Solution Manual of Operations and Supply Chain Management 14 Edition Jacobs





Solution Manual of Operations and Supply Chain Management 14 Edition Jacobs

Chapter 2


Discussion Questions


  1. What is meant by a “triple-bottom-line” strategy? Give an example of a company that has adopted this type of strategy.

A triple-bottom-line strategy places emphasis on a company’s environmental and social responsibilities as well as the traditional bottom line of economic prosperity.  It recognizes that the long-term health of the firm is interdependent with the health of the environment and the betterment of society.  There are many examples – one if Kraft Foods.  For details see their 2010 report:

  1. Find examples where companies have used features related to environmental sustainability to “win” new customers.

Car companies use environmental concerns in marketing ads.  The development of hybrid and flex-fuel cars is one way they have operationalized those concerns.  Consumer goods companies display the “made with recycled material” logo on the packaging.  Bottled water manufacturers are using and advertising bottles made with less plastic.

  1. What are the major priorities associated with operations and supply chain strategy? How has their relationship to each other changed over the years?

The four major imperatives are cost, quality, delivery, and flexibility.  In the sixties, these four imperatives were viewed from a tradeoffs perspective.  For example, this meant that improving quality would result in higher cost, and in many cases that was true.  However, advances in manufacturing and information technologies since then have reduced the size of those tradeoffs, allowing firms to improve on several or all of these imperatives simultaneously, gaining greater competitive advantage than was possible 50 years ago.    The problem now becomes one of prioritizing and managing towards orderly improvement.

  1. Why does the “proper” operations and supply chain strategy keep changing for companies that are world-class competitors?

The top three priorities have generally remained the same over time: make it good, make it fast, and deliver it on time. Others have changed.  Part of this may be explained by realizing that world class organizations have achieved excellence in these three areas and are, therefore, focusing attention on some of the more minor areas to gain competitive advantage.  The changes in the minor priorities may result from recognizing opportunities or from changes in customer desires or expectations.

  1. What is meant by the expressions order winners and order qualifiers? What was the order winner(s) for your last purchase of a product or service?

Order winners are dimensions that differentiate the product or service or services of one firm from another.  Order qualifiers are dimensions that are used to screen a product or service as a candidate for purchase.  Order qualifiers get a company’s “foot in the door.”  Order winners are what make the sale.  Obviously, answers will vary for the order winners from your last purchase.

  1. Pick a company that you are familiar with and describe its operations strategy and how it relates to winning customers. Describe specific activities used by the company that support the strategy.

Student answers will vary widely based on their experiences and views.  It might be helpful for a classroom exercise to assign certain companies to a number of students/teams and compare their answers in class.

  1. At times in the past, the dollar showed relative weakness with respect to foreign currencies, such as the yen, mark, and pound. This stimulated exports.  Why would long-term reliance on a lower valued dollar be at best a short-term solution to the competitiveness problem?

This approach is dependent on economic policies of other nations.  This is a fragile dependency.  A long-term approach is to increase manufacturing and service industry productivity in order to regain competitive advantage.  At a national level, solutions appear to lie in reversing attitudes.  At a firm level, competitive weapons are consistent quality, high performance, dependable delivery, competitive pricing, and design flexibility.

  1. Identify an operations and supply chain – related “disruption” that recently impacted a company. What could the company have done to have minimized the impact of this type of disruption prior to it occurring?

The March 2011 tsunami that struck Japan was geographically concentrated but had global impact on multiple firms, many of which had no physical presence at all in the affected area. Examples include firms that had sole source agreements with suppliers in the affected area.  The tsunami left these companies scrambling to find new suppliers to feed into their supply chains.  These firms could have reduced the impact of the tsunami by having a few high-quality, dependable suppliers located in different geographical regions.  There are many other examples that could be taken from this one event.  A simple Internet search will provide plenty of material for discussion.

  1. What do we mean when we say productivity is a “relative” measure?

For productivity to be meaningful, it must be compared with something else.  The comparisons can be either intra-company as in the case of year-to-year comparisons of the same measure, or intercompany as in the case of benchmarking.  Intercompany comparisons of single factor productivity measures can be somewhat tenuous due to differences in accounting practices (especially when comparing with foreign competitors) and the balance of labor to capital resources.  Total factor productivity measures are somewhat more robust for comparison purposes.

