OM 5 5th Edition Collier Solutions

Manual
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OM5 Chapter 8: Facility and Work Design

Discussion Questions
1. Discuss the type of facility layout that would be most appropriate for:

a. printing books---Product layout

b. performing hospital laboratory tests---Process layout or cellular
c. manufacturing home furniture---Process layout.
d. a hospital---Process layout
e. a photography studio---Product layout
f. a library---Process layout

2. Describe the layout of a typical fast-food franchise such as McDonald’s. What type of
layout is it? How does it support productivity? Do different franchises (e.g., Burger
King or Wendy’s) have different types of layouts? Why?

Students should be encouraged to visit these and look closely at the kitchen areas.
McDonald’s is basically a process layout, while others bear closer similarity to product
layouts, but are still basically process layouts. Students may argue McDonald’s has
characteristics of both product and process layouts, and therefore, is a hybrid. This
argument is valid. You can also tie in the concept of the servicescape and other
service management ideas in Chapter 6 if you have previously covered it. Note that
the items being processed are people, physical goods, and information. One key point
is that process design and flow should be integrated with facility design and layout!

3. How might sustainability issues be incorporated into the design of facilities and
workplaces? Provide examples and explain your reasoning.

The sports stadium box in OM3 C8 on “Play Ball and Save the Planet,” is a good
example of what is expected here. Undergraduate students will focus on what they
know about such as restaurants, hotels, retail stores, universities, airlines, parks,
beaches, utilities, and so on. Make sure you ask questions so students see how OM
relates to sustainability. Exhibit 1.6 in Chapter 1 is a good place to begin (frame) this
discussion as follows:

Exhibit 1.6 Examples of Sustainability Practices

Environmental Sustainability
• Waste management: Reduce waste and manage recycling efforts
• Energy optimization: Reduce consumption during peak energy demand times
• Transportation optimization: Design efficient vehicles and routes to save fuel
• Technology upgrades: Improvements to save energy and clean and reuse water in
manufacturing processes
• Air quality: Reduce greenhouse gas emissions
• Sustainable product design: Design goods whose parts can be recycled or safely
disposed of

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Social Sustainability
• Product safety: Ensure consumer safety in using goods and services
• Workforce health and safety: Ensure a healthy and safe work environment
• Ethics and governance: Ensure compliance with legal and regulatory requirements
and transparency in management decisions
• Community: Improve the quality of life through industry-community partnerships

Economic Sustainability
• Performance excellence: Build a high-performing organization with a capable
leadership and workforce
• Financial management: Make sound financial plans to ensure long-term
organizational survival
• Resource management: Acquire and manage all resources effectively and
efficiently
• Emergency preparedness: Have plans in place for business, environmental, and
social emergencies.

4. Describe the ergonomic features in the automobile that you drive most often. If it is an
older model, visit a new-car showroom and contrast those features with those found in
some newer models.

Automotive designers pay much attention to ergonomics, such as placement of

controls and cup holders, ability to reach them safely and comfortably, and the ability
to see them without being distracted. The BMW interface wheel (albeit a bit dated)
caused a lot of controversy when it was introduced, and you might suggest that
students search for articles or reviews that discuss it. Today’s “heads up” displays that
project information onto the windshield is an example of ergonomic design. Other
topics that enter this class discussion are location of controls, cubic space, line of sight,
size of the people, safety, etc. Cell phone use in vehicles is a hot topic today with
voice-activated controls becoming more available. Most auto enthusiast magazines
have reviews of cars and address these issues (while not formally calling them
“ergonomics”).

5. What do you think of Cargill Kitchen Solutions’ 20-minute job rotation approach?
Would you want to work in such an environment, or one in which you performed the
same tasks all day. Why?

Most students will feel that the approach is a great idea because it provides more
interesting work and cross-training. Few people today are happy with doing a
monotonous task all day. This question can be used to introduce a class discussion of
job design, job enlargement, and job enrichment, all topics in this chapter.

