Copyright © 2019 Pearson Education, Inc.
Chapter
2
Process Strategy and Analysis
DISCUSSION QUESTIONS
1. Many processes at manufacturing facilities involve customer contact. Internal
customers would include those employees whose operation(s) are subsequent.
2. Some students may see this as a difference in competitive priorities. Others may see
a difference in management styles. Ritz-Carlton empowers their employees and the
local restaurant does not seem to empower. Ritz-Carlton believes that by having
3. eBay has considerable arrival and request variability, because its customers do not
want service at the same time or at times necessarily convenient to the company.
They have request variability, seeking to buy and sell an endless number of items.
4. Student answers will vary. One idea that they may come up with is the use of
electronic files. The printing industry is undergoing a shift to pdf files. Medical
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5. Selling financial services would involve considerable customer contact, and thus be
a front office. Likely activities would be to work with the customer to undertand
6. The process of call center services is rated in the table below. The combined score is
5.6 if each is given a weight of 0.20. Arguments could be made to give more weight
Dimension of
Customer
Contact
Explanation
Score
❑ Physical
presence
❑ The customer is present for such steps as working to understand
customer needs and answering specific questions. Other steps such
as researching product information do not involve as direct contact.
1
❑ What is
processed
❑ The customer is the focus of what is being processed in certain
steps, such as the specific product explanation. However,
researching product information lies more in the category of
information–based service rather than people-processing services.
6
❑ Contact
intensity
❑ The customer is actively involved and there is high service
customization process
7
❑ Personal
attention
❑ There is considerable personal attention and confiding in working
to understand customer needs and in maintaining a continuing
relationship with the customer. .
7
❑ Method of
delivery
❑ Much of the delivery is through phone-to-phone contact .
7
7. The answer can be debated. On one hand, relentless pressure to improve can create
considerable benefits over time, and could well put a company at the top of the
8. This question was inspired by a similar situation faced by Ontario Hydro-Electric.
Today electricity is a commodity that competes on the basis of low-cost operations
and reliability. If the environmental protection equipment is installed, HEC must
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9. For background reading, see: Paul O’Neill, “Why the U.S. Healthcare System Is So
Sick and What O.R. Can Do To Cure It.” OR/MS Today (December, 2007).
a. Although many ideas are possible, a typical response is some kind of computer
order-entry system. Although we asked for blue sky ideas, these systems do cost
a medium-sized hospital about $10 million, They also solve only half of the
PROBLEMS
Process Strategy Decisions
1. Dr. Gulakowicz
Fixed cost, F = $150,000
2. Two manufacturing processes
3. Sebago Manufacturing
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The point of indifference (at which the proposals yield the same annual cost)
between:
Proposal 1 and 2: 0.00 + 22x = 150,000 +14x
X = 18,750 components per year
Defining, Measuring and Analyzing the Process
4. Custom Molds
5. Process chart for Custom Molds with metrics
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6. ABC Insurance Company
7. ABC Process Chart
8. DEF Flowchart
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9. Big Bob’s Service Blueprint
Customer
Counter
Employee
Grill
Employee
Fry
Employee
Order
Food
Pay for
Food
Receive
Food
Take
Order
Ask for
Payment
Make
Change
Wrap
Food
Retrieve
Drink
Complete
Packaging
Receive
Order
Retrieve
Raw Food
Grill
Food
Build
Sandwich
Receive
Order
Retrieve
Raw Food
Fry
Food
Wrap
Food
Transmit
Order
Deliver
Sandwich
$$
Line of Visibility
Service Blueprint for Big Bob’s Burger Barn
10. Referendum 13
Flowchart for yard sign assembly:
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Human resource requirements:
One of many possible arrangements is to create several cells with four workers in
each cell.
Worker 1 is a materials handler, bringing printed cards and stakes (say in stacks
or bundles of 25) to the gluing table and taking completed signs (again in
bundles of 25) to the shipping area.
Worker 2 glues printed cards to the stakes. Worker 2 is also responsible for
students) 83.33/3 = 27.78 or about 28 student volunteers are required to staff 7 cells.
Material requirements (for 7 cells of 4 workers each):
10,000
printed cards
10,000
stakes
32,000
staples (16 boxes of 2,000 each)
28
12-ounce bottles of wood glue
4
cases
10
pizzas
14
tables
7
staple guns
7
hammers (to set staples)
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11. Mailing to the alumni of your college
a. A sample process chart for 2000 letters follows.
c. Changes that would reduce the time and cost of the process:
A letterhead with “Dear Alumnus” will make step 1 (process letter) not
necessary, saving 400 minutes and $53.33 [$8(400/60)].