Objective Questions


  1. Shell Oil Company’s motto “People, Planet and Profit” is a real-world implementation of what OSCM concept?

Triple bottom line


  1. A firm’s strategy should describe how it intends to create and sustain value for ________________________.


its current shareholders


  1. What is the term used to describe individuals or organizations that are influenced by the actions of the firm?




  1. How often should a company develop and refine the operations and supply chain strategy.


At least yearly


  1. What is the term used to describe product attributes that attract certain customers and can be used to form the competitive position of a firm?


Competitive dimensions


  1. What are the two main competitive dimensions related to product delivery?


Delivery speed and delivery reliability


  1. What are the two characteristics of a product or service that define quality?


Design quality and process quality


  1. A diagram that shows how a company’s strategy is delivered by a set of supporting activities is called a _____________________________.


activity-system map


  1. In implementing supply chain strategy a firm must minimize its total cost without compromising the needs of its ____________________________.




  1. What is defined as the likelihood of disruption that would impact the ability of a company to continuously supply products or services?


Supply chain risk


  1. Risks caused by natural or manmade disasters, and therefore impossible to reliably predict, are called ______________________.


Disruption risks


  1. Match the following common risks with the appropriate mitigation strategy.


E Country risks A: Detailed tracking, alternate suppliers
D Regulatory risk B: Carefully select and monitor suppliers
A Logistics failure C: Contingency planning, insurance
C Natural disaster D: Good legal advice, compliance
B Major quality failure E: Currency hedging, local sourcing



  1. The assessment of the probability of a negative event against the aggregate severity of the related loss is called _____________________________.


Risk mapping




  1. As Operations Manager, you are concerned about being able to meet sales requirements in the coming months. You have just been given the following production report.














Units Produced










Hours per Machine










Number of Machines










Find the average of the monthly productivity figures (units per machine hour).


To answer this we need to realize that the measure of hours given is per machine, so we have to multiply that by the number of machines in each period to get the total machine hours in each period.  Those figures are used in the calculations below.


Average productivity:  (2300/975 + 1800/1000 + 2800/1600 + 3000/1280)/4


Average productivity (2.36+1.80+1.75+2.34)/4= 2.06 units per machine hour



  1. Sailmaster makes high-performance sails for competitive windsurfers. Below is information about the inputs and outputs for one model, the Windy 2000.


Units sold                                            1,217

Sale price each                                  $1,700

Total labor hours                              46,672

Wage rate                                           $12/hour

Total materials                                  $60,000

Total energy                                       $4,000


Calculate the productivity in sales revenue/labor expense.


We have to do some interim calculations here.  Sales revenue is calculated by multiplying units sold by the unit sales price.  Labor expense is calculated by multiplying labor hours by the wage rate.


                (1217*1700) / (46672*12) = 3.69               




  1. Live Trap Corporation received the data below for its rodent cage production unit. Find the total productivity?








50,000 cages


Production time


620 labor hours


Sales price: $3.50 per unit




$7.50 per hour




Raw materials (total cost)






Component parts (total cost)




Total productivity could be expressed two ways here based on how you express output: in units sold, or dollars of sales.


                Units sold:

                50,000 / ((620 * $7.50) + 30,000 + 15,350) = 1.00 units sold per dollar input

                Dollars of sales:

(50000*3.5) / ((620 * $7.50) + 30,000 + 15,350) = 3.5 dollars in sales per dollar input



  1. Two types of cars (Deluxe and Limited) were produced by a car manufacturer last year. Quantities sold, price per unit, and labor hours follow. What is the labor productivity for each car? Explain the problem(s) associated with the labor productivity.


Deluxe car 4,000 units sold $8,000/car
Limited car 6,000 units sold $9,500/car
Labor, Deluxe 20,000 hours $12/hour
Labor, Limited 30,000 hours $14/hour



Labor Productivity – units/hour                                                                                                                


Model Output

in Units


in Labor Hours



Deluxe Car 4,000 20,000 0.20 units/hour
Limited Car 6,000 30,000 0.20 units/hour



Labor Productivity – dollars


Model Output

in Dollars


in Dollars



Deluxe Car 4,000($8,000)=





Limited Car 6,000($9,500)=






The labor productivity measure is a conventional measure of productivity.  However, as a partial measure, it may not provide all of the necessary information that is needed.  For example, increases in productivity could result from decreases in quality, and/or increases in material cost.


  1. A U.S. manufacturing company operating a subsidiary in an LDC (less-developed country) shows the following results:

U.S.                        LDC 

Sales (units)                                       100,000                 20,000

Labor (hours)                                     20,000                   15,000

Raw materials (currency)              $20,000                 FC 20,000

Capital equipment (hours)           60,000                   5,000


  1. Calculate partial labor and capital productivity figures for the parent and subsidiary. Do the results seem misleading?


