Professor Dongwook Shin Fall 2022

ISOM2700 Operations Management

Practice Questions Set #1

1. The Travelers Insurance Company can process 10,000 claims per year. The average processing time of a claim is
3 weeks. Assuming 50 weeks in a year, what is the average number of claims that is in process?

2. Hoosier Manufacturing operates a production shop that is designed to have the lowest unit production cost at an
output rate of 100 units per hour. In the month of July, the company operated the production line for a total of 175
hours and produced 16,900 units of output. What was its capacity utilization rate for the month?
 ISOM2700 Practice Questions Set 1: Process Analysis

3. (Bottleneck analysis) This is the flowchart of an underwriting process in an insurance company. A clerk takes 30
minutes to review and distribute a request. An underwriter takes 40 minutes to evaluate and a rater takes 48 minutes
to rate the request. Finally, a writer needs 50 minutes to finalize the policy with the customer. Can this process have
a bottleneck? If so, which activity could be the bottleneck? (Hint: The job requests break up into two types of flows;
successful and rejected requests. Hence, the flow rate can be different for different activities.)

What if only 50% of the applications are rejected by the customers (instead of the current 80%)?

Job
Review and Policy
Underwriting Rating
(quotation) distribution writing
20%
requests
6 clerks 4 underwriters 5 raters 2 writers
80%

Rejected by
the customers

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 ISOM2700 Practice Questions Set 1: Process Analysis

4. Consider the following sequential operating system. In each activity, each worker is in charge of one unit of the
product. The resources and processing times for each activity are given below:

Activity 1 Activity 2 Activity 3

Resources: 2 worker A 1 worker B 4 worker C

Processing time: 12 min/unit 5 min/unit 15 min/unit

(1) Which resource is the bottleneck? What’s the capacity of the process?

(2) Suppose the process operates at its full capacity. What’s the average work-in-process inventory level?

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 ISOM2700 Practice Questions Set 1: Process Analysis

5. (Advanced Problem: Little’s law) Mt. Kinley is a strategy consulting firm that divides its consultants into three
classes: associates, managers, and partners. The firm has been stable in size for the last 20 years, ignoring growth
opportunities in the 90s, but also not suffering from a need to downsize in the recession at the beginning of the 21st
century. Specifically, there have been – and are expected to be – 200 associates, 60 managers, and 20 partners.

The work environment at Mt. Kinley is rather competitive. After four years of working as an associate, a consultant
goes “either up or out”; that is, becomes a manager or is dismissed from the company. Similarly, after six years, a
manager either becomes a partner or is dismissed. The company recruits MBAs as associate consultants; no hires are
made at the manager or partner level. A partner stays with the company for another 10 years (a total of 20 years with
the company).

a. How many new MBA graduates does Mt. Kinley have to hire every year?

b. What is the probability that a new MBA at Mt. Kinley will become partner?

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 ISOM2700 Practice Questions Set 1: Process Analysis

6. (Advanced Problem: Little’s Law) The ISOM Dept at HKUST has professors at three ranks: Assistant Professor,
Associate Professor, and Full Professor.

Assistant professors are hired from graduate schools. 40% of assistant professors leave in an average of 3 years.
The remaining 60% are evaluated for tenure after 6.5 (from the time they start at HKUST) and 35% of them get
tenure and promoted to associate professor. Those failing to get tenure leave HKUST. In an average year, the ISOM
department hires 2.5 assistant professors.

Over the last several years, the ISOM department has had an average of 7 associate professors. In addition to those
who started at HKUST, this total includes “external hires” who began their careers at other universities. On average,
the ISOM department hires one external hire at the associate level every four years. 70% of associate professors
(whether developed internally or hired from the outside) are ultimately promoted to full professor. In addition, the
department hires some senior scholars at the full professor level. Over the last several years, the ISOM department
has had an average of 12 full professors. The average full professor remains at the department for 20 years from the
time they are promoted to full or hired from the outside. The flow of faculty through the ranks is shown below:

External External
Hires Hires

Assistant Associate Full Prof.

Tenure Promotion
Prof. Prof.
Review Review

Leaving Denied Leaving

before Tenure before
Tenure Promotion

a. On average, how many professors are there in the ISOM department across all ranks?

b. How many “new professors” are hired by the department in an average year?