• American University of Beirut

• DCSN 310

COMPETITIVE ADVANTAGE from OPERATIONS

DCSN 310 | Spring 2015

PREVIOUS EXAM (3 hours)

Finals are to be worked on individually and NO interaction whatsoever among students is accepted. The write-up you will be submitting needs to be strictly the result of personal and independent efforts.

We will not answer questions related to the exam. If something is unclear to you, please write clearly your assumptions and move on. If a question is unclear to you, please write precisely what is your understanding of the question and then answer it. If you need to make an additional assumption, please highlight it clearly and continue.

For all the questions below, explain carefully your answer but be concise! We take into consideration, the efforts you put in completing the question!

Problem 1 (35 points)

A distribution center of Amazon.com is re-engineering its fulfillment process. The project manager has identified three main activities (sub processes) that need to take place sequentially during this process. (1.) Receive; (2.) Pick & Pack ; (3.) Load & Ship. Once shipped the process is assumed terminated.

- Activity (1) is performed at what is called a Reception point, where online orders are

collected and checked before they are sent to the distribution center. Each customer’s order

is allocated to one Reception point. Every order is handled by a single employee. The

employee spends 4 hours on every order.

There are three Reception points feeding the distribution center. In each reception point, four employees work independently.

- Activity (2) is performed at the distribution warehouse. During which and for each order, the

items are picked and packed. The order/package spends in this activity 48 hours overall, but

requires only 6 hours of processing time by one employee; the rest of the time the package

is idling.

There are six employees assigned to Activity (2).

- Activity (3) takes place at the shipping department and takes typically 10 hours. However,

the activity must start with a meeting of few minutes only with the distribution manager

who gets debriefed on all orders involved in this step. After the short meeting, all the orders,

reviewed by the manager, are loaded in trucks. This meeting can be scheduled at any time

and as often as needed. All orders that were loaded are shipped to destination.

CAFO | Final Exam Victor F. Araman

The number of orders that can be loaded during Activity (3) depends on the current needs; but cannot exceed 50 orders at a time. There is only one distribution manager at any time. Transportation time is not part of this process. We assume that the process work continuously 24hours/day.

1) What are the flow time, the capacity and the cycle time for each activity? What is the

bottleneck of this entire fulfillment process? What are the flow time, the capacity and

the cycle time of the fulfillment process? Explain briefly

2) Assume the process is working at full capacity.

a. At which frequency should the distribution center schedule Activity (3) of Load &

Ship if the goal is to keep the overall response-time of the process minimal?

Explain

b. How many orders should they process simultaneously during Activity (3)? Explain

3) (3 points) What should be the maximum overall arrival rate of customers’ orders, so that

the system works under a pull system (i.e. JIT)? What is the utilization of each of the

three activities when the entire process is working continuously under a pull system?

4) (2 points) When working continuously as a pull system, what is the average number of

orders that is being processed at any point in time in the entire process? Explain.