Labor Productivity


Country Output

in Units


in Hours



U.S. 100,000 20,000 5.00 units/hour
LDC  20,000 15,000 1.33 units/hour


Capital  Equipment Productivity


Country Output

in Units


in Hours



U.S. 100,000 60,000 1.67 units/hour
LDC  20,000  5,000 4.00 units/hour


Yes.  You might expect the capital equipment productivity measure to be higher in the U.S. than in a LDC.  Also, the measures seem contradictory.  Each plant appears to be far more productive than the other on one measure, but much worse on the other.





  1. Compute the multifactor productivity figures for labor and capital together. Do the results make more sense?


Multifactor – Labor and Capital Equipment


Country Output

in Units


in Hours



U.S. 100,000 20,000 + 60,000=



1.25 units/hour
LDC  20,000 15,000 + 5,000=



1.00 units/hour


Yes, labor and equipment can be substituted for each other.  Therefore, this multifactor measure is a better indicator of productivity in this instance.


  1. Calculate raw material productivity figures (units/$ where $1 = FC 10). Explain why these figures might be greater in the subsidiary.


Raw Material Productivity


Country Output

in Units


in Dollars



U.S. 100,000 $20,000 5.00 units/$
LDC  20,000 FC 20,000/$10 =



10.00 units/$


The raw material productivity measures might be greater in the LDC due to a reduced cost paid for raw materials, which is typical of LDC’s, especially if there are local sources for the raw materials.



  1. Various financial data for the past two years follow. Calculate the total productivity measure and the partial measures for labor, capital, and raw materials for this company for both years. What do these measures tell you about this company?


Last Year                This Year

Output:                  Sales                       $200,000               $220,000

Input:                     Labor                      30,000                   40,000

Raw materials       35,000                   45,000

Energy                    5,000                      6,000

Capital                    50,000                   50,000

Other                     2,000                      3,000




Total Productivity


Year Output

in Dollars


in Dollars



Last Year $200,000 $30,000 + 35,000 + 5,000 + 50,000 + 2,000 = $122,000 1.64
This Year $220,000 $40,000 + 45,000 + 6,000 + 50,000 +3,000 = $144,000 1.53



Partial Measure – Labor


Year Output

in Dollars


in Dollars



Last Year $200,000 $30,000


This Year $220,000 $40,000 5.50



Partial Measure – Raw Materials


Year Output

in Dollars


in Dollars



Last Year $200,000 $35,000


This Year $220,000 $45,000 4.89




Partial Measure – Capital


Year Output

in Dollars


in Dollars



Last Year $200,000 $50,000


This Year $220,000 $50,000 4.40


The overall productivity measure is declining, which indicates a possible problem.  The partial measures can be used to indicate cause of the declining productivity.  In this case, it is a combination of declines in both labor and raw material productivity, which were somewhat offset by an increase in the capital productivity.  Further investigation should be undertaken to explain the drops in both labor and raw material productivity.  An increase in the cost of both of these measures, without an accompanying increase in the selling price might explain these measures.


  1. An electronics company makes communications devices for military contracts. The company just completed two contracts. The navy contract was for 2,300 devices and took 25 workers two weeks (40 hours per week) to complete. The army contract was for 5,500 devices that were produced by 35 workers in three weeks. On which contract were the workers more productive?


Contract Output

in Units


in Hours



Navy 2300 25(2)40 = 2000 1.15
Army 5500 35(3)40 = 4200 1.31


The workers were more productive on the Army contract.



  1. A retail store had sales of $45,000 in April and $56,000 in May. The store employs eight full-time workers who work a 40-hour week. In April the store also had seven part-time workers at 10 hours per week, and in May the store had nine part-timers at 15 hours per week (assume four weeks in each month). Using sales dollars as the measure of output, what is the percentage change in productivity from April to May?


Month Output

in Dollars


in Hours



Percentage Change
April $45,000 (8(40)+7(10))*4 = 1560 28.85  
May $56,000 1820 30.77 (30.77-28.85)/28.85 = 6.66%



  1. A parcel delivery company delivered 103,000 packages last year, when its average employment was 84 drivers. This year the firm handled 112,000 deliveries with 96 drivers. What was the percentage change in productivity over the two years?


