of 18 Xray films for examination by staff radiologists. Each radiologist is equipped with a
4 M.M. Sprout, a catalog mail order retailer, has one customer service representative (CSR) to take orders at an 800 telephone number. If the CSR is busy, the next caller is put on hold. For simplicity, assume that any number of incoming calls can be put on hold and that nobody hangs up in
3 Entrepreneur John Doe has just founded Pizza-Ready, which will accept pizza orders for pickup over the phone. Pizza-Ready’s strategy is to compete with established pizza restaurants by offering superior, fresh, made-to-order deep-dish pizza and excellent service. As part of his advertising
2 A mail-order company has one department for taking customer orders and another for handling complaints.Currently, each department has a separate telephone number. Each has 7 telephone lines served by 2 customer service representatives. Calls come into each department at an average rate of 1 per
1 A call center has a total of 12 telephone lines coming into its customer service department, which is staffed by 5 customer service representatives. On average, 2 potential customers call every minute. Each customer service representative requires, on average, 2 minutes to serve a caller. After
8 In this chapter, we considered mostly quantitative measures of process performance in operational terms (such as flow time and inventory) as well as economic terms (including operating revenues and costs). Give five examples of strategies that would improve the perception of the process
7 In this chapter, we emphasized strategies for improving the process performance in terms of the average flow time and average inventory. Give examples in which it may be inadequate to consider only the average values of these measures.
6 Discuss and contrast the following three statements:• “The goal of every process manager should be to satisfy as many customers as possible as quickly as possible.”• “The goal of every process manager should be to minimize queues and inventories.”• “The goal of every process
5 In organizing resources to meet variable demand, service process managers can either pool resources so that each resource unit is available for processing any customer, or they can assign specific resources to specific types of customers. Discuss the pros and cons of each strategy and state which
4 What is the effect of limited buffer capacity on the number of customers who cannot get in and the waiting time of those who do get in?
3 In service operations such as supermarkets and medical clinics, process managers strive to make sure that they have sufficient resources on hand to process arriving customers. In spite of this effort, why do we often experience long lines?
2 Why are different strategies needed to manage maketo-stock and make-to-order processes?
1 A fundamental problem in operations management is that of matching supply and demand. What possible strategies can process managers use to address this problem?
11 Reconsider Exercise 8. Now suppose that the mailorder firm follows a periodic review policy with a review period of 2 weeks. Recall that the firm has four regional warehouses with demand at each warehouse that is normally distributed with a mean of 10,000 per week and a standard deviation of
*10 Daily consumption of fasteners at Boeing commercial airplane manufacturing facility is normally distributed with a mean of 1,000 and a standard deviation of 150. Each fastener costs $2. Boeing reviews its inventory every 2 weeks and places an order to bring the inventory position of fasteners
9 Hi-Tek is a retailer of computer equipment in the greater Chicago region with four retail outlets.Currently, each outlet manages its ordering independently.Demand at each retail outlet averages 4,000 units per week. Each unit costs $200, and Hi-Tek has an annual holding cost of 20%. The fixed
*8 A mail-order firm has four regional warehouses.Demand at each warehouse is normally distributed with a mean of 10,000 per week and a standard deviation of 2,000. Annual holding cost is 25%, and each unit of product costs the company $10. Each order incurs an ordering cost of $1,000 (primarily
7 Northwest Airlines runs daily flights from Detroit to Amsterdam. They face a fixed cost of $70,000 for each flight independent of the actual number of passengers on the plane. There are 310 seats available on a plane.One-way tickets generate revenues of $600 apiece when used but are fully
6 The residents of Bucktown, Illinois, place their trash at the curb each Wednesday morning to be picked up by municipal crews. Experience shows that the total amount of trash put out has a normal distribution with a mean of 35 tons and a standard deviation of 9 tons. Crews of full-time city
*5 As owner of Catch-of-the-Day Fish Shop, you can purchase fresh fish at $18 per crate each morning from the Walton Fish Market. During the day, you sell crates of fish to local restaurants for $120 each.Coupled with the perishable nature of your product, your integrity as a quality supplier
4 Johnson Electronics sells electrical and electronic components through catalogs. Catalogs are printed once every two years. Each printing run incurs a fixed cost of $25,000, with a variable production cost of $5 per catalog. Annual demand for catalogs is estimated to be normally distributed with
3 The Home and Garden (HG) chain of superstores imports decorative planters from Italy. Weekly demand for planters averages 1,500 with a standard deviation of 800. Each planter costs $10. HG incurs a holding cost of 25% per year to carry inventory. HG has an opportunity to set up a superstore in
*2 Weekly demand for DVD-Rs at a retailer is normally distributed with a mean of 1,000 boxes and a standard deviation of 150. Currently, the store places paper orders faxed to the supplier. Assume 50 working weeks in a year and the following data:• leadtime for replenishment of an order is 4
1 MassPC Inc. produces a 4-week supply of its PC Pal model when stock on hand drops to 500 units. It takes 1 week to produce a batch. Factory orders average 400 units per week, and standard deviation of forecast errors is estimated at 125 units.a. What level of customer service is MassPC providing
9 Discuss how the inability to monitor and reorder inventory on a real-time basis impacts safety inventory.
8 In the early days of paint manufacturing, manufacturers of paint used to produce paint of appropriate colors and sizes to be sold in retail stores. Today, consumers go to retail stores and select the color they wish, and the retailer mixes the pigment into a base paint to make the chosen color.
