Homework #10

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Diablo Valley College *

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102B

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Industrial Engineering

Date

Jan 9, 2024

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Homework #10 Prudvi Vuyyuru E12-3) 1. Compute the Throughput Time Throughput Time = Inspection Time + Wait Time + Process Time + Move Time + Queue Time Throughput Time = 0.3+14.0+2.7+1.0+5.0 Throughput Time = 0.3+14.0+2.7+1.0+5.0 Throughput Time = 23.0 days Throughput Time = 23.0 days 2. Compute the Manufacturing Cycle Efficiency (MCE) Value-Added Time = Inspection Time + Process Time + Move Time MCE = Value-Added Time/Throughput Time Value-Added Time = 0.3+2.7+1.0 Value-Added Time = 0.3+2.7+1.0 Value-Added Time = 4 .0 days MCE = 4.0/23.0 MCE≈0.1739 or 17.39% 3. Percentage of Throughput Time in Non-Value-Added Activities Non-Value-Added Time = Throughput Time - Value-Added Time Non-Value-Added Percentage = (Non-Value-Added Time/Throughput Time)×100 Non-Value-Added Time = 23.0 − 4.0 Non-Value-Added Time = 19.0 days Non-Value-Added Percentage = (19/23.0)×100 Non-Value-Added Percentage = 82.61% 4. Compute the Delivery Cycle Time Delivery Cycle Time=Wait Time + Process Time + Move Time + Queue Time Delivery Cycle Time=14.0+2.7+1.0+5.0 Delivery Cycle Time=22.7 days

5. New MCE after Eliminating Queue Time New Throughput Time=Inspection Time + Wait Time + Process Time + Move Time New Throughput Time=0.3+14.0+2.7+1.0 New Throughput Time=18.0 days New MCE=Value-Added Time/New Throughput Time New Value-Added Time=0.3+2.7+1.0 New Value-Added Time=4.0 days New MCE=4.0/18.0 New MCE = 22.22% E12-4) 1) a. Weekly Powder 8 Lodge sales i. Hypothesis: Increasing sales are positively correlated with overall performance. ii. Indicator: + (increase) b. Weekly Powder 8 Lodge profit i. Hypothesis: Profitability is a key measure of financial success. ii. Indicator: + (increase) c. Number of menu items i. Hypothesis: A diverse menu attracts more customers and increases sales. ii. Indicator: + (increase) d. Dining area cleanliness as rated by a representative from Western Resorts management i. Hypothesis: A clean dining area is essential for customer satisfaction and repeat business. ii. Indicator: + (increase) e. Customer satisfaction with menu choices as measured by customer surveys i. Hypothesis: Meeting customer preferences contributes to loyalty and positive word-of-mouth. ii. Indicator: + (increase) f. Customer satisfaction with service as measured by customer surveys i. Hypothesis: Good service is critical for customer retention and positive reviews. ii. Indicator: + (increase) g. Average time to take an order i. Hypothesis: Efficient order-taking improves customer experience. ii. Indicator: - (decrease) h. Average time to prepare an order i. Hypothesis: Quick food preparation contributes to customer satisfaction. ii. Indicator: - (decrease)

i. Percentage of kitchen staff completing a reimbursed cooking course at the local community college i. Hypothesis: Trained kitchen staff enhance food quality and speed. ii. Indicator: + (increase) j. Percentage of dining room staff completing a reimbursed hospitality course at the local community college i. Hypothesis: Trained dining staff improve overall customer service. ii. Indicator: + (increase) 2) Hypotheses Built into the Balanced Scorecard ● Probably that higher sales and profitability were caused by a diverse and appealing menu which accordingly requires efficient kitchen and dining staff. ● Great service and an attractive menu contribute to bringing back customers and positive word-of-mouth, driving sales and profitability. Most Questionable Hypothesis ● I would say that the most questionable hypothesis is that a more extensive menu directly leads to increased sales and profitability. It depends on the target segment and their preferences. It might even be that a well made menu that has high-quality items could lead to better results. 3) Management Verification ● Customer surveys and feedback can provide more information into customer satisfaction and identify areas that can be improved ● Efficiency in service such as the average time it takes to prepare an order can be monitored through operational data ● Staff training completion rates can be tracked through training records Q13-3) Variable costs are usually considered relevant costs because they vary, meaning they change and are dependent on the level of production or activity. In short term decision-making, these such variable costs play a very important role in determining the total cost associated with specific choices, such as accepting special orders or making incremental changes in production.

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Q13-8) If the cost of discontinuing that product is equal to or higher than the costs you would incur by continuing it, then it should be continued. Also, only looking at the profitability of a product or store for discontinuing is overly simplistic. There are many other factors that should be looked at including strategic fit, long-term vision, brand image, market conditions, mitigation strategies, and customer impact. The decision should be based on a wide variety of analysis of these aspects to match with broader business goals. E13-2) To determine the financial advantage or disadvantage of discontinuing the Racing Bikes, we can calculate the difference in net operating income with and without the production and sale of Racing Bikes. 1) ● Net Operating Income without Racing Bikes = Net Operating Income with Racing Bikes + Net Income from Racing Bikes ● Net Operating Income without Racing Bikes = $32,000 + $9,000 (loss from Racing Bikes) = $41,000 Financial advantage of discontinuing Racing Bikes is $41,000 per quarter . 2) Whether the production and sale of racing bikes should be discontinued is actually dependent on different factors. A possible way to make this decision is to compare the contribution margin of the racing bikes with the fixed expenses associated with them. Contribution Margin per Racing Bike = ($27,000 - $33,000) = -$6,000 Here the CM is negative, the sold racing bikes are not making enough to be able to cover their variable costs. However, this decision should also consider the fixed expenses associated with racing bikes. The fixed expenses associated with racing bikes are $36,000. Financial Advantage of Discontinuing = Fixed Expenses Saved - Contribution Margin Lost = $36,000 - (-$6,000) = $42,000 Discontinuing racing bikes would be financially advantageous by $42,000 per quarter.

Homework #10

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