Exam 1: Operations Management: Quality and Productivity

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?

Old City Photographics Located alongside a cobblestoned street in Old City, Old City Photographics (OCP) specializes in the processing of the traditional $35 \mathrm{~mm}$ negative film, a once dominant photographic medium now in decline due to the popularity of digital photography. OCP offers three packages to their customers. With the standard package, the customer gets a set of $6 " \mathrm{x} 4$ " prints for $\$ 19.99$ . The deluxe package adds to the standard package a CDROM of high resolution scans of the pictures for $\$ 29.99$ . Finally, the $\$ 39.99$ pro package is similar to the deluxe package in that it comes with a CD-ROM, although the customer gets a contact print rather than a set of prints. (A contact print is an $8 " \times 10^{\prime \prime}$ sheet of photographic paper that has all pictures on the roll of film printed next to each other at reduced dimensions and is used as an index.) The workflow for OCP is shown below (s=standard, d=deluxe, $p=$ pro): OCP is operated by one person at every station. -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.

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?

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

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?

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.

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).

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

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)

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.

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

-Consider a customer with a complex case

ProofSmart Inc. ProofSmart Inc., a supplier of home insulation materials, was burned down in a recent fire. From the remains of what used to be the accounting ledger, the following information was recovered: Prior to the fire, ProofSmart saw a sales growth of $48 \%$ in 2007 , a record performance for the 18 year-old company. (NOTE: Gross margin is defined as 1 -(COGS/Sales).) -What was the sales for 2012? Circle the answer closest to the correct answer.

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?

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.

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.

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?

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.

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

ProofSmart Inc. ProofSmart Inc., a supplier of home insulation materials, was burned down in a recent fire. From the remains of what used to be the accounting ledger, the following information was recovered: Prior to the fire, ProofSmart saw a sales growth of $48 \%$ in 2007 , a record performance for the 18 year-old company. (NOTE: Gross margin is defined as 1 -(COGS/Sales).) -What was the inventory turns for 2012? Circle the answer closest to the correct answer.