Year Output

in Packages


in Drivers



Percentage Change
Last 103,000 84 1226.2  
This 112,000 96 1166.7 (1166.7 -1226.2)/1226.2 = – 4.85%






  1. A fast-food restaurant serves hamburgers, cheeseburgers, and chicken sandwiches. The restaurant counts a cheeseburger as equivalent to 1.25 hamburgers and chicken sandwiches as 0.8 hamburger. Current employment is five full-time employees who work a 40-hour week. If the restaurant sold 700 hamburgers, 900 cheeseburgers, and 500 chicken sandwiches in one week, what is its productivity? What would its productivity have been if it had sold the same number of sandwiches (2,100), but the mix was 700 of each type?


Part Output in

Hamburger Equivalents


in Hours



700 Hamburgers

900 Cheeseburgers (1.25)

500 Chicken Sandwiches (.80)

2225 200 11.125
700 Hamburgers

700 Cheeseburgers (1.25)

700 Chicken Sandwiches (.80)

2135 200 10.675



Chapter 14

lean supply chains

Discussion Questions

  1. Is it possible to achieve zero inventories? Why or why not?

In reality, zero inventories are a challenging, if not impossible, goal for most organizations.  The concept is theoretical because the ideal production unit is one.  Nothing is made until the customer expresses an unmet need for the product.  In reality, inventories will always exist due to the timing between the expressed need and the actual delivery of the completed unit(s).  Nevertheless, this goal aids in understanding of the lean concepts, and remains a reference point to continually remember in the on-going improvement process.

  1. One way to help achieve lean production systems is to employ flexible automated manufacturing equipment and automated material handling systems. A natural result of such a move is that fewer people are required in the process, an issue addressed regularly in negotiations with labor unions.  Do you think there is a conflict between such a move and the principle of Respect for People in the Toyota Production System?


Student answers will vary, and could make for lively class discussion.  Some students will maintain that by eliminating worker positions there is an inherent disconnect between system automation and the “respect for people” principle.  Counter arguments might include that automating systems can eliminate some of the more mundane menial tasks currently performed by workers, freeing them up for more responsible and fulfilling positions.  Also, if such a move is needed to remain viable in a competitive market it may result in a firm surviving instead of going out of business, thus maintaining employment for the company’s employees.


  1. Can a supply chain become too lean? Explain your answer – use examples if possible.


Answers will vary but many should deal with the risks inherent in ultra-lean supply chains.  The 2011 tsunami in Japan and its domino effect should be one example students take away from the chapter.  Variability in the supplier and distribution networks may also be brought up.

  1. Why must lean have a stable schedule?

Because any changes in the final product schedule are magnified backward along the line, a stable schedule is necessary.  This schedule must be frozen at some point.  Also, because suppliers and vendors are delivering in small batches just as materials are needed, they need accurate information about the build schedule so they can plan their corresponding deliveries.

  1. Which objections might a marketing manager have against uniform plant loading?

Uniform plant loading might upset a marketing manager who is planning a special promotional campaign for a specific product.  If production did not make enough of the units during the promotional period, backorders or lost sales might result.  Also because some products have different life cycles and sales patterns, this smoothing might hinder the marketing activities.

  1. What are the implications for cost accounting of lean production?

Cost accounting can benefit lean analysis, but outdated measures tied to labor rates and productivity no longer apply.  Overhead is the key variable to measure under lean.  Labor is only a small part of the entire production dollar.  Also labor and machinery may be idle under lean because goods are only produced as needed.  Labor and machinery variances may not reflect the lean philosophy.

  1. What are the roles of suppliers and customers in a lean system?

Lean involves customers and suppliers as an integral part of the process.  Customers provide product enhancement, modification, and usage data.  Suppliers work with the manufacturing organization to coordinate delivery and raw material or other input production.  Both groups may sit on lean teams and participate in improvement activities, as all groups will benefit from changes.

  1. Explain how cards are used in a Kanban system.

Cards in a kanban system represent a visual work order.  As material is moved from the line to the customer, the last operator in the process goes to the next workstation up the line and pulls a bin of work for further processing.  This employee removes a card from the bin and leaves it at the previous station.  This card represents a work order for this station to make or process more products.  This sequence continues in a backward fashion through the line and back to the suppliers.

  1. In which ways, if any, are the following systems analogous to Kanban: returning empty bottles to the supermarket and picking up filled one; running a hot dog stand at lunchtime; withdrawing money from a checking account; raking leaves into bags?

