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Chapter 04 - Production Processes
Chapter 04 Production Processes Learning Objectives for Chapter 4 1. 2. 3. 4. 5. 6.
Understand the idea of production process mapping. Define Little’s law. Demonstrate how production processes are organized. Explain the trade-offs that need to be considered when deg a production processes. Describe the product-process matrix. Recognize how break-oven analysis is just as important in operations and supply chain management as it is in other functional areas. 7. Understand how to design and analyze an assembly line. True / False Questions
1. Process selection refers to the strategic decision of choosing the volume of output to produce in a manufacturing facility depending upon the way that facility produces. True False
2. Process selection refers to the strategic decision of selecting which kind of production processes to use to produce a product or provide a service. True False
3. A continuous process indicates production of discrete parts moving from workstation to workstation at a controlled rate. True False
4-1
Chapter 04 - Production Processes
4. One difference between an assembly line process flow and a continuous process flow is that on the assembly line the flow is discrete rather than continuous. True False
5. One trade-off illustrated by the product-process matrix is between flexibility and cost. True False
6. The choice of which process structure to select is generally a function of the volume requirements for the product. True False
4-2
Chapter 04 - Production Processes
7. One methodology used to evaluate equipment investment decisions where the investment entails a large initial investment, fixed costs, and variable costs is break-even analysis. True False
8. Break-even analysis can only be used in production equipment decision making when dealing solely with fixed costs, no variable costs. True False
9. A general purpose machine is less capable than a special purpose machine in certain tasks but can perform a broader variety of tasks. True False
10. Break-Even Analysis can be used to help decide whether to perform a task with a special purpose machine or with a general purpose machine. True False
11. The product-process matrix shows the relationship between process structures and product volume and variety characteristics. True False
12. The assembly-line balancing procedure determines the precedence relationships of manufacturing tasks. True False
13. Assembly lines are a special case of a project layout. True False
4-3
Chapter 04 - Production Processes
14. In assembly-line balancing the theoretical minimum number of workstations is found by the ratio of the sum of all task times divided by the cycle time. True False
15. The efficiency of an assembly-line is found by the ratio of the sum of all task times divided by the cycle time. True False
16. For the purposes of assembly-line balancing, cycle time is found by dividing production time per day by the required units of output per day. True False
17. In balancing an assembly line workstation cycle time has to be less than the time between successive units coming off the end of the line. True False
18. If the sum of the task times required to produce a product is 45 minutes and the cycle time for the same product is 10 minutes. Thus, the theoretical minimum number of workstations is 5 using the assembly-line balancing procedure. True False
19. The first step in balancing an assembly line is to specify the precedence relationships among tasks to be performed on the line. True False
20. The term "assembly line" refers to progressive assembly linked by some material handling device. True False
4-4
Chapter 04 - Production Processes
21. If the sum of the task times required to produce a product is 80 minutes and the cycle time for the same product is 15 minutes, the theoretical minimum number of workstations is 8 using the assembly-line balancing procedure. True False
22. In deg a production layout a flexible line layout might have the shape of a "U". True False
23. In deg an assembly line a mixed-model line layout is often used by JIT manufacturers. True False
24. The objective of a mixed-model line layout is to meet the demand for a variety of products and avoid building high inventories. True False
25. Workcenter layouts allocate dissimilar machines into cells to work on products that have dissimilar processing requirements. True False
26. A project layout is characterized by a relatively low number of production units in comparison with process and product layout formats. True False
27. A project layout is characterized by a high degree of task ordering. True False
4-5
Chapter 04 - Production Processes
28. Assembly line balancing means asg all necessary tasks to a series of workstations so that each workstation has no more than can be done in the workstation cycle time and so that idle time across all workstations is minimized. True False
29. Inventory turn is the cost of goods sold divided by the average inventory value. True False
30. Inventory turn is a better measure than the total value of inventory for comparative purposes because it is a relative measure. True False
31. Little's law says there is a long-term relationship between the inventory, throughput, and flow time of a production system in steady state. True False
Multiple Choice Questions
32. Which of the following is not considered a major process flow structure? A. Work Center B. Project C. Assembly line D. Fabrication E. Continuous Flow
4-6
Chapter 04 - Production Processes
33. A difference between project and continuous flow categories of process flow structures is which two of the following? A. The size of the product B. Discrete parts moving from workstation to workstation C. Degree of equipment specialization D. Being a "Virtual Factory" E. Both A & C
34. Assume a fixed cost for a process of $15,000. The variable cost to produce each unit of product is $10 and the selling price for the finished product is $25. Which of the following is the number of units that has to be produced and sold to break-even? A. 500 units B. 667 units C. 790 units D. 900 units E. 1,000 units
35. Assume a fixed cost for a process of $120,000. The variable cost to produce each unit of product is $35, and the selling price for the finished product is $50. Which of the following is the number of units that has to be produced and sold to break-even? A. 5,000 units B. 6,000 units C. 8,000 units D. 11,000 units E. 12,000 units
4-7
Chapter 04 - Production Processes
36. You are hired as a consultant to decide if your client should purchase a new, highly specialized, piece of equipment. The product to be produced by this equipment is forecast to have a total world wide demand of 15,000 units over the entire product life. The initial investment to acquire and install the equipment is $256,000. The variable cost to produce each unit will be $15 and the selling price for the finished product will be $30. Which of the following best describes the situation the firm is facing? A. The company will recover its initial investment B. The company's total margin will be less than its investment C. It's a good investment D. The break-even is lower than the 15,000 units that are expected to sell E. All of the above
37. In a workcenter machine A has a ten minute set-up time per batch and a two minute per unit run time. Machine B performs the identical function but has a set-up time of thirty minutes and a one minute run time per unit. The workcenter makes products in batches ranging from one unit to one hundred units. Assuming capacity is not a limitation on either machine, on which batches should machine B be used? A. All batches should be run on machine B B. Batches of more than 20 units should be run on machine B C. Batches of fewer than 80 units should be run on machine B D. Batches with up to 50 units should be run on machine B E. No batches should be run on machine B
38. Which of the following is a basic type of process structure? A. Process flow diagram B. Product matrix C. Process matrix D. Workcenter E. Manual assembly
39. Which of the following is not a basic type of process structure? A. Product-process matrix B. Workcenter C. Manufacturing cell D. Assembly line E. Continuous process
4-8
Chapter 04 - Production Processes
40. Which of the following basic types of process structures is one which equipment or work processes are arranged according to the progressive steps by which the product is made? A. Project B. Workcenter C. Manufacturing cell D. Assembly line E. Continuous process
41. Which of the following basic types of process structures is one which similar equipment or functions are grouped together? A. Project B. Workcenter C. Manufacturing cell D. Assembly line E. Continuous process
42. The placement of which of the following is not determined by process structure decisions? A. Departments B. Workgroups C. Workstations D. Machines E. Emergency exits
43. Using the assembly-line balancing procedure, which of the following is the required cycle time if the production time in minutes per day is 480 and the required output per day in units is 50? A. 0.104 B. 50 C. 9.6 D. 480 E. Cannot be determined from the information above
4-9
Chapter 04 - Production Processes
44. Using the assembly-line balancing procedure, which of the following is the required cycle time if the production time in minutes per day is 1440 and the required output per day in units is 2000? A. 0.72 B. 1.388 C. 250 D. 500 E. Cannot be determined from the information above
45. Using the assembly-line balancing procedure, which of the following is the theoretical minimum number of workstations if the task times for the six tasks that make up the job are 4, 6, 7, 2, 6, and 5 minutes, and the cycle time is 10 minutes? A. 3 B. 5 C. 6 D. 8 E. None of the above
46. Using the assembly-line balancing procedure, which of the following is the theoretical minimum number of workstations if the task times for the eight tasks that make up the job are 7, 4, 7, 8, 9, 4, 3 and 6 minutes, and the cycle time is 8 minutes? A. 3 B. 5 C. 6 D. 8 E. None of the above
47. You have just determined the actual number of workstations that will be used on an assembly line to be 6 using the assembly-line balancing procedure. The cycle time of the line is 5 minutes and the sum of all that tasks required on the line is 25 minutes. Which of the following is the correct value for the resulting line's efficiency? A. 0.500 B. 0.833 C. 0.973 D. 0.990 E. None of the above
4-10
Chapter 04 - Production Processes
48. You have just determined the actual number of workstations that will be used on an assembly line to be 8 using the assembly-line balancing procedure. The cycle time of the line is 10 minutes and the sum of all that tasks required on the line is 60 minutes. Which of the following is the correct value for the resulting line's efficiency? A. 0.500 B. 0.650 C. 0.750 D. 0.850 E. None of the above
49. When balancing an assembly line, which of the following is not a way to reduce the longest task time below the required workstation cycle time? A. Upgrade the equipment B. Assign a roaming helper to the line C. Split the task between two workstations D. Speed up the assembly line transfer mechanism E. Use a more skilled worker
50. The long-term relationship between the inventory, throughput, and flow time of a production system in steady state is called which of the following? A. Peterson's Rule B. Murphy's Law C. Little's Law D. Robert's Rule E. None of the above
Fill in the Blank Questions
51. Assume a fixed cost for a process of $100,000. The variable cost to produce each unit of product is $10, and the selling price for the finished product is $50. Ignoring inventory, how many units must the firm sell to break-even? ______________________ ________________________________________
4-11
Chapter 04 - Production Processes
52. Using the assembly-line balancing procedure, what is the required cycle time if the production time in minutes per day is 2,400 and the required output per day in units is 1,200? ______________________ ________________________________________
53. Using the assembly-line balancing procedure, which of the following is the theoretical minimum number of workstations if the task times for the six tasks that make up the job are 7, 4, 7, 5, 3 and 6 minutes, and the cycle time is 8 minutes? ______________________ ________________________________________
54. You have just determined the actual number of workstations that will be used on an assembly line to be 15 using the assembly-line balancing procedure. The cycle time of the line is 30 seconds and the sum of all that tasks required on the line is 10 minutes. What is the line's efficiency? ______________________ ________________________________________
55. Give an example of a project layout. ______________________ ________________________________________
56. The formula: (Inventory = Throughput rate x Flow time) is known as ______________________ ________________________________________
