Discussion Questions
- Discuss the type of facility layout that would be most appropriate for:
- printing books—Product layout
- performing hospital laboratory tests—Process layout or cellular
- manufacturing home furniture—Process layout.
- a hospital—Process layout
- a photography studio—Product layout
- a library—Process layout
- Describe the layout of a typical fast-food franchise such as McDonald’s. What type of layout is it? How does it support productivity? Do different franchises (e.g., Burger King or Wendy’s) have different types of layouts? Why?
Students should be encouraged to visit these and look closely at the kitchen areas. McDonald’s is basically a process layout, while others bear closer similarity to product layouts, but are still basically process layouts. Students may argue McDonald’s has characteristics of both product and process layouts, and therefore, is a hybrid. This argument is valid. You can also tie in the concept of the servicescape and other service management ideas in Chapter 6 if you have previously covered it. Note that the items being processed are people, physical goods, and information. One key point is that process design and flow should be integrated with facility design and layout!
- How might sustainability issues be incorporated into the design of facilities and workplaces? Provide examples and explain your reasoning.
The sports stadium box in OM3 C8 on “Play Ball and Save the Planet,” is a good example of what is expected here. Undergraduate students will focus on what they know about such as restaurants, hotels, retail stores, universities, airlines, parks, beaches, utilities, and so on. Make sure you ask questions so students see how OM relates to sustainability. Exhibit 1.6 in Chapter 1 is a good place to begin (frame) this discussion as follows:
Exhibit 1.6 Examples of Sustainability Practices
Environmental Sustainability
- Waste management: Reduce waste and manage recycling efforts
- Energy optimization: Reduce consumption during peak energy demand times
- Transportation optimization: Design efficient vehicles and routes to save fuel
- Technology upgrades: Improvements to save energy and clean and reuse water in manufacturing processes
- Air quality: Reduce greenhouse gas emissions
- Sustainable product design: Design goods whose parts can be recycled or safely disposed of
Social Sustainability
- Product safety: Ensure consumer safety in using goods and services
- Workforce health and safety: Ensure a healthy and safe work environment
- Ethics and governance: Ensure compliance with legal and regulatory requirements and transparency in management decisions
- Community: Improve the quality of life through industry-community partnerships
Economic Sustainability
- Performance excellence: Build a high-performing organization with a capable leadership and workforce
- Financial management: Make sound financial plans to ensure long-term organizational survival
- Resource management: Acquire and manage all resources effectively and efficiently
- Emergency preparedness: Have plans in place for business, environmental, and social emergencies.
- Describe the ergonomic features in the automobile that you drive most often. If it is an older model, visit a new-car showroom and contrast those features with those found in some newer models.
Automotive designers pay much attention to ergonomics, such as placement of controls and cup holders, ability to reach them safely and comfortably, and the ability to see them without being distracted. The BMW interface wheel (albeit a bit dated) caused a lot of controversy when it was introduced, and you might suggest that students search for articles or reviews that discuss it. Today’s “heads up” displays that project information onto the windshield is an example of ergonomic design. Other topics that enter this class discussion are location of controls, cubic space, line of sight, size of the people, safety, etc. Cell phone use in vehicles is a hot topic today with voice-activated controls becoming more available. Most auto enthusiast magazines have reviews of cars and address these issues (while not formally calling them “ergonomics”).
- What do you think of Cargill Kitchen Solutions’ 20-minute job rotation approach? Would you want to work in such an environment, or one in which you performed the same tasks all day. Why?
Most students will feel that the approach is a great idea because it provides more interesting work and cross-training. Few people today are happy with doing a monotonous task all day. This question can be used to introduce a class discussion of job design, job enlargement, and job enrichment, all topics in this chapter.
As the text describes: “Two broad objectives must be satisfied in job design. One is to meet the firm’s competitive priorities—cost, efficiency, flexibility, quality, and so on; the other is to make the job safe, satisfying, and motivating for the worker. Resolving
conflicts between the need for technical and economic efficiency and the need for employee satisfaction is the challenge that faces operations managers in designing jobs. Clearly, efficiency improvements are needed to keep a firm competitive.
However, it is also clear that any organization with a large percentage of dissatisfied employees cannot be competitive.”