All the systems represent work orders when the empty containers are returned.  The empty bottles at the supermarket will be picked up by the soda bottler and represent a need to clean and refill the bottles and return them to customers.  A hot dog stand at lunchtime has hungry customers as work orders to process.  The customers in line represent needs for the hot dogs.  Withdrawing money from a checking account serves as a receipt and also a tickler to the individual to deposit more money in the account at the next pay period.  Raking leaves into bags is also a kanban.  Once a bag is filled, the individual pulls an empty bag from the box and continues to fill bags until the yard is free of leaves or no empty bags remain.

  1. Why is lean so hard to implement in practice?

A key implementation difficulty is the lack of emphasis on lean on an on-going basis.  The lean improvements are slow, take time, and are never ending.  Initial enthusiasm may wane over time.  Other problems in implementation include poor supplier quality, a lack of employee commitment, and problems in reducing machine set up times.

  1. Explain the relationship between quality and productivity under the lean philosophy.

Under JIT, quality and productivity are key and equal partners.  As quality improves, so does productivity, as only good units are assembled.  No work is wasted on preparing inferior quality items.  Both are necessary in the lean philosophy.

  1. Stopping waste is a vital part of lean. Identify some sources of waste in your home or dorm and discuss how they may be eliminated.

Waste can include work in process, raw materials, and finished goods that are not being directly worked on or being shipped to the customer.  Any processes or procedures not needed to complete the product or deliver the service are wastes.  Material sitting in stores and queues are also sources of waste as is excess or inefficiencies.  Through applications of lean principles of streamlining flows and only performing work as it is needed, these wastes can be reduced and possibly eliminated.

Answers will vary to this question, but some obvious choices can be found in the refrigerator, with bills waiting to be paid, and, of course, laundry.  For example, if laundry were done in small lots on a regular basis, fewer clothes would be needed.  Of course, many people might not consider this an improvement.

  1. How would you show a pull system in VSM Symbols between the blanking and CNC stages of the bolt manufacturing solved problems?


  1. What is value stream mapping?


Basically it is a specialized flowcharting tool that focuses on mapping the flow of material and information through a process.  VSM identifies all of the steps that material and information go through in the process, identifying which are value-added and which are non-value-added steps. By identifying non-value-added steps, VSM is helpful in making processes more lean.


  1. What is the purpose of value stream mapping? How can this be achieved?


This could be worded several ways, but essentially the purpose of VSM is to make processes more efficient.  This is done by identifying non-value-added activities in the process and working to reduce or eliminate them.  Sometimes this may have an effect on the value-added activities as well.  The suggestion to change the production lot size in Exhibit 14.10 is an example of this.  It could also be used to discover value-added activities that are bottlenecks in the system, leading to redesign of that part of the system.


  1. Will lean work in service environments? Why or why not?

Lean is already achieving successes in a number of service environments.  As services identify their components that resemble an assembly line and are repetitive in nature, the concepts will work.  Also, the philosophy of reducing waste and streamlining flows to eliminate waste can work in any setting.

  1. Discuss ways to use lean to improve one of the following: a pizza restaurant, a hospital, or an auto dealership.

Any number of answers would be correct.  For example, in a pizza restaurant, streamlining the pizza preparation and baking operations would speed the product to the customer.  Fast and efficient customer ordering and payment would allow the system to process more customers.  Possibly letting customers refill their own drinks or serve themselves would speed processing.  In a hospital or automobile dealership, procedures can be streamlined and altered to serve the customer.


Objective Questions

  1. What phrase refers to the idea that every step in supply chain processes that deliver goods and services to the customer should create value?


Value chain


  1. What term refers to the optimization of value-adding activities and elimination of non-value adding activities that are part of a value stream?


Waste reduction


  1. List at least four of the seven prominent types of waste that should be eliminated from the supply chain.


Waste from overproduction, waste of waiting time, transportation waste, inventory waste, processing waste, waste of motion, waste from product defects


  1. What lean concept relates to eliminating non-value-added steps and waste in product storage processes?


Lean warehousing


  1. What term refers to a schedule that pulls material into final assembly at a constant rate?


Level schedule


  1. The periodic inspection and repair of equipment designed to keep the equipment reliable, thus eliminating unplanned downtime due to malfunctions is called _______________________.


Preventive maintenance


  1. What term refers to the concept of doing things right the first time, and when problems occur, stopping the process to fix the source of the problem?


Quality at the source


  1. In some JIT systems, marked spaces on a table or the floor identify where material should be stored. Supplying operations are signaled to produce more when the space is empty.  What are these spaces called?


