Because learning changes everything.

Chapter 11

Process Design and Analysis

© 2021 McGraw Hill. All rights reserved. Authorized only for instructor use in the classroom.
No reproduction or further distribution permitted without the prior written consent of McGraw Hill.
 Learning Objectives

LO11-1: Exemplify a typical business process and how it

can be analyzed.
LO11-2: Compare different types of processes.
LO11-3: Explain how jobs are designed.
LO11-4: Analyze manufacturing, service, and logistics
processes to ensure the competitiveness of a firm.

© McGraw Hill 2
 Amazon – The Master of Efficiency and Logistics

Amazon fulfillment is an example of a super efficient process

How does Amazon run the fulfillment centers?
• Employs over 120,000 full-time workers around the world
• Uses optimal combinations of humans and machines
• Prints labels, conveys items to the right truck
• Delivers within two days, sometimes even same day
• Experimenting with drone delivery

© McGraw Hill 3
 Process Analysis

Process: any part of an organization that takes inputs and

transforms them into outputs
• A process that does not match the needs of the firm will
punish the firm every minute that the firm operates
The output of many processes are services
Cycle time: the average successive time between
completions of successive units
Utilization: the ratio of the time that a resource is actually
activated relative to the time that it is available for use

© McGraw Hill 4
 Analyzing a Las Vegas Slot Machine

1. Analyzing the mechanical slot machine

2. Analyzing the new electronic slot machine
3. Comparison
4. The slot machine is one of many casino processes

© McGraw Hill 5
 Process Flowcharting

Process flowcharting: the use of a diagram to present the

major elements of a process
The basic elements can include tasks or operations, flows of
materials or customers, decision points, and storage areas or
queues
Separating a diagram into different horizontal or vertical
bands sometimes is useful
It is an ideal methodology by which to begin analyzing a
process

© McGraw Hill 6
 Process Flowchart Example (Slot Machine)

Exhibit 11.1 Access the text alternative for slide images.

© McGraw Hill 7
 Types of Processes

One way to categorize a process is single-stage or multiple-

stage
Single-stage: all of the activities could be collapsed and
analyzed using a single cycle time to represent the speed of
the process
Multiple-stage: has multiple groups of activities that are
linked through flows
Stage: multiple activities that have been pulled together for
analysis purposes

© McGraw Hill 8
 Buffering, Blocking, and Starving

Buffer: a storage area between stages where the output of a

stage is placed prior to being used in a downstream stage
Blocking: occurs when the activities in a stage must stop
because there is no place to deposit the item
Starving: occurs when the activities in a stage must stop
because there is no work
Bottleneck: stage that limits the capacity of the process

© McGraw Hill 9
 Make-to-Stock versus Make-to-Order

Make-to-order
• Only activated in response to an actual order
• Both work-in-process and finished goods inventory kept to
a minimum
• Response time is slow
Make-to-stock
• Process activated to meet expected or forecasted demand
• Customer orders are served from target stocking level
Hybrid
• Combines the features of both make-to-order and make-
to-stock
© McGraw Hill 10
 Pacing

A process can be either paced or nonpaced

Pacing: having a fixed time for the movement of items
through the process
In a serial process, the movement of items through each
activity is often paced in some mechanical way in order to
coordinate the line
Dividing the time available to produce a certain product by
customer demand for the product calculates the required
cycle time for a process
• Manufacturer needs to produce 1,000 automobiles
• A shift is 420 minutes
  420 𝑚𝑖𝑛𝑢𝑡𝑒𝑠 𝑠𝑒𝑐𝑜𝑛𝑑𝑠
•𝐶𝑦𝑐𝑙𝑒 𝑡𝑖𝑚𝑒= ×60 =25.2 𝑠𝑒𝑐𝑜𝑛𝑑𝑠
1,000 𝑎𝑢𝑡𝑜𝑚𝑜𝑏𝑖𝑙𝑒𝑠 𝑚𝑖𝑛𝑢𝑡𝑒
© McGraw Hill 11
 Measuring Process Performance

Exhibit 11.3 Access the text alternative for slide images.

