MGCR 472 Midterm Flashcards
What are the 3 main functions that organizations perform?
Marketing (generates demand), finance/acct, operations (input->output)
What are 2 inputs that go into a firm to make outputs?
Investment (inventory, equipment) and Costs (labor)
Differences between goods and services (3)
Goods: tangible, can be inventoried, no interaction between customers and process
Services: intangible, can’t be inventoried, direct interaction between customers and process
How would a 5% decrease in COGS affect ROA?
If cogs decreases by 5% -> x , Total cost of sales and expenses will decrease by x, then net income would decrease by x, then total assets/net income would increase ROA -> higher % = better
Pros and cons of in-house (or american) manufacturing
High response, High cost, shortens design to market time, frequent in-store replenishments, can keep inventory low
Pros and cons of Asian manufacturing (for an american company)
Pros: Low cost
Cons: low response time
Pros of small batch production
Lowers cost of demand uncertainty
What’s the main benefit of Decentralized management?
Supplements quick response time since managers determine products to sell/return
What is a business process?
A network of activities berformed by resources that transform inputs -> outputs. Buffers also in there (a.k.a. Wait times etc.)
By having a standardized meny with few options, benihana:
Makes it easier to predict demand
Can have economies of scale (buy in bulk)
Less waste (same menu for lunch/dinner)
How do hibachi tables lower costs (2 ways)?
- lowers labor costs since chefs perform multiple tasks
- Lowers rent costs (less space for BOH)
What are the three elements in a process flow diagram? And their shape.
Rectangle: Activity
Triangle: Storage area/buffer
Diamond: Decision point
True or False: Activities, Inputs and outputs move along the arrows in a proccess flow diagram
False. Only inputs and outputs move along the arrows in a process flow diagram
What is flow time?
Total time that a flow unit (e.g. a customer) spends in an activity/process
What is inventory
Number of flow units in an activity/process at any point
What is thoroughput
Number of flow units going in/out of an activity or process per minute of time (REPRESENTED AS LAMBDA)
What is Little’s Law?
Inventory = Thoroughput * Flow Time
EX: 1500 customers per 15-hour workday. At any point in time, there are on avg 75 customers in the restaurant. How long does a customer spend in the restaurant?
Thoroughput = inventory/time = 1500/15 = 100 Inventory = 75 75=100x X = 45 mins
A movie theatre expects avg num of weekly customers to DOUBLE over the next 5 yrs. Also expects avg length of movie to DECREASE by 10% Over next 5 yrs. By what % will the movie theatre need to increase its seats over the next 5 yrs?
Thoroughput(future) = 2Thoroughput(now)
Avg length(future) = 0.9Avg length now
Littles law: Inventory(future) = Thoroughput(future)*Length(future)
Therefore,
Inventory(future) = 1.8 current thoroughputcurrent length
So inventory will need to increase by 80%
What are the 5 process measures.
Thoroughput, inventory, flow time, cycle time, capacity
What is cycle time?
Avg time btwn 2 consecutive flow units entering an activity/process, which is working continuously
What is capacity?
Thoroughput of an activity/process if it’s working continuously
What is the relationship between capacity and cycle time?
Cycle time = 1/capacity
What is the difference between flow time and cycle time?
Flow time = Time to go through process
Cycle time = Time between 2 customers
What process flow measure: How long does it take to produce a product?
Flow Time
Which process measure: How many units can the process produce during a time interval (2)
Capacity or Cycle Time
Which process measure: What’s the level of W-I-P inventory?
Inventory
What is the capacity of the process?
The capacity of the bottleneck
What is the law of the minimum?
Capacity of process = capacity of the bottleneck
What is a resource?
A resource is any person, place, or thing which is required in order for an activity to run.
Is a bottleneck an activity or a resource?
Bottlenecks are always RESOURCES
What is the bottleneck resource?
The bottleneck resource for a single product process is the resource w/ the lowest capacity/highest cycle time
What is the utilization of a resource? + Formula
The utilization of a resource is the % of the capacity that’s used (utilization = thoroughput/capacity)
Does the capacity of the proces = the capacity of the bottleneck when different activities use different resources?
Yes
What are 4 ways to improve a process?
- Increase bottleneck resource
- Pool bottleneck resource w/ some non-bottleneck resources
- Change the batch sixe (econ of scale)
- Eliminate some non-bottleneck resources
What are the 2 main sources of waiting lines?
Arrivals > Capacity and Variability in processes
What is the cost of waiting for customers?