4-12
Chapter 04 - Production Processes Essay Questions
57. Describe the implications of the product-process matrix for process design in a competitive situation.
58. Differentiate between a workcenter and a manufacturing cell.
59. Assume that you are offered a new piece of equipment for $10,000. The equipment will produce 10,000 units per year with a margin of $6.00 per unit. Demand for the product being produced has been 2,000 units per year. Your current equipment is fully depreciated and can produce the 2,000 units per year at but at a margin of only $4.00 per unit. Should you purchase the new equipment? Under what conditions?
4-13
Chapter 04 - Production Processes
60. A manufacturer has identified the options for acquiring a machined part. It can make the part on a numerically controlled lathe for $150 per unit (including materials.) It can make the part on a standard lathe for $250 per unit Error! Hyperlink reference not valid.Error! Hyperlink reference not valid. It can make the part on a machining center for $50 per unit (also including materials.) The manufacturer can acquire a standard lathe for $10,000. It could acquire a numerically controlled lathe for $100,000. A machining center would cost $350,000. It has also found that it can purchase the part for $350 per unit.
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Chapter 04 - Production Processes
Chapter 04 Production Processes Answer Key
True / False Questions
1. Process selection refers to the strategic decision of choosing the volume of output to produce in a manufacturing facility depending upon the way that facility produces. FALSE
AACSB: Analytic Difficulty: Easy Learning Objective: 4 Taxonomy: Knowledge Topic: Deg a Production System
2. Process selection refers to the strategic decision of selecting which kind of production processes to use to produce a product or provide a service. TRUE
AACSB: Analytic Difficulty: Easy Learning Objective: 4 Taxonomy: Knowledge Topic: Deg a Production System
4-15
Chapter 04 - Production Processes
3. A continuous process indicates production of discrete parts moving from workstation to workstation at a controlled rate. FALSE
AACSB: Analytic Difficulty: Medium Learning Objective: 3 Taxonomy: Knowledge Topic: How Production Processes Are Organized
4. One difference between an assembly line process flow and a continuous process flow is that on the assembly line the flow is discrete rather than continuous. TRUE
AACSB: Analytic Difficulty: Easy Learning Objective: 3 Taxonomy: Knowledge Topic: How Production Processes Are Organized
5. One trade-off illustrated by the product-process matrix is between flexibility and cost. TRUE
AACSB: Analytic Difficulty: Easy Learning Objective: 5 Taxonomy: Knowledge Topic: How Production Processes Are Organized
6. The choice of which process structure to select is generally a function of the volume requirements for the product. TRUE
AACSB: Analytic Difficulty: Easy Learning Objective: 3 Taxonomy: Knowledge Topic: How Production Processes Are Organized
4-16
Chapter 04 - Production Processes
7. One methodology used to evaluate equipment investment decisions where the investment entails a large initial investment, fixed costs, and variable costs is break-even analysis. TRUE
AACSB: Analytic Difficulty: Easy Learning Objective: 6 Taxonomy: Knowledge Topic: Break-Even Analysis
8. Break-even analysis can only be used in production equipment decision making when dealing solely with fixed costs, no variable costs. FALSE
AACSB: Analytic Difficulty: Medium Learning Objective: 6 Taxonomy: Knowledge Topic: Break-Even Analysis
9. A general purpose machine is less capable than a special purpose machine in certain tasks but can perform a broader variety of tasks. TRUE
AACSB: Analytic Difficulty: Easy Learning Objective: 4 Taxonomy: Knowledge Topic: Deg a Production System
10. Break-Even Analysis can be used to help decide whether to perform a task with a special purpose machine or with a general purpose machine. TRUE
AACSB: Analytic Difficulty: Easy Learning Objective: 6 Taxonomy: Knowledge Topic: Break-Even Analysis
4-17
Chapter 04 - Production Processes
11. The product-process matrix shows the relationship between process structures and product volume and variety characteristics. TRUE
AACSB: Analytic Difficulty: Easy Learning Objective: 5 Taxonomy: Knowledge Topic: How Production Processes Are Organized
12. The assembly-line balancing procedure determines the precedence relationships of manufacturing tasks. FALSE
AACSB: Analytic Difficulty: Easy Learning Objective: 7 Taxonomy: Knowledge Topic: Assembly-Line Design
13. Assembly lines are a special case of a project layout. FALSE
AACSB: Analytic Difficulty: Easy Learning Objective: 7 Taxonomy: Knowledge Topic: Assembly-Line Design
14. In assembly-line balancing the theoretical minimum number of workstations is found by the ratio of the sum of all task times divided by the cycle time. TRUE
AACSB: Analytic Difficulty: Medium Learning Objective: 7 Taxonomy: Knowledge Topic: Assembly-Line Design
4-18
Chapter 04 - Production Processes
15. The efficiency of an assembly-line is found by the ratio of the sum of all task times divided by the cycle time. FALSE
AACSB: Analytic Difficulty: Easy Learning Objective: 7 Taxonomy: Knowledge Topic: Assembly-Line Design
16. For the purposes of assembly-line balancing, cycle time is found by dividing production time per day by the required units of output per day. TRUE
AACSB: Analytic Difficulty: Easy Learning Objective: 7 Taxonomy: Knowledge Topic: Assembly-Line Design
17. In balancing an assembly line workstation cycle time has to be less than the time between successive units coming off the end of the line. FALSE
AACSB: Analytic Difficulty: Easy Learning Objective: 7 Taxonomy: Knowledge Topic: Assembly-Line Design
18. If the sum of the task times required to produce a product is 45 minutes and the cycle time for the same product is 10 minutes. Thus, the theoretical minimum number of workstations is 5 using the assembly-line balancing procedure. TRUE
AACSB: Analytic Difficulty: Easy Learning Objective: 7 Taxonomy: Analysis Topic: Assembly-Line Design
4-19
Chapter 04 - Production Processes
19. The first step in balancing an assembly line is to specify the precedence relationships among tasks to be performed on the line. TRUE
AACSB: Analytic Difficulty: Easy Learning Objective: 7 Taxonomy: Knowledge Topic: Assembly-Line Design
20. The term "assembly line" refers to progressive assembly linked by some material handling device. TRUE
AACSB: Analytic Difficulty: Easy Learning Objective: 7 Taxonomy: Knowledge Topic: Assembly-Line Design
21. If the sum of the task times required to produce a product is 80 minutes and the cycle time for the same product is 15 minutes, the theoretical minimum number of workstations is 8 using the assembly-line balancing procedure. FALSE
AACSB: Analytic Difficulty: Easy Learning Objective: 7 Taxonomy: Analysis Topic: Assembly-Line Design
22. In deg a production layout a flexible line layout might have the shape of a "U". TRUE
AACSB: Analytic Difficulty: Easy Learning Objective: 7 Taxonomy: Knowledge Topic: Assembly-Line Design
4-20
Chapter 04 - Production Processes
23. In deg an assembly line a mixed-model line layout is often used by JIT manufacturers. TRUE
AACSB: Analytic Difficulty: Easy Learning Objective: 7 Taxonomy: Knowledge Topic: Assembly-Line Design
24. The objective of a mixed-model line layout is to meet the demand for a variety of products and avoid building high inventories. TRUE
AACSB: Analytic Difficulty: Easy Learning Objective: 7 Taxonomy: Knowledge Topic: Assembly-Line Design
25. Workcenter layouts allocate dissimilar machines into cells to work on products that have dissimilar processing requirements. FALSE
AACSB: Analytic Difficulty: Easy Learning Objective: 3 Taxonomy: Knowledge Topic: How Production Processes Are Organized
