Managerial Statements or Implications

Seyed Habibollah Mousavi – Cachon Homework 2.1 (chapter 3) –MGTOP 581

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Cachon Homework 2.1

Q3.2, ( Multiple flow units):

Managerial statements or implications:

One of the main reasons behind supply and demand mismatch is the high amount of the waiting time in between the processes ( From Input to Output).The only way to take on more work without increasing the waiting time is to add more capacity. This requires finding what activity is limiting the output of the process and increasing the capacity of that activity.

Since many flow units (e.g. customers in a shop, patients in a hospital) do not at all need the very same treatment or service, business processes have to serve different needs. Processing times thus might be quite different for each flow unit as well, even the path of flow units through the process might differ. For such processes with so-called multiple flow units, we need new tools to figure out which process step can bee seen as the bottleneck.

The highest implied utilization indicates the bottleneck process step. To differentiate between the implied utilization and the “regular” utilization, its best to keep this important difference in mind:

utilization = flow rate / capacity (always between 0% and 100%) implied utilization = demand / capacity (can very well exceed 100%)

Now to answer the question we should consider the following steps :

Seyed Habibollah Mousavi – Cachon Homework 2.1 (chapter 3) –MGTOP 581

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1. For each resource, compute the number of minutes that the resource can produce; 2. Create a process flow diagram, indicating how the flow units go through the process; 3. Create a table indicating how much workload each flow unit is consuming at each resource 4. Add up the workload of each resource across all flow units 5. Compute the IMPLIED UTILIZATION of each resource as: Step 1. For each resource, compute the number of minutes that the resource can produce;

Resource

Number of Workers

Minutes Per Day

1

2

2x8x60=960

2

2

2x8x60=960

3

1

1x8x60=480

4

1

1x8x60=480

5

2

2x8x60=960

Step 2. Create a process flow diagram, indicating how the flow units go through the process;

A

B

C

Step 3. Create a table indicating how much workload each flow unit is consuming at each resource.

1

2

3

4

5

Seyed Habibollah Mousavi – Cachon Homework 2.1 (chapter 3) –MGTOP 581

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Resource

Capacity Requirement from

A

Capacity Requirement From B

Capacity Requirement From C

1

5x40=200

5x50=250

5x60=300

2

3x40=120

4x50=200

5x60=300

3

15x40=600

0x50=0

0x60=0

4

0x40=0

3x50=150

3x60=180

5

6x40=240

6x50=300

6x60=360

Step 4. Add up the workload of each resource across all flow units