Opp. Cost of doing something else/time
What is the cost of a waiting line for firms? (2)
Lost customers & Customer dissatisfaction
How to reduce delay on demand side? 2 + ex
Appointments, Fast pass, i.e. nexus
How to reduce delay through both? 2
Surge pricing(i.e. uber w high demand) + self checkout
How to reduce wait time through supply side? 2
Flexible (cross-trained) servers such as hibachi, and Triage (priority)
As total cost and capity costs decrease, what happens to waiting time cost? And what is the optimal level of service/cost in the waiting line graph?
Decreases
Lowest Total Cost
T or F: You have to balance capacity cost with waiting cost?
T
What are the 5 performance measures and their symbols?
Lq - Num people in Queue Wq - Waiting time in Queue Ls - Num people in System Ws - Time in system P - Server utilization
What performance measure matters the most?
Waiting time in Queue
What is the relationship between Ws and Wq
Ws > Wq
Ws = Wq + Service time
What is the relationship between Ls and Ws?
Littles law: Ls = arrival rate * Ws
What is the relationship between Lq and Wq?
Lq = arrival rate * Wq
What are the 3 things that define a single server queue?
1 jobs arrival (lambda = rate of arrivals i.e. cust per hr)
2 queue discipline
3 jobs processing (mu = service rate)
What are the 4 assumptions of M/M/1 queuing system?
Single server
first come first serve discipline
exponential interarrival time
exponential service time
How do you calculate the interarrival Time?
A= 1/arrival rate
How do you calculate the service time?
S = 1/service rate
What symbol represents the service rate?
Mu
What symbol represents the arrival rate?
Lambda
The time it takes to serve a customer follows an ______ distribution
Exponential
The time between two successive customer arrivals follows a ___ distribution with parameter ___
Exponential, lambda
If the utilization is very high what happens to the waiting time in a single server Q?
The waiting time in the Q/system goes up
To which equations does Littles Law apply
Ls = lambda* Ws A.k.a. Num in system = arrival rate * time in system AND Throroughput = inventory * flow time A.k.a. L=lambda * W
What 2 performance measures hav an exponential distribution?
Service time and interarrival time
How long is the wait time in a multi server multi line queue?
Lambda (thoroughput) / S (num of servers)
When evaluating an M/M/S queue, you have to check if ____ and _____ are exponentially distributed
Service time and Interarrival time
How do you calculate avg. time in queue for M/M/S?
Wq = Lq/lambda
T or F: Common qurur always more efficient than seperayte
True
How do you calculate the total cost per hour?
Total cost per hour = capacity cost + waiting time cost
What are the steps to formulate an LP (four)
identify Decision Variables
Write objective function
Write out the constraints
write the LP
What is a feasible solution
A solution that satisfies all the constraints including non-negativity
What is an optimal solution
Satisfies all the constraints including non-negativity and gives the best value of the object of function
What is the best value of the objective function called
Optimal objective function value
True or false: there could be more than one optimal solution and sometimes no optimal solution
True
What is the allowable increase
Amount that the objective function coefficient can Increase without changing Optimal solution
What is the allowable decrease
Maximum amount the objective coefficient can decrease before the optimal solution changes
What is an asSumption of the changing of objective function Coefficient
Assume that changes are made in only one objective coefficient at a time while the others remain fixed at their original values
What is the shadow price
The rate of increase (or decrease) in the optimal objective function value resulting from an increase (or decrease) in the right hand side of the constraint (within the allowable interval)
If the right hand side increases by X(<= Allowable increase), then the optimal objection Function value increases by…
Shadow price * X
If the right hand side decreases by X(<= Allowable increase), then the optimal objection Function value decreases by…
X * shadow price
With in the allowable increase and decrease for a constraint, the shadow price for the constraint will…
Remain the same
Within the allowable increase and decrease for a constraint, the set of binding constraints…
Will not change
What happens to the binding constraints beyond the allowable increase
We dont know
What is a binding constraint
Bottleneck, optimality, left-hand side equal to right hand side
If the optimal solution changes, how do we compute the new optimal solution?
Solve the systems of equations of the BINDING inequalities
As the utilization of the MM1Q comes to 100% what happens to the waiting time of a customer
Increases to infinity
If A constraint is non-binding, what is the shadow price?
0
The new optimal solution after the constraint increase is:
At the intersection of the BINDING condtraints
Shadow price of non binding constraint
0
What happens to wait time is the service utilization is one
Infinite
Is the service time in an MMSQ exponentially distributed
Yes
When maximizing an objective function in a linear program, finding a feasible solution allows to get:
A lower bound of the optimal objective value
Shadow price of binding constraint is
Greater than 0
Within the allowable increase and decrease for a constraint the _______ for the constraint will remain the same
Shadow price
Within the allowable increase and decrease for a constraint the ____________ will not change
Set of binding constraints
