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# Productivity and Process Design

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For a Starbuck's process (chose the one you are more familiar with), list inputs (Xs) and performance measures. Indicate which inputs you view as being key, and identify those that can be controlled and those that cannot be controlled, or are not controlled, during routine operation, which are noise and which performance measures are critical.

#### Solution Preview

For this assignment I would recommend constructing a process map. Your process map identifies the process steps and inputs. I have created one as an example for making a cappuccino. It is attached in both PDF and MS Visio formats for your convenience.

Inputs on the attached process ...

#### Solution Summary

Constructing a process map of making a Starbucks process, how to capture inputs, and measure process performance.

\$2.19

## Operational Optimization, Queueing, Linear Programming, Logistics, Flow Charts and Productivity

1. A company that makes shopping carts for supermarkets and other stores recently purchased some new equipment that reduces the labor content of the jobs needed to produce the shopping carts. Prior to buying the new equipment, the company used five workers, who produced an average of 80 carts per hour. Labor cost was \$10/hour and machine cost was \$40/hour. With the new equipment, it was possible to transfer one of the workers to another department, and equipment cost increased by \$10/hour while output increased by four carts per hour.

a. Compute labor productivity under each system. Use carts per worker hour as the measure of labor productivity.
b. Compute the total productivity under each system. Use carts per dollar cost (labor plus equipment) as the measure.
c. Comment on the changes in productivity according to the two measures, and on which one you believe is the more pertinent in this situation?

3. The license renewal process at the State Automobile Driver's license office is designed as a service line, with customers processed in the fixed sequence listed in Table 1.

Each task is performed by a separate clerk.

a. Draw a process flow diagram for the license renewal process.
b. What is the cycle time?
c. How many customers can the Office process in an hour.
d. Assuming that customers arrive at the Office at 60 second intervals, what is the throughput time?
e. How many customers will be in the Office, on the average, at any given time (once the system reaches a steady state) ?
g. Compute the cycle time, capacity and throughput time for the system you designed in (f) above.
h. What is (are) the bottleneck(s) in the new system?
i. Will the system you designed in (f) above require additional expenditures in addition to the cost of the seventh clerk? Please be specific.

4. The following diagram describes how Dolphin Steel Co. makes steel.

Stage Capacity ( tons/day)

Iron Ore Processing 4,000
Coke ovens 1,000
Blast furnace 3,000
Scrap handling 1,500
Basic Oxygen furnace 4,200
Continuous Casting 6,000
Finishing Mill 5,000

At two points in the steel making process, outputs from two departments are inputs to a single department. The ratio of each input is indicated on the arrow that illustrates the flow. For example, in the blast furnace, 3 tons of iron ore are mixed with 1 ton of coke.

a. What is the system capacity?
b. Which stage(s) in the process is a bottleneck?
c. How much can you increase the capacity of the system, by adding capacity to the bottleneck?
d. Assume that adding capacity requires a capital investment, say for example \$2M. How would you go about determining if the investment is justified?

Now assume that the coke ovens, blast furnace and the basic oxygen furnace have yield rates of 80%, 85% and 90%, respectively. Please note that 80% yield means that for every 100 tons of input we get only 80 tons of output.

e. What is the system capacity?
f. Which stage(s) in the processes is (are) a bottleneck?

See attached file for full problem description.

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