Deck 1: Operations Management: Quality and Productivity

Question 1

What was the inventory turns for 2012? Circle the answer closest to the correct answer.

A)10
B)11
C)12
D)13
E)14
F)15

Answer 1

F

Question 2

Penne Pesto
Penne Pesto is a small restaurant in the financial district of San Francisco. Customers order from a variety of pasta dishes. The restaurant has 50 seats and is always full during the four hours in the evening. It is not possible to make reservations at Penne, most guests show up spontaneously on their way home from work. If there is no available seat, guests simply move on to another place.
On average, a guest spends 50 minutes in the restaurant, which includes 5 minutes until the waiter has taken the order, an additional 10 minutes until the food is served, 30 minutes to eat, and 5 minutes to handle the check-out (including waiting for the check, paying, and leaving). It takes the restaurant another 10 minutes to clean the table and have it be ready for the next guests (of which there are always plenty).The average guest leaves $20 at Penne, including food, drink, and tip (all tips are collected by the restaurant, employees get a fixed salary).
The restaurant has 10 waiters and 10 kitchen employees, each earning $90 per evening (including any preparation, the 4 hours the restaurant is open, and clean-up). The average order costs $5.50 in materials, including $4.50 for the food and $1 for the average drink. In addition to labor costs, fixed costs for the restaurant include $500 per day of rent and
$500 per day for other overhead costs.
The restaurant is open 365 days in the year and is full to the last seat even on week-ends and holidays. There are about $200k of capital tied up in the restaurant, largely consisting of furniture, decoration, and equipment.
What is the Return on Invested Capital for the owner of the restaurant?

Answer 2

ROIC = Return/(Invested Capital) = (Return/Sales)x(Sales/Invested Capital)
Sales (per evening)= 200*20 = $4000 Sales (per year) = 4000*365 = 1,460,000
Return = Sales - [(labor costs) + (material costs) + rent + overhead]
= 4000 - [ 20*90 + 200*5.50 + 500 + 500 ]
= 4000 - [ 1800 + 1100 + 500 + 500 ]
= 100
Invested Capital = 200,000
Sales (per year) = 4000*365 = 1,460,000
Plugging in,
ROIC = 0.025*7.3 = 18.25%

Question 3

Mr. K's is a very popular hair salon. It offers high-quality hair-styling and physical relaxation services at a reasonable price, so it always has unlimited demand. The service process includes five activities that are conducted in the sequence described below. (The time required for each activity is shown in parenthesis):
Activity 1: Welcome a guest and offer homemade herb tea. (10 minutes)
Activity 2: Wash and condition hair. (10 minutes)
Activity 3: Neck, shoulder, and back stress release massage. (10 minutes)
Activity 4: Design the hair style and do the hair. (25 minutes)
Activity 5: Check out the guest. (5 minutes)
Three servers (S1, S2, and S3) offer the services in a worker-paced line. The assignment of tasks to servers is the following:
S1 does Activity 1.
S2 does Activities 2 and Activity 3. S3 does Activities 4 and Activity 5.
Which server is the bottleneck of the process?

Answer 3

S1 can process 1/10 customers per minute.S2 can process 1/20 customers per minute.S3 can process 1/30 customers per minute.
S3 has the lowest capacity and is hence the bottleneck.

Question 4

Toyota and Capital One Cases
In the case of Capital One where is the bottleneck found?

A)Q&A
B)Closing
C)Underwriting
D)Interviewing

Question 5

Penne Pesto
Penne Pesto is a small restaurant in the financial district of San Francisco. Customers order from a variety of pasta dishes. The restaurant has 50 seats and is always full during the four hours in the evening. It is not possible to make reservations at Penne, most guests show up spontaneously on their way home from work. If there is no available seat, guests simply move on to another place.
On average, a guest spends 50 minutes in the restaurant, which includes 5 minutes until the waiter has taken the order, an additional 10 minutes until the food is served, 30 minutes to eat, and 5 minutes to handle the check-out (including waiting for the check, paying, and leaving). It takes the restaurant another 10 minutes to clean the table and have it be ready for the next guests (of which there are always plenty).The average guest leaves $20 at Penne, including food, drink, and tip (all tips are collected by the restaurant, employees get a fixed salary).
The restaurant has 10 waiters and 10 kitchen employees, each earning $90 per evening (including any preparation, the 4 hours the restaurant is open, and clean-up). The average order costs $5.50 in materials, including $4.50 for the food and $1 for the average drink. In addition to labor costs, fixed costs for the restaurant include $500 per day of rent and
$500 per day for other overhead costs.
The restaurant is open 365 days in the year and is full to the last seat even on week-ends and holidays. There are about $200k of capital tied up in the restaurant, largely consisting of furniture, decoration, and equipment.
What would be the new ROIC if over-head charges could be reduced by $100 per day? Answer this question independent of the previous question.

