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Washburn University School of Business

Spring 2006 BU 347: Prouction ! "perations #anage$ent


%nstructor: Bill &oach Stuent 'a$e ((((((((((((((((((((((((((((
)*a$ 2+
,ill %ns
,ill in the appropriate ter$s for the efinitions given belo-.
1. (((((((((((((((((((((((((((((( any instance when a process fails to satisfy its
customer.
2. (((((((((((((((((((((((((((((( a philosophy that stresses three principles for
achieving high levels of process performance and quality: customer satisfaction, employee
involvement, and continuous improvement in performance.
3. ((((((((((((((((((((((((((((((( the purely random, unidentifiable sources of
variation that are unavoidable with the current process.
4. (((((((((((((((((((((((((((((((( a chart used to monitor process variability.
5. the degree to which equipment, space, or
labor is currently being used.
!. ((((((((((((((((((((((((((((((((( the amount of reserve capacity that a
process has to handle sudden increases in demand or temporary losses of production
capacity" it measures the amount by which the average utili#ation $in terms of total
capacity% falls below 1&& percent
'. ((((((((((((((((((((((((((((((((( the time required to change a machine from
ma(ing one service or product to ma(ing another
). ((((((((((((((((((((((((((((((((( the difference between the flows of funds into
and out of an organi#ation over a period of time, including revenues, costs, and changes in
assets and liabilities
*. (((((((((((((((((((((((((((((((( a statement of all wor( that has to be
completed
1&. (((((((((((((((((((((((((((((((( a networ( planning method developed in the
1*5&s as a means of scheduling maintenance shutdowns at chemical+processing plants
11. (((((((((((((((((((((((((((((((( the sequence of activities between a pro,ect-s
start and finish that ta(es the longest time to complete
12. (((((((((((((((((((((((((((((((( the ma.imum length of time that an activity
can be delayed without delaying the entire pro,ect
13. (((((((((((((((((((((((((((((((( the design of a firm-s customer relationship,
order fulfillment, and supplier relationship process and the synchroni#ation of these
processes with the (ey processes of its suppliers and customers in order to match the flow
of services, "materials, and information
14. (((((((((((((((((((((((((((((((( the items in manufacturing plants,
warehouses, and retail outlets that are sold to the firm-s customers
15. (((((((((((((((((((((((((((((((( the phenomenon in supply chains whereby
ordering patterns e.perience increasing variance as you proceed upstream in the chain
1!. (((((((((((((((((((((((((((((((( the awarding of a contract for a service or item
to only one supplier
1'. (((((((((((((((((((((((((((((((( the description of businesses- deployment of
facilities and operations around the world
1). (((((((((((((((((((((((((((((((( solution guidelines, or rules of thumb, that find
feasible+but not necessarily the best+ solutions to problems
1*. (((((((((((((((((((((((((((((((( a situation whereby several competing firms
clustered in one location attract more customers than the total number who would shop at
the same stores at scattered locations
2&. (((((((((((((((((((((((((((((((( a factor that considers the availability of good
schools, recreational facilities, cultural events, and an attractive lifestyle
Wor Ban/
+ctivity0 +ssignable 1auses of 2ariation0 +ttributes0 Bull-hip )ffect0 1apacity 1ushion0
1ash ,lo-0 1o$$on 1auses of 2ariation0 1ritical #ass0 1ritical Path0 1ritical Path
#etho 31P#40 5efect0 5istribution0 )arliest ,inish 6i$e 3),40 ,inishe 7oos 3,740
7lobali8ation0 9euristics0 P:1hart0 Prevention 1osts0 ;uality 1ircles0 ;uality of <ife0 &:
1hart0 Setup 6i$e0 Slac/0 Sole Sourcing0 Statistical Process 1ontrol 3SP140 Supply 1hain
#anage$ent0 6otal ;uality #anage$ent 36;#40 Utili8ation0 Wor/ Brea/o-n Structure
Process +nalysis
Inputs
Solver - Process Charts
/nter data in yellow shaded areas.
Process: 0r 5+11 1a(ing 2ne 3ce 4ream 4one
5ummary
Subject: 5erver at the 4ounter
Beginning: 6al( to the cone storage area 7ctivity
8umber of
5teps
9ime
$min
%
:istance
$ft%
Ending: ;ive cone to server or customer
2peration
! 1.'&
9ransport
! &.)& 31
3nspect
1 &.25
:elay
1 &.5&
5tore
++ ++
5tep
8o.
9ime
$min%
:istance
$ft% 20 9<78
3850
:/=7> 592</
5tep :escription
1 &.2& 5.& . 6al( to cone storage area
2 &.&5 . <emove empty cone
3 &.1& 5.& . 6al( to counter
4 &.&5 . 0lace cone in holder
5 &.2& ).& . 6al( to the sin( area
! &.5& . 7s( dishwasher to wash scoop
' &.15 ).& . 6al( to counter with clean scoop
) &.&5 . 0ic( up empty cone
* &.1& 2.5 . 6al( to flavor ordered
1& &.'5 . 5coop ice cream from container
11 &.'5 . 0lace ice cream in cone
12 &.25 . 4hec( for stability
13 &.&5 2.5 . 6al( to order placement area
14 &.&5 . ;ive server or customer the cone
15
1!
a4 Sho- ho- the total istance travele is calculate.
b4 9o- $uch ti$e -oul be eli$inate by placing the ice crea$ scoop in a buc/et
of -ater= 9int: 6he attenant -oul not have to perfor$ any of the steps
involve in -ashing the scoop.
c4 Which steps involve a elay=
4 9o- -oul this chart change if the ice crea$ shop -ent to softserve0 that is0 no
scoops an fe-er variaties of ice crea$=
e4 Statistical Process 1ontrol
6he Watson )lectric 1o$pany prouces incanescent light bulbs. 6he follo-ing ata on
the nu$ber of lu$ens for 40:-att light bulbs -ere collecte -hen the process -as in
control.
Statistical Process 1ontrol
"bservation
Sa$ple > 2 3 4 *bar range
> 604 6>2 ?@@ 600 60> 24
2 ?A7 60> 607 603 602 >0
3 ?@> ?70 ?@? ?A2 ?@2 22
4 620 60? ?A? ?@@ 602 32
? ?A0 6>4 60@ 604 604 24
*barbar ?A@.2
rbar 22.4
Sa$ple
Si8e +2 53 54
2 >.@@0 0 3.267
4 0.72A 0 2.2@2
? 0.?77 0 2.>>?
>0 0.30@ 0.223 >.777
U1<*bar 6>4.?
<1<*bar ?@>.A
U1<r ?>.>
<1<r 0
)*plain the circle calculations. Bour e*planation shoul inclue both for$ulas an
nu$bers.
1onstruct the r:chart an e*plain -hether the process is in control.
6heory of 1onstraints
6uff &ier0 %nc. $anufactures touring bi/es an $ountain bi/es in a variety of fra$e
si8es0 colors0 an co$ponent co$binations. %entical bicycles are prouce in lots of
>00. 6he proCecte e$an0 lot si8e0 an ti$e stanars are sho-n in the follo-ing table.
Item Touring Mountain
5e$an ,orecast ?0000 units ! year >00000 units ! year
<ot Si8e >00 units >00 units
Stanar Processing 6i$e D hour ! unit E hour ! unit
Stanar Setup 6i$e 2 hour ! lot 3 hour ! lot
6he shop currently -or/s eight hours a ay0 five ays a -ee/0 ?0 -ee/s per year. %t
has ? -or/stations0 each proucing one bicycle in the ti$e sho-n in the table. 6he
shop $aintains a >? percent capacity cushion. )*plain ho- the circle figures in the
capacity analysis belo- -ere calculate.
Solver - Capacity Requirements
)nter ata in yello- shae areas.
Shifts!5ay > 1o$ponents 2
9ours!Shift @
5ays!Wee/ ? #ore 1o$ponents
Wee/s!Bear ?0 ,e-er 1o$ponents
1ushion 3as F4 >?F
1urrent capacity ?
Processing Setup <ot Si8e 5e$an ,orecasts
1o$ponents 3hr!unit4 3hr!lot4 3units!lot4 Pessi$istic )*pecte "pti$istic
6ouring Bi/es 0.2? 2.0 >00 ?0000
#ountain Bi/es 0.?0 3.0 >00 >00000
Prouctive hours fro$
one capacity unit for a year >0700
Pessimistic Expected Optimistic
Process Setup Process Setup Process Setup
6ouring Bi/es 0 0.0 >02?0 >00.0 0 0.0
#ountain Bi/es 0 0.0 ?0000 300.0 0 0.0
0 0.0 602?0 400.0 0 0.0
6otal hours reGuire 0.0 606?0.0 0.0
6otal capacity reGuire$ents 3#4 0.00 3.A> 0.00
&oune 0 4 0