© McGraw Hill 12
 Measuring Process Performance Terms 1

Benchmarking: comparing the metrics of one company to

another
Productivity: the ratio of output to input
• Total factor productivity usually measured in dollars
• Partial factor productivity measured based on an individual
input
• Labor is the most common

Efficiency: a ratio of the actual output of a process relative

to some standard
• An alternative way that the term efficiency is used is to
measure the loss or gain in a process

© McGraw Hill 13
 Measuring Process Performance Terms 2

Run time: the time required to produce a batch of parts

Setup time: the time required to prepare a machine to make a particular item
• In practice, setup time is often not included in the utilization of the process

Operation time: the sum of the setup time and run time for a batch of parts that
are run on a machine

Flow time: includes the time the unit spends actually being worked on, together
with the time spent waiting in a queue
• In practice, the term cycle time is often used to mean flow time

Value-added time: the time in which useful work is actually being done on the
unit

Process velocity: the ratio of the value-added time to the flow time
• Also known as throughput ratio

© McGraw Hill 14
 Production Process Mapping and Little’s Law

Total average value of inventory

• Sum of the value of raw materials, work-in-process, and
finished goods inventory
Inventory turns
• Cost of goods sold divided by the average inventory value

Days-of-supply
• Inverse of inventory turns scaled to days

Little’s law

• There is a long-term relationship among inventory, throughput,

and flow time
• Inventory = Throughput rate × Flow time
© McGraw Hill 15
 Example 11.1: Car Batteries

Average cost $45

12 hours to make a car
Assembles 200 cars per 8-hour shift
• Currently one shift
Holds on average 8,000 batteries in raw material inventory

© McGraw Hill 16
 Example 11.1: Average Inventory

WIP = Throughput × Flow time

WIP = 25 batteries × 12 hours
WIP = 300 batteries

Total = 8,000 + 300 = 8,300 batteries

© McGraw Hill 17
 Example 11.1: Value and Flow Time

Value = 8,300 × $45 = $373,500

Flow time = Inventory/Throughput

Flow time = 8,000/200 = 40 days

© McGraw Hill 18
 Understanding and Analyzing

Process Capacity – Little’s Law

• Little’s Law – A law that holds for any system that has reached a steady
state and enables the understanding of the relationship between average
inventory, average arrival rate (throughput rate), and average time a
unit spends in a system (throughput time)

𝐼 = 𝑅𝑇
Typically, we would like to have “Throughput (R) high” and
“WIP (I) & Throughput or Flow time (T) Low”

Introduction to Materials Management, 8e Copyright © 2017 by Pearson Education, Inc.

Stephen N. Chapman All Rights Reserved
 Understanding and Analyzing

Process Capacity – Little’s Law

A deceptively Simple but remarkably Powerful tool for
Process Analysis:
Inventory = Throughput Rate X Flow Time
I=RxT
 Little’s Law tells us the average time a flow unit spends in the
process.
 By changing the process, if we modify one the metrics while holding a
second one constant, we can determine how third one changes.

Throughput Rate = Inventory / Flow Time

Flow Time = Inventory / Throughput Rate
Throughput Rate/Inventory = 1 / Flow Time

Introduction to Materials Management, 8e Copyright © 2017 by Pearson Education, Inc.

Stephen N. Chapman All Rights Reserved
 Key Process Metrics

Process Metric – a scale or measure that informs us about the performance

and capability of a process.