Cargill is an excellent example of trying to reconcile these two broad objectives using job enlargement and rotation.
Problems and Activities
- Research and write a short report (maximum of two typed pages) on green facility design making sure that you incorporate some of the key topics in this chapter.
Students will have no trouble finding “green facility design” issues and examples via an Internet search such as the US Green Building Council (www.usgbc.org), Siemens (www.seimens.com/answers), and The Kresge Foundation (www.kresge.org). Make sure the students focus on facility design, layout, how to group work (i.e., ALB), energy, lighting, CO2 emissions, recycling, waste, workplace and station design, job enlargement and practices, service encounters, safety, pollution, ergonomics, water, and so on in both goods-producing and service-providing organizations. If students present or briefly discuss in class what they found make sure you explore issue(s) such as: How are processes and facility design and layout integrated? Does facility design enhance the customer experience and/or production efficiency? What are the economics of the green design? What type of sustainability is it – economic, social or environmental?
- Research and write a short paper illustrating how an organization uses one of the following types of facility layouts:
- Product layout
- Process layout
- Cellular layout
- Fixed position layout
If you Google any of these types of layouts you get millions of hits. The challenge for students is to find an example of how a real company uses the layout. For example, cellular layout reduces part movement, set-up time, and wait time between operations, resulting in a reduction of work in progress inventory and freeing idle capital that can be better utilized elsewhere. Most immediately, processes become more balanced and productivity increases because the manufacturing floor has been reorganized and tidied up. The results are cost savings and the better control of operations. The following link, for example, provides an interesting story w/r to a firm using cellular layouts.
http://www.massmac.org/newsline/0709/article05.htm
- Visit a manufacturer or service organization and critique their facility design. What are the advantages and disadvantages? How does the layout affect process flows,
customer service, efficiency, and cost? Describe the basic types of materials-handling systems commonly used in manufacturing.
This activity gives students a chance to see the application of OM. They might uncover some obvious improvements after examining the facilities in the context of the text material. One objective of this question is for students to understand the complimentary relationship between the type of layout and type of process.
- Bass Fishing, Inc. assembles fishing nets with aluminum handles in an assembly line using four workstations. Management wants an output rate of 200 nets per day using a 7.5 hour work day. The sum of the task times is 6.25 minutes/net.
- What is the cycle time?
Equation 8.2 is C = A/R or C = (7.5 hours/day)(60 minutes/1 hour)/[(200 nets/day] = 450 min/day/200 nets/day = 2.25 min/net.
- What is assembly-line efficiency?
Equation 8.6 is Assembly Line Efficiency = S t/ (N*CT) = 6.25/(4*2.25) = 69.4%
- What is total idle time?
Equation 8.5 is Total Idle Time = N*CT – S t = 4(2.25) – 6.25 = 2.75 min. Bass Fishing is paying 2.75 minutes for idle time out of every 9.0 minutes to produce one net. This is not so efficient and the work content should be redefined and better assembly line work balances found. AB efficiency and total idle time are directly related to cost per unit.
- Peter’s Paper Clips uses a three-stage production process: cutting wire to prescribed lengths, inner bending, and outer bending. The cutting process can produce at a rate of 150 pieces per minute; inner bending, 140 pieces per minute; and outer bending, 110 pieces per minute. Determine the hourly capacity of each process stage and the number of machines needed to meet an output rate of 20,000 units per hour. How does facility layout impact your numerical analysis and process efficiency? Explain.
Cutting: 150/min (60 min/hour) = 9000/hour; 20,000/9000 = 2.22. Need to round up to 3 machines to ensure meeting the required output rate.
Inner bending: 140/min (60) = 8400/hour; 20,000/8400 = 2.38. Need 3 machines. Outer bending: 110/min (60) = 6600/hour; 20,000/6600 = 3.03. Need 3 machines.
A few questions for class discussion include: Do we have enough space for these machines? How should the machines be configured? Would a product, process, or cellular layout work best? For each layout option, how many times to we handle the wire? Do we minimize the distance travelled for this three-stage wire cutting process?