Question 6

Given the long wait times for Precinct A, the city of Philadelphia is thinking of alternative solutions to improve voting conditions. One of the proposed solutions is as follows.
Proposal 1: Deploy an additional voting machine in precinct A.
Assume that the voter turnout is expected to have similar characteristics in 2008 as in the previous election.
Suppose Proposal 1 is rejected and that only one machine will be deployed in precinct A.In sign of protest, voters at precinct A decide to adopt the following rule: if the voting machine is busy, the voter will not vote and will leave (and not vote at all).What is the expected number of people who will end up voting on election day in precinct A (assume that the voting station accepts voters for 12 hours from 8:00am to 8:00pm)

A)Less than 100
B)Between 100 and 150
C)Between 150 and 250
D)More than 250

Question 7

Mr. K's is a very popular hair salon. It offers high-quality hair-styling and physical relaxation services at a reasonable price, so it always has unlimited demand. The service process includes five activities that are conducted in the sequence described below. (The time required for each activity is shown in parenthesis):
Activity 1: Welcome a guest and offer homemade herb tea. (10 minutes)
Activity 2: Wash and condition hair. (10 minutes)
Activity 3: Neck, shoulder, and back stress release massage. (10 minutes)
Activity 4: Design the hair style and do the hair. (25 minutes)
Activity 5: Check out the guest. (5 minutes)
Three servers (S1, S2, and S3) offer the services in a worker-paced line. The assignment of tasks to servers is the following:
S1 does Activity 1.
S2 does Activities 2 and Activity 3. S3 does Activities 4 and Activity 5.
.Assume a wage rate of $18 per hour.What are the direct labor costs for one guest?

Question 8

Mr. K's is a very popular hair salon. It offers high-quality hair-styling and physical relaxation services at a reasonable price, so it always has unlimited demand. The service process includes five activities that are conducted in the sequence described below. (The time required for each activity is shown in parenthesis):
Activity 1: Welcome a guest and offer homemade herb tea. (10 minutes)
Activity 2: Wash and condition hair. (10 minutes)
Activity 3: Neck, shoulder, and back stress release massage. (10 minutes)
Activity 4: Design the hair style and do the hair. (25 minutes)
Activity 5: Check out the guest. (5 minutes)
Three servers (S1, S2, and S3) offer the services in a worker-paced line. The assignment of tasks to servers is the following:
S1 does Activity 1.
S2 does Activities 2 and Activity 3. S3 does Activities 4 and Activity 5.
What is the average labor utilization of the servers? Assume the process operates at its capacity.

Question 9

Penne Pesto
Penne Pesto is a small restaurant in the financial district of San Francisco. Customers order from a variety of pasta dishes. The restaurant has 50 seats and is always full during the four hours in the evening. It is not possible to make reservations at Penne, most guests show up spontaneously on their way home from work. If there is no available seat, guests simply move on to another place.
On average, a guest spends 50 minutes in the restaurant, which includes 5 minutes until the waiter has taken the order, an additional 10 minutes until the food is served, 30 minutes to eat, and 5 minutes to handle the check-out (including waiting for the check, paying, and leaving). It takes the restaurant another 10 minutes to clean the table and have it be ready for the next guests (of which there are always plenty).The average guest leaves $20 at Penne, including food, drink, and tip (all tips are collected by the restaurant, employees get a fixed salary).
The restaurant has 10 waiters and 10 kitchen employees, each earning $90 per evening (including any preparation, the 4 hours the restaurant is open, and clean-up). The average order costs $5.50 in materials, including $4.50 for the food and $1 for the average drink. In addition to labor costs, fixed costs for the restaurant include $500 per day of rent and
$500 per day for other overhead costs.
The restaurant is open 365 days in the year and is full to the last seat even on week-ends and holidays. There are about $200k of capital tied up in the restaurant, largely consisting of furniture, decoration, and equipment.
How many guests will the restaurant serve on an evening?