Kanban squares

  1. Under a kanban approach to lean manufacturing, order quantities should be as small as possible. For a part that is manufactured in-house, what part of its manufacturing process needs to be reduced to reduce the optimal order quantity for an item?


Setup time

D = 10 gauges per hour

L = 2 hours

S = .20

C = 5 gauges

K = DL(1+S)/C

K = 10(2)(1+0.20) / 5 = 4.8 Þ 5 Kanban card sets

D = 4 transmissions per hour

L = 1 hour

S = .50

C = 4 transmissions

K = DL(1+S)/C

K = 4(1)(1+0.50) / 4 = 1.50 Þ 2 Kanban card sets

D = 2,400 bottles/2 hours = 1200/60 minutes = 20 per minute

L = 40 minutes

S = .10

C = 120 bottles

K = DL(1+S)/C

K = 2(40)(1+0.10) / 120 = 7.33 Þ 8 Kanban cards

D = 16 catalytic converters per hour

L = 2 hours

S =.125

C = 10 catalytic converters

K = DL(1+S)/C

K = 16(2)(1+0.125) / 10 = 3.6 Þ 4 Kanban cards

D = 32 catalytic converters per hour

L = 1 hour

S =.125

C = 8 catalytic converters

K = DL(1+S)/C

K = 32(1)(1+0.125) / 8 = 4.5 Þ 5 Kanban cards

  1. In value stream mapping, what does an arrow in the shape of a lightning bolt mean?


Transmission of electronic information


  1. What does an inverted triangle represent in a value stream map?


Storage of material


  1. In a data box on a value stream map, what do the abbreviations CT and C/O mean?


Cycle time, changeover time


  1. What is used to indicate suggested changes in a process that may lead to improvements in a value stream?


Kaizen burst


  1. Compared to manufacturing systems, what is it about the environment of service operations that make them much harder to control?


Uncertainty and variability


  1. The chapter presents multiple techniques that service firms can use to make their processes leaner. Which technique is demonstrated by a restaurant that offers special discounts mid-week to attract more demand during a traditionally slow period?


Level the facility load



CASE: Quality Parts Company


  1. Which of the changes being considered by the manager of Quality Parts Company go counter to the JIT philosophy?

Almost all of the recommended changes run counter JIT principles: Using MRP to “keep the skids filled” implies the use of inventory as a motivator to push production.  Adding external inspectors is counter the JIT practice of in-process inspection.  Setting up a rework line only institutionalizes the acceptance of rework.  Labor and machine utilization are not objectives of JIT.  The focus should be more on flexibility and reducing the waste of overproduction.  The installation of high rise shelving indicates an acceptance of wasteful inventory.


  1. Make recommendations for JIT improvements in such areas as scheduling, layout, Kanban, task groupings, and inventory. Use quantitative data as much as possible; state necessary assumptions.

Answers will vary.  The students might be encouraged to use the Lotfi and Pegels software to develop layouts.  Machines and operations might be located in U-shaped layouts according to the assembly line balance.


  1. Sketch the operation of a pull system for quality for Quality Parts Company’s current system.

Answers will vary.  The U-shaped layout is a useful tool.  Machining cells might also be utilized.

  1. Outline a plan for the introduction of JIT at Quality Parts Company.

The plan will depend on the specific recommendations.  Likely steps include acceptance of recommendations, development of an implementation schedule, training, team development, waste reduction, retooling, reallocation of workspace, and implementation of workflows.  Top down direction in the change should be emphasized.  Shigeo Shingo estimates that most companies will need five years to implement JIT.


Case: Value Stream Mapping


  1. Eliminating the queue of work dramatically quickens the time it takes a part to flow through the system. What are the disadvantages of removing those queues?

The big consideration is whether or not these machines should operate independently or not.  The buffers allow the machines to be scheduled, at least to some extent, independently of one another.  Totally eliminating the buffers and moving to “one-piece flow” is like setting up an assembly line in this area.

  1. How do you think the machine operators would react to the change?

No doubt they would not like the change since they probably enjoyed the independence that they before.

  1. What would you do to ensure that the operators were kept busy?

This is a major issue since the cycle time for the first machine is only .5 minutes and the second machine is 1.2 minutes.  Probably you could just assign one worker to both machines.


CASE:  Pro Fishing Boats


  1. Create a value stream map of this supply chain. What other information is needed?


Here is a simplified map.  Currently, we do not know about the components using by Manufacturing Inc.  All we know is that there are 12 weeks’ worth of one component and 4 weeks’ worth of the other.