- An assembly line with 30 activities is to be balanced. The total amount of time to complete all 30 activities is 42 minutes. The longest activity takes 2.4 minutes and the shortest takes .3 minutes. The line will operate for 480 minutes per day.
- What are the maximum and minimum cycle times?
Maximum cycle time = 42 minutes; minimum cycle time = 2.4 minutes.
- How much daily output will be achieved by each of those cycle times?
Using Equation 8.2, C = 480/42 = 11.4 units/day; C = 480/2.4 = 200 units/day
Make sure students understand how to get the proper “units per day.” That is, they must get the numerator and denominator in the correct and same units of measure before they do the computation.
- In Problem 6, suppose the line is balanced using 10 workstations and a finished product can be produced every 4.2 minutes.
- What is the production rate in units per day?
Using Equation 8.2, CT = A/R or 4.2 = 480/R or R = 114.3 units/day
- What is the assembly line efficiency?
Using Equation 8.6, Efficiency = 42/[4.2(10)] = 1.0 or 100 percent efficiency. The line is perfectly balanced.
- A small assembly line for the assembly of power steering pumps needs to be balanced. Exhibit 8.11 is the precedence diagram for problems #8 and #9. The cycle time is determined to be 1.5 minutes. How would the line be balanced by choosing the assignable task having the longest task time first?
Longest (largest) processing time first rule?
| Station | Tasks | Total time | Idle Time |
| 1 | B,A,C,D | 1.5 | 0.0 |
| 2 | E,F | 1.2 | 0.3 |
| 3 | G,H,I | 1.5 | 0.0 |
| Total | 4.2 | 0.3 |
Using Equation 8.6, Efficiency = 4.2/[1.5(3)] = 93.3%
- For the assembly line described in Problem 8, how would the line be balanced by choosing the assignable task having the shortest task time first?
Exhibit 8.11 is the precedence diagram for problems #8 and #9.
Shortest (smallest) processing time rule?
| Station | Tasks | Total time | Idle Time |
| 1 | A,D,F,G | 1.4 | 0.1 |
| 2 | B,C | 0.9 | 0.6 |
| 3 | E,H | 1.4 | 0.1 |
| 4 | I | 0.5 | 1.0 |
| Total | 4.2 | 1.8 |
Using Equation 8.6, Efficiency = 4.2/[1.5(4)] = 70.0%.
The conclusion is that the assembly line balancing rule does make a difference in line balancing solutions and therefore, must be carefully chosen and monitored. The idea is to strictly follow the ALB rule like a computer would do it. This is an important point to make to students and why we work this type of problem. Large assembly line balancing problems also used more complex heuristic rules and simulation to test out alternative line balances.
- For the in-line skate assembly example in this chapter, suppose the times for the individual operations are as follows:
| Task | Time (sec.) |
| 1 | 20 |
| 2 | 10 |
| 3 | 30 |
| 4 | 10 |
| 5 | 30 |
| 6 | 20 |
| 7 | 10 |
| 8 | 20 |
Assume that inspections cannot be performed by production personnel, but only by persons from quality control. Therefore, assembly operations are separated into three
groups for inspection. Design a production line to achieve an output rate of 120 per hour and 90 per hour.
There is no one correct answer. A suggested solution is to group operations having a CT of 30 seconds or less (120/hour): tasks 1 and 2 (30 sec); task 3 (30 sec); task 5 (30 sec);
tasks 4 and 6 (30 sec); tasks 7 and 8 (30 sec). A proposed design would then be:
The line would be perfectly balanced (100% efficient).
| Station | Tasks | Total time | Idle Time |
| A | 1 and 2 | 30 sec. | 0.0 |
| B | 3 | 30 | 0.0 |
| C | 4 and 6 | 30 | 0.0 |
| D | 5 | 30 | 0.0 |
| E | 7 and 8 | 30 | 0.0 |
| Total | 150 | 0.0 |
Using Equation 8.6, Efficiency = 150/[30(5)] = 100.0%
- For the in-line skate example described in Problem 10, design a production line to achieve an output rate of 90 per hour.