Question 10

Given the long wait times for Precinct A, the city of Philadelphia is thinking of alternative solutions to improve voting conditions. One of the proposed solutions is as follows.
Proposal 1: Deploy an additional voting machine in precinct A.
Assume that the voter turnout is expected to have similar characteristics in 2008 as in the previous election.
Under Proposal 1, how long on average would a voter have to wait in line in precinct A in 2008 before casting her/his vote.Circle the closest answer.

A)1 minute
B)5 minutes
C)6 minutes
D)10 minutes
E)11 minutes

Question 11

Airport Massage Station
A small company just opened a new massage station at Philadelphia airport. The company has a stand that offers massages to travelers. Customers can select a length of massage between 5 and 20 minutes and there is a unique rate of $30 independently of the length selected by customers. The average length of massage requested by customers is of 15 minutes with standard deviation of 10 minutes.
There are four employees delivering massages. The average number of potential customers requesting a massage is of 20 per hour. The inter-arrival times are assumed to be exponentially distributed.
If no spot is available when the customer arrives, s/he leaves in order not to risk missing her/his flight.
The station manager is considering the option of hiring additional employees to deliver massages.The hourly wage of an employee is $50/hr.How many ADDITIONAL employees should s/he hire if s/he wants to maximize profits? [Profit = revenues from customers - labor cost] Suppose that there exists sufficient equipment to accommodate as many new employees as needed.

A)none
B)1 additional employee
C)2 additional employees
D)3 additional employees
E)4 additional employees

Question 12

How long on average a voter had to wait in line precinct at A in 2004 before entering in a booth to cast her/his vote.Circle the closest answer.

A)56 minutes
B)58 minutes
C)60 minutes
D)62 minutes
E)71 minutes

Question 13

Toyota and Capital One Cases
In the Toyota Production System, jidoka refers to

A)Level production, where different models are produced along side each other on the assembly line
B)Continuous improvement, where workers organize meetings to discuss ways of improving the production process
C)The inventory retrieval system where parts are replenished only when they are needed
D)The aggressive reduction of changeover and setup times
E)Continuous line-balancing to maximize utilization
F)The cross-training of workers for a wide range of skills
G)None of the above

Question 14

Given the long wait times for Precinct A, the city of Philadelphia is thinking of alternative solutions to improve voting conditions. One of the proposed solutions is as follows.
Proposal 1: Deploy an additional voting machine in precinct A.
Assume that the voter turnout is expected to have similar characteristics in 2008 as in the previous election.
Under Proposal 1, on average, at precinct A, what would be the ratio of the average number of people voting (at a booth) over the average number of people in the line (waiting).Circle the closest answer.

A)0.4
B)1.4
C)2.4
D)3.4
E)4.4

Question 15

Penne Pesto
Penne Pesto is a small restaurant in the financial district of San Francisco. Customers order from a variety of pasta dishes. The restaurant has 50 seats and is always full during the four hours in the evening. It is not possible to make reservations at Penne, most guests show up spontaneously on their way home from work. If there is no available seat, guests simply move on to another place.
On average, a guest spends 50 minutes in the restaurant, which includes 5 minutes until the waiter has taken the order, an additional 10 minutes until the food is served, 30 minutes to eat, and 5 minutes to handle the check-out (including waiting for the check, paying, and leaving). It takes the restaurant another 10 minutes to clean the table and have it be ready for the next guests (of which there are always plenty).The average guest leaves $20 at Penne, including food, drink, and tip (all tips are collected by the restaurant, employees get a fixed salary).
The restaurant has 10 waiters and 10 kitchen employees, each earning $90 per evening (including any preparation, the 4 hours the restaurant is open, and clean-up). The average order costs $5.50 in materials, including $4.50 for the food and $1 for the average drink. In addition to labor costs, fixed costs for the restaurant include $500 per day of rent and
$500 per day for other overhead costs.
The restaurant is open 365 days in the year and is full to the last seat even on week-ends and holidays. There are about $200k of capital tied up in the restaurant, largely consisting of furniture, decoration, and equipment.
Assume that you could improve the productivity of the kitchen employees and free up one person who would be helping cleaning up the table.This would reduce the clean- up to 5 minutes instead of 10 minutes.What would be the new ROIC?