7 Going online allows a firm to supply online orders from a centralized location rather than using many retail outlets because customers are willing to wait a little for the online order to be delivered. Do you think that the inventory benefits of this centralization will be higher for staple
6 It takes the same amount of inventory to operate a single warehouse system as a four warehouse distribution network. True or false? Explain.
5 If the quality of goods provided by suppliers is identical, purchasing goods based on lowest price is the best strategy. Discuss.
4 Consider two products with the same margins but with different salvage values. Which product should have a higher service level, and why?
3 How does service level impact the level of safety inventory?
2 Discuss the pros and cons of different ways to measure service level.
1 What is the role of safety inventory?
*10 Complete Computer (CC) is a retailer of computer equipment in Minneapolis with four retail outlets.Currently each outlet manages its ordering independently.Demand at each retail outlet averages 4,000 units per week. Each unit costs $200, and CC has a holding cost of 20% per annum. The fixed
9 Superfast Motors manufactures and sells a wide variety of motors to industrial customers. All motors cost about the same and are assembled on the same line.Switching over from assembling one motor to another requires about two hours. Superfast assembles motors to be stocked in a distribution
8 A supplier to Toyota stamps out parts using a press.Changing a part type requires the supplier to change the die on the press. This changeover currently takes four hours. The supplier estimates that each hour spent on the changeover costs $250. Demand for parts is 1,000 per month. Each part costs
7 (See Appendix 2) Gourmet Coffee (GC) is a specialty coffee shop that sells roasted coffee beans. It buys green beans, roasts them in its shop, and then sells them to the consumer. GC estimates that it sells about 150,000 pounds of coffee per year. Green beans cost about $1.50 per pound. In
6 National Bank operates a network of automated teller machines (ATMs). Cash withdrawals at an ATM average about $80. The bank estimates that the fixed cost of filling an ATM with cash is about $100 regardless of the amount of cash put in. Average numbers of cash withdrawals per week is about 150.
5 Major Airlines would like to train new flight attendants in an economically rational way. The airline requires a staff of about 1,000 trained attendants to maintain inflight service. Because of the nature of the job, attendants have a high propensity to quit, with average job tenure being about
*4 A retailer estimates her fixed cost for placing an order at $1,000. Currently, she orders in optimal quantities of 400 units. She has, however, heard of the benefits of just-in-time purchasing—a principle that advocates purchasing goods in smaller lots as a means of keeping inventory down. To
3 Victor sells a line of upscale evening dresses in his boutique. He charges $300 per dress, and sales average 30 dresses per week. Currently, Victor orders a 10-week supply at a time from the manufacturer. He pays $150 per dress, and it takes two weeks to receive each delivery. Victor estimates
*2 BIM Computers Inc. sells its popular PC-PAL model to distributors at a price of $1,250 per unit. BIM’s profit margin is 20%. Factory orders average 400 units per week. Currently, BIM works in a batch mode and produces a four-week supply in each batch. BIM’s production process involves three
1 Suppose you purchase a part from a supplier for a unit cost of $4 with which you assemble red widgets.On average, you use 50,000 units of this part each year. Every time you order this particular part, you incur a sizable ordering cost of $800 regardless of the number of parts you order. Your
8 Which policy—continuous review or periodic review—results in a larger cycle inventory? Explain why.
7 Discuss whether reduction in replenishment lead times will reduce cycle inventory.
6 How can the use of information technology result in lower inventory?
5 Explain why fixed costs must decrease by a factor of four when reducing cycle inventory only by one half.
4 Explain why it is not absolutely critical to estimate the cost parameters accurately in implementing the economic order quantity model.
3 What are the key trade-offs in determining the economic order quantity?
2 Why do firms carry inventory even though it is costly to do so?
1 Explain how better inventory management affects a firm’s bottom line.
7 Reexamine Exercise 1. Assume that the capacity waste factors of the paralegals, tax lawyers, and senior partners are 20%, 30%, 35%, respectively.a. What is the theoretical capacity of the process?
*6 A company’s average costs and revenues for a typical month are $15 million and $18 respectively. It is estimated that 33% of the costs are variable, and the rest is fixed.a. What is the throughput profit multiplier?
5 An insurance company processes two types of claims:Life and Property. The capacity of processing life claims is 500 per month. The capacity of processing property claims is 1000 per month.a. Assuming a common bottleneck, what is the capacity of processing a mix of 50%-50% of the two types?
4 A company makes two products A and B, using a single resource pool. The resource is available for 900 minutes per day. The contribution margins for A and B are $20 and $35 per unit respectively. The unit loads are 10 and 20 minutes per unit.a. Which product is more profitable?b. The company
*3 Three hairstylists, François, Bernard, and Mimi, run Fast Service Hair Salon for busy professionals in the Gold Coast area of downtown Chicago (see Figure 1). They stay open from 6:45 a.m. to 9:00 p.m. in order to accommodate as many people’s work schedules as possible. They perform only
*2 Reconsider the law firm of Exercise 1. Assume the prevailing revenues per shopping and medical projects are $4000 and $5000 per project, respectively, and that out of pocket expenses associated with each project are negligible. The (fixed) cost of operating the office is $500,000 per month.a.
1 Alaw firm specializes in the issuance of insurance policies covering large commercial real estate projects. The projects fall into two categories: shopping centers, and medical complexes. The typical work involved in each transaction is quite predictable and repetitive. The time requirements
8 Comment on the statement: “Maximizing utilization of each resource pool is an exercise in futility.”
7 Comment on the statement, “Doubling the number of units of a bottleneck resource will double the process capacity.”

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