As the text describes: “Two broad objectives must be satisfied in job design. One is to
meet the firm’s competitive priorities—cost, efficiency, flexibility, quality, and so on;
the other is to make the job safe, satisfying, and motivating for the worker. Resolving

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conflicts between the need for technical and economic efficiency and the need for
employee satisfaction is the challenge that faces operations managers in designing
jobs. Clearly, efficiency improvements are needed to keep a firm competitive.
However, it is also clear that any organization with a large percentage of dissatisfied
employees cannot be competitive.”

Cargill is an excellent example of trying to reconcile these two broad objectives using
job enlargement and rotation.

Problems and Activities

1. Research and write a short report (maximum of two typed pages) on green facility
design making sure that you incorporate some of the key topics in this chapter.

Students will have no trouble finding “green facility design” issues and examples via
an Internet search such as the US Green Building Council (www.usgbc.org), Siemens
(www.seimens.com/answers), and The Kresge Foundation (www.kresge.org). Make
sure the students focus on facility design, layout, how to group work (i.e., ALB),
energy, lighting, CO2 emissions, recycling, waste, workplace and station design, job
enlargement and practices, service encounters, safety, pollution, ergonomics, water,
and so on in both goods-producing and service-providing organizations. If students
present or briefly discuss in class what they found make sure you explore issue(s)
such as: How are processes and facility design and layout integrated? Does facility
design enhance the customer experience and/or production efficiency? What are the
economics of the green design? What type of sustainability is it – economic, social or
environmental?

2. Research and write a short paper illustrating how an organization uses one of the
following types of facility layouts:
• Product layout
• Process layout
• Cellular layout
• Fixed position layout

If you Google any of these types of layouts you get millions of hits. The challenge
for students is to find an example of how a real company uses the layout. For
example, cellular layout reduces part movement, set-up time, and wait time between
operations, resulting in a reduction of work in progress inventory and freeing idle
capital that can be better utilized elsewhere. Most immediately, processes become
more balanced and productivity increases because the manufacturing floor has been
reorganized and tidied up. The results are cost savings and the better control of
operations. The following link, for example, provides an interesting story w/r to a
firm using cellular layouts.

http://www.massmac.org/newsline/0709/article05.htm

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3. Visit a manufacturer or service organization and critique their facility design. What
are the advantages and disadvantages? How does the layout affect process flows,
customer service, efficiency, and cost? Describe the basic types of materials-handling
systems commonly used in manufacturing.

This activity gives students a chance to see the application of OM. They might
uncover some obvious improvements after examining the facilities in the context of
the text material. One objective of this question is for students to understand the
complimentary relationship between the type of layout and type of process.

4. Bass Fishing, Inc. assembles fishing nets with aluminum handles in an assembly line
using four workstations. Management wants an output rate of 250 nets per day using
a 7.5 hour work day. The sum of the task times is 5.75 minutes/net.

a. What is the cycle time?

Equation 8.2 is C = A/R or C = (7.5 hours/day)(60 minutes/1 hour)/[(250 nets/day] = 450

min/day/250 nets/day = 1.8 min/net.

b. What is assembly-line efficiency?

Equation 8.6 is Assembly Line Efficiency =  t/ (N*CT) = 5.75/(4*1.8) = 79.9%

c. What is total idle time?

Equation 8.5 is Total Idle Time = N*CT -  t = 4(1.8) – 5.75 = 1.45 min. Bass
Fishing is paying 1.45 minutes for idle time out of every 7.2 minutes to produce
one net. This is not so efficient and the work content should be redefined and
better assembly line work balances found. AB efficiency and total idle time are
directly related to cost per unit.

5. Peter’s Paper Clips uses a three-stage production process: cutting wire to prescribed
lengths, inner bending, and outer bending. The cutting process can produce at a rate
of 200 pieces per minute; inner bending, 160 pieces per minute; and outer bending,
150 pieces per minute. Determine the hourly capacity of each process stage and the
number of machines needed to meet an output rate of 20,000 units per hour. How
does facility layout impact your numerical analysis and process efficiency? Explain.