26. A project layout is characterized by a relatively low number of production units in comparison with process and product layout formats. TRUE
AACSB: Analytic Difficulty: Easy Learning Objective: 3 Taxonomy: Knowledge Topic: How Production Processes Are Organized
4-21
Chapter 04 - Production Processes
27. A project layout is characterized by a high degree of task ordering. TRUE
AACSB: Analytic Difficulty: Easy Learning Objective: 7 Taxonomy: Knowledge Topic: Assembly-Line Design
28. Assembly line balancing means asg all necessary tasks to a series of workstations so that each workstation has no more than can be done in the workstation cycle time and so that idle time across all workstations is minimized. TRUE
AACSB: Analytic Difficulty: Easy Learning Objective: 7 Taxonomy: Knowledge Topic: Assembly-Line Design
29. Inventory turn is the cost of goods sold divided by the average inventory value. TRUE
AACSB: Analytic Difficulty: Easy Learning Objective: 1 Taxonomy: Knowledge Topic: Production Processes
30. Inventory turn is a better measure than the total value of inventory for comparative purposes because it is a relative measure. TRUE
AACSB: Analytic Difficulty: Easy Learning Objective: 1 Taxonomy: Knowledge Topic: Production Processes
4-22
Chapter 04 - Production Processes
31. Little's law says there is a long-term relationship between the inventory, throughput, and flow time of a production system in steady state. TRUE
AACSB: Analytic Difficulty: Easy Learning Objective: 2 Taxonomy: Knowledge Topic: Production Processes
Multiple Choice Questions
32. Which of the following is not considered a major process flow structure? A. Work Center B. Project C. Assembly line D. Fabrication E. Continuous Flow
AACSB: Analytic Difficulty: Easy Learning Objective: 3 Taxonomy: Knowledge Topic: How Production Processes Are Organized
33. A difference between project and continuous flow categories of process flow structures is which two of the following? A. The size of the product B. Discrete parts moving from workstation to workstation C. Degree of equipment specialization D. Being a "Virtual Factory" E. Both A & C
AACSB: Analytic Difficulty: Easy Learning Objective: 3 Taxonomy: Knowledge Topic: How Production Processes Are Organized
4-23
Chapter 04 - Production Processes
34. Assume a fixed cost for a process of $15,000. The variable cost to produce each unit of product is $10 and the selling price for the finished product is $25. Which of the following is the number of units that has to be produced and sold to break-even? A. 500 units B. 667 units C. 790 units D. 900 units E. 1,000 units
AACSB: Analytic Difficulty: Medium Learning Objective: 6 Taxonomy: Analysis Topic: Break-Even Analysis
35. Assume a fixed cost for a process of $120,000. The variable cost to produce each unit of product is $35, and the selling price for the finished product is $50. Which of the following is the number of units that has to be produced and sold to break-even? A. 5,000 units B. 6,000 units C. 8,000 units D. 11,000 units E. 12,000 units
AACSB: Analytic Difficulty: Medium Learning Objective: 6 Taxonomy: Analysis Topic: Break-Even Analysis
4-24
Chapter 04 - Production Processes
36. You are hired as a consultant to decide if your client should purchase a new, highly specialized, piece of equipment. The product to be produced by this equipment is forecast to have a total world wide demand of 15,000 units over the entire product life. The initial investment to acquire and install the equipment is $256,000. The variable cost to produce each unit will be $15 and the selling price for the finished product will be $30. Which of the following best describes the situation the firm is facing? A. The company will recover its initial investment B. The company's total margin will be less than its investment C. It's a good investment D. The break-even is lower than the 15,000 units that are expected to sell E. All of the above
AACSB: Analytic Difficulty: Medium Learning Objective: 6 Taxonomy: Analysis Topic: Break-Even Analysis
37. In a workcenter machine A has a ten minute set-up time per batch and a two minute per unit run time. Machine B performs the identical function but has a set-up time of thirty minutes and a one minute run time per unit. The workcenter makes products in batches ranging from one unit to one hundred units. Assuming capacity is not a limitation on either machine, on which batches should machine B be used? A. All batches should be run on machine B B. Batches of more than 20 units should be run on machine B C. Batches of fewer than 80 units should be run on machine B D. Batches with up to 50 units should be run on machine B E. No batches should be run on machine B
AACSB: Analytic Difficulty: Medium Learning Objective: 6 Taxonomy: Analysis Topic: Break-Even Analysis
4-25
Chapter 04 - Production Processes
38. Which of the following is a basic type of process structure? A. Process flow diagram B. Product matrix C. Process matrix D. Workcenter E. Manual assembly
AACSB: Analytic Difficulty: Medium Learning Objective: 3 Taxonomy: Knowledge Topic: How Production Processes Are Organized
39. Which of the following is not a basic type of process structure? A. Product-process matrix B. Workcenter C. Manufacturing cell D. Assembly line E. Continuous process
AACSB: Analytic Difficulty: Easy Learning Objective: 3 Taxonomy: Knowledge Topic: How Production Processes Are Organized
40. Which of the following basic types of process structures is one which equipment or work processes are arranged according to the progressive steps by which the product is made? A. Project B. Workcenter C. Manufacturing cell D. Assembly line E. Continuous process
AACSB: Analytic Difficulty: Easy Learning Objective: 3 Taxonomy: Knowledge Topic: How Production Processes Are Organized
4-26
Chapter 04 - Production Processes
41. Which of the following basic types of process structures is one which similar equipment or functions are grouped together? A. Project B. Workcenter C. Manufacturing cell D. Assembly line E. Continuous process
AACSB: Analytic Difficulty: Easy Learning Objective: 3 Taxonomy: Knowledge Topic: How Production Processes Are Organized
42. The placement of which of the following is not determined by process structure decisions? A. Departments B. Workgroups C. Workstations D. Machines E. Emergency exits
AACSB: Analytic Difficulty: Easy Learning Objective: 7 Taxonomy: Synthesis Topic: Assembly-Line Design
43. Using the assembly-line balancing procedure, which of the following is the required cycle time if the production time in minutes per day is 480 and the required output per day in units is 50? A. 0.104 B. 50 C. 9.6 D. 480 E. Cannot be determined from the information above
AACSB: Analytic Difficulty: Medium Learning Objective: 7 Taxonomy: Analysis Topic: Assembly-Line Design
4-27
Chapter 04 - Production Processes
44. Using the assembly-line balancing procedure, which of the following is the required cycle time if the production time in minutes per day is 1440 and the required output per day in units is 2000? A. 0.72 B. 1.388 C. 250 D. 500 E. Cannot be determined from the information above
AACSB: Analytic Difficulty: Medium Learning Objective: 7 Taxonomy: Analysis Topic: Assembly-Line Design
45. Using the assembly-line balancing procedure, which of the following is the theoretical minimum number of workstations if the task times for the six tasks that make up the job are 4, 6, 7, 2, 6, and 5 minutes, and the cycle time is 10 minutes? A. 3 B. 5 C. 6 D. 8 E. None of the above
AACSB: Analytic Difficulty: Medium Learning Objective: 7 Taxonomy: Analysis Topic: Assembly-Line Design
4-28
Chapter 04 - Production Processes
46. Using the assembly-line balancing procedure, which of the following is the theoretical minimum number of workstations if the task times for the eight tasks that make up the job are 7, 4, 7, 8, 9, 4, 3 and 6 minutes, and the cycle time is 8 minutes? A. 3 B. 5 C. 6 D. 8 E. None of the above
