Chapter 3  Process Strategy

Chapter

3 Developing a Process Strategy

TRUE/FALSE

1. Process decisions are strategic in nature.

Answer: True
Reference: Introduction
Difficulty: Moderate
Keywords: process strategy

2. No process can exist without at least one product or service.

Answer: True
Reference: Process Strategy Across The Organization
Difficulty: Easy
Keywords: process, product, service

3. Process structure is the mix of equipment and human skills in a process.

Answer: False
Reference: Process Strategy Decisions
Difficulty: Moderate
Keywords: process, process structure, equipment, human skills

4. Resource flexibility determines whether resources are organized around products or

processes.
Answer: False
Reference: Process Strategy Decisions
Difficulty: Moderate
Keywords: resource flexibility, products, processes

5. Customer involvement reflects the ways in which customers become part of the process and
the extent of their participation.
Answer: True
Reference: Process Strategy Decisions
Difficulty: Moderate
Keywords: customer contact, customer participation, customer involvement

6. Capital intensity is the ease with which employees and equipment can handle a wide variety
of products, output levels, duties, and functions.
Answer: False
Reference: Process Strategy Decisions
Difficulty: Moderate
Keywords: capital intensity, equipment

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 Chapter 3  Process Strategy

7. The degree of customization is one factor that impacts the selection of a manufacturer’s
process structure.
Answer: True
Reference: Process Strategy Decisions
Difficulty: Easy
Keywords: process selection, customization

8. Service providers with a line process tend to move customers, materials, or information in a
fixed sequence from one operation to the next.
Answer: True
Reference: Process Structure in Services
Difficulty: Moderate
Keywords: line process, service provider, standard process

9. People-processing services involve tangible actions provided for the person rather than to the
person, and do not require physical presence.
Answer: False
Reference: Process Structure in Services
Difficulty: Moderate
Keywords: people processing, physical presence

10. A moment of truth or service encounter is face-to-face interaction between the customer and
a service provider.
Answer: True
Reference: Process Structure in Services
Difficulty: Moderate
Keywords: moment of truth, face-to-face interaction, customer, service provider

11. Physical presence does not occur in a manufacturing service process.

Answer: False
Reference: Process Structure in Services
Difficulty: Moderate
Keywords: physical presence, process structure in manufacturing

12. Services that process possessions or information are more likely to be found in a front office
instead of a back office.
Answer: False
Reference: Process Structure in Services
Difficulty: Moderate
Keywords: service process structuring, dimensions of customer contact

13. Active contact in services means that the customer is very much part of the creation of the
service.
Answer: True
Reference: Process Structure in Services
Difficulty: Easy
Keywords: active contact, service

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14. Divergence is the extent to which the process is customized with considerable latitude on
how the tasks are preformed.
Answer: True
Reference: Process Structure in Services
Difficulty: Easy
Keywords: divergence, customization

15. A front office structure features high levels of customer contact where the service provider
interacts directly with the internal or external customer.
Answer: True
Reference: Process Structure in Services
Difficulty: Easy
Keywords: front office process structure, customer contact, service provider interaction

16. Back office work is typically routine, with many steps having considerable divergence.
Answer: False
Reference: Process Structure in Services
Difficulty: Easy
Keywords: back office process structure, divergence

17. Beginning points for manufacturing process structure decisions are the volume level, amount
of customization, and competitive priorities.
Answer: True
Reference: Process Structure in Manufacturing
Difficulty: Easy
Keywords: manufacturing process structure, volume, customization, competitive
priorities

18. A continuous flow process is characterized by a high degree of job customization.

Answer: False
Reference: Process Structure in Manufacturing
Difficulty: Moderate
Keywords: continuous flow process, customization

19. A job process has a relatively high level of customization.

Answer: True
Reference: Process Structure in Manufacturing
Difficulty: Moderate
Keywords: job process, customization

20. A job process has the highest level of customization of the process choices.
Answer: True
Reference: Process Structure in Manufacturing
Difficulty: Moderate
Keywords: job process, customization

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21. Job processes typically use a line flow through the operations.
Answer: False
Reference: Process Structure in Manufacturing
Difficulty: Moderate
Keywords: job process, line flow, flexible flow

22. Job processes generally have higher volumes than batch processes.
Answer: False
Reference: Process Structure in Manufacturing
Difficulty: Moderate
Keywords: job process, batch process, volume

23. In a line process, there is little variability in the products manufactured, and production and
material handling equipment are often specialized.
Answer: True
Reference: Process Structure in Manufacturing
Difficulty: Moderate
Keywords: line process, product variability, specialized equipment

24. Petroleum refineries typically use continuous flow processes.

Answer: True
Reference: Process Structure in Manufacturing
Difficulty: Moderate
Keywords: continuous flow process

25. Continuous flow processes have a high level of customization.

Answer: False
Reference: Process Structure in Manufacturing
Difficulty: Easy
Keywords: continuous flow process, customization

26. The product-process matrix brings together the elements of volume, process, and quality.
Answer: False
Reference: Process Structure in Manufacturing
Difficulty: Moderate
Keywords: product-process matrix, manufacturing volume, process, quality

27. A make-to-stock strategy involves holding items in stock for immediate delivery and is
feasible for standardized products with high volumes and reasonably accurate forecasts.
Answer: True
Reference: Process Structure in Manufacturing
Difficulty: Easy
Keywords: make-to-stock strategy, standardized products, volume, product forecasts

28. Mass production is a production strategy that uses batch processes in a make-to-stock
strategy.
Answer: False
Reference: Process Structure in Manufacturing
Difficulty: Moderate
Keywords: mass production, batch process, make-to-stock strategy

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29. Assemble-to-order strategy produces a wide variety of products from relatively few
assemblies and components after orders are received.
Answer: True
Reference: Process Structure in Manufacturing
Difficulty: Moderate
Keywords: assemble-to-order strategy

30. A layout is the physical arrangement of human and capital resources used by processes
clustered together into operations.
Answer: True
Reference: Layout
Difficulty: Easy
Keywords: layout, operation

31. A block plan allocates space and indicates the placement of each department within the
framework of a new or existing facility.
Answer: True
Reference: Layout
Difficulty: Easy
Keywords: block plan

32. A block plan is a table that gives a measure of the relative importance of each pair of centers
being located close together.
Answer: False
Reference: Layout
Difficulty: Easy
Keywords: block plan, closeness matrix, relative importance

33. A closeness matrix can reflect the qualitative judgments of managers and employees, or can
be the number of trips between each pair of departments.
Answer: True
Reference: Layout
Difficulty: Moderate
Keywords: closeness matrix, judgment

34. Euclidean distance is the distance between two points with a series of 90-degree turns, as
along city blocks.
Answer: False
Reference: Layout
Difficulty: Moderate
Keywords: Euclidean distance, rectilinear distance

35. Euclidean distance calculations are usually more realistic than rectilinear distance
calculations when determining the walking distance between operations in a building.
Answer: False
Reference: Layout
Difficulty: Moderate
Keywords: Euclidean distance, rectilinear distance

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 Chapter 3  Process Strategy

36. A detailed layout showing exact size and shape of each department or work center cannot be
designed until after a satisfactory block plan has been developed.
Answer: True
Reference: Layout
Difficulty: Moderate
Keywords: detailed layout, block plan

