New User Special Price Expires in

Let's log you in.

Sign in with Facebook


Don't have a StudySoup account? Create one here!


Create a StudySoup account

Be part of our community, it's free to join!

Sign up with Facebook


Create your account
By creating an account you agree to StudySoup's terms and conditions and privacy policy

Already have a StudySoup account? Login here

Midterm One Study Guide

by: Emily Laurienti

Midterm One Study Guide BUAD 311

Emily Laurienti

Preview These Notes for FREE

Get a free preview of these Notes, just enter your email below.

Unlock Preview
Unlock Preview

Preview these materials now for free

Why put in your email? Get access to more of this material and other relevant free materials for your school

View Preview

About this Document

These notes cover the concepts that will be covered on the first midterm. Yellow highlight is for definitions of concepts, green highlight is for examples, and blue is equations. If you have any...
Operations Management
Prof. Hamid Nazer-Zadeh
Study Guide
operations, Management, business
50 ?




Popular in Operations Management

Popular in Business Administration

This 6 page Study Guide was uploaded by Emily Laurienti on Friday September 23, 2016. The Study Guide belongs to BUAD 311 at University of Southern California taught by Prof. Hamid Nazer-Zadeh in Fall 2016. Since its upload, it has received 451 views. For similar materials see Operations Management in Business Administration at University of Southern California.

Popular in Business Administration


Reviews for Midterm One Study Guide


Report this Material


What is Karma?


Karma is the currency of StudySoup.

You can buy or earn more Karma at anytime and redeem it for class notes, study guides, flashcards, and more!

