1. (No more than 1 page)

a. Why is it important to look at aggregate flow performance, as measured by average inventory, average flow time, and average throughput?

Aggregate flow performance is measured by average flow time, average inventory and average throughput. The whole unit is represented by the averages of these three measures.

b. Discuss why it is often easier to measure average inventory and average throughput rather than average flow time.

2. (No more than 1 page) The Internal Revenues Department of Tax Regulations writes regulations in accordance with laws passed by Congress. On average, the department completes 300 projects per year. The Wall Street Journal reports that, as of October 11, 2011, the number of projects currently on the departments plate is 588. Nevertheless, the department head claims that average time to complete a project is less than six months. Do you have any reason to disagree? Why or why not?

3. (No more than 1 page) The Wall Street Journal reported that although GM and Toyota are operating with the same number of inventory turns, Toyotas throughput is twice that of GM. The discrepancy, concluded the writer, could be due to much faster flow times and lower inventories by virtue of Toyotas productions system. Do you have any reason to disagree? Why or why not?

Case Analysis Problem:

Case 1. (Show all your works: including flow charts, all computational procedures)

a. A hospital emergency room (ER) is currently organized so that all patients register through an initial check-in process. At his or her turn, each patient is seen by a doctor and then exits the process, either with a prescription or with admission to the hospital. Currently, 55 people per hour arrive at the ER, 10 percent of who are admitted to the hospital. On average, 7 people are waiting to be registered and 34 are registered and waiting to see a doctor. The registration process takes, on average, 2 minutes per patient. Among patients who receive prescriptions, average time spent with a doctor is 5 minutes. Among those admitted to the hospital, average time is 30 minutes. On average, how long does a patient spend in the ER? On average, how many patients are being examined by doctors? On average, how many patients are there in the ER? Assume the process to be stable; that is, average inflow rate equals average outflow rate.

b. A triage system has been proposed for the ER. Under the proposed triage plan, entering patients will be registered as before. They will then be quickly examined by a nurse practitioner who will classify them as Simple Prescriptions of Potential Admits. While Simple Prescriptions will move on to an area staffed for regular care, Potential Admits will be taken to the emergency area. Planners anticipate that the initial examination will take 3 minutes. They expect that, on average, 20 patients will be waiting to register and 5 will be waiting to be seen by the triage nurse. Recall that registration takes an average of 2 minutes per patient. The triage nurse is expected to take an average of 1 minute per patients. Planners expect the Simple Prescriptions area to have, on average, 15 patients waiting to be seen. As before, once a patients turn comes, each will take 5 minutes of a doctors time. The hospital anticipates that, on average, the emergency area will have only 1 patients waiting to be seen. As before, once that patients turn comes, he or she will take 30 minutes of a doctors time. Assume that, as before, 90 percent of all patients are Simple Prescriptions. Assume, too, that the triage nurse is 100 percent accurate in making classifications. Under the proposed plan, how long, on average, will a patient spend in the ER? On average, how long will a Potential Admit spend in the ER? On average, how many patients will be in the ER? Assume the process to be stable; that is, average inflow rate equals average outflow rate.

c. Refer to Exercise 1.b. Once the triage system is put in place, it performs quite close to expectations. All data conform to planners expectations except for one set- the classifications made by the nurse practitioner. Assume that the triage nurse has been sending 91 percent of all patients to the Simple Prescription area when in fact only 90 percent should have been so classified. The remaining 1 percent is discovered when transferred to the emergency area by a doctor. Assume all other information from 1.b to be valid. On average, how long does a patient spend in the ER? On average, how long does a Potential Admit spend in the ER? On average, how many patients are in the ER? Assume the process to be stable; that is, average inflow rate equals average outflow rate.

Case 2. (Show all your works: including flow charts, detail computation procedures) Finance Inc. makes loans to qualified buyers of prefabricated garages from its parent company, MBPF inc. Having just reengineered its application-processing operations, MBPF Finance is now evaluating the effect of its changes on service performance. The subsidiary receives about 1,000 loan applications per 30 days working month and makes accept/reject decisions based on an extensive review of each application.

Prior to 1/1998 (Under process I) MBPF Finance processed each application individually. On average 20% of applications received approval. An internal audit showed that, on average, MBPF Finance had about 1,000 applications in process at various stages of the approval procedure, but on which no decision had yet been made.

In response to customer complaints about the time taken to process each application, MBPF Finance called in Kellogg Consultant (KC) to help streamline this decision-making process. KC quickly identified a key problem with the current process. Although most applications could be processed rather quickly, some took a disproportionate amount of time because of insufficient and/or unclear documentation. KC suggested the following changes to the process (thereby creating process II):

An initial review team is set up to process all applications according to a strict but mechanical guideline. Each applicant would fall into one of three categories: type A (look excellent), type B (need more detailed evaluation), and Type C (rejected summarily). Type A and B applications would be forwarded to different specialist subgroups. Each subgroup would then evaluate the applications in its domain and make acceptance/ rejection decisions.

Process II was implemented on an experimental basis. The company found that, on average, 25% of all applications were type A, 30% were of type B, and 45% were of C%. Typically, about 70% of type A and 10% of type B were approved on review (recall that all of type C were rejected) Internal-audit checks further revealed that, on average, 200 applications were with the initial review team undergoing pre-processing. Only 25 were with the subgroup A team undergoing the next stage of processing and approximately 150 were with the subgroup B team. MBPF Finance would like to determine if the implemented changes have improved service performance.

a. Type A, B, C applications spend on average how long in the Process II before receiving an acceptance/reject decision?

b. Average Flow time spent in Process II by an application that is eventually approved is?

c. Average Flow time spent in Process II by an application that is eventually rejected is?