For 90 parts/hour, each station needs to have a work content of 40 sec. or less. A configuration is shown below. There would be a lack of work delay before tasks 4 and 5, and flow blocking delay before tasks 6 and 7, and before task 8.
| Station | Tasks | Total time | Idle Time |
| A | 1 and 2 | 30 sec. | 10.0 |
| B | 3 | 30 | 10.0 |
| C | 4 and 5 | 40 | 0.0 |
| D | 6 and 7 | 30 | 10.0 |
| E | 8 | 20 | 20.0 |
| Total | 150 | 50.0 |
Using Equation 8.6, Efficiency = 150/[40(5)] = 75.0%
- You have been asked to set up an assembly line to assemble a computer mouse. The precedence network is shown in Exhibit 8.12; task times in minutes are given in parentheses. There are 480 minutes of assembly time per shift and the company operates one shift each day. The required output rate is forecasted to be 60 units per shift.
Exhibit 8.12 Precedence Network for Problem 12
- Balance the assembly line using the longest processing time rule. State the tasks associated with each workstation, total time, and idle time.
| Work Station | Assigned Tasks | Total Time | Idle Time |
| A | 2, 4, 3 | 8 minutes | 0 minutes |
| B | 1, 6 (or 7 tie) | 7 | 1 |
| C | 5 | 6 | 2 |
| D | 7 (or 6) | 3 | 5 |
| E | 8 | 8 | 0 |
| F |
You need to know the cycle time first so C = A/R = (480 min/shift)/(60 units/shift) = 8 min/unit. The sum of the task times is 32 minutes. See the table for a solution strictly following the longest processing time rule.
- What is the assembly line efficiency?
Equation 8.6 is Assembly Line Efficiency = S t/ (N*CT) = 32 minutes/(5*8.0) = 80.0%
- Is your assembly line balance solution good or bad? What criteria do you used to make this assessment? Explain.
Equation 8.5 is Total Idle Time = N*CT – S t = 5(8.0) – 32 = 8 min. The firm is paying for 8 minutes of idle time out of every 40 minutes so this is not a good (just
fair) balance. Also, since the idle time per work station varies greatly (i.e., from zero at station A and E to 5 minutes at station D, it is not a very good balance and solution. The potential for a bottleneck to happen at work stations A and E is greatest. We should redefine the work content into more tasks (say 15 to 20 instead of 8) and try to regroup the work better and increase efficiency.
- Balance the assembly line in Exhibit 8.13 for (a) a shift output of 60 pieces and (b) a shift output of 40 pieces. Assume an eight-hour shift, and use the rule: choose the assignable task with the longest processing time. Compute the line efficiency for each case.
For an output of 60 pieces/shift, cycle time = 8(60)/60 = 8 minutes/unit. You need to go over the cycle time calculation carefully.
| Work station | Tasks | Total Time | Idle Time |
| 1 | a, b | 8 | 0 |
| 2 | e, c, d | 7 | 1 |
| 3 | g | 7 | 1 |
| 4 | f | 6 | 2 |
| 5 | i | 6 | 2 |
| 6 | h, k | 8 | 0 |
| 7 | j | 4 | 4 |
| Total | 46 | 10 |
Using Equation 8.6, Efficiency = 46/[7(8)] = 82.1% The idea is to strictly follow the ALB rule like a computer would do it. Students may also ask about the two ending tasks and one explanation is the assembly line is producing a subassembly where J and K are end items that are not yet put together (might be shipped separately and then used in final assembly).
For a shift output of 40 pieces, cycle time (C) = 8(60)/40 = 12 minutes/unit
Work Station Tasks Total Time Idle Time
| 1 | a, b, e | 12 | 0 |
| 2 | d, g, c | 10 | 2 |
| 3 | f, i | 12 | 0 |
| 4 | h, j, k | 12 | 0 |
| Total | 46 | 2 |
Using Equation 8.6, Efficiency = 46/[4(12)] = 95.8%
The two ending tasks J and K could represent parts of a subassembly that are unfinished and ready to be shipped to manufacturer.
- List the ergonomic features of your automobile’s interior and discuss any improvements that you can identify.
Height, width, seat comfort, visibility, headrests, cup holders, space, steering wheel, etc.