Supply 1hain #anage$ent
+ fir$Hs cost of goos sol last year -as I304>000000 an the fir$ operates ?2 -ee/s per
year. %t carries seven ite$s in inventory0 three ra- $aterials0 t-o -or/:in:process ite$s
an t-o finishe goo ite$s. 6he follo-ing table last yearHs average inventory level for
each ite$0 along -ith its value.
4ost of ;oods 5old ?3,41&,&&&
6ee(s of 2peration 52
3tem
8umber
7verage
=evel @nit Aalue 9otal Aalue
<aw 1aterials 1 15,&&& ?3.&& ?45,&&&
2 2,5&& ?5.&& ?12,5&&
3 3,&&& ?1.&& ?3,&&&
?&
?&
6or( in 0rogress 4 5,&&& ?14.&& ?'&,&&&
5 4,&&& ?1).&& ?'2,&&&
?&
?&
?&
Binished ;oods ! 2,&&& ?4).&& ?*!,&&&
' 1,&&& ?!2.&& ?!2,&&&
?&
?&
?&
9otal ?3!&,5&&
7verage 6ee(ly 5ales at 4ost ?!5,5''
6ee(s of 5upply 5.5
3nventory 9urnover *.5
Sho- ho- the circle figures are calculate an e*plain their $eaning if appropriate.
<ocation 5ecisions
,all <ine0 %nc. is a 7reat ,alls0 #ontana $anufacturer of a variety of o-nhill s/is. ,all
<ine is consiering four locations for a ne- plant: +spen0 1oloraoJ #eicine <oge
KansasJ Bro/en Bo-0 'ebras/aJ an Woune Knee0 South 5a/ota. +nnual fi*e costs
an variable cost per pair of s/is are sho- in the follo-ing table.
)*plain ho- the circle figures are calculate an their $eaning if appropriate.
7nnual Aariable
=ocation Bi.ed 4osts 4ost C 0air
7spen
?
),&&&,&&& 25&
1edicine =odge
?
2,4&&,&&& 13&
Dro(en Dow
?
3,4&&,&&& *&
6ounded Enee
?
4,5&&,&&& !5
4osts
1edicine Dro(en 6ounded
Aolume 7spen =odge Dow Enee
+ ),&&&,&&& 2,4&&,&&& 3,4&&,&&& 4,5&&,&&&

5,&&& *,25&,&&& 3,&5&,&&& 3,)5&,&&& 4,)25,&&&

1&,&&& 1&,5&&,&&& 3,'&&,&&& 4,3&&,&&& 5,15&,&&&

15,&&& 11,'5&,&&& 4,35&,&&& 4,'5&,&&& 5,4'5,&&&

2&,&&& 13,&&&,&&& 5,&&&,&&& 5,2&&,&&& 5,)&&,&&&

25,&&& 14,25&,&&& 5,!5&,&&& 5,!5&,&&& !,125,&&&

3&,&&& 15,5&&,&&& !,3&&,&&& !,1&&,&&& !,45&,&&&

35,&&& 1!,'5&,&&& !,*5&,&&& !,55&,&&& !,''5,&&&

4&,&&& 1),&&&,&&& ',!&&,&&& ',&&&,&&& ',1&&,&&&

45,&&& 1*,25&,&&& ),25&,&&& ',45&,&&& ',425,&&&

5&,&&& 2&,5&&,&&& ),*&&,&&& ',*&&,&&& ','5&,&&&
1edicine =odge + Dro(en Dow Drea(even

25,&&&
6ounded Enee + Dro(en Dow Drea(even

44,&&&
See graph on ne*t page.

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