There is about a 27.3 weeks cumulative lead time from arrival of the raw materials to Manufacturing Inc. to the Pro Fishing Warehouse.   Most of this is transportation time and waiting delay.  If we add the component shipped from the US to China this cumulative lead time may be double this time.

The lead time analysis may not be very accurate.  It might be good to actually track some components and product through the network to see what the actual time is and how much variability there is in the flow time.  This could reveal much about how the network actually operates.


  1. Where is there risk for supply chain disruptions or stoppages to the flow of materials?


Of course, there are many all along this supply chain.  The supply of parts coming from the US could be disrupted.  The plant in China could experience a problem.  The complex port operations in Shanghai and LA could be delayed.  In a sense, it is surprising that they can get away with only 6 weeks of inventory in the Pro Fishing warehouse.


  1. Where do opportunities reside in improving supply chain operations and how has VSM helped to reveal these?


There may be some significant opportunities to reduce cost in this supply chain.  Pro Fishing could analyze the total cost of the network, not just the cost of parts quoted by Manufacturing, Inc.  They should also look at the efficiency (cost) of the 2nd tier suppliers in the network.



Chapter 24

health care

Discussion Questions


  1. Where would you place Shouldice Hospital on the product–process framework (see Chapter 5 case, “Shouldice Hospital—A Cut Above”)? What are the implications of adding a specialty such as cosmetic surgery?


Clearly, Shouldice Hospital is a specialty hospital.  The focus the hospital is hernias.  Using exhibit 24.1, we can see that the Specialty Hospitals offer a more narrow range of services and procedures than a general hospital.  If the management of the hospital decided to add a specialty such as cosmetic surgery, Shouldice would still be a specialty hospital.  If Shouldice decided it will start performing a wide range of medical care in addition to their current practice then it would move to a different category. 


  1. Think about your latest trip to a hospital/health care facility. How many different handoffs did you encounter? How would you rate the quality of the service relative to the patient experience

and relative to that of the friends and family?


Responses will vary based on the students’ experience. 


  1. Some have argued that for hospitals, both medical schools and nursing schools should be considered part of the supply chain. Do you agree?


The opinions of the students will vary.  A case can be made for either. 


  1. Hospitals are major users of poka-yoke (fail-safe) devices. Can you think of any?


  1. A surgeon marking an “X” on a leg or arm to be operated on.
  2. Nurse checking the patience wrist band prior to administering drugs
  3. RFID band placed on a new baby’s leg and the exits of the maternity ward locked if someone attempts to take the infant from the ward.
  4. Computer systems check for drug interaction conflicts


  1. Could a hospital or physician offer a service guarantee? Explain.


The physician can offer a service guarantee!  The guarantee might not revolve around whether or not a cure will be made.  A guarantee can be in the form of time of the appointment and being examined within a certain time frame.  It can also be the assurance that a procedure will be done correctly.




  1. How does a physician-driven supply chain differ from a typical materials supply chain?


The physician-driven supply chain is service centric.  A hospital must begin allocating resources to the patient when he/she is admitted.  These resources might include, x-ray, surgery, rehabilitation or lab work.  The delivery of drugs will be one of the very few occurrences of “material” be delivered within a physician-delivered supply chain.  



  1. What could a hospital learn from benchmarking a Ritz-Carlton Hotel? Southwest Airlines?



From the Ritz, hospitals could learn about room assignment and moving patience from admission to their room.  Also room food service and assistance in the room i.e. use of the TV or Phone.  


From Southwest Airlines could be used to learn how to schedule equipment for use by patience while minimizing their delay. 


From Disneyland, a hospital could learn how to effectively manage lines. 


  1. As in manufacturing, productivity and capacity utilization are important performance measures in health care operations. What are the similarities and differences in how these measures might be used in the two different industries?


In both industries these are measures of efficiencies that compare the cost of the operation to the output gained from it.  Efficiency is critical in both industries because of the effect on profit or accountability to funding sources in a non-profit situation.  While it is perceived as generally positive in manufacturing operations to be near 100% capacity utilization, the same might not hold in many health care operations, especially trauma care.  The emergency room needs to be able to respond to short-term peaks in demand due to the cost of failure in that process.  Conversely, a primary care clinic will typically try to schedule to full capacity for maximum efficiency.  Due to the cost of resources in a health care operation, finding the right level of capacity utilization is important.