37. High customer involvement increases service provider productivity and makes quality
measurement easier.
Answer: False
Reference: Customer Involvement
Difficulty: Moderate
Keywords: customer involvement, productivity, quality

38. High task divergence requires less flexibility of the process’s resources.
Answer: False
Reference: Resource Flexibility
Difficulty: Easy
Keywords: resource flexibility, divergence

39. A flexible workforce usually requires greater skills and training, which comes at a cost.
However, total benefits can exceed these costs.
Answer: True
Reference: Resource Flexibility
Difficulty: Easy
Keywords: resource flexibility, training cost, workforce skill level

40. Resource flexibility helps to absorb feast-or-famine workloads in individual operations that
are caused by low volume production, divergent tasks, and fluid scheduling.
Answer: True
Reference: Resource Flexibility
Difficulty: Easy
Keywords: resource flexibility, workload

41. Capital intensive automation is appropriate for high and low volume operations.
Answer: False
Reference: Capital Intensity
Difficulty: Moderate
Keywords: automation, capital intensity

42. Fixed automation is appropriate for line and continuous flow operations.
Answer: True
Reference: Capital Intensity
Difficulty: Moderate
Keywords: fixed automation, continuous flow

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43. The ability to reprogram machines is useful for both low-customization and high-
customization processes.
Answer: True
Reference: Capital Intensity
Difficulty: Moderate
Keywords: customization, programmable automation

44. A toaster is an example of flexible automation.

Answer: False
Reference: Capital Intensity
Difficulty: Moderate
Keywords: flexible automation

45. Economies of scope reflect the ability to produce multiple products more cheaply in
combination than separately.
Answer: True
Reference: Capital Intensity
Difficulty: Moderate
Keywords: economies of scope

46. In a service process, capital intensity varies with volume in both front office and back office
operations.
Answer: True
Reference: Strategic Fit
Difficulty: Moderate
Keywords: capital intensity, front office service, back office service

47. The common denominator for decisions on service processes is primarily customer contact.
Answer: True
Reference: Strategic Fit
Difficulty: Moderate
Keywords: service process, customer contact

48. The common denominator for decisions on manufacturing processes is volume.

Answer: True
Reference: Strategic Fit
Difficulty: Moderate
Keywords: manufacturing process, volume

49. Reengineering is the fundamental rethinking and radical redesign of processes to improve
performance dramatically.
Answer: True
Reference: Strategies for Change
Difficulty: Easy
Keywords: process reengineering, redesign, rethinking

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50. The emphasis of reengineering is on the functional departments.

Answer: False
Reference: Strategies for Change
Difficulty: Moderate
Keywords: process reengineering, departments

51. Information technology is rarely used with reengineering.

Answer: False
Reference: Strategies for Change
Difficulty: Easy
Keywords: information technology, process reengineering

MULTIPLE CHOICE

52. Which one of the following statements concerning process management is best?
a. Process management is a short-term decision, and thus it has a tactical rather than a
strategic focus.
b. Process changes should be made only when introducing new products or services.
c. The variable underlying all four major process decisions is volume.
d. A company’s operations strategy is the primary output of its major process decisions.
Answer: c
Reference: Process Strategy Decisions
Difficulty: Moderate
Keywords: process management decisions

53. Several key decisions must be made in building an effective process design. Which one of
the following best identifies them?
a. Capital intensity, resource flexibility, facility location, process reengineering, and process
choice
b. Product or service life cycle, capital intensity, process reengineering, process choice, and
customer involvement
c. Capital intensity, process choice, inventory placement, resource flexibility, and customer
involvement
d. Capital intensity, resource flexibility, customer involvement, and process structure
Answer: d
Reference: Process Strategy Decisions
Difficulty: Moderate
Keywords: process dimensions

54. People processing services require:

a. a high degree of process structure.
b. high capital intensity.
c. physical presence.
d. hybrid low volume–capital intensive operations.
Answer: c
Reference: Process Structure in Services
Difficulty: Moderate
Keywords: people processing services, physical presence

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55. A college course taught in a case-discussion format is an example of:

a. back office.
b. passive contact.
c. active contact.
d. hybrid office.
Answer: c
Reference: Process Structure in Services
Difficulty: Easy
Keywords: service processes, passive contact

56. A yacht maker produces customized yachts for a clientele that wants a one-of-a-kind
watercraft. This process is said to be:
a. divergent.
b. complex.
c. specialized.
d. hybrid.
Answer: a
Reference: Process Structure in Services
Difficulty: Moderate
Keywords: service processes, process divergence

57. The process structure that best describes a waiter’s position at a restaurant would be
classified as:
a. front office.
b. back office.
c. hybrid office.
d. inner office.
Answer: a
Reference: Process Structure in Services
Difficulty: Easy
Keywords: services processes, process structure, front office

58. Field service representatives are classified as a:

a. back office.
b. hybrid office.
c. front office.
d. mid office.
Answer: c
Reference: Process Structure in Services
Difficulty: Easy
Keywords: services processes, process structure, front office

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59. A process that is primarily back office is:

a. a taxi driver.
b. loan officer at a bank.
c. the payroll clerk that calculates your paycheck.
d. the hostess at a restaurant.
Answer: c
Reference: Process Structure in Services
Difficulty: Easy
Keywords: service processes, process structure, back office

60. Front offices typically emphasize:

a. low cost operations and on-time delivery.
b. top quality and customization.
c. on-time delivery and standardization.
d. top quality and low cost operations.
Answer: b
Reference: Process Structure in Services
Difficulty: Easy
Keywords: services processes, process structure, front office

61. Back offices typically emphasize:

a. low cost operations and on-time delivery.
b. top quality and customization.
c. on-time delivery and customization.
d. top quality and low cost operations.
Answer: a
Reference: Process Structure in Services
Difficulty: Easy
Keywords: service processes, process structure, back office

62. Which of the following is sometimes called mass production?

a. Batch process and make-to-order strategy
b. Line process and make-to-stock strategy
c. Continuous flow process and assemble-to-order strategy
d. Job process and make-to-order strategy
Answer: b
Reference: Process Structure in Manufacturing
Difficulty: Moderate
Keywords: manufacturing processes, mass production, line, line process

63. A job process should be preferred when:

a. workforce and equipment are specialized.
b. products are made to stock type.
c. customization is high and volume is low.
d. customization is low and volume is high.
Answer: c
Reference: Process Structure in Manufacturing
Difficulty: Moderate
Keywords: manufacturing processes, job process, customization, volume

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64. When the process choice is a job process, it requires:

a. organizing the resources around the process.
b. a line flow strategy.
c. perfectly predictable customer demands.
d. same sequence of processing steps for each job.
Answer: a
Reference: Process Structure in Manufacturing
Difficulty: Moderate
Keywords: manufacturing processes, job process, resources

65. Which of the following statements about process choice is best?

a. A batch process typically has a standard sequence of operations through the facility.
b. Automobiles and appliances are examples of products created using a continuous flow
process.
c. Continuous flow processes are very capital intensive.
d. A custom cake operation is an example of a batch process.
Answer: c
Reference: Process Structure in Manufacturing
Difficulty: Moderate
Keywords: manufacturing processes, process choice, continuous flow, capital, intensity