Question 16

What was the sales for 2012? Circle the answer closest to the correct answer.

A)$318,000
B)$38,000,000
C)$43,000,000
D)$66,000,000
E)$85,000,000

Question 17

Mr. K's is a very popular hair salon. It offers high-quality hair-styling and physical relaxation services at a reasonable price, so it always has unlimited demand. The service process includes five activities that are conducted in the sequence described below. (The time required for each activity is shown in parenthesis):
Activity 1: Welcome a guest and offer homemade herb tea. (10 minutes)
Activity 2: Wash and condition hair. (10 minutes)
Activity 3: Neck, shoulder, and back stress release massage. (10 minutes)
Activity 4: Design the hair style and do the hair. (25 minutes)
Activity 5: Check out the guest. (5 minutes)
Three servers (S1, S2, and S3) offer the services in a worker-paced line. The assignment of tasks to servers is the following:
S1 does Activity 1.
S2 does Activities 2 and Activity 3. S3 does Activities 4 and Activity 5.
What is the utilization of server 2?

Question 18

Mr. K's is a very popular hair salon. It offers high-quality hair-styling and physical relaxation services at a reasonable price, so it always has unlimited demand. The service process includes five activities that are conducted in the sequence described below. (The time required for each activity is shown in parenthesis):
Activity 1: Welcome a guest and offer homemade herb tea. (10 minutes)
Activity 2: Wash and condition hair. (10 minutes)
Activity 3: Neck, shoulder, and back stress release massage. (10 minutes)
Activity 4: Design the hair style and do the hair. (25 minutes)
Activity 5: Check out the guest. (5 minutes)
Three servers (S1, S2, and S3) offer the services in a worker-paced line. The assignment of tasks to servers is the following:
S1 does Activity 1.
S2 does Activities 2 and Activity 3. S3 does Activities 4 and Activity 5.
What would be the costs of direct labor of serving one guest under each of the two alternatives? Assume that the system operates at its capacity.

Question 19

Toyota and Capital One Cases
Which of the following statements accurately describe the Toyota Production System?
I)The entire production is shut down every time the on cord is pulled
II)There is zero idle time at each production step
III)The TPS uses no buffers
IV)TPS uses buffer inventories between line segments to avoid blocking and starving of the production line

A)I only
B)II only
C)III only
D)IV only
E)I, II, III and IV
F)II and IV
G)II, III and IV
H)I and IV

Question 20

Airport Massage Station
A small company just opened a new massage station at Philadelphia airport. The company has a stand that offers massages to travelers. Customers can select a length of massage between 5 and 20 minutes and there is a unique rate of $30 independently of the length selected by customers. The average length of massage requested by customers is of 15 minutes with standard deviation of 10 minutes.
There are four employees delivering massages. The average number of potential customers requesting a massage is of 20 per hour. The inter-arrival times are assumed to be exponentially distributed.
If no spot is available when the customer arrives, s/he leaves in order not to risk missing her/his flight.
What is average number of customers being serviced per hour at the massage station? Circle the closest answer.

A)7
B)8
C)9
D)10
E)11
F)12
G)13

Question 21

Kick Scooters
Metal frames for kick scooters are manufactured in two steps: Stamping and assembly. Each frame is made up of three pieces: one unit of part A and two units of part B.
The parts are fabricated by a single stamping machine that requires a set up time of 90 minutes switching between two part types. Once the machine is set up, the activity time for parts, regardless of type, is 30 seconds each piece. Currently, the stamping machine rotates its production between one batch of 120 part A's and 240 part B's. Completed parts move only when the entire batch is produced.
At assembly, parts are assembled manually to form the finished products. The three parts and a number of small purchased components are required for each unit of final product. Each product requires 30 minutes of labor time to assemble. There are 12 workers in assembly. There is sufficient demand to sell every scooter the system can make
At the current batch sizes, what is the process capacity in units per hour? Circle the answer below that is closest to the correct answer.A unit refers to a complete scooter frame (i.e.one part A and two parts B).