Cutting: 200/min (60 min/hour) = 12,000/hour; 20,000/12,000 = 1.67. Need to round

up to 2 machines to ensure meeting the required output rate.
Inner bending: 160/min (60) = 9600/hour; 20,000/9600 = 2.08. Need 3 machines.
Outer bending: 170/min (60) = 10,200/hour; 20,000/10,200 = 1.96. Need 2 machines.

A few questions for class discussion include: Do we have enough space for these
machines? How should the machines be configured? Would a product, process, or
cellular layout work best? For each layout option, how many times to we handle the

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wire? Do we minimize the distance travelled for this three-stage wire cutting
process?

6. An assembly line with 30 activities is to be balanced. The total amount of time to

complete all 30 activities is 48 minutes. The longest activity takes 3.6 minutes and the
shortest takes .3 minutes. The line will operate for 480 minutes per day.

a. What are the maximum and minimum cycle times?

Maximum cycle time = 48 minutes; minimum cycle time = 3.6 minutes.

b. How much daily output will be achieved by each of those cycle times?

Using Equation 8.2, C = 480/48 = 10 units/day; C = 480/3.6 = 133.33 units/day

Make sure students understand how to get the proper “units per day.” That is,
they must get the numerator and denominator in the correct and same units of
measure before they do the computation.

7. In Problem 6, suppose the line is balanced using 12 workstations and a finished

product can be produced every 4.5 minutes.

a. What is the production rate in units per day?

Using Equation 8.2, CT = A/R or 4.5 = 480/R or R = 106.7 units/day

b. What is the assembly line efficiency?

Using Equation 8.6, Efficiency = 48/[4.5(12)] = 88.89 percent efficiency.

8. A small assembly line for the assembly of power steering pumps needs to be
balanced. Exhibit 8.11 is the precedence diagram for problems #8 and #9. The cycle
time is determined to be 1.5 minutes. How would the line be balanced by choosing
the assignable task having the longest task time first?

Longest (largest) processing time first rule?

Station Tasks Total time Idle Time

1 B,A,C,D 1.5 0.0
2 E,F 1.2 0.3
3 G,H,I 1.5 0.0
Total 4.2 0.3

Using Equation 8.6, Efficiency = 4.2/[1.5(3)] = 93.3%

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9. For the assembly line described in Problem 8, how would the line be balanced by
choosing the assignable task having the shortest task time first?

Exhibit 8.11 is the precedence diagram for problems #8 and #9.

Shortest (smallest) processing time rule?

Station Tasks Total time Idle Time

1 A,D,F,G 1.4 0.1
2 B,C 0.9 0.6
3 E,H 1.4 0.1
4 I 0.5 1.0
Total 4.2 1.8

Using Equation 8.6, Efficiency = 4.2/[1.5(4)] = 70.0%.

The conclusion is that the assembly line balancing rule does make a difference in line
balancing solutions and therefore, must be carefully chosen and monitored. The idea is
to strictly follow the ALB rule like a computer would do it. This is an important point to
make to students and why we work this type of problem. Large assembly line balancing
problems also used more complex heuristic rules and simulation to test out alternative
line balances.

10. For the in-line skate assembly example in this chapter, suppose the times for the
individual operations are as follows:
Task Time (sec.)
1 20
2 10
3 30
4 10
5 30
6 20
7 10
8 20

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Assume that inspections cannot be performed by production personnel, but only by

persons from quality control. Therefore, assembly operations are separated into three
groups for inspection. Design a production line to achieve an output rate of 120 per hour
and 90 per hour.
There is no one correct answer. A suggested solution is to group operations having a CT
of 30 seconds or less (120/hour): tasks 1 and 2 (30 sec); task 3 (30 sec); task 5 (30 sec);
tasks 4 and 6 (30 sec); tasks 7 and 8 (30 sec). A proposed design would then be:

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1&2 3 7&8

4&6

The line would be perfectly balanced (100% efficient).

Station Tasks Total time Idle Time

A 1 and 2 30 sec. 0.0
B 3 30 0.0
C 4 and 6 30 0.0
D 5 30 0.0
E 7 and 8 30 0.0
Total 150 0.0

Using Equation 8.6, Efficiency = 150/[30(5)] = 100.0%

11. For the in-line skate example described in Problem 10, design a production line to
achieve an output rate of 90 per hour.