66. The product-process matrix used to analyze manufacturing operations brings together the
elements of:
a. volume, process, and intensity.
b. process, intensity, and product design.
c. intensity, volume, and process.
d. customization, volume, and process.
Answer: d
Reference: Process Structure in Manufacturing
Difficulty: Moderate
Keywords: manufacturing processes, product-process matrix

67. Which one of the following statements about process management is best?
a. When customization must be high, equipment should be general purpose, and employees
need to perform a broader range of duties.
b. The traditional relationship between capital intensity and resource flexibility is that if one
is high, so is the other.
c. Creating a more capital-intensive process tends to reduce the fixed cost and raise the
variable unit cost.
d. Economies of scope mean that a process should be devoted to a single product or service
to achieve high volumes.
Answer: a
Reference: Process Structure in Manufacturing
Difficulty: Hard
Keywords: manufacturing processes, process management, customization

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68. A manufacturer that produces standard products in large volumes is likely to be using a(n):
a. make-to-stock strategy.
b. make-to-order strategy.
c. assemble-to-order strategy.
d. engineer-to-order strategy.
Answer: a
Reference: Process Structure in Manufacturing
Difficulty: Easy
Keywords: production and inventory strategies, make-to-stock

69. The principle of postponement is employed by a producer using a(n):

a. make-to-stock strategy.
b. make-to-order strategy.
c. assemble-to-order strategy.
d. engineer-to-order strategy.
Answer: c
Reference: Process Structure in Manufacturing
Difficulty: Easy
Keywords: production and inventory strategies, assemble-to-order

70. Combining a line process with the make-to-stock strategy is sometimes called:
a. make-to-order.
b. assemble-to-order.
c. a hybrid process.
d. mass production.
Answer: d
Reference: Process Structure in Manufacturing
Difficulty: Moderate
Keywords: production and inventory strategies, mass production, line process, make-to-
stock

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USE THE FOLLOWING TO ANSWER QUESTIONS 71 – 75.

Acme Machine is a job shop that makes specialty parts for the airline industry. Figure #1 below
shows the block plan for key manufacturing operations in its current facility. Acme believes there
may be a way to reduce the total distance traveled between departments. Consider the two
revisions that have been suggested, based on the closeness matrix shown below the block plans.
The aisles are shown by the dotted lines in Figure 1.

3 4 2 3 6 4 3 5 1

1 5 6 5 1 2 6 4 2

FIGURE 1 REVISION 1 REVISION 2

CLOSENESS MATRIX

TRIPS BETWEEN DEPARTMENTS

1 2 3 4 5 6
1. Burr & Grind - 8 3 0 9 5
2. NC Equipment - 0 3 0 0
3. Shipping & Receiving - 0 8 9
4. Lathes & Drills - 0 3
5. Tool Crib - 3
6. Inspection -

Dept. Closeness Original Revision #1 Revision #2

Pair Factor (w) Distance (dO) w  dO Distance (d1) w  d1 Distance (d2) w  d2
1–2
1–3
1–4
1–5
1–6
2–3
2–4
2–5
2–6
3–4
3–5
3–6
4–5
4–6
5–6
TOTAL

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71. If travel between departments is restricted to the aisles shown in Figure 1, what is the total
weighted-distance (wd) score for the block plan shown in Figure 1?
a. less than or equal to 30
b. greater than 30 but less than or equal to 60
c. greater than 60 but less than or equal to 90
d. greater than 90
Answer: d
Reference: Layout
Difficulty: Moderate
Keywords: layout, block plan, closeness matrix, total weighted-distance (wd) score

72. If travel between departments is restricted to the aisles shown in Figure 1, what is the total
weighted-distance (wd) score for the block plan shown in Revision 1?
a. less than or equal to 30
b. greater than 30 but less than or equal to 60
c. greater than 60 but less than or equal to 90
d. greater than 90
Answer: b
Reference: Layout
Difficulty: Moderate
Keywords: layout, block plan, closeness matrix, total weighted-distance (wd) score

73. If travel between departments is restricted to the aisles shown in Figure #1, what is the total
weighted-distance (wd) score for the block plan shown in Revision 2?
a. less than or equal to 30
b. greater than 30 but less than or equal to 60
c. greater than 60 but less than or equal to 90
d. greater than 90
Answer: c
Reference: Layout
Difficulty: Moderate
Keywords: layout, block plan, closeness matrix, total weighted-distance (wd) score

74. Considering the current facility situation and the two suggested revisions, if Acme wishes to
minimize the total weighted-distance score, which option should be selected?
a. Current situation—stay with Figure 1
b. Revision 1
c. Revision 2
d. Either Revision 1 or Revision 2—they have the same what is the total weighted-distance
(wd) score
Answer: b
Reference: Layout
Difficulty: Moderate
Keywords: layout, block plan, closeness matrix, total weighted-distance (wd) score

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 Chapter 3  Process Strategy

75. By picking this option, how much is the total wd score reduced, when compared to Figure 1?
a. None—the current situation in Figure 1 provides the lowest total weighted-distance (wd)
score
b. less than or equal to 30
c. greater than 30 but less than or equal to 60
d. greater than 60 but less than or equal to 90
Answer: c
Reference: Layout
Difficulty: Moderate
Keywords: layout, block plan, closeness matrix, total weighted-distance (wd) score

USE THE FOLLOWING TO ANSWER QUESTIONS 76 – 80.

A department store chain is designing a layout for a new store. The store manager wants to
provide as much convenience as possible for her customers. Based on historical data, the number
of trips between departments per hour is given in the following closeness matrix. A block plan
showing a preliminary layout is also shown.

Closeness Factors (Trips per hour)

Department 1/O 2/S 3/H 4/T 5/A 6/E

1. Office Supplies (O) --- 40 100 50 20 10

2. Sporting Goods (S) --- 100 80 60 80
3. Hardware (H) --- 70 100 50
4. Toys (T) --- 70 90
5. Automotive (A) --- 60
6. Electronics (E) ---

Customer travel between departments is restricted to the aisles shown in the block plan as dotted
lines.

1. OFFICE SUPPLIES 2. SPORTING GOODS 3. HARDWARE

4. TOYS 5. AUTOMOTIVE 6. ELECTRONICS

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 Chapter 3  Process Strategy

Dept. Pair Closeness Original Revision 1

Factor (w) Distance (dO) w  dO Distance (d1) w  d1
1–2
1–3
1–4
1–5
1–6
2–3
2–4
2–5
2–6
3–4
3–5
3–6
4–5
4–6
5–6
TOTAL
76. What is the total weighted-distance (wd) score between Office Supplies and Hardware?
a. less than or equal to 50
b. greater than 50 but less than or equal to 150
c. greater than 150 but less than or equal to 250
d. greater than 250
Answer: c
Reference: Layout
Difficulty: Moderate
Keywords: layout, block plan, closeness matrix, weighted-distance (wd) score

77. What is the total weighted-distance (wd) score between Hardware and Toys?
a. less than or equal to 50
b. greater than 50 but less than or equal to 150
c. greater than 150 but less than or equal to 250
d. greater than 250
Answer: c
Reference: Layout
Difficulty: Moderate
Keywords: process layout, block plan, closeness matrix, weighted-distance (wd) score

78. What is the total weighted-distance (wd) score for the entire store?
a. less than or equal to 1,500
b. greater than 1,500 but less than or equal to 2,000
c. greater than 2,000 but less than or equal to 2,500
d. greater than 2,500
Answer: b
Reference: Layout
Difficulty: Moderate
Keywords: layout, block plan, closeness matrix, weighted-distance (wd) score
79. A suggestion has been made to switch Hardware and Automotive. What would the total
weighted-distance (wd) score for the entire store if these two departments were switched?