A)1 units/hour
B)5 units/hour
C)10 units/hour
D)20 units/hour
E)30 units/hour

Question 22

Consider a customer with a complex case

A)16 minutes
B)20 minutes
C)22 minutes
D)28 minutes
E)34 minutes

Question 23

Old City Photographics

On average, OCP receive 13 jobs per hour consisted of 44% standard, 37% deluxe and 19% pro.Which of the following statement best describes OCP's process?

A)The process is demand-constrained
B)The process is capacity-constrained and "process film" is the bottleneck
C)The process is capacity-constrained and "scan film" is the bottleneck
D)The process is capacity-constrained and "make 6"x4" prints" is the bottleneck

Question 24

Kick Scooters
Metal frames for kick scooters are manufactured in two steps: Stamping and assembly. Each frame is made up of three pieces: one unit of part A and two units of part B.
The parts are fabricated by a single stamping machine that requires a set up time of 90 minutes switching between two part types. Once the machine is set up, the activity time for parts, regardless of type, is 30 seconds each piece. Currently, the stamping machine rotates its production between one batch of 120 part A's and 240 part B's. Completed parts move only when the entire batch is produced.
At assembly, parts are assembled manually to form the finished products. The three parts and a number of small purchased components are required for each unit of final product. Each product requires 30 minutes of labor time to assemble. There are 12 workers in assembly. There is sufficient demand to sell every scooter the system can make
At the current batch sizes, the bottleneck of the system is

A)Stamping
B)Assembly
C)They both have the same capacity

Question 25

Old City Photographics

Fixing the relative proportions of job types, what is the largest number of jobs per hour that OCP can handle? Circle the answer closest to the correct answer.

A)10
B)11
C)12
D)13
E)14
F)15
G)16
H)17
I)18

Question 26

Kick Scooters
Metal frames for kick scooters are manufactured in two steps: Stamping and assembly. Each frame is made up of three pieces: one unit of part A and two units of part B.
The parts are fabricated by a single stamping machine that requires a set up time of 90 minutes switching between two part types. Once the machine is set up, the activity time for parts, regardless of type, is 30 seconds each piece. Currently, the stamping machine rotates its production between one batch of 120 part A's and 240 part B's. Completed parts move only when the entire batch is produced.
At assembly, parts are assembled manually to form the finished products. The three parts and a number of small purchased components are required for each unit of final product. Each product requires 30 minutes of labor time to assemble. There are 12 workers in assembly. There is sufficient demand to sell every scooter the system can make
Which batch size for the stamping machine would minimize inventory without decreasing the current flow rate? Circle the answer below that is closest to the correct answer.

A)60 sets
B)120 sets
C)180 sets
D)240 sets

Question 27

Old City Photographics

What is the implied utilization (ratio of workload relative to capacity) at "Scan Film"

A)less than 50%
B)50% to 60%
C)60% to 70%
D)80% to 90%
E)90% to 100%

Question 28

How long does a customer with a simple call waits, on average, before speaking to Agent 1?

A)5 minutes
B)10 minutes
C)15 minutes
D)30 minutes
E)35 minutes
F)40 minutes

Question 29

Kick Scooters
Metal frames for kick scooters are manufactured in two steps: Stamping and assembly. Each frame is made up of three pieces: one unit of part A and two units of part B.
The parts are fabricated by a single stamping machine that requires a set up time of 90 minutes switching between two part types. Once the machine is set up, the activity time for parts, regardless of type, is 30 seconds each piece. Currently, the stamping machine rotates its production between one batch of 120 part A's and 240 part B's. Completed parts move only when the entire batch is produced.
At assembly, parts are assembled manually to form the finished products. The three parts and a number of small purchased components are required for each unit of final product. Each product requires 30 minutes of labor time to assemble. There are 12 workers in assembly. There is sufficient demand to sell every scooter the system can make
One way to increase process capacity is to

A)increase the batch size at the Stamping step
B)decrease the batch size at the Stamping step
C)add more workers at Assembly
D)none of the above