HW2_Solutions

# HW2_Solutions - Process and Systems Analysis BUS 351...

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Process and Systems Analysis BUS 351 Professor Diwas KC Homework 2: Solutions Posted: February 15, 2010 1. Jim’s Eyeglass Store is coming under intense scrutiny for not fulfilling its promise to allow customers to be in and out of the store in under an hour with new eyeglasses. The eyeglass process consists of 6 steps. Each customer is processed in the following sequence: 1) Greet and meet with customer to find appropriate frames – 21 minutes 2) Check lens prescription and give customer a price quote for frames – 11 minutes 3) Prescription and frames go to lab for processing – 7 minutes 4) Lab properly cleans and fits frames with lenses and delivers to sales assistant – 25 minutes 5) Sales assistant allows customer to try new eyeglasses in order to verify satisfaction – 4 minutes 6) Customer pays for eyeglasses – 3 minutes Assume an employee is assigned to each of the 6 process steps listed above (therefore a total of 6 employees). A) How many customers can Jim’s Eyeglasses accommodate in an 8-hour workday? B) What is the bottleneck? Why? A) 8 hours * 60 minutes = 480 minutes 480 11 7 4 21 3 = 434 minutes 434/25 = 17.36 = 17 customers B) Step 4 is the bottleneck because at 25 minutes, it is the step in the process that takes the most amount of time.

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2. Question 2.4 from Cachon and Terwiesch (Apparel Retailing) Revenues = \$100 Million Cost of goods sold = 100/2 = \$50 Million (because the markup is 100%) Inventory = \$5 Million a) Flow Time (T) = I/R = inventory / cost of goods sold = 1/10 year. Thus the company turns its inventory 10 times a year. b) Cost of inventory = 40% per year x COGS x Flow Time = 40% / yr x \$30 x 1/10 yr = \$1.2 3. Question 3.1 from Cachon and Terwiesch (Process Analysis with one Flow Unit) Step 1. We first compute the capacity of the three resources: Resource 1: 2/10 unit per minute = 0.2 unit per min Resource 2: 1/6 unit per min = 0.1666 unit per min Resource 3: 3/16 unit per min = 0.1875 unit per min Step 2. Resource 2 has the lowest capacity; process capacity is thus 0.1666 unit per minute, which is equal to 10 units per hour. Step 3. Flow Rate = min {Process capacity, Demand} = min {8 units/hr, 10 units / hr} = 8 units per hr = 0.1333 unit per min Step 4. We find the utilizations of the three resources as Resource 1: 0.1333 unit per min/0.2 unit per min = 66.67 percent Resource 2: 0.1333 unit per min/0.1666 unit per min = 80 percent Resource 3: 0.1333 unit per min/0.1875 unit per min = 71.1 percent 4. Question 4.1 from Cachon and Terwiesch (Empty System, Labor Utilization)

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5. Thrifty Car Rental Case (End of Chapter 12 of Fitzsimmons and Fitzsimmons) On the basis of your experience and the description of Thrifty's operations, describe the five essential features of the queuing systems at the customer counter, the garage, and the car wash. (A)
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HW2_Solutions - Process and Systems Analysis BUS 351...

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