Answer the following questions using the information below:
The tool crib at a large manufacturing company is responsible for providing tools to the factory workers
on demand. The tool crib has a variable demand. Historically, its demand has ranged from 300 to 500
small tools per day with an average of 400. Diane, the tool crib attendant, works eight hours a day, five
days a week. Each order is for one small tool and each small tool takes Diane 1 minute to retrieve from
the bins.
22) What is the average waiting time, in minutes?
A) 1.0
B) 1.5
C) 2.5
D) 3.5
23) What is the cycle time for an order?
A) 1 minutes per tool
B) 1.5 minutes per tool
C) 2.5 minutes per tool
D) 3.5 minutes per tool
24) Diane has been asked to consider plans to add the retrieval of larger tooling fixtures to her duties. She
anticipates that there would be an average of 12 tooling fixtures per day requested. Each tooling fixture
would take Diane 4 minutes to retrieve.
What is the average waiting time, in minutes, if Diane continues to be the only worker that would
retrieve the small tools as well as the larger tooling fixtures?
A) 3.50 minutes
B) 7.00 minutes
C) 9.25 minutes
D) 64.00 minutes
25) Two common operational measures of time are customer-response time and on-time performance.
26) Customer response time is the time it takes from the time a customer places an order for a product or
service to the time the product or service is delivered to the customer.
27) Manufacturing lead time is the sum of waiting time and manufacturing time for an order.
28) A time driver is any factor that causes a change in the speed of an activity when the factor changes.
29) The average waiting time is the average amount of time an order will wait at the company’s shipping
office before it is sent to the customer.
30) Manufacturing Cycle Efficiency (MCE) = Value-added Manufacturing Time divided by
Manufacturing Cycle Time.
31) Identifying and minimizing the sources of non-value-added manufacturing time increases a firm’s
responsiveness to its customers and reduces its costs.
32) Norton’s Convenience store has a variable demand. The daily demand ranges from 270 to 330
customers a day who average purchasing 5 items each. The average daily demand is 300 customers. The
convenience store currently operates 12 hours a day. Each order takes approximately 2 minutes.
Required:
a. What is the average customer waiting time, in minutes?
b. What is the cycle time for an order?
c. Norton has decided that the waiting time is too long and has increased the hours the store is open to
15 hours. What is the waiting time now?
33) Brown Laundry has a variable demand. The daily demand ranges from 100 to 140 customers a day
with an average of 5 items. The average daily demand is 110 customers. The laundry operates 10 hours a
day. Each order takes approximately 5 minutes.
Required:
a. What is the average customer waiting time, in minutes?
b. What is the cycle time for an order?
c. The manager has decided that the waiting time is too long and has increased the workday to 11
hours. What is the waiting time now? Will the customers be any happier?
34) Acme Janitor Service has always taken pride in the fact that it had one of the highest customer
response times in the home cleaning service industry. However, as the products manufactured for this
industry have become more complex, the company’s customer response time has declined.
Required:
Why do you think that response time declined if all other quality factors have remained the same?
1) Which of the following reduces manufacturing cycle times and delays?
A) increasing the capacity of a bottleneck resource
B) selling of an existing equipment to save up on depreciation costs
C) increasing the time it takes for setups and processing
D) outsourcing the job to a third party
2) Inventory carrying costs equal the ________.
A) opportunity costs of the investment tied up in inventory and the cost of manufacturing of goods
B) costs of storage only
C) opportunity costs of the investment tied up in inventory and the relevant costs of storage
D) historical costs and the relevant costs of storage
3) Which of the following is a storage cost?
A) labor cost
B) deterioration
C) direct material
D) overhead cost
4) When manufacturing cycle increases, ________.
A) sunk costs will decrease
B) opportunity costs will increase
C) opportunity costs will decrease
D) inventory carrying costs will increase
5) Longer manufacturing cycle times results in ________.
A) lower revenues and higher inventory carrying costs
B) higher opportunity costs and low profit margins
C) lower opportunity costs and high profit margins
D) higher revenues and lower inventory carrying costs
Answer the following questions using the information below:
Speedy Dress Manufacturing has two workstations, cutting and finishing. The cutting station is limited
by the speed of operating the cutting machine. Finishing is limited by the speed of the workers. Finishing
normally waits for work from cutting. Each department works an eight-hour day. If cutting begins work
two hours earlier than finishing each day, the two departments generally finish their work at about the
same time. Not only does this eliminate the bottleneck, but also it increases finished units produced each
day by 160 units. All units produced can be sold even though the change increases inventory stock by
20% from 400 units. The cost of operating the cutting department two more hours each day is $1,600. The
contribution margin of the finished products is $6 each. Inventory carrying costs are $0.40 per unit per
day.