Date Created: 09/23/16
Midterm One Study Guide Process—coordinated tasks to achieve specific business goals  Made to Order—product that isn’t made until after the order is placed o This produces higher quality and prevents excess inventory, but is slower than made to stock o Use MTO for expensive and customizable items  Luxury cars, airplanes  Made to Stock—product that is made before an order is placed o MTS is fast but may produce lower quality and inventory may be too high or you may have to throw away some product o Use MTS for cheap, uniform items  McDonalds Measurements for a Process  Capacity—the maximum number of units that can be processed per unit of time o Determined by the bottleneck—process with the smallest capacity  Flow Rate (throughput rate)—the flow you actually process; average rate of inflows and outflows expressed as a rate  Utilization Rate—a measure of efficiency, shows what percentage of time your workers are actually working ???????????????? ???????????????? (???????????????????????????????? ????????????????) o ???????????????????????????????????????????? ???????????????? = ???????????????????????????????? o Starbucks Example  Capacity of a cashier is 96 customers per shift  Flow rate is 72 customers per shift  Utilization rate = 72/96 = 75%  This means that the cashier is busy 75% of the time, idle 25% of the time  We should think about this in context of rush hours and off-peak times before making managerial decisions  Utilization rate cannot be more than 1. If demand is higher than the capacity, some customers will have to go elsewhere or cannot be served.  Bottleneck Resource—process with the smallest capacity o If you have one product (that goes through every station), the bottleneck is the slowest workstation with the lowest capacity and highest utilization o If you have multiple products, the bottleneck can be identified as the resource with the highest utilization rate.  Flow Time (throughput time)—the average time a unit stays in the system o Hamburger Example  The first 10 burgers take 87 seconds to produce  60 seconds to cook + 27 seconds to assemble  The second 10 burgers take 114 seconds to produce  60 seconds to cook + 27 seconds waiting (while first 10 are assembled) + 27 seconds to assemble  Average out the two times to find the flow time ????????+????????????  ???? = ????????????.???? ???????????????????????????? = ????:????????.????  Work in Process (WIP)—the number of units in the system at a point in time being stored, processed, or waiting. Kristen’s Cookie Case—know the concepts, not just the facts  How many orders can you complete in four hours? o Find the Bottleneck!  Calculate the capacity of each resource  The oven is being used for 10 minutes per order. o Capacity = 6 orders/hour  Kristen is working for the mixing and loading portion—8 minutes/order o Capacity = 7.5 orders/hour  Kristen’s roommate is working for setting the oven, packing and paying—4 minutes/order o Capacity = 15 orders/hour  Because the oven has the lowest capacity, it is the bottleneck o Every order after the first one will be waiting on the bottleneck (oven) which means that it will take 10 additional minutes. o Four hours * 60 minutes = 240 minutes o 240 minutes – 26 minutes for the first order = 214 remaining minutes o 214/10 minutes per order = 21.4 orders + 1 initial order = 22.4 orders o Total = 22 orders in four hours  Calculating orders in a certain amount of time ???????????????????????????????????? ???????????????? ???????????????????? ???????????????????????????? ???????????????????? o ???? + ???????????????? ???????????????????????????????????????? ???????????????????????????????? ???????????? ???? ???????????????????????????????? ???????????? ???? ????????????????????????????  How much are we willing to pay for another oven? o We work for four hours a day, 300 days a year o We currently produce at full capacity o We sell cookies for $1.50 per dozen o How much more could we produce with another oven?  Find the new bottleneck!  With two ovens, the ovens capacity is 12 orders/hour  Kristen’s capacity is still 7.5 orders/hour so she is the new bottleneck taking 8 minutes/order  Use above calculation to determine how many orders we can produce with two ovens  ???? + ????????????−???????? = ????????.???????? = ???????? ???????????????????????? ???????? ???????????????? ???????????????????? ????  We could produce 5 more orders a day with another oven o How much more money could we make per year with another oven?  This is the maximum that we would be willing to pay for another oven to make it worth the expense  Our profit is 80 cents/order  We can sell 5 dozen more a day  .???????? ∗ ???? ∗ ???????????? = $???????????????? ???????????????????????????????????????? ????????????????????????  We would be willing to pay $1200 for another oven as long as there was enough demand for this  Flexibility—given demand, how much capacity do you need to meet the demand?  Cross-training—each person is trained to do multiple jobs in order to increase capacity o To calculate Capacity after cross-training, take time each job takes and add them together to represent the total amount of time that person can spend on each order (because they can do both jobs) o Next, take the total minutes worked in an hour (60 * number of cross-trained workers) and divide by the total time for both jobs to be completed Calculating Capacity with Multiple Products (unable to meet demand)  You must know demand to be able to determine the bottleneck  To determine the capacity of a process: ???????????????????????????????? ???????? ????????????????????????????????????????  ???????????????????????????????? ???????? ???????????????????????????? = % ???????????????????????? ???????????? ???????????????????????????????????????? ???????????????? ???????????????? ???????? ????????????????????????????????????????  % ???????????????????????? ???????????? ???????????????????????????????????????? = ???????????????? ???????????????? ???????? ???????????????????????? ???????????????????????????? Little’s Law ???????????? ???????????????? ???????????????? = ???????????????? ????????????????  Flow time is given as an average  Increasing Revenue o Revenue is proportionate to flow rate, increasing flow rate increases revenue  Increase FR by increasing WIP or decreasing flow time  Practice Problem o Call center employs 1000 agents—WIP o Every month 125 leave and 125 are hired—flow rate o How long on average does an agent work for this call center?  ???????????????? ???????????????? = ???????????????? = ???? ???????????????????????? ???????? ???????????????????????????? ???????????? o Cost of hiring and training a new agent = $2500 o Want to increase average work time to 20 months o How much do the hiring and training costs decrease?  What is the new flow rate if flow time is 20 months? ????????????????  ???????? = ????  ???? = ???????? ???????????????????????????????????? ???????????? ????????????????????  What is the current cost of training?  125 * 2500 = 312,500  What would be the new cost of training?  50 * 2500 = 125,000  Total Decrease = 312,500 – 125,000 = 187,500 savings per month o What is the increase in salary the manager can afford to offer?  Total savings is the additional amount the manager could afford per month  ???????????????????????? = ????.???????? ???????????????????????????????????????? ???????????? ???????????????? ????????????????∗????∗???????? Waiting Line Management  Uncertainty and Variability—as this increases, wait time increases  Utilization—as utilization increases, wait time increases exponentially  Risk Pooling—combining lines into one queue that leads to multiple servers o This causes the line to move faster because one problem doesn’t stop an entire line from moving completely, and it ensures that someone who is in line first will get to a server first  Notations for wait line formula o a = interarrival time o 1/a = average arrival rate—flow rate o p = average service time o 1/p = average service rate o m = number of servers o CV = coefficient of variation  Formulas for wait time o ???????????????????????????????????????????? = ( ???? ) ????∗???? o ???????????? ???????? ???????????????????????????? = ∗ ???? = ???? ∗ ???? ???? o ???????????? ???????? ???????????????????? = ???????? ∗ ???? ???? o ???????????? = ????(???????? + ???? ) ???? o ???????? = ???????????????????????????????? ???????????????????????????????????? ????????????????  Queue time with one server: ???????? ????????????+???????????? o ???????? = ∗ ????−???? ???? ????∗????  The first half of the equation can also be expressed as 1−????  Gap Example o 10 customers per hour for the checkout line o Flow rate = 1/a = 10 customers/hour o a = 6 minutes o standard deviation of interarrival time = 5 o average service time for checkout: p = 5 min; 1/p = 12 customers/hour o standard deviation of service times = 1 min o one cashier; m = 1 o What is the waiting time in line? ???? ???? ????  ???? ∗ ((???? + ???? )/????) ????−???? ???? ????  = 9.18 average wait time o What is the flow time?  FT = Tq + p = 9.18 + 5 = 14.18 Multiple Server Systems  Define a system by: arrival pattern/service pattern/# of servers  Notations o M—exponential o G—general (any distribution) o D—deterministic  NOTE—CV in exponential distributions is always 1 because the mean is the same as the standard deviation  Queue time with multiple servers ???? ????( ???? ????+???? −????????????????+???????? ???? o ???????? = ???? ∗ ????−???? ∗ ????  Call Center Example o 11 operators o Arrival rate = 200 calls/hour o 1/a = 60/200 = .3 minutes/call o a = .3 o Operators can serve 20 calls/hour o 1/p = 60/20 = 3 mins/call o p = 3 o Inter-arrival and service times are exponentially distributed ????  ???? = =.???????????? .????∗????????  What is the average waiting time? ???? .???????????????? ???????? −???? ????+????  ???????? = ∗ ∗ =2.06 minutes wait time ???????? ????−.???????????? ????  How many customers are waiting? ????  ???????????????? = ????.???????? ∗ .????= ????.????????  Call center deterministic example o Service time is constant, arrival is still exponential o If service time is constant, there is no variability and CVp = 0 ???? .???????????????? ???????? −???? ????+???? o ???????? = ????????∗ ????−.???????????? ∗ ???? = ????.???????? ???????????????????????????? ???????????????? ???????????????? ???? o ???????????????? = ????.???????? ∗ .????= ????.???? ???????????????????????????? Wait line Perceptions  Perceived waiting time can matter more than actual waiting time when it comes to customer satisfaction  Satisfaction = Perception – Expectation o To increase satisfaction, you can make people’s perception better (distract them in line) or you can lower expectations (tell someone the wait is 30 minutes when it will really be 20)