AACSB: Analytic Difficulty: Medium Learning Objective: 7 Taxonomy: Analysis Topic: Assembly-Line Design
47. You have just determined the actual number of workstations that will be used on an assembly line to be 6 using the assembly-line balancing procedure. The cycle time of the line is 5 minutes and the sum of all that tasks required on the line is 25 minutes. Which of the following is the correct value for the resulting line's efficiency? A. 0.500 B. 0.833 C. 0.973 D. 0.990 E. None of the above
AACSB: Analytic Difficulty: Medium Learning Objective: 7 Taxonomy: Analysis Topic: Assembly-Line Design
4-29
Chapter 04 - Production Processes
48. You have just determined the actual number of workstations that will be used on an assembly line to be 8 using the assembly-line balancing procedure. The cycle time of the line is 10 minutes and the sum of all that tasks required on the line is 60 minutes. Which of the following is the correct value for the resulting line's efficiency? A. 0.500 B. 0.650 C. 0.750 D. 0.850 E. None of the above
AACSB: Analytic Difficulty: Medium Learning Objective: 7 Taxonomy: Analysis Topic: Assembly-Line Design
49. When balancing an assembly line, which of the following is not a way to reduce the longest task time below the required workstation cycle time? A. Upgrade the equipment B. Assign a roaming helper to the line C. Split the task between two workstations D. Speed up the assembly line transfer mechanism E. Use a more skilled worker
AACSB: Analytic Difficulty: Medium Learning Objective: 7 Taxonomy: Analysis Topic: Assembly-Line Design
4-30
Chapter 04 - Production Processes
50. The long-term relationship between the inventory, throughput, and flow time of a production system in steady state is called which of the following? A. Peterson's Rule B. Murphy's Law C. Little's Law D. Robert's Rule E. None of the above
AACSB: Analytic Difficulty: Medium Learning Objective: 2 Taxonomy: Analysis Topic: Production Processes
Fill in the Blank Questions
51. Assume a fixed cost for a process of $100,000. The variable cost to produce each unit of product is $10, and the selling price for the finished product is $50. Ignoring inventory, how many units must the firm sell to break-even? ______________________ 2,500 units
AACSB: Analytic Difficulty: Medium Learning Objective: 7 Taxonomy: Analysis Topic: Assembly-Line Design
52. Using the assembly-line balancing procedure, what is the required cycle time if the production time in minutes per day is 2,400 and the required output per day in units is 1,200? ______________________ 2 minutes
AACSB: Analytic Difficulty: Medium Learning Objective: 7 Taxonomy: Analysis Topic: Assembly-Line Design
4-31
Chapter 04 - Production Processes
53. Using the assembly-line balancing procedure, which of the following is the theoretical minimum number of workstations if the task times for the six tasks that make up the job are 7, 4, 7, 5, 3 and 6 minutes, and the cycle time is 8 minutes? ______________________ 4
AACSB: Analytic Difficulty: Medium Learning Objective: 7 Taxonomy: Analysis Topic: Assembly-Line Design
54. You have just determined the actual number of workstations that will be used on an assembly line to be 15 using the assembly-line balancing procedure. The cycle time of the line is 30 seconds and the sum of all that tasks required on the line is 10 minutes. What is the line's efficiency? ______________________ 0.75
AACSB: Analytic Difficulty: Medium Learning Objective: 7 Taxonomy: Analysis Topic: Assembly-Line Design
55. Give an example of a project layout. ______________________ A construction project like a building, a ship, a bridge or a highway
AACSB: Analytic Difficulty: Easy Learning Objective: 3 Taxonomy: Knowledge Topic: How Production Processes Are Organized
4-32
Chapter 04 - Production Processes
56. The formula: (Inventory = Throughput rate x Flow time) is known as ______________________ Little's Law
AACSB: Analytic Difficulty: Easy Learning Objective: 2 Taxonomy: Knowledge Topic: Production Processes
Essay Questions
57. Describe the implications of the product-process matrix for process design in a competitive situation. The product-process matrix on page 73 and is discussed on page 72 of the text. A successful answer will focus on matching the process selected to characteristics of the product and will discuss the trade-off between flexibility and low cost. For example in a commodity-type marketing segment there is a strong imperative to push toward the lower right-hand corner of the matrix, abandoning flexibility to achieve low cost. For products which are maturing, this is a very strong imperative and the firm that reaches the low cost position first has substantial competitive advantage through its ability to achieve low cost and high volume.
AACSB: Analytic Difficulty: Hard Learning Objective: 5 Taxonomy: Synthesis Topic: How Production Processes Are Organized
4-33
Chapter 04 - Production Processes
58. Differentiate between a workcenter and a manufacturing cell. These layout types are discussed on page 82 of the text. A successful response should include the notion that workcenters contain similar equipment while manufacturing cells are organized around similarities in processing requirements of products and may contain a collection of quite diverse equipment. In other words, a workcenter is organized around technical aspects of the equipment while a manufacturing cell is organized around the processing needs of the product.
AACSB: Analytic Difficulty: Medium Learning Objective: 3 Taxonomy: Analysis Topic: How Production Processes Are Organized
59. Assume that you are offered a new piece of equipment for $10,000. The equipment will produce 10,000 units per year with a margin of $6.00 per unit. Demand for the product being produced has been 2,000 units per year. Your current equipment is fully depreciated and can produce the 2,000 units per year at but at a margin of only $4.00 per unit. Should you purchase the new equipment? Under what conditions? Yes. At 2,000 units per year the equipment will pay for itself through increased margin in two and one-half years. If demand is expected to increase and the product life is expected to be greater than two and one-half years, it is a good buy. Otherwise stick with the old equipment.
AACSB: Analytic Difficulty: Hard Learning Objective: 6 Taxonomy: Analysis Topic: Break-Even Analysis
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Chapter 04 - Production Processes
60. A manufacturer has identified the options for acquiring a machined part. It can make the part on a numerically controlled lathe for $150 per unit (including materials.) It can make the part on a standard lathe for $250 per unit Error! Hyperlink reference not valid.Error! Hyperlink reference not valid. It can make the part on a machining center for $50 per unit (also including materials.) The manufacturer can acquire a standard lathe for $10,000. It could acquire a numerically controlled lathe for $100,000. A machining center would cost $350,000. It has also found that it can purchase the part for $350 per unit. If the quantity required is less than 100, purchase the part for $350 per unit. If the quantity needed is between 100 and 900, use the standard lathe. If the quantity needed is more than 900 but less than 2,500, use the numerically controlled lathe. If the quantity needed was greater than 2,500, the machining center is best. (Buy vs. Std: $350*D = $10,000 + 250*D; $100*D = $10,000; D = 100) (Std vs. NC: $250*D + $10,000 = $150*D + $100,000; $100*D = $90,000; D = 900) (NC vs. Machining Ctr: $150*D + $100,000 = $50*D + $350,000; $100*D = $250,000; D = 2,500)
AACSB: Analytic Difficulty: Hard Learning Objective: 6 Taxonomy: Analysis Topic: Break-Even Analysis
4-35
Chapter 04 Production Processes Learning Objectives for Chapter 4 1. 2. 3. 4. 5. 6.