6) What is the total production per day if the change is made?
A) 6400 units
B) 800 units
C) 880 units
D) 1600 units
7) What is the change in the daily contribution margin if the change is made?
A) $(608)
B) $(634)
C) $(672)
D) $800
Answer the following questions using the information below:
Captain Carl’s Seascapes produces sea pictures for sale through catalogs. The company has two
workstations, photo production and framing. The photo production station is limited by the speed of
operating the photo development machine. Framing is limited by the speed of the employees. Framing
normally waits for work from photo production. Each department works an eight-hour day. If Captain
Carl’s Seascapes adds an earlier half shift so that photo production begins work four hours earlier than
framing each day, the two departments generally finish their work at about the same time. Not only does
this eliminate the bottleneck, but it also increases finished units produced each day by 200 units. All units
produced can be sold. The cost of operating the photo production department four more hours each day
is $1,250. The contribution margin of the finished products is $10 each.
8) What is the total production per day if the change is made?
A) 50 units
B) 200 units
C) 400 units
D) 600 units
9) What is the change in the daily contribution margin if the change is made?
A) $250
B) $750
C) $2,000
D) $800
10) The manufacturing cycle including related delays can be reduced by ________.
A) batching similar jobs together for processing
B) decreasing the capacity of a bottleneck resource
C) not setting up flexible manufacturing systems
D) increasing the time for setups and processing
11) Manufacturing cycle times affect both revenues and costs.
12) Longer manufacturing cycle times increase the inventory carrying costs and decrease revenues.
13) Increasing the capacity of a bottleneck resource increases manufacturing cycle times and delays.
14) One way to increase capacity is to reduce the time it takes for setups and processing.
15) Investing in a new equipment, such as flexible manufacturing systems that can be programmed to
switch quickly from producing one product to producing another can decrease capacity as it would incur
excess overhead costs.
16) Brix, Inc., prepares frozen food for fast-food restaurants. It has two workstations, cooking and
assembly. The cooking station is limited by the cooking time of the food. Assembly is limited by the
speed of the workers. Assembly normally waits on food from cooking. Because the demand has increased
in recent months to 2,800 dozen units, management is considering adding another cooking station or else
having the cooks start to work earlier. The monthly cost of operating the cooking station one more hour
each day is $2,400. The cost of adding another cooking station would add an average of $10 per hour. The
current operating hours total eight hours a day, 22 days a month. The contribution margin of the finished
products is currently $8 per dozen. Inventory carrying costs average $2.00 per dozen per month. Either
the extra hour or the new cooking station would increase production by 20 dozen a day, with a long-run
increase of 80 dozen units in finished goods inventory to 280 dozen.
Required:
a. What is the total production per month if the change is made?
b. What is the increase in the expected monthly product contribution for each of the possible changes?
Assume long-run production equals sales.
17)
Relevant items
Cookies with
cashew and
honey
Plain cookies
Difference
Expected
revenue
$850,000
$725,000
$125,000
Expected
variable costs
548,000
418,000
(130,000)
Expected
inventory
carrying cost
32,000
22,000
(10,000)
Expected total
costs
580,000
440,000
(140,000)
Expected
profits
$270,000
$285,000
$(15,000)
Dulcet Foods, Inc., has the option to sell either of the variant. Which one is a better alternative?
18) Manufacturing cycle times affect both revenues and costs. Explain.
Objective 19.7
1) Which of the following is an internal-business-process measure to study the output during bottleneck
situations?
A) manufacturing cycle efficiency for key processes
B) carrying cost of inventories
C) number of employees trained to manage bottlenecks
D) customer-response time
2) Which of the following is a learning-and-growth measure to study the output during bottleneck
situations?
A) manufacturing cycle efficiency for key processes
B) carrying cost of inventories
C) number of employees trained to manage bottlenecks
D) improve customer-response time during bottlenecks
3) From a balanced scorecard perspective, average reduction in setup time and processing time at
bottleneck operations is an example of ________.
A) financial measures
B) customer measures
C) internal-business-process measures
D) learning-and-growth measures
4) Revenue gains or price increases from fewer delays is a financial measure to increase the output of
bottlenecks.
5) Average reduction in setup time and processing time at bottleneck operations is an example of
learning-and-growth measures to tackle bottleneck situations.
45
6) The last step of the five-step decision making process is implementing the decision, evaluating
performance, and learning. How can a balanced scorecard play a role in helping to assure this final step
will be successful?
7) A machine has been identified as a bottleneck and the source of the constraint for a manufacturing
company that has multiple products and multiple machines. Discuss ways the company can overcome
the bottleneck.