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PSetOneSolution2019

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MODULE 1: PROBLEM SET SOLUTIONS
Baby Trend is a jogging stroller manufacturer. It makes a full line of baby products, from diaper
pails to high chairs to a variety of strollers. Its jogging strollers consist of a cloth seat stretched
over a metal frame, a fairly standard design in the industry. They make a limited number of styles
of single jobbers, meant to carry one baby (mostly differentiated by the color of the cloth) and one
style of double stroller meant to carry two children. In the Baby Trend double stroller, the children
sit next to each other (again, a standard industry design). Baby Trend sells through independent
Web sites, specialty stores, and big box retailers. Their prices range from under $100 for the
simple single jogger to $299 for the double stroller.
This question can be approached from a variety of angles. In terms of life cycle – it seems fair to say
that this product is fairly mature, but probably not yet in the declining stages of its life cycle. It sounds
as if a dominant product design is identifiable and there is no indication that Baby Trend is really
doing anything unique here.
In terms of demand levels, the presence of multiple outlets including big box retailers suggests that
demand is fairly high. However, we do not know much about market share so we have to take that
with a grain of salt. We cannot tell if we are talking about 1000s of items or millions of items. You
may give a different answer depending on what you assume here.
In terms of order winning criteria – this is a bit fuzzy. Clearly customization is not what they are
selling. Quality is never fully defined, but I would guess it is conformance to specifications more than
anything else. Availability may be an issue but this sounds more like an inventory management issue
than a production issue.
Finally, how this fits with the rest of the product line is not entirely clear. Are the other products as
simple as this one or not? The bottom line is that your response depends somewhat on what you
assume about demand. If demand is high enough to keep a line busy on a continuous basis, then a line
flow process makes sense. If demand is not that high, then we can probably make these things in
batches and allow the workers to make other items after monthly demand for these items has been met.
If desired output is of a “moderate” volume and we consider the product-process matrix we can say the
following. Customization is not an order winner, specifications are set, no evidence is given to
suggests that lots of new designs are being introduced, production does not seem to involve a high
level of worker skill and demand is reasonably high. This suggests that a job-shop process would yield
unnecessarily high variable costs.
If demand is moderate, and we want to be flexible in terms of production volumes, and we use the
same space to make several other parts of the product line, then a line-flow process may involve a
level of automation that raises fixed costs unnecessarily. On the other hand, if we believe demand is
high and innovation is low then a line-flow process makes a lot of sense.
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Finally, if we believe that demand is not that high, or that we want to use the same workers to make
more items in the product line, the a batch flow process makes a lot of sense. The bottom line is that
when answering the question it is best to explain your assumptions a bit and defend your answer
accordingly.
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Compare McDonald’s and a fine dining restaurant in terms of the product attributes that
customers expect. What process competencies should each organization aim to develop? Would
you expect each process to be more like a job shop or a flow shop and why?
This question is a little more tricky than it may appear. When McDonalds started many years ago, the
menu included only 4 items. At that time they often claimed to be competing on quality. Over the
years it became pretty clear that they delivered a highly consistent product at a low price with fast
service. Over the past 40 years or so, the menu has been steadily expanding while competition from
other low cost providers has maintained the need to minimize cost. This is very difficult to do, but
remains quite profitable. With that being said, we can gather product attributes expected to include:
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Fast service
Accurate order fulfillment
Low price
Tasty (although this means different things to different people)
Process competencies must include:
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Low cycle times
High throughput
High consistency
Minimum labor cost
Note that the more different product one tries to deliver with this process, the more difficult it will be
to get it done, especially with high labor turnover. This is why managing a McDonalds is much more
difficult than most people think.
Using the classic models of OM these product attributes and process competencies suggests that a
Flow-shop is the best fit. However, the question is a vivid reminder that technology blurs these lines
in ways that were not anticipated when McDonalds began service.
For a “fine dining” restaurant the product attributes demanded must include:
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Friendly service
Accurate order fulfillment
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Fresh ingredients
Unique flavors
Attractive presentation
Ability to perform re-work
Customization
Process competencies must include:
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Reasonable cycle times
Low inventory
Flexibility (to make customized orders)
High ratio of quality to cost where quality is defined in terms of “taste” and appearance
All of these elements suggest that a job shop structure is the better fit.
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