Understand the idea of production process mapping. Define Little’s law. Demonstrate how production processes are organized. Explain the trade-offs that need to be considered when deg a production processes. Describe the product-process matrix. Recognize how break-oven analysis is just as important in operations and supply chain management as it is in other functional areas. 7. Understand how to design and analyze an assembly line. True / False Questions
1. Process selection refers to the strategic decision of choosing the volume of output to produce in a manufacturing facility depending upon the way that facility produces. True False
2. Process selection refers to the strategic decision of selecting which kind of production processes to use to produce a product or provide a service. True False
3. A continuous process indicates production of discrete parts moving from workstation to workstation at a controlled rate. True False
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Chapter 04 - Production Processes
4. One difference between an assembly line process flow and a continuous process flow is that on the assembly line the flow is discrete rather than continuous. True False
5. One trade-off illustrated by the product-process matrix is between flexibility and cost. True False
6. The choice of which process structure to select is generally a function of the volume requirements for the product. True False
4-2
Chapter 04 - Production Processes
7. One methodology used to evaluate equipment investment decisions where the investment entails a large initial investment, fixed costs, and variable costs is break-even analysis. True False
8. Break-even analysis can only be used in production equipment decision making when dealing solely with fixed costs, no variable costs. True False
9. A general purpose machine is less capable than a special purpose machine in certain tasks but can perform a broader variety of tasks. True False
10. Break-Even Analysis can be used to help decide whether to perform a task with a special purpose machine or with a general purpose machine. True False
11. The product-process matrix shows the relationship between process structures and product volume and variety characteristics. True False
12. The assembly-line balancing procedure determines the precedence relationships of manufacturing tasks. True False
13. Assembly lines are a special case of a project layout. True False
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Chapter 04 - Production Processes
14. In assembly-line balancing the theoretical minimum number of workstations is found by the ratio of the sum of all task times divided by the cycle time. True False
15. The efficiency of an assembly-line is found by the ratio of the sum of all task times divided by the cycle time. True False
16. For the purposes of assembly-line balancing, cycle time is found by dividing production time per day by the required units of output per day. True False
17. In balancing an assembly line workstation cycle time has to be less than the time between successive units coming off the end of the line. True False
18. If the sum of the task times required to produce a product is 45 minutes and the cycle time for the same product is 10 minutes. Thus, the theoretical minimum number of workstations is 5 using the assembly-line balancing procedure. True False
19. The first step in balancing an assembly line is to specify the precedence relationships among tasks to be performed on the line. True False
20. The term "assembly line" refers to progressive assembly linked by some material handling device. True False
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Chapter 04 - Production Processes
21. If the sum of the task times required to produce a product is 80 minutes and the cycle time for the same product is 15 minutes, the theoretical minimum number of workstations is 8 using the assembly-line balancing procedure. True False
22. In deg a production layout a flexible line layout might have the shape of a "U". True False
23. In deg an assembly line a mixed-model line layout is often used by JIT manufacturers. True False
24. The objective of a mixed-model line layout is to meet the demand for a variety of products and avoid building high inventories. True False
25. Workcenter layouts allocate dissimilar machines into cells to work on products that have dissimilar processing requirements. True False
26. A project layout is characterized by a relatively low number of production units in comparison with process and product layout formats. True False
27. A project layout is characterized by a high degree of task ordering. True False
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Chapter 04 - Production Processes
28. Assembly line balancing means asg all necessary tasks to a series of workstations so that each workstation has no more than can be done in the workstation cycle time and so that idle time across all workstations is minimized. True False
29. Inventory turn is the cost of goods sold divided by the average inventory value. True False
30. Inventory turn is a better measure than the total value of inventory for comparative purposes because it is a relative measure. True False
31. Little's law says there is a long-term relationship between the inventory, throughput, and flow time of a production system in steady state. True False
Multiple Choice Questions
32. Which of the following is not considered a major process flow structure? A. Work Center B. Project C. Assembly line D. Fabrication E. Continuous Flow
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Chapter 04 - Production Processes
33. A difference between project and continuous flow categories of process flow structures is which two of the following? A. The size of the product B. Discrete parts moving from workstation to workstation C. Degree of equipment specialization D. Being a "Virtual Factory" E. Both A & C
34. Assume a fixed cost for a process of $15,000. The variable cost to produce each unit of product is $10 and the selling price for the finished product is $25. Which of the following is the number of units that has to be produced and sold to break-even? A. 500 units B. 667 units C. 790 units D. 900 units E. 1,000 units
35. Assume a fixed cost for a process of $120,000. The variable cost to produce each unit of product is $35, and the selling price for the finished product is $50. Which of the following is the number of units that has to be produced and sold to break-even? A. 5,000 units B. 6,000 units C. 8,000 units D. 11,000 units E. 12,000 units
4-7
Chapter 04 - Production Processes
36. You are hired as a consultant to decide if your client should purchase a new, highly specialized, piece of equipment. The product to be produced by this equipment is forecast to have a total world wide demand of 15,000 units over the entire product life. The initial investment to acquire and install the equipment is $256,000. The variable cost to produce each unit will be $15 and the selling price for the finished product will be $30. Which of the following best describes the situation the firm is facing? A. The company will recover its initial investment B. The company's total margin will be less than its investment C. It's a good investment D. The break-even is lower than the 15,000 units that are expected to sell E. All of the above
37. In a workcenter machine A has a ten minute set-up time per batch and a two minute per unit run time. Machine B performs the identical function but has a set-up time of thirty minutes and a one minute run time per unit. The workcenter makes products in batches ranging from one unit to one hundred units. Assuming capacity is not a limitation on either machine, on which batches should machine B be used? A. All batches should be run on machine B B. Batches of more than 20 units should be run on machine B C. Batches of fewer than 80 units should be run on machine B D. Batches with up to 50 units should be run on machine B E. No batches should be run on machine B
38. Which of the following is a basic type of process structure? A. Process flow diagram B. Product matrix C. Process matrix D. Workcenter E. Manual assembly
39. Which of the following is not a basic type of process structure? A. Product-process matrix B. Workcenter C. Manufacturing cell D. Assembly line E. Continuous process
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Chapter 04 - Production Processes
40. Which of the following basic types of process structures is one which equipment or work processes are arranged according to the progressive steps by which the product is made? A. Project B. Workcenter C. Manufacturing cell D. Assembly line E. Continuous process
41. Which of the following basic types of process structures is one which similar equipment or functions are grouped together? A. Project B. Workcenter C. Manufacturing cell D. Assembly line E. Continuous process
42. The placement of which of the following is not determined by process structure decisions? A. Departments B. Workgroups C. Workstations D. Machines E. Emergency exits
43. Using the assembly-line balancing procedure, which of the following is the required cycle time if the production time in minutes per day is 480 and the required output per day in units is 50? A. 0.104 B. 50 C. 9.6 D. 480 E. Cannot be determined from the information above
4-9
Chapter 04 - Production Processes
44. Using the assembly-line balancing procedure, which of the following is the required cycle time if the production time in minutes per day is 1440 and the required output per day in units is 2000? A. 0.72 B. 1.388 C. 250 D. 500 E. Cannot be determined from the information above
45. Using the assembly-line balancing procedure, which of the following is the theoretical minimum number of workstations if the task times for the six tasks that make up the job are 4, 6, 7, 2, 6, and 5 minutes, and the cycle time is 10 minutes? A. 3 B. 5 C. 6 D. 8 E. None of the above
46. Using the assembly-line balancing procedure, which of the following is the theoretical minimum number of workstations if the task times for the eight tasks that make up the job are 7, 4, 7, 8, 9, 4, 3 and 6 minutes, and the cycle time is 8 minutes? A. 3 B. 5 C. 6 D. 8 E. None of the above
47. You have just determined the actual number of workstations that will be used on an assembly line to be 6 using the assembly-line balancing procedure. The cycle time of the line is 5 minutes and the sum of all that tasks required on the line is 25 minutes. Which of the following is the correct value for the resulting line's efficiency? A. 0.500 B. 0.833 C. 0.973 D. 0.990 E. None of the above
4-10
Chapter 04 - Production Processes
48. You have just determined the actual number of workstations that will be used on an assembly line to be 8 using the assembly-line balancing procedure. The cycle time of the line is 10 minutes and the sum of all that tasks required on the line is 60 minutes. Which of the following is the correct value for the resulting line's efficiency? A. 0.500 B. 0.650 C. 0.750 D. 0.850 E. None of the above
49. When balancing an assembly line, which of the following is not a way to reduce the longest task time below the required workstation cycle time? A. Upgrade the equipment B. Assign a roaming helper to the line C. Split the task between two workstations D. Speed up the assembly line transfer mechanism E. Use a more skilled worker
50. The long-term relationship between the inventory, throughput, and flow time of a production system in steady state is called which of the following? A. Peterson's Rule B. Murphy's Law C. Little's Law D. Robert's Rule E. None of the above
Fill in the Blank Questions
51. Assume a fixed cost for a process of $100,000. The variable cost to produce each unit of product is $10, and the selling price for the finished product is $50. Ignoring inventory, how many units must the firm sell to break-even? ______________________ ________________________________________
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Chapter 04 - Production Processes
52. Using the assembly-line balancing procedure, what is the required cycle time if the production time in minutes per day is 2,400 and the required output per day in units is 1,200? ______________________ ________________________________________
53. Using the assembly-line balancing procedure, which of the following is the theoretical minimum number of workstations if the task times for the six tasks that make up the job are 7, 4, 7, 5, 3 and 6 minutes, and the cycle time is 8 minutes? ______________________ ________________________________________
54. You have just determined the actual number of workstations that will be used on an assembly line to be 15 using the assembly-line balancing procedure. The cycle time of the line is 30 seconds and the sum of all that tasks required on the line is 10 minutes. What is the line's efficiency? ______________________ ________________________________________
55. Give an example of a project layout. ______________________ ________________________________________
56. The formula: (Inventory = Throughput rate x Flow time) is known as ______________________ ________________________________________