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 Chapter 3  Process Strategy

a. less than or equal to 1,000

b. greater than 1,000 but less than or equal to 1,500
c. greater than 1,500 but less than or equal to 2,000
d. greater than 2,000
Answer: c
Reference: Layout
Difficulty: Moderate
Keywords: layout, block plan, closeness matrix, weighted-distance (wd) score

80. Based on your calculations, would you recommend that Hardware and Toys be switched?
a. Yes, and this is an improvement of 200 – 300 in the weighted-distance (wd) score.
b. No, the travel distances are the same.
c. Yes, and this is a difference of over 300 feet in the weighted-distance (wd) score.
d. We don’t have enough information to determine this.
Answer: b
Reference: Layout
Difficulty: Moderate
Keywords: process layout, block plan, closeness matrix, weighted-distance (wd) score

Figure 3.1
The information systems and operations management department of a small college is now
designing its layout for newly built office space. An overhead view of the available office
space reveals the following (note: assume all locations are measured from center point to
center point):

Each block in the graph is 10 feet

C by 10 feet. Therefore, point
D locations are:
A: 10, 10 D: 20, 40
E B: 50, 10 E: 60, 30
C: 40, 50 F: 30, 20
F
A B

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 Chapter 3  Process Strategy

81. Use the information in Figure 3.1. What is the Euclidean distance between offices A and C?
a. less than or equal to 25 feet
b. greater than 25 but less than or equal to 45 feet
c. greater than 45 but less than or equal to 65 feet
d. greater than 65 feet
Answer: c
Reference: Layout
Difficulty: Moderate
Keywords: Euclidean distance, layout

82. Use the information in Figure 3.1. What is the rectilinear distance between offices A and C?
a. less than or equal to 25 feet
b. greater than 25 but less than or equal to 45 feet
c. greater than 45 but less than or equal to 65 feet
d. greater than 65 feet
Answer: d
Reference: Layout
Difficulty: Moderate
Keywords: rectilinear distance

83. Use the information in Figure 3.1. What is the rectilinear distance between offices B and D?
a. greater than 65 feet
b. greater than 45 but less than or equal to 65 feet
c. greater than 25 but less than or equal to 45 feet
d. less than or equal to 25 feet
Answer: b
Reference: Layout
Difficulty: Moderate
Keywords: rectilinear distance, layout

84. Use the information in Figure 3.1. What is the Euclidean distance between offices B and D?
a. greater than 65 feet
b. greater than 45 but less than or equal to 65 feet
c. greater than 25 but less than or equal to 45 feet
d. less than or equal to 25 feet
Answer: c
Reference: Layout
Difficulty: Moderate
Keywords: Euclidean distance, layout

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 Chapter 3  Process Strategy

85. Use the information in Figure 3.1. What pair of locations has Euclidean and rectilinear
distances that are identical?
a. C and D
b. F and E
c. D and E
d. B and A
Answer: d
Reference: Layout
Difficulty: Hard
Keywords: Euclidean distance, rectilinear distance, layout

Figure 3.2
A company of four departments has the following closeness factors and current locations of all
departments. Assume rectilinear distance.

Department Closeness 1
Pair Factor
1&2 10
1&3 8 2
1&4 6
2&3 3 3 4
2&4 2
3&4 1

86. Use the information in Figure 3.2. Which pair of departments has the greatest weighted-
distance score?
a. 1 & 2
b. 1 & 3
c. 1 & 4
d. 2 & 3
Answer: c
Reference: Layout
Difficulty: Moderate
Keywords: weighted-distance score, layout

87. Use the information in Figure 3.2. What is the overall weighted-distance score for the
arrangement?
a. 52
b. 48
c. 63
d. 58
Answer: a
Reference: Layout
Difficulty: Moderate
Keywords: weighted-distance score, layout

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 Chapter 3  Process Strategy

88. Using the information in Figure 3.2, which of these arrangements has the best weighted-
distance score?

a.

b.

c.

d.
Answer: a
Reference: Layout
Difficulty: Moderate
Keywords: weighted distance score, layout

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 Chapter 3  Process Strategy

Figure 3.3
A company of four departments has the following closeness factors and current locations
of all departments:

Department Distance Closeness

Pair Factor
A&B 1 10 A B C
A&C 2 8
A&D 1 6
A&E 2 7
B&C 1 8 D E
B&D 1 4
B&E 1 3
C&D 2 6
C&E 1 6
D&E 1 2

89. Use the information from Figure 3.3. The departmental pair that has the greatest weighted
distance between them is:
a. A & B.
b. A & C.
c. A & D.
d. A & E.
Answer: b
Reference: Layout
Difficulty: Moderate
Keywords: weighted distance, facility layout

90. Use the information from Figure 3.3. What is the total weighted distance for the current
layout?
a. 69
b. 73
c. 77
d. 81
Answer: d
Reference: Layout
Difficulty: Moderate
Keywords: weighted distance, layout

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91. Which of the following statements about customer involvement is best?

a. In service industries, customer contact is of minor importance.
b. High task divergence and flexible process flows require more flexibility of the process’s
employees, facilities and equipment.
c. A firm that produces standardized products often seeks customer specifications.
d. When customer involvement is highly customized, a process is more likely to use a
standardized-services process rather than a customized-services process.
Answer: b
Reference: Customer Involvement
Difficulty: Moderate
Keywords: customer involvement

92. Active customer contact and personalized attention can lower cost to the customer by:
a. increasing the capital intensity.
b. trading fixed costs for an equivalent variable cost.
c. substituting customer efforts for those of the service provider.
d. lowering the level of technology involved.
Answer: c
Reference: Customer Involvement
Difficulty: Easy
Keywords: customer contact, cost

93. An advantages of customer involvement in a service process is that:

a. if the customers are price sensitive, they might feel they are receiving more value.
b. dealing with the unique needs of each customer make the process more capital intensive.
c. accommodating the needs of each different customer can make the process less
divergent.
d. measurement of quality becomes more difficult.
Answer: a
Reference: Customer Involvement
Difficulty: Moderate
Keywords: customer involvement, price sensitivity, value

USE THE FOLLOWING TO ANSWER QUESTIONS 94 – 96.

A company must decide on the type on equipment to buy in order to manufacture a new product
line. The company can purchase an all-purpose machine, with fixed costs amounting to $20,000
per year, and it will cost $40 / unit to produce the new line on this machine. It can also buy a
special-purpose machine, with fixed costs of $50,000 per year, and the per unit cost on this
machine is $30.