1. Inventory – the number of flow units within a process which can be

measured in physical units (parts, people, jobs, $ values etc.). Tells us
how much “stuff” is in the process; takes up space and costs money.
2. Flow Rate – the rate at which flow units are processed by the system.
Tells us how much time is spent in the process.
3. Flow time – the time a flow unit spends in a process, from start to finish
including any reworks, restarts due to yield loss or other
disruptions.
More units flowing through a process is generally
more desirable because the point of the process is 2-12
to produce output.
Introduction to Materials Management, 8e Copyright © 2017 by Pearson Education, Inc.
Stephen N. Chapman All Rights Reserved
 Let’s Check Our Understanding
Flow Rate
Question: Over the course of an 8-hour day, a dentist’s
office treats 24 patients. What is the flow rate of
patients in this dentist’s office per hour?
Answer:   24  patients
Flow   rate   =   = 3  patients   per   hour
8  hours
The rate at which units travel through a process. As a rate, it is measured in “Flow
Units per Unit of Time” :
 Dollars $ per Week
 Kilograms per Hour
 People per month
It is always expressed in terms of some units (e.g. boxes, dollars, people) “per unit
2-14
of time”. Without this, it is then just inventory.

Introduction to Materials Management, 8e Copyright © 2017 by Pearson Education, Inc.

Stephen N. Chapman All Rights Reserved
 Let’s Check Our
Understanding
Question:

During a typical Friday, the West End Donut Shop serves

2,400 customers during the 10 hours it is open.

A customer spends (on average) 5-minutes in the shop.

On average, how many customers are in the shop

simultaneously?

I=R*T
2-17

Introduction to Materials Management, 8e Copyright © 2017 by Pearson Education, Inc.

Stephen N. Chapman All Rights Reserved
 Check Your Understanding
Answer:
Flow Rate is:
2,400 customers / 10 hours
= 240 customers / hour
= 4 customers / minute

Flow Time: 5 minutes

I=R*T
4 customers per minute * 5 minutes = 20 customers.

2-18

Introduction to Materials Management, 8e Copyright © 2017 by Pearson Education, Inc.

Stephen N. Chapman All Rights Reserved
 Check Your Understanding: Example

Patient Arrival Departure Flow Time

1 7:35 8.50 75
2 7.45 10.05 140
3 8.10 10.10 120
4 9.30 11.15 105
5 10.15 10.30 I = R *15T
6 10.30 13.35 185
7 11.05 13.15 130
8 12.35 15.05 150
9 14.30 18.10 220
10 14.35 15.45 70
11 14.40 17.20 160 2-18

Average: 125
Introduction to Materials Management, 8e Copyright © 2017 by Pearson Education, Inc.
Stephen N. Chapman All Rights Reserved
 Check Your Understanding: Example

Patient Arrival Departure Flow

Time
1 7:35 8.50 75
2 7.45 10.05 140 Avg. Flow Time (T): 125 mins.
3 8.10 10.10 120 = 2.08 hrs.
4 9.30 11.15I = R *105
T Flow Rate(R) : 7:35 – 18:10 = 10.58
5 10.15 10.30 15 = 11/10.58 hours
6 10.30 13.35 185 = 1.04 Pats. / hour
7 11.05 13.15 130
8 12.35 15.05 150 So. Average Patients in the
day (I) = 1.04 x 2.08
9 14.30 18.10 220 = 2.16 patients
10 14.35 15.45 70 2-18

11 14.40 17.20 160

Introduction to Materials Management, 8e
Average: Stephen N. Chapman 125Copyright © 2017 by Pearson Education, Inc.
All Rights Reserved
 Let's Check Our Understanding

Congress Has 435 members

52 get reelected every 2 years
How much does an average congress person serve in the house?

Introduction to Materials Management, 8e Copyright © 2017 by Pearson Education, Inc.

Stephen N. Chapman All Rights Reserved
 Let's Check Our Understanding

Typically, as we discussed, the objective in Operations management is to have

throughput rate high and WIP and FT( i.e. cycle time) Low.
The extent to which you achieve this is a function of systems' overall efficiency. One
useful measure of that is the Inventory Turns:

Inv. Turns = Throughput Rate / WIP

=$CGS /$WIP
How efficiently are we converting inventory into output.

 A major determinant of Throughput Rate, WIP and Flow Time, as well as

Inventory Turns, is the system’s capacity.
 Capacity of a system is the maximum average rate at which units can flow
through the system.
 Capacity = Base Capacity – Detractors
 Base capacity is the rate of the process at ideal conditions.
 Detractors represent anything that slows the output of the process.