4-12
Chapter 04 - Production Processes Essay Questions
57. Describe the implications of the product-process matrix for process design in a competitive situation.
58. Differentiate between a workcenter and a manufacturing cell.
59. Assume that you are offered a new piece of equipment for $10,000. The equipment will produce 10,000 units per year with a margin of $6.00 per unit. Demand for the product being produced has been 2,000 units per year. Your current equipment is fully depreciated and can produce the 2,000 units per year at but at a margin of only $4.00 per unit. Should you purchase the new equipment? Under what conditions?
4-13
Chapter 04 - Production Processes
60. A manufacturer has identified the options for acquiring a machined part. It can make the part on a numerically controlled lathe for $150 per unit (including materials.) It can make the part on a standard lathe for $250 per unit Error! Hyperlink reference not valid.Error! Hyperlink reference not valid. It can make the part on a machining center for $50 per unit (also including materials.) The manufacturer can acquire a standard lathe for $10,000. It could acquire a numerically controlled lathe for $100,000. A machining center would cost $350,000. It has also found that it can purchase the part for $350 per unit.
4-14
Chapter 04 - Production Processes
Chapter 04 Production Processes Answer Key
True / False Questions
1. Process selection refers to the strategic decision of choosing the volume of output to produce in a manufacturing facility depending upon the way that facility produces. FALSE
AACSB: Analytic Difficulty: Easy Learning Objective: 4 Taxonomy: Knowledge Topic: Deg a Production System
2. Process selection refers to the strategic decision of selecting which kind of production processes to use to produce a product or provide a service. TRUE
AACSB: Analytic Difficulty: Easy Learning Objective: 4 Taxonomy: Knowledge Topic: Deg a Production System
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Chapter 04 - Production Processes
3. A continuous process indicates production of discrete parts moving from workstation to workstation at a controlled rate. FALSE
AACSB: Analytic Difficulty: Medium Learning Objective: 3 Taxonomy: Knowledge Topic: How Production Processes Are Organized
4. One difference between an assembly line process flow and a continuous process flow is that on the assembly line the flow is discrete rather than continuous. TRUE
AACSB: Analytic Difficulty: Easy Learning Objective: 3 Taxonomy: Knowledge Topic: How Production Processes Are Organized
5. One trade-off illustrated by the product-process matrix is between flexibility and cost. TRUE
AACSB: Analytic Difficulty: Easy Learning Objective: 5 Taxonomy: Knowledge Topic: How Production Processes Are Organized
6. The choice of which process structure to select is generally a function of the volume requirements for the product. TRUE
AACSB: Analytic Difficulty: Easy Learning Objective: 3 Taxonomy: Knowledge Topic: How Production Processes Are Organized
4-16
Chapter 04 - Production Processes
7. One methodology used to evaluate equipment investment decisions where the investment entails a large initial investment, fixed costs, and variable costs is break-even analysis. TRUE
AACSB: Analytic Difficulty: Easy Learning Objective: 6 Taxonomy: Knowledge Topic: Break-Even Analysis
8. Break-even analysis can only be used in production equipment decision making when dealing solely with fixed costs, no variable costs. FALSE
AACSB: Analytic Difficulty: Medium Learning Objective: 6 Taxonomy: Knowledge Topic: Break-Even Analysis
9. A general purpose machine is less capable than a special purpose machine in certain tasks but can perform a broader variety of tasks. TRUE
AACSB: Analytic Difficulty: Easy Learning Objective: 4 Taxonomy: Knowledge Topic: Deg a Production System
10. Break-Even Analysis can be used to help decide whether to perform a task with a special purpose machine or with a general purpose machine. TRUE
AACSB: Analytic Difficulty: Easy Learning Objective: 6 Taxonomy: Knowledge Topic: Break-Even Analysis
4-17
Chapter 04 - Production Processes
11. The product-process matrix shows the relationship between process structures and product volume and variety characteristics. TRUE
AACSB: Analytic Difficulty: Easy Learning Objective: 5 Taxonomy: Knowledge Topic: How Production Processes Are Organized
12. The assembly-line balancing procedure determines the precedence relationships of manufacturing tasks. FALSE
AACSB: Analytic Difficulty: Easy Learning Objective: 7 Taxonomy: Knowledge Topic: Assembly-Line Design
13. Assembly lines are a special case of a project layout. FALSE
AACSB: Analytic Difficulty: Easy Learning Objective: 7 Taxonomy: Knowledge Topic: Assembly-Line Design
14. In assembly-line balancing the theoretical minimum number of workstations is found by the ratio of the sum of all task times divided by the cycle time. TRUE
AACSB: Analytic Difficulty: Medium Learning Objective: 7 Taxonomy: Knowledge Topic: Assembly-Line Design
4-18
Chapter 04 - Production Processes
15. The efficiency of an assembly-line is found by the ratio of the sum of all task times divided by the cycle time. FALSE
AACSB: Analytic Difficulty: Easy Learning Objective: 7 Taxonomy: Knowledge Topic: Assembly-Line Design
16. For the purposes of assembly-line balancing, cycle time is found by dividing production time per day by the required units of output per day. TRUE
AACSB: Analytic Difficulty: Easy Learning Objective: 7 Taxonomy: Knowledge Topic: Assembly-Line Design
17. In balancing an assembly line workstation cycle time has to be less than the time between successive units coming off the end of the line. FALSE
AACSB: Analytic Difficulty: Easy Learning Objective: 7 Taxonomy: Knowledge Topic: Assembly-Line Design
18. If the sum of the task times required to produce a product is 45 minutes and the cycle time for the same product is 10 minutes. Thus, the theoretical minimum number of workstations is 5 using the assembly-line balancing procedure. TRUE
AACSB: Analytic Difficulty: Easy Learning Objective: 7 Taxonomy: Analysis Topic: Assembly-Line Design
4-19
Chapter 04 - Production Processes
19. The first step in balancing an assembly line is to specify the precedence relationships among tasks to be performed on the line. TRUE
AACSB: Analytic Difficulty: Easy Learning Objective: 7 Taxonomy: Knowledge Topic: Assembly-Line Design
20. The term "assembly line" refers to progressive assembly linked by some material handling device. TRUE
AACSB: Analytic Difficulty: Easy Learning Objective: 7 Taxonomy: Knowledge Topic: Assembly-Line Design
21. If the sum of the task times required to produce a product is 80 minutes and the cycle time for the same product is 15 minutes, the theoretical minimum number of workstations is 8 using the assembly-line balancing procedure. FALSE
AACSB: Analytic Difficulty: Easy Learning Objective: 7 Taxonomy: Analysis Topic: Assembly-Line Design
22. In deg a production layout a flexible line layout might have the shape of a "U". TRUE
AACSB: Analytic Difficulty: Easy Learning Objective: 7 Taxonomy: Knowledge Topic: Assembly-Line Design
4-20
Chapter 04 - Production Processes
23. In deg an assembly line a mixed-model line layout is often used by JIT manufacturers. TRUE
AACSB: Analytic Difficulty: Easy Learning Objective: 7 Taxonomy: Knowledge Topic: Assembly-Line Design
24. The objective of a mixed-model line layout is to meet the demand for a variety of products and avoid building high inventories. TRUE
AACSB: Analytic Difficulty: Easy Learning Objective: 7 Taxonomy: Knowledge Topic: Assembly-Line Design
25. Workcenter layouts allocate dissimilar machines into cells to work on products that have dissimilar processing requirements. FALSE
AACSB: Analytic Difficulty: Easy Learning Objective: 3 Taxonomy: Knowledge Topic: How Production Processes Are Organized