For 90 parts/hour, each station needs to have a work content of 40 sec. or less. A
configuration is shown below. There would be a lack of work delay before tasks 4
and 5, and flow blocking delay before tasks 6 and 7, and before task 8.

1&2 3 4&5 6&7 8

Station Tasks Total time Idle Time

A 1 and 2 30 sec. 10.0
B 3 30 10.0
C 4 and 5 40 0.0
D 6 and 7 30 10.0
E 8 20 20.0
Total 150 50.0

Using Equation 8.6, Efficiency = 150/[40(5)] = 75.0%

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12. You have been asked to set up an assembly line to assemble a computer mouse. The
precedence network is shown in Exhibit 8.12; task times in minutes are given in
parentheses. There are 480 minutes of assembly time per shift and the company
operates one shift each day. The required output rate is forecasted to be 60 units per
shift.

Exhibit 8.12 Precedence Network for Problem 12

a. Balance the assembly line using the longest processing time rule. State the tasks
associated with each workstation, total time, and idle time.

Work Station Assigned Tasks Total Time Idle Time

A 2, 4, 3
B 1, 6 (or 7 tie)
C 5
D 7 (or 6)
E 8
F
8 minutes 0 minutes
7 1
6 2
3 5
8 0

You need to know the cycle time first so C = A/R = (480 min/shift)/(60 units/shift) = 8
min/unit. The sum of the task times is 32 minutes. See the table for a solution strictly
following the longest processing time rule.

(b) What is the assembly line efficiency?

Equation 8.6 is Assembly Line Efficiency =  t/ (N*CT) = 32 minutes/(5*8.0) =
80.0%

(c) Is your assembly line balance solution good or bad? What criteria do you used
to make this assessment? Explain.

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Equation 8.5 is Total Idle Time = N*CT -  t = 5(8.0) - 32 = 8 min. The firm is
paying for 8 minutes of idle time out of every 40 minutes so this is not a good (just
fair) balance. Also, since the idle time per work station varies greatly (i.e., from
zero at station A and E to 5 minutes at station D, it is not a very good balance and
solution. The potential for a bottleneck to happen at work stations A and E is
greatest. We should redefine the work content into more tasks (say 15 to 20
instead of 8) and try to regroup the work better and increase efficiency.

13. Balance the assembly line in Exhibit 8.13 for (a) a shift output of 60 pieces and (b)
a shift output of 40 pieces. Assume an eight-hour shift, and use the rule: choose the
assignable task with the longest processing time. Compute the line efficiency for
each case.

For an output of 60 pieces/shift, cycle time = 8(60)/60 = 8 minutes/unit. You

need to go over the cycle time calculation carefully.

Work station Tasks Total Time Idle Time

1 a, b 8 0
2 e, c, d 7 1
3 g 7 1
4 f 6 2
5 i 6 2
6 h, k 8 0
7 j 4 4
Total 46 10

Using Equation 8.6, Efficiency = 46/[7(8)] = 82.1% The idea is to strictly

follow the ALB rule like a computer would do it. Students may also ask about
the two ending tasks and one explanation is the assembly line is producing a
subassembly where J and K are end items that are not yet put together (might
be shipped separately and then used in final assembly).

For a shift output of 40 pieces, cycle time (C) = 8(60)/40 = 12 minutes/unit

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Work Station Tasks Total Time Idle Time

1 a, b, e 12 0
2 d, g, c 10 2
3 f, i 12 0
4 h, j, k 12 0
Total 46 2

Using Equation 8.6, Efficiency = 46/[4(12)] = 95.8%

The two ending tasks J and K could represent parts of a subassembly that are
unfinished and ready to be shipped to manufacturer.

14. List the ergonomic features of your automobile’s interior and discuss any
improvements that you can identify.

Height, width, seat comfort, visibility, headrests, cup holders, space, steering wheel,
etc.