94. What is the break-even quantity between the two machines?

a. 7,000 units
b. 10,000 units
c. 3,000 units
d. 5,000 units
Answer: d
Reference: Capital Intensity
Difficulty: Easy
Keywords: capital-intensive operations, automation, general-purpose equipment,
special-purpose equipment, break even quantity

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95. Which alternative should be selected if annual requirements are 5,000 units?
a. All-purpose machine
b. Special-purpose machine
c. Either machine; costs are the same for either option at 5,000 units
d. Alternative to be selected; can’t be determined with information given.
Answer: b
Reference: Capital Intensity
Difficulty: Easy
Keywords: general-purpose equipment, special-purpose equipment, total cost

96. What does the company save for the year by selecting this low-cost option (for annual
requirements of 5,000 units)?
a. $15,000
b. $5,000
c. $10,000
d. $20,000
Answer: d
Reference: Capital Intensity
Difficulty: Moderate
Keywords: general-purpose equipment, special-purpose equipment, total cost

USE THE FOLLOWING TO ANSWER QUESTIONS #97 – 99.

A company is considering two options for the production of a part needed downstream in the
manufacturing process. Particulars are as follows:
Specialized automation: Fixed Costs = $9,000 / month Variable Cost / Unit = $2
General automation: Fixed Costs = $3,000 / month Variable Cost / Unit = $5

97. What is the monthly break-even quantity for choosing between the two automation
approaches?
a. 1,000 units
b. 2,000 units
c. 6,000 units
d. 12,000 units
Answer: b
Reference: Capital Intensity
Difficulty: Easy
Keywords: capital-intensive operations, automation, break even quantity

98. For a monthly volume of 3,000 units, which automation approach should be chosen?
a. Specialized automation
b. General automation
c. Either approach is acceptable, because costs are the same for either option at 3,000 units.
d. Can’t be determined with information given.
Answer: a
Reference: Capital Intensity
Difficulty: Easy
Keywords: automation, total cost, low-cost option

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99. What does the company save each month by selecting this low-cost option (for monthly
requirements of 3,000 units)?
a. $1,000
b. $3,000
c. $6,000
d. Can’t be determined with information given.
Answer: b
Reference: Capital Intensity
Difficulty: Moderate
Keywords: automation, total cost

USE THE FOLLOWING TO ANSWER QUESTIONS #100 – 105.

You currently purchase a part used in your production process from an outside supplier, and have
decided to begin making this part in-house. You have two equipment options for moving
production in-house: special-purpose equipment and general-purpose equipment. Cost
information for these two options is as follows:

ALTERNATIVE FIXED COST VARIABLE COST

Special-Purpose Equipment $200,000 per year $15 per unit
General-Purpose Equipment $50,000 per year $20 per unit

100. What is the break even quantity between the two options?
a. 30,000 units per year
b. 40,000 units per year
c. 50,000 units per year
d. 60,000 units per year
Answer: a
Reference: Capital Intensity
Difficulty: Easy
Keywords: capital-intensive operations, general-purpose equipment, special-purpose
equipment, break even quantity

101. What are total costs under the Special-Purpose Equipment option for an annual quantity of
40,000 units?
a. $400,000
b. $500,000
c. $800,000
d.$850,000
Answer: c
Reference: Capital Intensity
Difficulty: Easy
Keywords: general-purpose equipment, special-purpose equipment, total cost

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102. What are total costs under the General-Purpose Equipment option for an annual quantity of
40,000 units?
a. $400,000
b. $450,000
c. $800,000
d. $850,000
Answer: d
Reference: Capital Intensity
Difficulty: Easy
Keywords: general-purpose equipment, special-purpose equipment, total cost

103. For what range of output is the General-Purpose Equipment the low-cost option?
a. 030,000 units per year
b. 30,000 or more units per year
c. 40,000 or more units per year
d. 0 – 40,000 units per year
Answer: a
Reference: Capital Intensity
Difficulty: Easy
Keywords: general-purpose equipment, special-purpose equipment, total cost

104. For what range of output is the Special-Purpose Equipment the low-cost option?
a. 30,000 or more units per year
b. 0 – 30,000 units per year
c. 0 – 40,000 units per year
d. 40,000 or more units per year
Answer: a
Reference: Capital Intensity
Difficulty: Easy
Keywords: general-purpose equipment, special-purpose equipment, total cost, low-cost
option

105. At an annual requirement of 40,000 units, what does the company save per year by
selecting the low-cost option?
a. $150,000
b. $300,000
c. $50,000
d. $40,000
Answer: c
Reference: Capital Intensity
Difficulty: Easy
Keywords: general-purpose equipment, special-purpose equipment, total cost, low-cost
option

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106. More fixed automation typically means:

a. decreased labor productivity.
b. longer cycle time.
c. higher demand volumes.
d. lower sales.
Answer: c
Reference: Capital Intensity
Difficulty: Hard
Keywords: fixed automation, volume

134. Which of the following statements regarding capital intensity is NOT true?
a. Capital intensity can be a prohibitive investment for low-volume operations.
b. Decreased amounts of automation increase capital intensity.
c. Automation refers to a system or piece of equipment that is self-regulating and self-
acting.
d. Leasing is a method to acquire equipment while defraying financial risk.
Answer: b
Reference: Capital Intensity
Difficulty: Hard
Keywords: capital intensity, automation

135. Which one of the following statements about flexible automation is best?
a. Investment cost is lower when a transfer machine handles many operations.
b. Chemical processing plants and oil refineries mainly utilize programmable automation.
c. It is an automatic process that can be reprogrammed to handle various products.
d. It achieves top efficiency; accommodating new products is difficult and costly.
Answer: c
Reference: Capital Intensity
Difficulty: Moderate
Keywords: flexible automation, reprogramming

136. With flexible automation, the ability to reprogram instructions can be useful in:
a. line flow, but not flexible flow, operations.
b. flexible flow, but not line flow, operations.
c. either line flow or flexible flow operations.
d. situations in which top efficiency is mandatory, but only if volumes are high.
Answer: c
Reference: Capital Intensity
Difficulty: Moderate
Keywords: flexible automation, reprogramming, line flow

137. Higher volume in a process is generally associated with:

a. more resource flexibility.
b. more capital intensity.
c. greater customer involvement.
d. fewer opportunities for standardization.
Answer: b
Reference: Capital Intensity
Difficulty: Moderate
Keywords: volume, process, capital intensity

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138. Low capital intensity is generally associated with:

a. low resource flexibility.
b. high customer involvement.
c. high levels of fixed automation.
d. high volumes.
Answer: b
Reference: Capital Intensity
Difficulty: Moderate
Keywords: capital intensity, customer involvement

139. As it relates to process management, the concept of a flexible workforce is defined as:
a. a labor force that often changes in size because of hirings and firings.
b. workers who are willing to work large amounts of overtime when necessary.
c. workers who are capable of performing many different tasks.
d. a labor force with a high turnover rate.
Answer: c
Reference: Resource Flexibility
Difficulty: Moderate
Keywords: flexible workforce

140. Which of the following statements regarding resource flexibility is best?

a. Training is a small part of worker flexibility.
b. Specialization of employees is consistent with worker flexibility.
c. Worker flexibility is not a priority if the process is subject to hourly or seasonal peaks
in demand.
d. Resource flexibility requires employees to be able to perform a broad range of duties,
and equipment usually must be more general purpose.
Answer: d
Reference: Resource Flexibility
Difficulty: Moderate
Keywords: resource flexibility, flexible workforce

