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Albany State University *

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Management

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Feb 20, 2024

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Operations - Lesson 2 Problem Set: Solution Part 1 A small four-step process runs with four employees, each one operating one step of the process. The cycle times are shown in the following table: Steps Employee Cycle Time (Seconds/Customer) 1 Bob 10 2 Jim 15 3 Mary 8 4 Liz 12 1. Draw the process flow diagram. (2 points) 2. Calculate the capacity of each step in customers per minute. (5 points) Steps Employee Customers per Minute 1 Bob ___6____ 2 Jim ___4____ 3 Mary ___7.5____ 4 Liz ___5____ 3. Step __2_ is the bottleneck. (3 points) Step 1 Bob 10 sec. Step 2 Jim 15 sec. Step 3 Mary 8 sec. Step 4 Liz 12 sec.

4. The capacity of the entire process is: _4___ customers per minute. (3 points) 5. One day Jim called in sick. Mary agreed to do both his step and hers, but she can only do one step at a time. She is just as fast as Jim, and can also do Step 2 in 15 seconds per customer. Does the capacity of the whole process change on this day? If yes, calculate the new capacity. If no, briefly explain why not. (Must decide on yes or no, not an argument for both.) (4 points) a. Yes, it changes. Mary’s new capacity is 60/(15+8) = 2.6 customers/min. This is also the capacity of the entire process in Jim’s absence. b. No, it does not change. Part 2 A small Starbucks in middle America serves, on average, 60 customers a night. A typical night in this town is long, about 10 hours. There’s not much else to do. The manager observed customers in the store all night and she is wondering if she is allowing them to stay too long, just using the free internet. She has gathered data on how many customers are in the store at any one time, and believes this average to be 18 customers. These customers are eating food they purchased and drinking coffee, but she has calculated that each customer could finish eating and drinking in 30 minutes. 1. Calculate IN. There is an average of _18___ customers in the store at any point in time. (4 points) 2. Calculate TH. Arrivals are _60/10 = 6___ customers per hour on average. (6 points) 3. Calculate FT. The average customer spends _18/6 = 3___ hours in the store. (4 points) 4. The average customer is spending an extra _3-0.5 = 2.5___ hour(s) more in the store than they need to eat and drink. (2 points) Part 3 Don’s Donuts makes donuts using a three-step process as shown in the table. Each dozen (dz) costs $5 to make and is priced at $10, giving the company a margin of $5/dz. Don’s Donuts is

doing a great business, working at full capacity, and selling all the donuts (of any kind) that they can make. Step 1 Step 2 Step 3 Number of Workers 1 1 1 Processing Time (minutes per dozen) 5 15 1 The company’s founder creates a new recipe, called The Special, that uses higher quality raw material costing more money but can be made faster. The processing times for each dozen of donuts of the new type are as follows. The cost per dozen of these donuts is $8 and selling price is $12, giving a margin of $4/dz. Step 1 Step 2 Step 3 Processing Time for Don’s Special (minutes per dozen) 5 10 4 1. Eventually, Don's Donuts wants to make and sell only one type of donut. The company thinks they can make more money per hour making and selling only The Specials, as compared to only the first type. Are they correct? Explain briefly. (5 points) a. Yes, they are correct. b. No, they are not correct. 2. For making regular donuts, their capacity is __4__ dozen per hour. (2 points) 3. For making The Special donuts, their capacity is __6__ dozen per hour. (3 points) 4. For making regular donuts, their profit is $__20__ per hour. (2 points) 5. For making The Special donuts, their profit is $__24__ per hour. (3 points) 6. If they follow their strategy of only making and selling The Specials, their profit is $__4__ more per hour. (2 points)

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