Introduction to Materials Management, 8e Copyright © 2017 by Pearson Education, Inc.

Stephen N. Chapman All Rights Reserved
 Let's Check Our Understanding
Station 1 Station 2 Station 3 Station 4
(.7 minutes) (.8 mins.) (1 min.) (.9 mins)_

Looking at the above process, we say that the bottleneck is Station #3 because this is
the slowest of the process.
Now, let us assume that Station 3 is experiencing 50% fall out due to quality issues. So,
the station that will limit the flow will be the station that is

Introduction to Materials Management, 8e Copyright © 2017 by Pearson Education, Inc.

Stephen N. Chapman All Rights Reserved
 Example – Manufacturing Plant (1 of 4)

• A manufacturing plant has 100 orders arrive each day. All orders go
through the order processing area, where, on average, there are 25 orders
in the system.
• Of the incoming orders , 70% are “A” orders routed through work center A
where average inventory is 14
• The remaining 30% are “B” orders routed through work center B where on
the average inventory is 1.5 orders.
WC “A”
70 orders /day
70% I=14
Order
Proces
00 orders/ day sing
I=25 30% WC “B” 30 orders /day
I=1.5

Introduction to Materials Management, 8e Copyright © 2017 by Pearson Education, Inc.

Stephen N. Chapman All Rights Reserved
Example – Manufacturing Plant
The plant manager wants to know, on average:
 How long does an order (A or B) stay in the order
processing area?
 How long does it take an A order to work its way through
the plant?
 How long does it take a B order to work its way through
the plant?
 How long does it take the average order (A or B) to work
its way through the plant?

Introduction to Materials Management, 8e Copyright © 2017 by Pearson Education, Inc.

Stephen N. Chapman All Rights Reserved
 Example (Little’s Law)

Manufacturing Plant
 How long does an order (A or B) stay in the order processing area?

AverageThroughputTime=¿
 

 How long does it take an A order to work its way through the plant?

Averagetimeanorderspendsin workcenterA=¿
 

AmountoftimetheaverageAorderspendsin theplant=¿
 

Introduction to Materials Management, 8e Copyright © 2017 by Pearson Education, Inc.

Stephen N. Chapman All Rights Reserved
 Example (Little’s Law)

Manufacturing Plant
 How long does it take a B order to work its way through the plant?

AmountoftimetheaverageBorderspendsin theplant=¿
 

Averagetimeanorderspendsin theplant=¿
 

 How long does it take the average order (A or B) to work its way through the plant?

Estimate averagethroughouttimefortheentire system=¿

 

Introduction to Materials Management, 8e Copyright © 2017 by Pearson Education, Inc.

Stephen N. Chapman All Rights Reserved
 Job Design Decisions

Job design: the function of specifying the work activities of

an individual or group in an organizational setting
Objective is to develop job structures that meet the
requirements of the organization and its technology
• Also that satisfy the jobholders’ personal and individual
requirements
Work measurement methods are used to determine the most
efficient means of performing a given task, as well as to set
reasonable standards for performing it

© McGraw Hill 34
 Behavioral Considerations in Job Design

Specialization of labor
• Made high-speed, low-cost production possible
• Greatly enhanced standard of living
• Adverse effects on workers

Job enrichment
• Making job more interesting to the worker
• Horizontal enrichment: worker performs a greater
number of variety of tasks
• Vertical enrichment: worker is involved in planning,
organizing, and inspecting work

© McGraw Hill 35
 Work Measurement and Standards

Work measurement: a process of analyzing jobs for the

purpose of setting time standards
Why use it?
1. Schedule work and allocate capacity
2. Motivate and measure work performance
3. Evaluate performance
4. Provide benchmarks
Work measurement and its resulting work standards have
been controversial
• Management may set the rate too high
• Workers who find a better way get penalized by having a
revised rate set
© McGraw Hill 36
 Four Basic Work Measurement Techniques