If you Google “ergonomic automobiles” you get almost 3 million hits such as
below:
http://www.ccohs.ca/oshanswers/ergonomics/driving.html

Automotive designers pay much attention to ergonomics, such as placement of

controls and cup holders, ability to reach them safely and comfortably, and the
ability to see them without being distracted. The BMW interface wheel (albeit a bit
dated) caused a lot of controversy when it was introduced, and you might suggest
that students search for articles or reviews that discuss it. Today’s “heads up”
displays that project information onto the windshield is an example of ergonomic
design. Other topics that enter this class discussion are location of controls, cubic
space, line of sight, size of the people, safety, etc. Cell phone use in vehicles is a
hot topic today with voice-activated controls becoming more available. Most auto
enthusiast magazines have reviews of cars and address these issues (while not
formally calling them “ergonomics”).

15. Research and write a short paper (1 page maximum) on the advantages and
disadvantages of virtual teams in today’s digital environment.

One of the major trends in business is a move toward virtual workplaces. In

situations where this is not in place or not appropriate, virtual teams can be utilized
within a more traditional workplace.

In a virtual team, members are dispersed, either geographically or

organizationally with their primary communications through electronic means
(versus face-to-face). Team membership is also more likely to change over time
than with traditional single-location teams.

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Advantages of a virtual team

• Saves time and travel expenses

• Eliminates moving expenses
• Provides access to experts
• Greater flexibility in team membership
• Less cost to use outside consultants
• Easier to hire and retain team members
• Better accommodation to team members personal & professional lives
• Dynamic team membership
• Allows assignment to multiple teams simultaneously
• Provides faster response to market demands
• See also virtual workplace advantages

Disadvantages of a virtual team

• Lack of physical interaction

• Loss of face-to-face synergies
• Lack of trust
• Greater concern with predictability and reliability
• Lack of social interaction
• See also virtual workplaces disadvantages

Reference: Cascio, Wayne F. (2000, August). Managing a Virtual Workplace.

Academy of Management Executive. pp. 81-90.

Case Teaching Notes: BankUSA Cash Movement

Overview

The case describes a department in the investment and trust operations area of a major
bank that processes “information-intensive transactions (wires).” Notice the ALB
problem is described for a service industry. The wires are initiated by a paper-based
process. The case analysis requires a blend of numerical analysis as well as qualitative
analysis. Some of the issues in the case encourage a vigorous class discussion such as
(a) the best level of detail in defining work tasks for assembly line balancing in a
service business, (b) control and the cost of failure versus higher process efficiency,
(c) labor savings (costing out) due to more efficient balances, and (d) how to handle
high dollar amount wires. The case focuses on outgoing wires only. Cycle time
computations are included in the case to clarify this computation for the students.
With these example computations their “what if” computations are normally accurate!
This is a good case for a major team case write-up and management report. Students

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should work numerous ALB problems and master this topic before they try to analyze
the case.

Case Questions and Brief Answers

1. What is the best way to group the work represented by the 16 work groups for an
average demand of 306 outgoing wires per day? What is your line balance if peak
demand is 450 wires per day? What is assembly-line efficiency for each line
balance solution?

How to group work tasks most efficiently is best done with assembly line
balancing methods. Please note that this process is best described as having
dominant line flows (i.e., a flow shop) with considerable customization per
transaction (widget). The high volumes and fair degree of customization per
financial transaction resembles the idea of mass customization. Case Exhibit 8.13
gives us enough information to do assembly line balancing. Students should work
line balancing problems before they are assigned this case. Please note that the
line balancing solutions are for the outgoing wire process only. At the line
balancing level of analysis we should examine the job design of every task in the
process. Line balancing is a very effective and powerful method to reduce unit
costs as long as the volume is high and stable, and the transaction is somewhat
standardized.
The cycle time at 306 wires/day is 1.47 min/wire as shown in the case. At about
150% of average demand, the cycle time in Equation 8.2 is C = A/R or C = 1/[(306
wires/day*1.5)(1/7.5 hours/day)(1 hr./60 minutes)] = 1/1.02 = 0.98 min/wire ≈ 1
min./wire. This assumes demand is 150% of average demand or 457
wires/workday or about 450. We use the 450 as peak demand in the case. The line
balance below assumes an output rate of 457 wires/day or a cycle time of about 1.0
minutes/wire. (You may want to work out these cycle time computations and
assumptions in class prior to them doing the case analysis.)
You may also want to explain to students that if demand is greater than 457
wires/day, you have to redefine the work and break the 16 steps and times into
more steps and smaller task times; then do line balancing. The resulting line
balance with C = 1.0 min/wire for a peak demand of 457 wires/day is as follows:

Work Station Tasks Total Time Idle Time

1 1 0.8 0.20
2 2 0.3 0.70
3 3, 4 0.9 0.10
4 5 1.0 0.00
5 6, 7, 8 0.9 0.10
6 9 1.0 0.00
7 10, 11, 12, 13 1.0 0.00
8 14, 15 0.4 0.60

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9 16 .75 0.25
Total 7.05 min. 1.95 min.

Total Time Available = (Number work stations)(Cycle Time) = N*CT = 9(1) =

9.0 min (Equation 8.4)

Total Idle Time = N*CT -  t = 9(1) - 7.05 = 1.95 min. (8.5)

Assembly Line Efficiency =  t/ (N*CT) = 7.05/(9*1) = 78.33%

(8.6)

Balance Delay = 1 - Assembly Line Efficiency = 1.0 - .7833 = .2167 or

21.67% (8.7)

Therefore, by grouping work using assembly line balancing you need 9 people,
not 11 as currently assigned. The annual labor savings is (2
employee)($30,000)(1.30) = $78,000.
The resulting line balance with C = 1.47 min/wire (306 wires/day) is as
follows:
Work Station Tasks Total Time Idle Time
1 1, 2 1.1 0.37
2 3, 4 0.9 0.57
3 5, 6, 7 1.4 0.07
4 8 0.5 0.97
5 9, 10, 11, 12 1.25 0.22
6 13, 14, 15 1.15 0.32
7 16 0.75 0.72
Total 7.05 min. 3.24 min.

Total Time Available = (# work stations)(Cycle Time) = N*CT = 7(1.47) =

10.29 min (8.4)

Total Idle Time = N*CT -  t = 7(1.47) - 7.05 = 3.24 min.

(8.5)

Assembly Line Efficiency =  t/ (N*CT) = 7.05/(7*1.47) = 68.85% (8.6)

Balance Delay = 1 - Assembly Line Efficiency = 1.0 - .6885 = .3115 or

31.15% (8.7)

2. How many people are needed for outgoing wires using assembly line balancing
methods versus the current staffing level of 11 full-time equivalent employees?

Therefore, by grouping work using assembly line balancing, you need 7

people, not 11 as currently assigned if you plan for average demand of 306

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wires/day. Here, the annual labor savings is (4 employee)($30,000)(1.30) =

$156,000. The question is whether the risk of going to 7 employees is worth it;
given the necessity for control and the high cost of failure—going to 9
employees seems more reasonable.
Many other "what if" scenarios are possible and left to the discretion of the
instructor. For example, you could ask what if we worked 20% faster or 20%
slower and change standard task times accordingly? The 20% faster standard
times could be due to continuous improvement initiatives while the 20%
slower stand times could be due to everyone ignoring the standards (which
happen often).
Eliminating the 3 rework tasks is working smarter and taking non-value added
tasks out of the process. Eliminating rework saves two or three full-time
employees (FTE) depending on how much safety capacity you want in the
process. Several "what if" line balancing solutions for outgoing wires are
summarized below.

Process Cycle No. No.

Standard Output Time Work- Direct Idle
Seven Scenarios Time/Wire Rate* (min) Stations People Time

(1) Peak Demand 7.05 min 450 1.00 9 9 1.95

(2) +20% Inc. Std Times 8.46 min 450 1.00 12 14 3.14
(3) -20% Dec. Std Times 5.67 min 450 1.00 7 7 1.33
(4) Drop 3 Rework Steps 6.15 min 450 1.00 8 8 1.85
(5) Average Demand 7.05 min 306 1.47 7 7
3.24
(6) Demand Inc. 50% 7.05 min 457 0.98 10 12
2.71

*An output rate of 450 wires per day assumes 7.5 hours/day times 60
minutes/hour. Hence, the cycle time is 1.0 minute/wire (Cycle Time =
1/Output Rate).