141. Which of the following statements concerning resource flexibility is best?

a. Flexible equipment is useful to companies with low production volumes and high
customization.
b. Investment in general-purpose equipment is warranted if the firm expects to sell more
than the break-even amount.
c. Manufacturing efficiency increases with general-purpose equipment.
d. Resource flexibility is crucial for line-flow processing.
Answer: a
Reference: Resource Flexibility
Difficulty: Moderate
Keywords: resource flexibility, volume, customization

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142. Suppose that competitive priorities call for offering a wide variety of customized services.
Which of the following process decisions would be more likely?
a. More capital intensity
b. More resource flexibility
c. More process automation
d. Less customer involvement
Answer: b
Reference: Resource Flexibility
Difficulty: Hard
Keywords: resource flexibility, customized service
143. Under which one of the following environments would you opt for a higher degree of
resource flexibility?
a. A firm using a flexible flow strategy
b. A firm facing a stable demand
c. A firm using a line flow strategy
d. A firm producing only one product
Answer: a
Reference: Resource Flexibility
Difficulty: Moderate
Keywords: resource flexibility, flexible flow

144. Which statement about economies of scope is not true?

a. Economies of scope are often attained through programmable automation.
b. Economies of scope bring together two competitive priorities—customization and low
price.
c. Economies of scope reflect the ability to produce multiple products more cheaply in
combination than separately.
d. Economies of scope reflect low capital intensity and high resource flexibility.
Answer: d
Reference: Capital Intensity
Difficulty: Moderate
Keywords: economies of scope, capital intensity, resource flexibility

145. Which one of the following statements on the concept of focused factories is best?
a. Emphasizes economies of scale, rather than diseconomies of scale
b. Prefers larger facilities producing all of the products or services the company offers
c. Reduces the range of demands placed on an operation so management can concentrate
on fewer tasks
d. Emphasizes flexibility rather than cost
Answer: c
Reference: Strategic Fit
Difficulty: Moderate
Keywords: focused factory

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146. One method for a factory to gain operational focus is to:

a. build large enough factories to produce all products and services the company offers.
b. hire more specialists and supervisors to control the operations.
c. reorganize existing facilities to the plant-within-plant approach.
d. remodel stores to create the effect of many small boutiques under one roof.
Answer: c
Reference: Strategic Fit
Difficulty: Hard
Keywords: focus, process, plants within plants

147. Which one of the following statements on the concept of gaining focus is best?
a. Focused factories maximize the amount of customization.
b. Small sizes of many focused factories make it difficult to compete on the basis of
shorter lead times.
c. Plants within plants are different operations within a facility that can have
individualized competitive priorities and processes.
d. Focused factories are large factories producing all the products that the company offers.
Answer: c
Reference: Strategic Fit
Difficulty: Moderate
Keywords: focus, process, plants within plants

148. A plant that has separate operations that are relatively autonomous with individualized
competitive priorities, processes, and workforces under the same roof are said to have:
a. focused factories.
b. economies of scale.
c. plants within plants.
d. matrix operations.
Answer: c
Reference: Strategic Fit
Difficulty: Moderate
Keywords: focus, process, plants within plants

149. Which one of the following statements concerning process reengineering is not true?
a. Reengineering is the fundamental rethinking and radical design of business processes.
b. Reengineering efforts should focus on functional departments.
c. Information technology is a major enabler of reengineering.
d. Reengineering requires a “clean slate” philosophy.
Answer: b
Reference: Strategies for Change
Difficulty: Moderate
Keywords: reengineering, radical redesign, information technology

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150. Which one of the following statements about reengineering is TRUE?

a. It does not require much time or resources to implement.
b. It can be done easily for any process.
c. It only requires improving cross-functional processes.
d. It is not appropriate for all organizations and all processes.
Answer: d
Reference: Strategies for Change
Difficulty: Moderate
Keywords: reengineering, organization, process

151. Which statement on reengineering and process improvement is best?

a. Only process improvement programs make use of cross-functional teams.
b. Process improvement focuses only on critical or core processes such as order
fulfillment.
c. Reengineering starts with a “clean slate” whereas process improvement looks for ways
to incrementally improve.
d. Only reengineering focuses on business processes.
Answer: c
Reference: Strategies for Change
Difficulty: Moderate
Keywords: reengineering, process improvement

152. A primary enabler of process reengineering is:

a. the service-product matrix.
b. a process flow chart.
c. information technology.
d. employee training.
Answer: c
Reference: Strategies for Change
Difficulty: Moderate
Keywords: process reengineering, information technology

153. A team consisting of members from each functional area affected by the process change is
referred to as a(n):
a. reengineering team.
b. cross-functional team.
c. process team.
d. improvement team.
Answer: b
Reference: Strategies for Change
Difficulty: Moderate
Keywords: cross-functional team

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154. A process selected for reengineering should be a:

a. core process.
b. front-office process.
c. hybrid office.
d. back office process.
Answer: a
Reference: Strategies for Change
Difficulty: Moderate
Keywords: reengineering, core process

FILL IN THE BLANK

155. ____________ is the ease with which employees and equipment can handle a wide variety
of products, output levels, duties, and functions.
Answer: Resource flexibility
Reference: Process Strategy Decisions
Difficulty: Moderate
Keywords: resource flexibility

156. _____________ reflects the ways in which customers become part of the process and the
extent of their participation.
Answer: Customer involvement
Reference: Process Strategy Decisions
Difficulty: Moderate
Keywords: customer involvement, customer participation

157. ______________ is the mix of equipment and human skills in a process.

Answer: Capital intensity
Reference: Process Strategy Decisions
Difficulty: Moderate
Keywords: capital intensity, equipment, human skills

158. __________ means that the customer is very much a part of the creation of the service and
affects the process itself.
Answer: Active contact or Customer involvement
Reference: Process Structure in Services
Difficulty: Easy
Keywords: active contact, service, customer contact, customer involvement

159. Customer, materials, or information move in diverse ways in processes that have
__________.
Answer: Active contact
Reference: Process Structure in Services
Difficulty: Easy
Keywords: active contact, service, customer contact

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160. A(n) __________ process has high customer contact where the service provider interacts
directly with the internal or external customer.
Answer: front-office
Reference: Process Structure in Services
Difficulty: Easy
Keywords: front-office, customer contact, service, internal customer, external customer

134. A(n) ____________ allocates space and indicates placement of each department.
Answer: block plan
Reference: Layout
Difficulty: Moderate
Keywords: block plan, space allocation, department placement

135. A(n) ____________ gives the relative importance of each pair of operations or departments
being located close together.
Answer: closeness matrix
Reference: Layout
Difficulty: Moderate
Keywords: closeness matrix

136. The most elementary way to develop a block plan that satisfies performance criteria and
area requirements is by ____________.
Answer: trial and error
Reference: Layout
Difficulty: Moderate
Keywords: block plan, trial and error

137. The ____________ method is a mathematical model used to evaluate layouts based on
proximity factors.
Answer: weighted distance
Reference: Layout
Difficulty: Moderate
Keywords: weighted distance, proximity factors

138. The ____________ method measures distance between two points with a series of 90-
degree turns.
Answer: rectilinear distance
Reference: Layout
Difficulty: Easy
Keywords: rectilinear distance, weighted distance

139. __________ automation produces one type of product or part in a sequence of simple
operations.
Answer: Fixed
Reference: Capital Intensity
Difficulty: Moderate
Keywords: fixed automation

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140. __________ automation can handle various products through programmability.

