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UBC FT MBA Core 2010

Supply Chain Management Homework 1
Tom McCormick
Due: Tuesday, 12 October 2010, 8:30am

You are required to do this homework individually, and you are required to submit it electronically
to turnitin.com and on paper to the drop box by the due date to get credit for the homework.
Important: please DO NOT copy the text of the questions into your answers that you submit to
turnitin.com to avoid confusing it. Note that the questions on this homework are somewhat
harder than the questions on the final exam will be (since you have more time to do the homework).
Each question is worth 10 marks.

1. In class we talked about types of processes, and we used “job shop” and “assembly line” to
stand for types of processes more at one end of the spectrum than the other. For each of the
following processes, based on your experience say whether an appropriate process is likely to
be more like a job shop or more like an assembly line, and write a short (at most one
paragraph) justification for your choice.
a. The process of creating new advertising campaigns at an advertising agency.
b. In a call center (which handles customer service calls) of a large company, the process
of updating the call-handling software on each Customer Service Representative’s work
station to a new version.
c. The process of handling mortgage applications at a bank between the time that a
customer fills out the application, and the time the customer is informed of the decision
as to whether their application was approved or not.
d. The process of hiring new staff for a call center.
e. The process of re-stocking the shelves of a supermarket after its overnight deliveries.

2. Flow analysis:

a. A fast-food restaurant is open for 20 hours each day, and serves 2,500 customers per
day on average. The average customer spends about 48 minutes at the restaurant.
When averaged over a day, about how many customers are in the restaurant at any given
time (eating, waiting to order, or waiting for their food)?

b. A bank processes 3,000 mortgage applications per year. The bank is open for 50 weeks
of the year, and the bank has about 120 applications in the process at any given time.
What is the average time in weeks between when an application is submitted and when
it is decided?

c. At one time BC Packers processed $600M of salmon per year. The cost of processing
the salmon is $200M per year. Average inventory of salmon is $80M (the value of
inventory includes both raw material and processing cost). What is the average time
that a dollar of working capital is tied up in the process? That is, what is the average
time between when a dollar enters the process (as either raw material or as processing
cost) and when it leaves in the form of finished goods?
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3. Let’s think about where quality might fit into the Operations Triangle. Recall that the three
corners of the triangle are labelled “inventory”, “information (lack of variability)”, and “excess
capacity”, and that each corner represents an extreme position a company can choose to serve
customers in its operations strategy.

Suppose that a company has already done a good job of implementing some process
improvement program focusing on quality (e.g., TQM or 6-Sigma). What corner of the
Operations Triangle is this company likely to find itself near? Explain your answer.

4. In a speech by John E. Pepper when he was CEO of P&G, he said:

Efficient Replenishment is basically “just-in-time” inventory management……We wanted to

eliminate excess inventory…..But we also discovered some other benefits, as well. Perhaps
the most surprising was the impact this strategy had on product freshness.

Assume that P&G’s total sales (throughput rate) did not change significantly during this period.
Explain why this would not have surprised John Pepper if he had taken the MBA Core.

5. Here is an excerpt from an article:

APC (the American Printed Circuit Company) was a small company which had been
growing rapidly and successfully. Its printed circuits were custom-built in lots of 1 to 100
for about 20 principal customers and were used for engineering tests and development
work. APC's process consisted of about 15 operations using simple equipment, such as
hand-dipping tanks, drill presses, and manual touch-ups. There was considerable variation
in the sequence and processes for different products. Delivery was a major element for
success, and price was not a key factor.

APC's president accepted an order from a large computer company to manufacture 20,000
printed circuit boards - a new product for the company - at a price equivalent to about one
third of its average mix of products. APC made the decision to produce these circuit boards
in order to build volume, broaden the company's range of markets, and diversify the line.
The new product was produced in the existing plant.

The result was disastrous. The old products were no longer delivered on time. The cost of
the new printed circuit boards were substantially in excess of the bid price. The quality on
all items suffered as the organization frenetically attempted to meet deliveries. Old
customers grew bitter over missed deliveries, and the new customer returned one third of
the merchandise for below-spec quality. Such heavy losses ensued that the APC Company
had to recapitalize. Subsequently, the ownership of the company changed hands.

a. How would you describe the type of process in APC’s factory (i.e., is it more like a job
shop or an assembly line)? Cite specific details that justify your answer.
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b. Why did introducing the new product lead to disaster?