# Operations Management

June 25, 2017 Management

1. (15 pts) Question 2. 1 (page 41 in the textbook) The capacity of resource 1 is (60/10)*2=12 units per hour. The capacity of resource 2 is (60/6)*1=10 units per hour. The capacity of resource 3 is (60/16)*3=11. 25 units per hour. Resource 2 is the bottleneck and the process capacity is 10 units per hour. The flow rate would be 8 units per hour if demand rate is 8 units per hour. The utilization rate of resource 1 is 8/12=66. 7% The utilization rate of resource 2 is 8/10=80% The utilization rate of resource 3 is 8/11. 25=71. 1% 2. 10 pts) A processor makes two components, A and B, which are then packaged together as the final product (each product sold contains one A and one B). The processor can do only one component at a time: either it can make As or it can make Bs. There is a setup time when switching from A to B (or B to A). Current plan are to make 100 units of component A, then 100 units of component B, then 100 units of component A, then 100 units of component B, and so forth, where the setup and run times for each component are given below. ComponentSetup/Charge over TimeRun Time/Unit A 5 minutes0. 2 minutes B10 minutes0. minutes . Assume the packing of the two components is totally automated and is small enough that you can ignore it. What is the average hourly output, in terms of the number of units of packaged product (which includes one component A and one component B)? It takes 5 + 100*0. 2 + 10 + 100*0. 1 = 45 minutes to make 100 products. The capacity is 100/(45/60) = 133. 3 units per hour. 3. (20 points) Wells Fargo has adopted lean philosophy for its document management team that provides paper imaging, electronic document routing, data lifting, and document storage services to the Home and Consumer Finance division.

One function area of the document management team is paper imaging, which enables Wells Fargo to store information electronically. When loan documents arrive, the papers are first prepared, then scanned, then sent to validation. If everything is correct, the packages are reconstructed and then loaded to cart for off-site; if mistakes are found during validation, the packages are sent back to the preparation stage to start all over again. For each loan document, the preparation activity takes 277 seconds, while the scan, the validation, and the reconstruction each takes 55 seconds. employees are assigned to the preparation activity, while 1 employee is assigned to the other three activities. a. Draw the process flowchart diagram for Wells Fargo’s paper imaging process. Yes No Use arrows, not lines. It is ok to have more details. b. Assume that all the documents will pass the validation stage and no documents are sent back to the preparation stage, what is the bottleneck? What is the hourly capacity? The capacity of preparation is (60*60/277)*5=64. 98 units per hour. The capacity of scan is (60*60/55)*1=65. 45 units per hour. The capacity of validation is (60*60/55)*1=65. 5 units per hour. The capacity of reconstruction is (60*60/55)*1=65. 45 units per hour. Preparation is the bottleneck and the process capacity is 64. 98 units per hour. c. Assume that all the documents will need to be sent back to the preparation stage once and only once, what is the bottleneck? What is the hourly capacity? The capacity of preparation is (60*60/(277*2))*5=32. 49 units per hour. The capacity of scan is (60*60/(55*2))*1=32. 73 units per hour. The capacity of validation is (60*60/(55*2))*1=32. 73 units per hour. The capacity of reconstruction is (60*60/55)*1=65. 45 units per hour.

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Preparation is the bottleneck and the process capacity is 32. 49 units per hour. d. Assume that 99% of the documents will pass the validation stage and 1% of the documents will need to be sent back to the preparation stage once and only once, what is the bottleneck? What is the hourly capacity? The capacity of preparation is (60*60/(277*1. 01))*5=64. 34 units per hour. The capacity of scan is (60*60/(55*1. 01))*1=64. 81 units per hour. The capacity of validation is (60*60/(55*1. 01))*1=64. 81 units per hour. The capacity of reconstruction is (60*60/55)*1=65. 45 units per hour.

Preparation is the bottleneck and the process capacity is 64. 34 units per hour. 4. (25 pts. ) Question 2. 6 (page 43 in the textbook) a. Based on the demand mix, the time needed for the administrative support person is 15%*(20+50)+5%*(40+80)+50%*(20+30)+30%*(40+60)=71. 50 minutes per case; the time needed for the senior accountant is 15%*(30+20)+5%*(40+60)+50%*(0+5)+30%*(0+30)=24 minutes per case; the time needed for the junior accountant is 15%*(120)+5%*(300)+50%*(80)+30%*(200)=133 minutes per case. The junior accountant is the bottleneck. b. The implied utilization rate of senior accountant is 71. 0*50/(8*20*60)=37%. The implied utilization rate of junior accountant is 24*50/(8*20*60)=12. 5%. The implied utilization rate of administrative support person is 133*50/(8*20*60)=69. 3%. c. The revenue of each product group will be the most important factor given that all the resources have extra capacity. The wage/cost information should also be presented. d. The junior accountant is the bottleneck with a capacity of (8*20*60)/133=72. 2 cases per month. A new word processing system would not reduce the time on bottleneck and the capacity would remain 72. 2 cases per month.

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