If you Google “ergonomic automobiles” you get almost 3 million hits such as below:
http://www.ccohs.ca/oshanswers/ergonomics/driving.html
Automotive designers pay much attention to ergonomics, such as placement of controls and cup holders, ability to reach them safely and comfortably, and the ability to see them without being distracted. The BMW interface wheel (albeit a bit dated) caused a lot of controversy when it was introduced, and you might suggest that students search for articles or reviews that discuss it. Today’s “heads up” displays that project information onto the windshield is an example of ergonomic design. Other topics that enter this class discussion are location of controls, cubic space, line of sight, size of the people, safety, etc. Cell phone use in vehicles is a hot topic today with voice-activated controls becoming more available. Most auto enthusiast magazines have reviews of cars and address these issues (while not formally calling them “ergonomics”).
- Research and write a short paper (1 page maximum) on the advantages and disadvantages of virtual teams in today’s digital environment.
One of the major trends in business is a move toward virtual workplaces. In situations where this is not in place or not appropriate, virtual teams can be utilized within a more traditional workplace.
In a virtual team, members are dispersed, either geographically or organizationally with their primary communications through electronic means (versus face-to-face). Team membership is also more likely to change over time than with traditional single-location teams.
Advantages of a virtual team
- Saves time and travel expenses
- Eliminates moving expenses
- Provides access to experts
- Greater flexibility in team membership
- Less cost to use outside consultants
- Easier to hire and retain team members
- Better accommodation to team members personal & professional lives
- Dynamic team membership
- Allows assignment to multiple teams simultaneously
- Provides faster response to market demands
- See also virtual workplace advantages Disadvantages of a virtual team
- Lack of physical interaction
- Loss of face-to-face synergies
- Lack of trust
- Greater concern with predictability and reliability
- Lack of social interaction
- See also virtual workplaces disadvantages
Reference: Cascio, Wayne F. (2000, August). Managing a Virtual Workplace. Academy of Management Executive. pp. 81-90.
Case Teaching Notes: BankUSA Cash Movement
Overview
The case describes a department in the investment and trust operations area of a major bank that processes “information-intensive transactions (wires).” Notice the ALB problem is described for a service industry. The wires are initiated by a paper-based process. The case analysis requires a blend of numerical analysis as well as qualitative analysis. Some of the issues in the case encourage a vigorous class discussion such as
- the best level of detail in defining work tasks for assembly line balancing in a service business, (b) control and the cost of failure versus higher process efficiency, (c) labor savings (costing out) due to more efficient balances, and (d) how to handle high dollar amount wires. The case focuses on outgoing wires only. Cycle time computations are included in the case to clarify this computation for the students. With these example computations their “what if” computations are normally accurate! This is a good case for a major team case write-up and management report. Students should work numerous ALB problems and master this topic before they try to analyze the case.
Case Questions and Brief Answers
- What is the best way to group the work represented by the 16 work groups for an average demand of 306 outgoing wires per day? What is your line balance if peak demand is 450 wires per day? What is assembly-line efficiency for each line balance solution?
How to group work tasks most efficiently is best done with assembly line balancing methods. Please note that this process is best described as having dominant line flows (i.e., a flow shop) with considerable customization per transaction (widget). The high volumes and fair degree of customization per financial transaction resembles the idea of mass customization. Case Exhibit 8.13 gives us enough information to do assembly line balancing. Students should work line balancing problems before they are assigned this case. Please note that the line balancing solutions are for the outgoing wire process only. At the line balancing level of analysis we should examine the job design of every task in the process. Line balancing is a very effective and powerful method to reduce unit costs as long as the volume is high and stable, and the transaction is somewhat standardized.
The cycle time at 306 wires/day is 1.47 min/wire as shown in the case. At about 150% of average demand, the cycle time in Equation 8.2 is C = A/R or C = 1/[(306 wires/day*1.5)(1/7.5 hours/day)(1 hr./60 minutes)] = 1/1.02 = 0.98 min/wire ≈ 1 min./wire. This assumes demand is 150% of average demand or 457 wires/workday or about 450. We use the 450 as peak demand in the case. The line balance below assumes an output rate of 457 wires/day or a cycle time of about 1.0 minutes/wire. (You may want to work out these cycle time computations and assumptions in class prior to them doing the case analysis.)
