MGCR 472 Midterm Flashcards by brandt muncey-buckley

What are the 3 main functions that organizations perform?

Marketing (generates demand), finance/acct, operations (input->output)

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What are 2 inputs that go into a firm to make outputs?

Investment (inventory, equipment) and Costs (labor)

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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

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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

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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

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Pros and cons of Asian manufacturing (for an american company)

Pros: Low cost
Cons: low response time

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Pros of small batch production

Lowers cost of demand uncertainty

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What’s the main benefit of Decentralized management?

Supplements quick response time since managers determine products to sell/return

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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.)

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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)

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How do hibachi tables lower costs (2 ways)?

lowers labor costs since chefs perform multiple tasks

- Lowers rent costs (less space for BOH)

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What are the three elements in a process flow diagram? And their shape.

Rectangle: Activity
Triangle: Storage area/buffer
Diamond: Decision point

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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

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What is flow time?

Total time that a flow unit (e.g. a customer) spends in an activity/process

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What is inventory

Number of flow units in an activity/process at any point

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What is thoroughput

Number of flow units going in/out of an activity or process per minute of time (REPRESENTED AS LAMBDA)

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What is Little’s Law?

Inventory = Thoroughput * Flow Time

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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

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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%

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What are the 5 process measures.

Thoroughput, inventory, flow time, cycle time, capacity

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What is cycle time?

Avg time btwn 2 consecutive flow units entering an activity/process, which is working continuously

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What is capacity?

Thoroughput of an activity/process if it’s working continuously

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What is the relationship between capacity and cycle time?

Cycle time = 1/capacity

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What is the difference between flow time and cycle time?

Flow time = Time to go through process

Cycle time = Time between 2 customers

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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?

1. Increase bottleneck resource 2. Pool bottleneck resource w/ some non-bottleneck resources 3. Change the batch sixe (econ of scale) 4. 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?

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?

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?

The new optimal solution after the constraint increase is:

At the intersection of the BINDING condtraints

Shadow price of non binding constraint

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