Direct methods
1. Time study: uses a stopwatch to time the work
2. Work sampling: entails recording random observations of
a person or teams at work
Indirect methods
3. Predetermined motion-time data system: sums data from
tables of generic movement times developed in the
laboratory to arrive at a time for the job
4. Elemental data: sums times from a database of similar
combinations of movements to arrive at job time

© McGraw Hill 37
 Example 11.2: Bread Making 1

Two steps are required

1. Prepare the dough and bake the loaves (bread making)
2. Packaging the loaves
Bread is made in batches of 100 loaves
• Completes a batch every hour, which is the cycle time
• Slower process, so is the bottleneck
Packaging needs only 0.75 hour to place the 100 loaves in
bags
• Has 75 percent utilization

Access the text alternative for slide images.

Exhibit 11.5A
© McGraw Hill 38
 Example 11.2: Bread Making 2

Suppose we have two bread making lines

• Cycle time on each is still one hour to make 100 loaves
Bread making runs two shifts
• Produces 200 × 8 × 2 = 3,200
Packaging runs three shifts
• Produces 133.3 × 8 × 3 = 3,200
Capacities are roughly equal

Access the text alternative for slide images.

Exhibit 11.5B
© McGraw Hill 39
 Example 11.3: A Restaurant 1

Consider the restaurant in the casino

Managers have set up a buffet arrangement where customers
serve themselves
Buffet is continually replenished to keep items fresh
To further speed service a fixed amount is charged for the meal
Customers take an average of 30 minutes to get their food and
eat
They typically eat in groups (or customer parties) of two or
three to a table
The restaurant has 40 tables
• Each table can accommodate four people
What is the maximum capacity of this restaurant?
© McGraw Hill 40
 Example 11.3: Solution Approach

Utilization
• The restaurant can accommodate 160 people at a time
• It might be more convenient to measure the capacity in terms of
customer parties because this is how the capacity will be used
• If the average customer party is 2.5 individuals, then the average seat
utilization is 62.5 percent when the restaurant is operating at capacity
Cycle time
• When operating at capacity, 0.75 minute
• 30 minutes ÷ 40 tables
• On average, a table would become available every 0.75 minute
or 45 seconds
Capacity
• The restaurant could handle 80 customer parties per hour
• 60 minutes ÷ 0.75 minute/party
© McGraw Hill 41
 Example 11.3: Challenges in Restaurant Problem 1

The problem with this restaurant is that everyone wants to

eat at the same time
Management has collected data and expects the profile
below for customer parties arriving during lunch, which runs
from 11:30 am until 1:30 pm
Customers are seated only until 1:00 pm
Time Parties Arriving
11:30 to 11:45 15
11:45 to 12:00 35
12:00 to 12:15 30
12:15 to 12:30 15
12:30 to 12:45 10
12:45 to 1:00 5
Total parties 110

© McGraw Hill 42
 Example 11.3: Challenges in Restaurant Problem 2

Restaurant operates for two hours for lunch

The capacity is 80 customer parties per hour
A simple way to analyze the situation is to calculate how the system looks
at the end of each 15-minute interval
The key is to look at the cumulative numbers
• The difference between cumulative arrivals and cumulative departures
gives the number of customer parties in the restaurant
Because there are only 40 tables, when the cumulative difference through
is greater than 40, a waiting line forms
Cycle time for the entire restaurant is 45 seconds per customer party at this
time
The last party will need to wait for all of the earlier parties to get a table, so
the expected waiting time is the number of parties in line multiplied by the
cycle time
© McGraw Hill 43
 Example 11.3: Challenges in Restaurant Problem 3