With mailing labels, step 1 involves matching the letters with labels rather
than with addressed envelopes, but now we must stick the label to the
d. Using the letter with “Dear Alumnus” may reduce the effectiveness of the
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available to them.
12. Gasoline Stations
a. The gas station in part (b) has a more efficient flow from the perspective of the
customer because traffic moves in only one direction through the system.
13. Just Like Home Restaurant
a. The summary of the process chart should appear as follows:
b. Each cycle of making a single-scoop ice cream cone takes
c. To make this operation more efficient, we can eliminate delay and reduce
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14. Grading Homework Steps:
1. Check each paper to identify the author of the homework, then mark each paper
with section number and graduate status.
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15. DMV
The process chart is as follows.
The tax assessment clerks’ time is being wasted by an inefficient waiting line
process. Whenever the customer arrival rate approaches the service rate, a waiting
line will form. While the clerk is waiting for phantom customers, service rate
declines, and waiting lines become even longer. More disgusted customers leave the
waiting area (renege).
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Epilogue.
It is almost sad how little exaggeration was used in creating this problem. When this
location of the DMV closed, the local news announcer referred to it as “the city’s
most popular place to wait in line.” This DMV process has since been replaced by
an automated one-stop, one-transaction process. Just today I visited the new DMV
and completed the entire process in five minutes.
16. Oil Change
a. Each oil changing cycle takes 16.5 + 5.5 + 5.0 + 0.7 + 0.3 = 28 minutes.
The total labor cost is
17. Time Study of Assembling Peanut Valves
18. Time Study of Process
Element
Performance
Rating
Obs 1
Obs
2
Obs
3
Obs 4
Obs 5
Average
Time
Normal
Time
Element 1
70
4
3
5
4
3
3.8
2.66
Element 2
110
8
10
9
11
10
9.6
10.56
Element 3
90
6
8
7
7
6
6.8
6.12
Total =
19.34
Standard Time = 19.34 1.20 = 23.21 minutes
Process Strategy and Analysis ⚫ CHAPTER 2 ⚫
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19. Work Sampling on Idle Time
20. Bid on Swimming Pools
21. Bid Using OM Explorer
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22. Rain Tite
a. Production time on the manual line
1st window = 30 minutes
2nd window = 30 x .90 = 27.00 minutes
b. Production time on the semi-automated line
1st window = 45 minutes
As displayed in the graph below, after 4 windows produced, the employee on
the semi-automated line will be able to build a window more quickly than an
employee on the manual line.
23. Perrotti’s Pizza Pareto chart
a. Although the frequency of partly eaten pizza is low, it is a serious quality
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b. Cause-and-effect diagram
Not familiar with service area
Misunderstood address
Person
Machines
Car trouble
Materials
Late production
Lost invoice
Service area too large
deliveries on one trip
Methods
Scheduling too many
Late
Delivery
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24. Smith, Schroeder, and Torn (short moves)
a. The tally sheet given in the problem is essentially a horizontal bar chart.
To create a Pareto diagram, the categories are arranged in order of
decreasing frequency. This diagram was created using the Bar, Pareto,
and Line Charts Solver of OM Explorer.
b. Cause-and-effect diagram
Complaints
Machines Materials
Person Methods
No furniture pads
No Packing Material
Ran out of boxes
Truck Trouble
Defective ramp into truck
Moving dolly broken
Not familiar with service area
Frequently drops items
Frequently late to work
Poor training/packing
Too many deliveries
scheduled on one day
25. Golden Valley Bank
16.2 hours
=
Process Strategy and Analysis ⚫ CHAPTER 2 ⚫
Copyright © 2019 Pearson Education, Inc.
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b. Golden Valley’s average time is 16.2 hours or about two business days.
26. East Woods Ford
a. Bar chart, from the Bar, Pareto, and Line Charts Solver of OM Explorer.
Pareto chart, from the Bar, Pareto, and Line Charts Solver of OM Explorer..
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b. Cause-and-effect diagram drawn using PowerPoint.
Complaints
Machines Materials
Person Methods
Defective parts
Tools
Diagnostic equipment
Training
Performance Measures
Scheduling
Billing System
Communications
27. Oregon Fiber Board
a. Scatter diagram (see following)
b. As the production run size increases, the percent of failures decreases.
28. Grindwell, Inc.