You may also want to explain to students that if demand is greater than 457 wires/day, you have to redefine the work and break the 16 steps and times into more steps and smaller task times; then do line balancing. The resulting line balance with C = 1.0 min/wire for a peak demand of 457 wires/day is as follows:
| Work Station | Tasks | Total Time | Idle Time |
| 1 | 1 | 0.8 | 0.20 |
| 2 | 2 | 0.3 | 0.70 |
| 3 | 3, 4 | 0.9 | 0.10 |
| 4 | 5 | 1.0 | 0.00 |
| 5 | 6, 7, 8 | 0.9 | 0.10 |
| 6 | 9 | 1.0 | 0.00 |
| 7 | 10, 11, 12, 13 | 1.0 | 0.00 |
| 8 | 14, 15 | 0.4 | 0.60 |
| 9 | 16 | .75 | 0.25 |
| Total | 7.05 min. | 1.95 min. |
Total Time Available = (Number work stations)(Cycle Time) = N*CT = 9(1) =
9.0 min (Equation 8.4)
Total Idle Time = N*CT – S t = 9(1) – 7.05 = 1.95 min. (8.5) Assembly Line Efficiency = S t/ (N*CT) = 7.05/(9*1) = 78.33%
(8.6)
Balance Delay = 1 – Assembly Line Efficiency = 1.0 – .7833 = .2167 or 21.67%
(8.7)
Therefore, by grouping work using assembly line balancing you need 9 people, not 11 as currently assigned. The annual labor savings is (2 employee) ($30,000)(1.30) = $78,000.
The resulting line balance with C = 1.47 min/wire (306 wires/day) is as follows:
| Work Station | Tasks | Total Time | Idle Time |
| 1 | 1, 2 | 1.1 | 0.37 |
| 2 | 3, 4 | 0.9 | 0.57 |
| 3 | 5, 6, 7 | 1.4 | 0.07 |
| 4 | 8 | 0.5 | 0.97 |
| 5 | 9, 10, 11, 12 | 1.25 | 0.22 |
| 6 | 13, 14, 15 | 1.15 | 0.32 |
| 7 | 16 | 0.75 | 0.72 |
| Total | 7.05 min. | 3.24 min. |
Total Time Available = (# work stations)(Cycle Time) = N*CT = 7(1.47) =
10.29 min (8.4)
Total Idle Time = N*CT – S t = 7(1.47) – 7.05 = 3.24 min. (8.5)
Assembly Line Efficiency = S t/ (N*CT) = 7.05/(7*1.47) = 68.85% (8.6) Balance Delay = 1 – Assembly Line Efficiency = 1.0 – .6885 = .3115 or 31.15%
(8.7)
- How many people are needed for outgoing wires using assembly line balancing methods versus the current staffing level of 11 full-time equivalent employees?
Therefore, by grouping work using assembly line balancing, you need 7 people, not 11 as currently assigned if you plan for average demand of 306 wires/day. Here, the annual labor savings is (4 employee)($30,000)(1.30) =
$156,000. The question is whether the risk of going to 7 employees is worth it; given the necessity for control and the high cost of failure—going to 9 employees seems more reasonable.
Many other “what if” scenarios are possible and left to the discretion of the instructor. For example, you could ask what if we worked 20% faster or 20% slower and change standard task times accordingly? The 20% faster standard times could be due to continuous improvement initiatives while the 20% slower stand times could be due to everyone ignoring the standards (which happen often).
Eliminating the 3 rework tasks is working smarter and taking non-value added tasks out of the process. Eliminating rework saves two or three full-time employees (FTE) depending on how much safety capacity you want in the process. Several “what if” line balancing solutions for outgoing wires are summarized below.
| Seven Scenarios | Process Standard Time/Wire | Output Rate* | Cycle Time (min) | No. Work- Stations | No. Direct People | Idle Time |
| (1) Peak Demand | 7.05 min | 450 | 1.00 | 9 | 9 | 1.95 |
| (2) +20% Inc. Std Times | 8.46 min | 450 | 1.00 | 12 | 14 | 3.14 |
| (3) -20% Dec. Std Times | 5.67 min | 450 | 1.00 | 7 | 7 | 1.33 |
| (4) Drop 3 Rework Steps | 6.15 min | 450 | 1.00 | 8 | 8 | 1.85 |
| (5) Average Demand | 7.05 | min | 306 | 1.47 7 | 7 | |
| 3.24 | ||||||
| (6) Demand Inc. 50% 2.71 | 7.05 min | 457 | 0.98 | 10 | 12 |
*An output rate of 450 wires per day assumes 7.5 hours/day times 60 minutes/hour. Hence, the cycle time is 1.0 minute/wire (Cycle Time = 1/Output Rate).