In the table below, when the cumulative number of parties is 50, there are
10 parties waiting to be seated
The average wait time is 10 × 45 seconds = 7.5 minutes
During 12:00 to 12:15
• Parties that arrived during 11:30 to 11:45 would have left
• The cumulative number of parties at the end of 12:00 = 50
• 50 (number at the end of 12:00) + 30 (arrivals during 12:00 to 12:15) − 15
(departures during 12:00 to 12:15) = 65
Parties Parties Parties Either at Customer Expected
Arriving during Departing Table or Waiting to Parties Waiting Waiting Time
Period during Period Be Served (at End Tables Used (at (at End of (at End of
Time Period (Cumulative) (Cumulative) of Period) End of Period) Period) Period)
11:30 to 11:45 15 0 15 15
11:45 to 12:00 35 (50) 0 50 40 10 7.5 minutes
12:00 to 12:15 30 (80) 15 65 40 25 18.75 minutes
12:15 to 12:30 15 (95) 20 (35) 60 40 20 15 minutes
12:30 to 12:45 10 (105) 20 (55) 50 40 10 7.5 minutes
12:45 to 1:00 5 (110) 20 (75) 35 35
1:00 to 1:30 0 (110) 35 (110)

© McGraw Hill 44
 Example 11.3: Customers in the Restaurant

Access the text alternative for slide images.

© McGraw Hill 45
 Example 11.4: The Balabus (“Tourist Bus”) in Paris

Two hours for the route during peak traffic

Route has 60 stops
Each bus has seating capacity of 50
• Another 30 passengers can stand
Busy much of the day

© McGraw Hill 46
 Example 11.4: Initial Analysis

With one bus, maximum wait is two hours

If bus is halfway through cycle, wait is one hour
Average wait is one hour
• In general, average wait is ½ cycle time
If two buses used…
• Cycle time is one hour
• Average wait is 30 minutes
For a two-minute wait…
• Need four-minute cycle time
• Need 30 buses (120 minutes ÷ 4 minute cycle time)

© McGraw Hill 47
 Example 11.4: Capacity

Each bus has total capacity of 80 passengers

• 50 seated
• 30 standing
30 buses can accommodate…
• 1,500 seated
• 2,400 total

© McGraw Hill 48
 Example 11.4: Detailed Analysis

Load Minimum Buses Needed for

Number of Average Time (Passenger Number of All Passengers
Time Customers on Bus Hours) Buses Needed to Be Seated
8:00 to 9:00 A.M. 2,000 45 minutes 1,500 18.75 30
9:00 to 10:00 A.M. 4,000 30 minutes 2,000 25 40
10:00 to 11:00 A.M. 6,000 30 minutes 3,000 37.5 60
11:00 A.M. to 12:00 noon 5,000 30 minutes 2,500 31.25 50
12:00 to 1:00 P.M. 4,000 30 minutes 2,000 25 40
1:00 to 2:00 P.M. 3,500 30 minutes 1,750 21.875 35
2:00 to 3:00 P.M. 3,000 45 minutes 2,250 28.125 45
3:00 to 4:00 P.M. 3,000 45 minutes 2,250 28.175 45
4:00 to 5:00 P.M. 3,000 45 minutes 2,250 28.175 45
5:00 to 6:00 P.M. 4,000 45 minutes 3,000 37.5 60
6:00 to 7:00 P.M. 3,000 45 minutes 2,250 28.175 45
7:00 to 8:00 P.M. 1,500 45 minutes 1,125 14.0625 22.5
TOTALS 42,000 25,875

© McGraw Hill 49
 Example 11.4: Conclusion

With 30 buses, many will stand

During morning and afternoon rush, not all customers can be
accommodated
• Need at least 40 buses during rush hours
With 40 buses all the time…
• 24,000 seat-hours available
• 40 buses × 12 hours × 50 seats per bus
• 25,875 seat-hours needed
• 107.8 percent utilization
• 7.8 percent of customers must stand

© McGraw Hill 50
 Process Flow Time Reductions

1. Perform activities in parallel

2. Change the sequence of activities
3. Reduce interruptions

© McGraw Hill 51
 What Goes Into a Process Must Come out of the Process

Exhibit 11.6 Access the text alternative for slide images.

© McGraw Hill 52
 Solved Problem 2

Daffy Dave’s sub shop makes custom submarine sandwiches to order. It is

analyzing the process at its shop. The general flow of the process is shown as
follows. A different person is working at each step in the process.