Answer: Flexible
Reference: Capital Intensity
Difficulty: Moderate
Keywords: flexible automation, programmable automation

141. __________ are different operations within a facility with individualized competitive
priorities, processes, and workforces under the same roof.
Answer: Plants within plants
Reference: Strategic Fit
Difficulty: Moderate
Keywords: plants within plants, PWP

142. When a firm splits a large factory that makes all of a firm’s products into smaller
specialized plants that each make one product, they have created _________.
Answer: focused factories or plants within plants
Reference: Strategic Fit
Difficulty: Moderate
Keywords: focused factory, plants within plants

SHORT ANSWERS

143. What are the different dimensions of customer contact in service processes? Provide an
example of a service that has high levels of customer contact and one that has very low
levels of customer contact.
Answer: The dimensions of customer contact are physical presence, what is processed,
contact intensity, personal attention, and method of delivery. Examples will vary.
Reference: Process Structure in Services
Difficulty: Moderate
Keywords: customer contact intensity, physical presence, personal attention, delivery
method, what processed

144. Describe and highlight differences among the three process structures in services.
Answer: The three process structures form a continuum and are front office, hybrid
office, and back office. The front office structure is a process with high customer contact
in which the service provider interacts directly with the customer. This process is more
complex and has considerable divergence. The back office structure is a process with low
customer contact in which the service provider interacts little with the customer. The
work tends to be standardized and routine, with line flows from one service provider to
the next with little variation. The hybrid office is a process with moderate levels of
customer contact and standard services with perhaps some options available. Work flow
progresses from one station to the next with some dominant paths apparent. Work is
reasonably complex and some customization exists in how the process is performed.
Reference: Process Structure in Services
Difficulty: Moderate
Keywords: service process structure, front office, back office, hybrid office

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145. Describe the differences among make-to-order, assemble-to-order, and make-to-stock

strategies from the producer’s and from the customer’s perspective.
Answer: A make-to-order strategy produces to customer specifications in low volumes;
typically using highly divergent job shop or batch processes that are highly flexible. This
level of customization requires a great deal of planning and control by the producer; the
customer receives exactly what has been requested which may literally be a one-of-a-
kind item. The customer must suffer through a lead time period during which the item is
being fabricated. The assemble-to-order strategy produces wide variety from relatively
few assemblies in a line or batch process. The process does not require as much
flexibility and since the subassemblies are standardized, the production planning and
supply chain management is easier for the producer. The customer again receives exactly
what is ordered (which may be precisely what was desired) and the item could be one-of-
a-kind. Again, the customer must wait for the item to be produced, but this wait tends to
be shorter than in a make-to-order system. The make-to-stock strategy allows the
producer to manufacture standardized items in high volumes based on a forecast.
Production planning and control is much simpler and inventory can be used as a buffer
for variable demand. The customer’s order is filled immediately and the product is far
from one-of-a-kind.
Reference: Process Structure in Manufacturing
Difficulty: Moderate
Keywords: process strategy, make-to-order, make-to-stock, assemble-to-order

146. Describe the appearance and use of a closeness matrix.

Answer: A closeness matrix is a table that lists each department (or operation) across the
top and down the left side of the table. At the intersection points of each pair of
departments there is a closeness factor that gives a measure of the relative importance of
each pair of centers being located together. The layout planner uses these factors in
conjunction with a block plan to assign departments to a physical location in the facility.
Reference: Layout
Difficulty: Moderate
Keywords: closeness matrix

147. List and briefly define four different basic types of manufacturing basic processes.
Answer: The four basic process types are job process, batch process, line process, and
continuous flow process. A job process creates the flexibility needed to produce a variety
of products or services in significant quantities. Customization is relatively high, and
volume for any one product or service is low. A batch process differs from the job
process with respect to volume, variety, and quantity. The primary difference is that
volumes are higher because the same or similar products or services are provided
repeatedly. A line process lies between the batch and continuous processes on the
continuum, volumes are high, and products or services are standardized. The continuous
flow process is the extreme end of high-volume, standardized production with rigid line
flows.
Reference: Process Structure in Manufacturing
Difficulty: Moderate
Keywords: batch, job, line, continuous flow

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148. Provide examples of three different processes that rely on the customer for approximately
100% of the process; about 50%; and about 0%. What unique challenges exist for
operations and supply chain managers and process designer in each one of these scenarios?
Answer: Examples will vary. Some students might argue that the process designer must
be more careful to error-proof the process that relies more heavily on the customer while
the manager takes a greater role in a process that does not rely on the customer. The
burden for training shifts from an internal to an external focus as the customer becomes a
bigger part of the production process. Students should also comment on customer buy-in
for the final product and the appropriateness of a limited number and type of processes
for customer involvement.
Reference: Customer Involvement
Difficulty: Moderate
Keywords: customer involvement

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149. Sketch and discuss the product-process matrix for manufacturing.

Answer: The product-process matrix brings together the elements of volume, product
design, and process. It synchronizes the product to be manufactured with the process.
Good manufacturing design depends first on volume, so if high customization is needed,
then volume is usually lower and vice versa. The vertical dimension of the product-
process matrix deals with divergence and flow. Combinations that are best choices are reflected
along the diagonal of the matrix.
Less customization and higher volume

I. II. III. IV.

Low Multiple Few major High volume, high
volume products, low products, standardization,
products, to moderate higher volume commodity
made to volumes products
customer
order
Process
Characteristics
I. Job process
Centralized
processes, with
flexible and
unique sequence
of tasks

II. Batch
Disconnected line process
flows, moderately
Less divergence and more line flows

repetitive work

III. Line process

Connected line,
highly repetitive
work

IV. Continuous
Continuous flows flow process

Reference: Process Structure in Manufacturing

Difficulty: Moderate
Keywords: product- process matrix, manufacturing, volume, customization, divergence,
line-flow

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150. Define economies of scope, and identify how they relate to flexible automation.
Answer: Economies of scope are the ability to produce multiple products more cheaply
in combination than separately. Flexible automation provides economies of scope by
allowing the producer to use the same productive resource to make intermediate volumes
of a range of products, resulting in a shorter payback period for the capital equipment
than if it were fixed automation.
Reference: Capital Intensity
Difficulty: Easy
Keywords: economies of scope, flexible automation

151. What is the meaning of process reengineering and how can it be applied to a major process
with which you are familiar? Be as complete as time permits.
Answer: Process reengineering is the fundamental rethinking and radical redesign of
processes to improve performance dramatically in terms of cost, quality, service, and
speed. Applications will vary.
Reference: Strategies For Change
Difficulty: Moderate
Keywords: process reengineering

PROBLEMS

152. A firm of four departments has the following trip matrix and current block plan of all departments:

Trips Between
Departments
Dept. Name A B C D
A --- 14 6 9
B --- 7 16
C --- 2
D ---

a. What is the weighted-distance score for the current layout? (Assume rectilinear distance
and that the distance between departments A and B is one unit of distance.)
b. What would be the weighted-distance score for the following layout?

