Operations Management

Assignment 1

Infusion US

Infusion US is a start-up that offers powerful and energizing infusions in a non-hospital setting for
athletes (just electrolytes, ). The service process includes five activities that are conducted in the
sequence described below. (The time required for each activity is shown in parentheses).

Activity 1: Welcome and explain procedure (7 min)

Activity 2: Take vitals, insert IV, and take blood (13 min)

Activity 3: Mix infusion treatment (12 min)

Activity 4: Infusion (30 min)

Activity 5: Debrief (5 min)

Three nurses (S1, S2 and S3) offer the services in a worker paced line. The assignment of activities to
the nurses is given below.

S1 – Activity 1 and Activity 2

S2 – Activity 3

S3 – Activity 4 and Activity 5

Assume the demand to be unlimited and that the process admits patients at the rate of the
bottleneck.

IU1. Which nurse is the bottleneck of the process?

IU2. What is the utilization of nurse 2?
IU3. What is the cycle time in minutes?
IU4. What is the average labour utilization across all three nurses?
IU5. What are the direct labour costs associated with serving one patient? Assume wages @
$30/h for nurses 1 and 2, and $60/h for nurse 3.

Ruhpolding

Ruhpolding is a village in the German Alps. Given its enormous popularity, all of its beds are always
booked in the winter season and there are 1200 beds on offer in the village. On average, skiers stay
in Ruhpolding for 10 days.

R1. On average, how many skiers arrive in Ruhpolding every day?

R2. A study done by the largest hotel in the village has shown that skiers spend on average $50
per person on the first day and $30 per person on each additional day in local restaurants.
The study also forecasts that – due to increased hotel prices – the average length of stay for
 this season will reduce to five days. What will be the impact on revenues of local restaurants
compared to last year (when skiers stayed for 10 days)? Assume that hotels continue to be
fully booked. Express your answer in $/day.

MSY Sweets

Makhan Singh Yadav runs a small chain of jalebi stores in UP. In 2014, his revenue was Rs. 43,00,000
and the cost of goods sold was Rs. 26,00,000. Assume 52 weeks and 365 days in a year.

MSY1. MSY keeps only 4.5 days of inventory of supplies because of their shorter shelf life.
What is his annual inventory turns?
MSY2. Given that he has 4.5 days of supply of inventory on average, how much inventory does
MSY have on average?

Atlas Inc

Atlas Inc. is a toy bicycle manufacturing company producing a five-inch small version of the bike
that Lance Armstrong rode to win his first Tour de France. The assembly line at Atlas Inc.
consists of seven work stations, each performing a single step. Stations and processing times are
summarized here:
• Step 1 (30 sec.): The plastic tube for the frame is cut to size.
• Step 2 (20 sec.): The tube is put together.
• Step 3 (35 sec.): The frame is glued together.
• Step 4 (25 sec.): The frame is cleaned.
• Step 5 (30 sec.): Paint is sprayed onto the frame.
• Step 6 (45 sec.): Wheels are assembled.
• Step 7 (40 sec.): All other parts are assembled to the frame.

Under the current process layout, workers are allocated to the stations as shown here:
• Worker 1: Steps 1, 2
• Worker 2: Steps 3, 4
• Worker 3: Step 5
• Worker 4: Step 6
• Worker 5: Step 7

AI1. What is the bottleneck in this process?

AI2. What is the capacity of this assembly line, in finished units/hour?
AI3. What is the utilization of Worker 4, ignoring the production of the first and last units?
AI4. What is the average labour utilization of the workers, ignoring the production of the
first and last units?
AI5. Assume the workers are paid $15 per hour. What is the cost of direct labour for the
bicycle?
Airline Check-in

Consider the baggage check-in of a small airline. Check-in data indicate that from
9 a.m. to 10 a.m., 255 passengers checked in. Moreover, based on counting the number of
passengers waiting in line, airport management found that the average number of passengers
waiting for check-in was 35. How long did the average passenger have to wait in line?