Slice bun and

Add toppings
Take order (1 add meat Bag the order
and condiments
min/order) and cheese (2 mins/ord)
(4 mins/ord)
(3 mins/ord)

What is the current maximum output of the process per hour?

Maximum orders per hour in each of the four steps is
• “Take order” : 60 min. per hour/1 min. per order = 60 subs per hour
• “Slice ..”: 60 min. per hour/3 min. per order = 20 subs per hour
• “Add the..” 60 min. per hour/4 min. per order = 15 subs per hour
• “Bag..”: 60 min. per hour/2 min. per order = 30 subs per hour
• Overall capacity per hour, determined by the bottleneck operation (that is “Add
toppings…”) is 15 per hour.
For other parts, refer to the text.

© McGraw Hill 53
 Objective Question 15: Two Production Sequence
Coming Together 1

Assembling an upholstered chair is described by the

following 9 steps (ABC, JKL done on parallel and steps XYZ
occur as shown below).

Access the text alternative for slide images.

© McGraw Hill 54
 Objective Question 15: Two Production Sequence
Coming Together 2
Amount of work in seconds required at each station is given in the table below
A 30 J 20 X 10
B 25 K 15 Y 12
C 10 L 15 Z 20

What is the maximum hourly output?

Maximum hourly output in each station is obtained by taking dividing 3600 (secs
per hour) by the processing time in each station. Maximum output of the process
is determined by the smallest output in any station. (this example
A 3600/30=120 J 180 X 360
B 144 K 240 Y 300
C 360 L 240 Z 180

From A-B-C max output is 120;

From J-K-L; max output is 240;
From X-Y-Z , max output is 180;
Overall maximum output is 120.
What is the flow time of the process?
Flow time will be the maximum time in any station, which is 30.
© McGraw Hill 55
 Summary 1

A process takes inputs and transforms them into outputs that

create value for the organization
• A company may have literally thousands of different
processes
Understanding a process usually starts with a flowchart
With multistage process, it is useful to buffer the activities by
placing inventory between the activities
The bottleneck is the activity or stage that limits the capacity
of the process
A process that is only activated after an actual order arrives
is called make-to-order
Make-to-stock processes supply inventory from which actual
customer orders are filled
© McGraw Hill 56
 Summary 2

Little’s law is a mathematical formula that captures the

relationship between the amount of inventory of all types in
the process
Job design is the study of how work activities are designed
for workers
A key design decision is the amount of specialization that a
job entails
Trade-offs exist between the quality and relative productivity
of a process
A fundamental concept is that what goes into a process must
come out of the process in some form
Coordinating the inputs and outputs is important to having a
good process
© McGraw Hill 57
 Practice Exam 1

In each of the following, name the term defined or answer the question.

1. This is a part of an organization that takes inputs and transforms them into
outputs.
2. This is the ratio of the time that a resource is activated relative to the time it is
available for use.
3. This is when one or more activities stop because of lack of work.
4. This is when an activity stops because there is no place to put the work that
is completed.
5. This is a step in a process that is the slowest compared to the other steps.
This step limits the capacity of the process.
6. What is the difference between McDonald’s old and current process?
7. This refers to the fixed timing of the movement of items through a process.

© McGraw Hill 58
 Practice Exam 2

8. This is when one company compares itself to another relative to

operations performance.
9. This is the time it takes for a unit to travel through the process from
beginning to end. It includes time waiting in queues and buffers.
10. The relationship between time and units in a process is called this.
11. What is the mathematical relationship between time and units in a
process?
12. What is the major assumption about how a process is operating for
Little’s law to be valid?
13. What is the double-edged sword of job design?
14. This is when a job is increased vertically or horizontally.
15. What are the four basic work measurement techniques?
© McGraw Hill 59
 End of Main Content

Because learning changes everything. ®

www.mheducation.com

© 2021 McGraw Hill. All rights reserved. Authorized only for instructor use in the classroom.
No reproduction or further distribution permitted without the prior written consent of McGraw Hill.