Consider the following four-step assembly operation with quality problems.

 Resource 1 has a processing time of 5 minutes per unit and one worker doing the operation.
 Resource 2 has a processing time of 4 minutes per unit. It also has one worker doing the
operation. However, this is a very delicate operation and 80% of all products have to be
scrapped after this step.
 Resource 3 is staffed with two workers. No quality problems occur at this resource and the
processing time is 20 minutes per unit.

 Resource 4 is handled by one worker. No quality problems exist at this step and the processing
time is 12 minutes per unit.

1. For every unit of demand, how many units have to flow through Resource 1 in the process?

Given:

Resource Processing Time # of workers Quality Issues Demand Capacity IU

1 5 1   5D 1/5 25D
2 4 1 80% should be scrapped 5D 1/4 20D
3 20 2 No quality problems D 2/20 10D
4 12 1 No quality problems D 1/12 12D

Let assume that the total demand is represented by D (units).

We need to know how many units we should produce to deliver the required D to customers.
Yield percentage = 100% - scrapped percentage = 100% - 80% = 20%
D D
The expected number of units that we need to produce = =
Yield 20 % = 5 D

 for every 1 unit of demand, 5D units have to flow through resource 1 to step 2

2. Where in the process is the bottleneck? (Hint: Assume demand for the final product is D,
calculate the expected number of units needed from each resource, then calculate the implied
utilization for each resource, and decide which one is the bottleneck.)

The capacity of each resource:

- Capacity = Number of workers / processing time

- Capacity of resource 1 = 1 / 5

- Capacity of resource 2 = 1 / 4

- Capacity of resource 3 = 2 / 20
 - Capacity of resource 4 = 1 / 12

Implied utilization of each resource:

Implied utilization = Flow rate / Capacity

- Resource 1: 5 D / (1/5) = 25 D

- Resource 2: 5 D / (1/4) = 20 D

- Resource 3: D / (2/20) = 10 D

- Resource 4: D / (1/12) = 12 D

 Thus, the bottleneck is Resource 1 which has the highest implied utilization.

When analyzing process with rework or scrap, ass either demand is D or inputs is D