In the spirit of continuous improvement, a 20 percent decrease in standard

times (that is total time = 5.67 min/wire) results in higher process efficiencies,
better grouping of tasks, and requires only 7 people, not the current 11.

3. How many staff members do you need for the outgoing wire process if you
eliminate all rework?

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The next line balancing “what if” scenario assumes you eliminate the three rework
areas. If this can be done, you need only 8 people instead of the original 9 people
in the base case. These first four scenarios assume an output rate of 450 wires per
day and a cycle time of one minute per wire.
A few of the conclusions from these analyses are as follows:

a) Either a 20 percent decrease in standard times or staffing to meet the average

demand of 306 wires/day would require 7 associates for the outgoing wire process,
not 11. This is a labor savings of $156,000 ($30,000*4*1.3).

b) A 20 percent increase in standard times has severe consequences, requiring 12

workstations and 14 associates, given that all other variables remain the same. In
this scenario, cost per wire would increase dramatically. One lesson here is that
standard times must be carefully managed and not allowed to drift upward.

c) Eliminating rework at three steps in the process would allow the reduction of one
associate compared to the base case and a savings of $39,000. So rework does
costs money and reduces efficiency!

4. What are your final recommendations?

The student must decide on the best line balance given their assumptions. Please note
that students at times will make assumptions that place their solution beyond the
bounds of the actual case facts, and you must grade accordingly.

Another issue in the case is “how to handle high dollar wire customers?” The case
provides no data to help make this decision but does define the problem. At the time
of the case, no real data existed to help make this decision. Preliminary initiatives to
help analyze this issue include:

a) Do an ABC analysis on dollars per wire versus customer category. Who are the
high-dollar wire A customers? These data will also help set a high dollar wire
cut-off dollar value.
b) Do a well-designed Pareto cause and effect analysis on who causes what types of
problems (other banks, the BankUSA departments, customers, Federal Reserve
system, etc.).
c) Another related idea is to evaluate the advantages and disadvantages of sending
high dollar wire customers a "confirmation" that once the wire is successfully
completed, to enhance customer service and relieve customer anxiety. For
example, by sending the confirmation for wires over say $100,000, Cash
Movement sets customers expectations. What if the high dollar wire customer
now asks for this premium service on all wires they initiate?
d) High dollar wire volumes may be large enough to justify a separate dedicated
high wire process. If this topic comes up in class ask the class (a) Do we need
duplicate equipment for a new dedicated high wire process? (b) What dollar

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amount and decision rule would you use here? Greater $10,000, $50,000, etc. (c)
How would you determine such a decision rule?

Other questions you may or may not want to cover include:

(1) Could you balance the assembly line using the 47 more detailed work tasks
(mentioned but not provided in the case)? What is the best level of detail for
grouping work? 47 versus 16?
(2) How would you estimate the standard times? (work measurement)
(3) Should Cash Movement set up a separate process for high dollar wires? What
information do we need to make this decision? What else could Cash Movement
do to provide superior service to high dollar wire customers?
(4) How should wires be processed and sequenced? What type of information do you
need to make this decision?
(5) How would you handle the tradeoff between “control and no mistakes” versus
“risk and cost of failure” versus the “cost of labor resources and assembly line
efficiency?” What are the economic, customer service, and managerial tradeoffs?

Teaching Plan

1. What is the best way to group the work represented by the 16 work groups for an
average demand of 306 outgoing wires per day? What is your line balance if peak
demand is 450 wires per day? What is assembly-line efficiency for each line
balance solution?
2. How many people are needed for outgoing wires using assembly line balancing
methods versus the current staffing level of 11 full-time equivalent employees?
3. How many staff members do you need for the outgoing wire process if you
eliminate all rework?
4. (see other possible questions)What are your final recommendations?

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