Buy Material

Are you sure you want to buy this material for

50 Karma

Buy Material

BOOM! Enjoy Your Free Notes!

We've added these Notes to your profile, click here to view them now.


You're already Subscribed!

Looks like you've already subscribed to StudySoup, you won't need to purchase another subscription to get this material. To access this material simply click 'View Full Document'

Why people love StudySoup

Bentley McCaw University of Florida

"I was shooting for a perfect 4.0 GPA this semester. Having StudySoup as a study aid was critical to helping me achieve my goal...and I nailed it!"

Allison Fischer University of Alabama

"I signed up to be an Elite Notetaker with 2 of my sorority sisters this semester. We just posted our notes weekly and were each making over $600 per month. I LOVE StudySoup!"

Jim McGreen Ohio University

"Knowing I can count on the Elite Notetaker in my class allows me to focus on what the professor is saying instead of just scribbling notes the whole time and falling behind."


"Their 'Elite Notetakers' are making over $1,200/month in sales by creating high quality content that helps their classmates in a time of need."

Become an Elite Notetaker and start selling your notes online!

Refund Policy


All subscriptions to StudySoup are paid in full at the time of subscribing. To change your credit card information or to cancel your subscription, go to "Edit Settings". All credit card information will be available there. If you should decide to cancel your subscription, it will continue to be valid until the next payment period, as all payments for the current period were made in advance. For special circumstances, please email


StudySoup has more than 1 million course-specific study resources to help students study smarter. If you’re having trouble finding what you’re looking for, our customer support team can help you find what you need! Feel free to contact them here:

Recurring Subscriptions: If you have canceled your recurring subscription on the day of renewal and have not downloaded any documents, you may request a refund by submitting an email to

Satisfaction Guarantee: If you’re not satisfied with your subscription, you can contact us for further help. Contact must be made within 3 business days of your subscription purchase and your refund request will be subject for review.

Please Note: Refunds can never be provided more than 30 days after the initial purchase date regardless of your activity on the site.