26. A project layout is characterized by a relatively low number of production units in comparison with process and product layout formats. TRUE
AACSB: Analytic Difficulty: Easy Learning Objective: 3 Taxonomy: Knowledge Topic: How Production Processes Are Organized
4-21
Chapter 04 - Production Processes
27. A project layout is characterized by a high degree of task ordering. TRUE
AACSB: Analytic Difficulty: Easy Learning Objective: 7 Taxonomy: Knowledge Topic: Assembly-Line Design
28. Assembly line balancing means asg all necessary tasks to a series of workstations so that each workstation has no more than can be done in the workstation cycle time and so that idle time across all workstations is minimized. TRUE
AACSB: Analytic Difficulty: Easy Learning Objective: 7 Taxonomy: Knowledge Topic: Assembly-Line Design
29. Inventory turn is the cost of goods sold divided by the average inventory value. TRUE
AACSB: Analytic Difficulty: Easy Learning Objective: 1 Taxonomy: Knowledge Topic: Production Processes
30. Inventory turn is a better measure than the total value of inventory for comparative purposes because it is a relative measure. TRUE
AACSB: Analytic Difficulty: Easy Learning Objective: 1 Taxonomy: Knowledge Topic: Production Processes
4-22
Chapter 04 - Production Processes
31. Little's law says there is a long-term relationship between the inventory, throughput, and flow time of a production system in steady state. TRUE
AACSB: Analytic Difficulty: Easy Learning Objective: 2 Taxonomy: Knowledge Topic: Production Processes
Multiple Choice Questions
32. Which of the following is not considered a major process flow structure? A. Work Center B. Project C. Assembly line D. Fabrication E. Continuous Flow
AACSB: Analytic Difficulty: Easy Learning Objective: 3 Taxonomy: Knowledge Topic: How Production Processes Are Organized
33. A difference between project and continuous flow categories of process flow structures is which two of the following? A. The size of the product B. Discrete parts moving from workstation to workstation C. Degree of equipment specialization D. Being a "Virtual Factory" E. Both A & C
AACSB: Analytic Difficulty: Easy Learning Objective: 3 Taxonomy: Knowledge Topic: How Production Processes Are Organized
4-23
Chapter 04 - Production Processes
34. Assume a fixed cost for a process of $15,000. The variable cost to produce each unit of product is $10 and the selling price for the finished product is $25. Which of the following is the number of units that has to be produced and sold to break-even? A. 500 units B. 667 units C. 790 units D. 900 units E. 1,000 units
AACSB: Analytic Difficulty: Medium Learning Objective: 6 Taxonomy: Analysis Topic: Break-Even Analysis
35. Assume a fixed cost for a process of $120,000. The variable cost to produce each unit of product is $35, and the selling price for the finished product is $50. Which of the following is the number of units that has to be produced and sold to break-even? A. 5,000 units B. 6,000 units C. 8,000 units D. 11,000 units E. 12,000 units
AACSB: Analytic Difficulty: Medium Learning Objective: 6 Taxonomy: Analysis Topic: Break-Even Analysis
4-24
Chapter 04 - Production Processes
36. You are hired as a consultant to decide if your client should purchase a new, highly specialized, piece of equipment. The product to be produced by this equipment is forecast to have a total world wide demand of 15,000 units over the entire product life. The initial investment to acquire and install the equipment is $256,000. The variable cost to produce each unit will be $15 and the selling price for the finished product will be $30. Which of the following best describes the situation the firm is facing? A. The company will recover its initial investment B. The company's total margin will be less than its investment C. It's a good investment D. The break-even is lower than the 15,000 units that are expected to sell E. All of the above
AACSB: Analytic Difficulty: Medium Learning Objective: 6 Taxonomy: Analysis Topic: Break-Even Analysis
37. In a workcenter machine A has a ten minute set-up time per batch and a two minute per unit run time. Machine B performs the identical function but has a set-up time of thirty minutes and a one minute run time per unit. The workcenter makes products in batches ranging from one unit to one hundred units. Assuming capacity is not a limitation on either machine, on which batches should machine B be used? A. All batches should be run on machine B B. Batches of more than 20 units should be run on machine B C. Batches of fewer than 80 units should be run on machine B D. Batches with up to 50 units should be run on machine B E. No batches should be run on machine B
AACSB: Analytic Difficulty: Medium Learning Objective: 6 Taxonomy: Analysis Topic: Break-Even Analysis
4-25
Chapter 04 - Production Processes
38. Which of the following is a basic type of process structure? A. Process flow diagram B. Product matrix C. Process matrix D. Workcenter E. Manual assembly
AACSB: Analytic Difficulty: Medium Learning Objective: 3 Taxonomy: Knowledge Topic: How Production Processes Are Organized
39. Which of the following is not a basic type of process structure? A. Product-process matrix B. Workcenter C. Manufacturing cell D. Assembly line E. Continuous process
AACSB: Analytic Difficulty: Easy Learning Objective: 3 Taxonomy: Knowledge Topic: How Production Processes Are Organized
40. Which of the following basic types of process structures is one which equipment or work processes are arranged according to the progressive steps by which the product is made? A. Project B. Workcenter C. Manufacturing cell D. Assembly line E. Continuous process
AACSB: Analytic Difficulty: Easy Learning Objective: 3 Taxonomy: Knowledge Topic: How Production Processes Are Organized
4-26
Chapter 04 - Production Processes
41. Which of the following basic types of process structures is one which similar equipment or functions are grouped together? A. Project B. Workcenter C. Manufacturing cell D. Assembly line E. Continuous process
AACSB: Analytic Difficulty: Easy Learning Objective: 3 Taxonomy: Knowledge Topic: How Production Processes Are Organized
42. The placement of which of the following is not determined by process structure decisions? A. Departments B. Workgroups C. Workstations D. Machines E. Emergency exits
AACSB: Analytic Difficulty: Easy Learning Objective: 7 Taxonomy: Synthesis Topic: Assembly-Line Design
43. Using the assembly-line balancing procedure, which of the following is the required cycle time if the production time in minutes per day is 480 and the required output per day in units is 50? A. 0.104 B. 50 C. 9.6 D. 480 E. Cannot be determined from the information above
AACSB: Analytic Difficulty: Medium Learning Objective: 7 Taxonomy: Analysis Topic: Assembly-Line Design
4-27
Chapter 04 - Production Processes
44. Using the assembly-line balancing procedure, which of the following is the required cycle time if the production time in minutes per day is 1440 and the required output per day in units is 2000? A. 0.72 B. 1.388 C. 250 D. 500 E. Cannot be determined from the information above
AACSB: Analytic Difficulty: Medium Learning Objective: 7 Taxonomy: Analysis Topic: Assembly-Line Design
45. Using the assembly-line balancing procedure, which of the following is the theoretical minimum number of workstations if the task times for the six tasks that make up the job are 4, 6, 7, 2, 6, and 5 minutes, and the cycle time is 10 minutes? A. 3 B. 5 C. 6 D. 8 E. None of the above
AACSB: Analytic Difficulty: Medium Learning Objective: 7 Taxonomy: Analysis Topic: Assembly-Line Design
4-28
Chapter 04 - Production Processes
46. Using the assembly-line balancing procedure, which of the following is the theoretical minimum number of workstations if the task times for the eight tasks that make up the job are 7, 4, 7, 8, 9, 4, 3 and 6 minutes, and the cycle time is 8 minutes? A. 3 B. 5 C. 6 D. 8 E. None of the above