  1. What would you consider to be the most important performance measure in a hospital?


Student answers will vary widely.  This would be a good question to use for in-class discussion.


  1. As the “baby-boomer” generation ages, the percentage of the U.S. population over age 65 will grow at a faster rate than the size of the workforce paying taxes and health insurance premiums. How do you expect that to impact health care operations and supply chain management?


Student answers will vary.  We expect students to bring up ideas related to the cost of operations, capacity/availability of appropriate services, advancements in technology and treatment and tax policy.

Objective Questions

  1. In manufacturing, quality measures are largely based on hard evidence. In health care, quality and service measures are largely based on what?




  1. A general rule of designing hospital layouts is to separate patient/visitor flow from what?


Staff flows


  1. What is the term used to refer to the flow of work through a hospital?


Care chain


  1. What inventory-related term is used to refer to points in a health care process where waiting takes place, either before or after treatment takes place?


Decoupling points


  1. What type of worker constitutes the largest component of the hospital’s workforce?




  1. In hospitals, dashboards are often used to display performance measures on a routine basis. What type of dashboard tracks metrics such as mortality rate, quality improvement, and readmission rates?


Clinical dashboard


  1. What dashboard would display metrics such as accurate performance of transfusion protocols and code response time?


Key process dashboard


  1. Remote diagnosis uses electronic devices for diagnosing patients at a distance. What is another term used to refer to this practice?




  1. What is the term used to describe arrangements to move clinical information across various information systems while still maintaining the meaning of the information being exchanged?


Health information exchanges


  1. What is the term used to refer to the application of the scientific method to evaluate alternative treatment methods and create guidelines for similar clinical situations?


Evidence-based medicine




Case:  Venice Family Clinic Managing Patients Waiting Times

  1. Draw a process flow diagram for each type of patient. Below are sample flow charts for the two main classes of patients.

New and Returning Patients

Pharmacy Customers

  1. Calculate the capacity and utilization of each resource and identify bottlenecks

Utilization formula = (Arrivals X Service Time)/ (Number of servers X Available hours X 60 minutes)

Employees Amount Arrivals Service Time Available Time Utilization
Security   1 150 2 11 0.454545
Clerks   4 150 8 6 0.833333
Medical Assistants 7 120 6 7 0.244898
Physicians 9 120 20 7 0.634921
Coordinators 3 120 7 7.5 0.622222
Pharmacy Staff 3 90 11 7.5 0.733333
Vitals   3 120 6 7 0.571429
Physicians 8 120 37 7 1.321429


The room for Physicians is a bottleneck statistically showing over 100% utilization.  This means that the rooms are actually used beyond the stated available time, patients wait elsewhere or something else is not captured in the statistics presented since actual utilization cannot be over 100%.

  1.  Calculate the wait time and time in service for both new and returning patients with appointments and those visiting the pharmacy.

Wait Time for a new and returning patient:

10 minutes for security, 24 minutes for registration, 15 minutes for vitals, 25 minutes for physicians, 25 minutes for coordinators, and 50% chance of a 13 minute wait for the pharmacy for a total of 100.5 minutes

Service Time for a new patient:

2 minutes for security, 22 minutes for registration, 6 minutes for vitals, 20 minutes for physicians, 7 minutes for coordinators, and 50% chance of a 11 minute service for the pharmacy for a total of 62.5 minutes

Service Time for a returning patient:

2 minutes for security, 7 minutes for registration, 6 minutes for vitals, 20 minutes for physicians, 7 minutes for coordinators, and 50% chance of a 11 minute service for the pharmacy for a total 47.5 minutes

Wait Time for a pharmacy customer:

10 minutes for security, 24 minutes for registration and a 13 minute wait for the pharmacy for a total of 47 minutes

Service Time for a pharmacy customer:

2 minutes for security, 7 minutes for registration, and 11 minutes service for the pharmacy for a total 20 minutes

  1. What are your recommendations for improvement?

Possible answers include:

  • Install touch screen registration as presented in the chapter.
  • Change the process so that Pharmacy customers do not have to register.
  • Currently the medical assistants have less than 30% utilization so decrease their number.
  • Change one of the vital rooms into a physician room and have patients wait in the waiting room until physicians are ready to see them.
  • Have physicians start later since they often do not see the first patient until 9:30.
  • Find ways to reduce the registration time such as having new patients pre-register on-line or by mail.
  • Look for fail safes to make sure processes operate correctly, such as color coding X-rays to ensure their delivery on time.



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