In the spirit of continuous improvement, a 20 percent decrease in standard times (that is total time = 5.67 min/wire) results in higher process efficiencies, better grouping of tasks, and requires only 7 people, not the current 11.
- How many staff members do you need for the outgoing wire process if you eliminate all rework?
The next line balancing “what if” scenario assumes you eliminate the three rework areas. If this can be done, you need only 8 people instead of the original 9 people in the base case. These first four scenarios assume an output rate of 450 wires per day and a cycle time of one minute per wire.
A few of the conclusions from these analyses are as follows:
- Either a 20 percent decrease in standard times or staffing to meet the average demand of 306 wires/day would require 7 associates for the outgoing wire process, not 11. This is a labor savings of $156,000 ($30,000*4*1.3).
- A 20 percent increase in standard times has severe consequences, requiring 12 workstations and 14 associates, given that all other variables remain the same. In this scenario, cost per wire would increase dramatically. One lesson here is that standard times must be carefully managed and not allowed to drift upward.
- Eliminating rework at three steps in the process would allow the reduction of one associate compared to the base case and a savings of $39,000. So rework does costs money and reduces efficiency!
- What are your final recommendations?
The student must decide on the best line balance given their assumptions. Please note that students at times will make assumptions that place their solution beyond the bounds of the actual case facts, and you must grade accordingly.
Another issue in the case is “how to handle high dollar wire customers?” The case provides no data to help make this decision but does define the problem. At the time of the case, no real data existed to help make this decision. Preliminary initiatives to help analyze this issue include:
- Do an ABC analysis on dollars per wire versus customer category. Who are the high-dollar wire A customers? These data will also help set a high dollar wire cut-off dollar value.
- Do a well-designed Pareto cause and effect analysis on who causes what types of problems (other banks, the BankUSA departments, customers, Federal Reserve system, etc.).
- Another related idea is to evaluate the advantages and disadvantages of sending high dollar wire customers a “confirmation” that once the wire is successfully completed, to enhance customer service and relieve customer anxiety. For example, by sending the confirmation for wires over say $100,000, Cash Movement sets customers expectations. What if the high dollar wire customer now asks for this premium service on all wires they initiate?
- High dollar wire volumes may be large enough to justify a separate dedicated high wire process. If this topic comes up in class ask the class (a) Do we need duplicate equipment for a new dedicated high wire process? (b) What dollar amount and decision rule would you use here? Greater $10,000, $50,000, etc. (c) How would you determine such a decision rule?
Other questions you may or may not want to cover include:
- Could you balance the assembly line using the 47 more detailed work tasks (mentioned but not provided in the case)? What is the best level of detail for grouping work? 47 versus 16?
- How would you estimate the standard times? (work measurement)
- Should Cash Movement set up a separate process for high dollar wires? What information do we need to make this decision? What else could Cash Movement do to provide superior service to high dollar wire customers?
- How should wires be processed and sequenced? What type of information do you need to make this decision?
- How would you handle the tradeoff between “control and no mistakes” versus “risk and cost of failure” versus the “cost of labor resources and assembly line efficiency?” What are the economic, customer service, and managerial tradeoffs?
Teaching Plan
- What is the best way to group the work represented by the 16 work groups for an average demand of 306 outgoing wires per day? What is your line balance if peak demand is 450 wires per day? What is assembly-line efficiency for each line balance solution?
- How many people are needed for outgoing wires using assembly line balancing methods versus the current staffing level of 11 full-time equivalent employees?
- How many staff members do you need for the outgoing wire process if you eliminate all rework?
(see other possible questions)What are your final recommendations