AACSB: Analytic Difficulty: Medium Learning Objective: 7 Taxonomy: Analysis Topic: Assembly-Line Design
47. You have just determined the actual number of workstations that will be used on an assembly line to be 6 using the assembly-line balancing procedure. The cycle time of the line is 5 minutes and the sum of all that tasks required on the line is 25 minutes. Which of the following is the correct value for the resulting line's efficiency? A. 0.500 B. 0.833 C. 0.973 D. 0.990 E. None of the above
AACSB: Analytic Difficulty: Medium Learning Objective: 7 Taxonomy: Analysis Topic: Assembly-Line Design
4-29
Chapter 04 - Production Processes
48. You have just determined the actual number of workstations that will be used on an assembly line to be 8 using the assembly-line balancing procedure. The cycle time of the line is 10 minutes and the sum of all that tasks required on the line is 60 minutes. Which of the following is the correct value for the resulting line's efficiency? A. 0.500 B. 0.650 C. 0.750 D. 0.850 E. None of the above
AACSB: Analytic Difficulty: Medium Learning Objective: 7 Taxonomy: Analysis Topic: Assembly-Line Design
49. When balancing an assembly line, which of the following is not a way to reduce the longest task time below the required workstation cycle time? A. Upgrade the equipment B. Assign a roaming helper to the line C. Split the task between two workstations D. Speed up the assembly line transfer mechanism E. Use a more skilled worker
AACSB: Analytic Difficulty: Medium Learning Objective: 7 Taxonomy: Analysis Topic: Assembly-Line Design
4-30
Chapter 04 - Production Processes
50. The long-term relationship between the inventory, throughput, and flow time of a production system in steady state is called which of the following? A. Peterson's Rule B. Murphy's Law C. Little's Law D. Robert's Rule E. None of the above
AACSB: Analytic Difficulty: Medium Learning Objective: 2 Taxonomy: Analysis Topic: Production Processes
Fill in the Blank Questions
51. Assume a fixed cost for a process of $100,000. The variable cost to produce each unit of product is $10, and the selling price for the finished product is $50. Ignoring inventory, how many units must the firm sell to break-even? ______________________ 2,500 units
AACSB: Analytic Difficulty: Medium Learning Objective: 7 Taxonomy: Analysis Topic: Assembly-Line Design
52. Using the assembly-line balancing procedure, what is the required cycle time if the production time in minutes per day is 2,400 and the required output per day in units is 1,200? ______________________ 2 minutes
AACSB: Analytic Difficulty: Medium Learning Objective: 7 Taxonomy: Analysis Topic: Assembly-Line Design
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Chapter 04 - Production Processes
53. Using the assembly-line balancing procedure, which of the following is the theoretical minimum number of workstations if the task times for the six tasks that make up the job are 7, 4, 7, 5, 3 and 6 minutes, and the cycle time is 8 minutes? ______________________ 4
AACSB: Analytic Difficulty: Medium Learning Objective: 7 Taxonomy: Analysis Topic: Assembly-Line Design
54. You have just determined the actual number of workstations that will be used on an assembly line to be 15 using the assembly-line balancing procedure. The cycle time of the line is 30 seconds and the sum of all that tasks required on the line is 10 minutes. What is the line's efficiency? ______________________ 0.75
AACSB: Analytic Difficulty: Medium Learning Objective: 7 Taxonomy: Analysis Topic: Assembly-Line Design
55. Give an example of a project layout. ______________________ A construction project like a building, a ship, a bridge or a highway
AACSB: Analytic Difficulty: Easy Learning Objective: 3 Taxonomy: Knowledge Topic: How Production Processes Are Organized
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Chapter 04 - Production Processes
56. The formula: (Inventory = Throughput rate x Flow time) is known as ______________________ Little's Law
AACSB: Analytic Difficulty: Easy Learning Objective: 2 Taxonomy: Knowledge Topic: Production Processes
Essay Questions
57. Describe the implications of the product-process matrix for process design in a competitive situation. The product-process matrix on page 73 and is discussed on page 72 of the text. A successful answer will focus on matching the process selected to characteristics of the product and will discuss the trade-off between flexibility and low cost. For example in a commodity-type marketing segment there is a strong imperative to push toward the lower right-hand corner of the matrix, abandoning flexibility to achieve low cost. For products which are maturing, this is a very strong imperative and the firm that reaches the low cost position first has substantial competitive advantage through its ability to achieve low cost and high volume.
AACSB: Analytic Difficulty: Hard Learning Objective: 5 Taxonomy: Synthesis Topic: How Production Processes Are Organized
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Chapter 04 - Production Processes
58. Differentiate between a workcenter and a manufacturing cell. These layout types are discussed on page 82 of the text. A successful response should include the notion that workcenters contain similar equipment while manufacturing cells are organized around similarities in processing requirements of products and may contain a collection of quite diverse equipment. In other words, a workcenter is organized around technical aspects of the equipment while a manufacturing cell is organized around the processing needs of the product.
AACSB: Analytic Difficulty: Medium Learning Objective: 3 Taxonomy: Analysis Topic: How Production Processes Are Organized
59. Assume that you are offered a new piece of equipment for $10,000. The equipment will produce 10,000 units per year with a margin of $6.00 per unit. Demand for the product being produced has been 2,000 units per year. Your current equipment is fully depreciated and can produce the 2,000 units per year at but at a margin of only $4.00 per unit. Should you purchase the new equipment? Under what conditions? Yes. At 2,000 units per year the equipment will pay for itself through increased margin in two and one-half years. If demand is expected to increase and the product life is expected to be greater than two and one-half years, it is a good buy. Otherwise stick with the old equipment.
AACSB: Analytic Difficulty: Hard Learning Objective: 6 Taxonomy: Analysis Topic: Break-Even Analysis
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Chapter 04 - Production Processes
60. A manufacturer has identified the options for acquiring a machined part. It can make the part on a numerically controlled lathe for $150 per unit (including materials.) It can make the part on a standard lathe for $250 per unit Error! Hyperlink reference not valid.Error! Hyperlink reference not valid. It can make the part on a machining center for $50 per unit (also including materials.) The manufacturer can acquire a standard lathe for $10,000. It could acquire a numerically controlled lathe for $100,000. A machining center would cost $350,000. It has also found that it can purchase the part for $350 per unit. If the quantity required is less than 100, purchase the part for $350 per unit. If the quantity needed is between 100 and 900, use the standard lathe. If the quantity needed is more than 900 but less than 2,500, use the numerically controlled lathe. If the quantity needed was greater than 2,500, the machining center is best. (Buy vs. Std: $350*D = $10,000 + 250*D; $100*D = $10,000; D = 100) (Std vs. NC: $250*D + $10,000 = $150*D + $100,000; $100*D = $90,000; D = 900) (NC vs. Machining Ctr: $150*D + $100,000 = $50*D + $350,000; $100*D = $250,000; D = 2,500)
AACSB: Analytic Difficulty: Hard Learning Objective: 6 Taxonomy: Analysis Topic: Break-Even Analysis
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