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Answer:

a.
Department Closeness wd
Pair Factor Distance Score
B-D
b. 2,Department
4 16Load 2 32wd
A-B 1,Pair
2 14Factor 1 Distance 14Score
A-D
B-D 2,44
1, 9 16 11 9 16
B-C
A-B 2,1,32 7 14 12 7 28
A-C
A-D 1,1,34 69 21 129
C-D
B-C 3,2,43 27 11 2 7
A-C 1, 3 6 1 6
C-D 3, 4 2 Total
2 764

Total 70
Reference: Layout
Difficulty: moderate
Keywords: weighted-distance, rectilinear

153. A firm of six departments has the following trip matrix and current block plan of all
departments:

Closeness Factor
Dept. Name A B C D E F
A --- 7 8 9 0 2
B --- 6 3 0 10
C --- 2 12 0
D --- 3 0
E --- 6
F ---

a. What is the weighted–distance score for the current layout? (Assume rectilinear distance
and that the distance between departments A and B is one unit of distance.)

b. What would be the weighted–distance score for the following layout?

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Answer:
a.
Department Closeness Wd
Pair Factor Distance Score
C-E 3, 5 12 2 24
B-F 2, 6 10 2 20
A-D 1, 4 9 1 9
A-C 1, 3 8 2 16
A-B 1, 2 7 1 7
B-C 2, 3 6 1 6
E-F 5, 6 6 1 6
B-D 2, 4 3 2 6
D-E 4, 5 3 1 3
A-F 1, 6 2 3 6
C-D 3, 4 2 3 6

Total 109
b.
Department Closeness wd
Pair Factor Distance Score
C-E 3, 5 12 1 12
B-F 2, 6 10 1 10
A-D 1, 4 9 1 9
A-C 1, 3 8 1 8
A-B 1, 2 7 2 14
B-C 2, 3 6 1 6
E-F 5, 6 6 1 6
B-D 2, 4 3 1 3
D-E 4, 5 3 3 9
A-F 1, 6 2 3 6
C-D 3, 4 2 2 4

Total 87
Reference: Layout
Difficulty: Moderate
Keywords: weighted distance, rectilinear

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154. A department store chain is designing a layout for a new store. The store manager wants to
provide as much convenience as possible for her customers. Based on historical data, the
number of trips between departments per hour is given in the following closeness matrix. A
block plan showing a preliminary layout is also shown.

Closeness Factors (Trips per hour)

1/O 2/S 3/H 4/T 5/A 6/E

1. Office Supplies (O) --- 40 100 50 20 10

2. Sporting Goods (S) --- 100 80 60 80
3. Hardware (H) --- 70 100 50
4. Toys (T) --- 70 90
5. Automotive (A) --- 60
6. Electronics (E) ---

1. OFFICE SUPPLIES 2. SPORTING GOODS 3. HARDWARE

4. TOYS 5. AUTOMOTIVE 6. ELECTRONICS

Customer travel between departments is restricted to the aisles shown in the block plan as dotted
lines.

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CALCULATIONS TABLE:
Dept. Pair Closeness Original Revision #1
Factor (w) Distance (dO) w  dO Distance (d1) w  d1
1–2
1–3
1–4
1–5
1–6
2–3
2–4
2–5
2–6
3–4
3–5
3–6
4–5
4–6
5–6
TOTAL
a. What is the total expected weighted-distance score between Office Supplies and Hardware?
b. What is the total weighted-distance score between Hardware and Toys?
c. What is the total weighted-distance score for the entire store?
d. A suggestion has been made to switch Hardware and Automotive. What would the total
weighted-distance score for the entire store if these two departments were switched?
e. Based on your calculations, would you recommend that Hardware and Toys be switched?
Answers:
COMPLETED CALCULATIONS TABLE:
Dept. Pair Closeness Original Revision #1
Factor (w) Distance (dO) w  dO Distance (d1) w  d1
1–2 40 1 40 1 40
1–3 100 2 200 2 200
1–4 50 1 50 1 50
1–5 20 2 40 2 40
1–6 10 3 30 3 30
2–3 100 1 100 1 100
2–4 80 2 160 2 160
2–5 60 1 60 1 60
2–6 80 2 160 2 160
3–4 70 3 210 1 70
3–5 100 2 200 2 200
3–6 50 1 50 1 50
4–5 70 1 70 3 210
4–6 90 2 180 2 180
5–6 60 1 60 1 60
TOTAL N/A 25 1610 25 1610
a. The weighted-distance score between Office Supplies and Hardware (#1 and #3) is two
distance lengths (see block plan) times the # of trips per hour.

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(2 distance lengths)(100 trips per hour) = weighted-distance score of 200

b. The weighted-distance score between Hardware and Toys (#3 and #4) is three distance
lengths (see block plan) times the # of trips per hour.

(3 distance lengths)(70 trips per hour) = weighted-distance score of 210

c. The total weighted-distance score for the entire store is (see completed calculation table
above) = 1,610.

d. Switching Hardware and Automotive results in the same total weighted-distance score
for the entire store as the original layout (see completed calculation table, Revision #1):
1,610.

e. The travel distances are the same, so the switch of Hardware and Automotive should not
be made.

Reference: Layout
Difficulty: Moderate
Keywords: process layout, block plan, closeness matrix, distance traveled

155. Two manufacturing processes are being considered for making a new product. Process #1 is
less capital intensive, with fixed costs of $50,000 per year and variable costs of $700 per
unit. Process #2 has fixed costs of $400,000 annually, with variable costs of $200 per unit.

a. What is the break-even quantity for the two processes?

b. If annual sales are expected to be 600 units, which process should be selected?
c. If lowest overall costs per year is your overall objective, for what range of annual
production quantities should you select the first process? the second process?
d. Operations and Engineering have found a way to reduce the cost of the second process,
such that the fixed costs for this process decrease from $400,000 to $300,000 annually.
All other costs remain the same (1 st process fixed = $50,000 / year, 1 st process variable =
$700 / unit, 2nd process variable = $200 / unit). What is the new break even quantity
between the two processes?
e. Does this change the process selection for the annual sales volume of 600 units? If so, for
what range of annual production quantities should you select the first process? the second
process?

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Answers:

i)$50,000 + $700(Q) = $400,000 +$ 200(Q)

$500(Q) = $350,000 => Q = 700 units per year

ii) Process #1: $50,000 + $700(600) = $470,000

Process #2: $400,000 + $200(600) = $520,000

Process #1 should be selected, since it will save $50,000 compared to Process #2

at an annual volume of 600 units.

iii) In part b, we have seen that Process #1 is the better choice at volumes below the
break even quantity of 700 units per year. Therefore,

Process #1 should be selected for volumes from 0 – 700 units per year;
Process #2 should be selected for volumes of 700 or more units per year.

iv) $50,000 + $700(Q) = $300,000 +$ 200(Q)

$500(Q) = $250,000 => Q = 500 units per year

v) In this case,

Process #1: $50,000 + $700(600) = $470,000

Process #2: $300,000 + $200(600) = $420,000

Process #2 should be selected, since it will now save $50,000 compared to

Process #1 at an annual volume of 600 units.

Process #1 should be selected for volumes from 0 – 500 units per year;
Process #2 should be selected for volumes of 500 or more units per year.

Reference: Capital Intensity

Difficulty: Easy
Keywords: general-purpose equipment, special-purpose equipment, break even
quantity, total cost, low-cost option

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