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  1. Explain the differences between maximum capacity and effective capacity.

  2. How would you define the maximum capacity for the front desk of a hotel? What is meant by the effective capacity? Define the difference in these two terms relative to the number of customers that can be checked into the hotel in a given period.

  3. Penny’s Pies is a small specialty supplier to a national coffeehouse chain. Penny’s makes three types of pies (apple, cherry, and pecan). Penny’s operates 250 days per year with a single eight-hour shift. Capacity is controlled by the number of production lines within the bakery (a line consists of mixing equipment, rolling and cutting equipment, an oven, and packaging equipment). Based on the information provided in the table, determine the number of production lines Penny’s should have.

    Hint: The total operating time required is the sum of total processing time and total setup time. To calculate the total setup time, you need to first calculate the total number of setups required by dividing demand forecast by lot size.

  4. New Time Videos (NTV) is a new on-line video rental service. In the field, it is trying to compete by offering its customers access to all of the major new video releases in one business day. That is, if you order a video from NTV, you can expect it in one business day from the time when you placed the order. When you are done with the video, you simply drop it in the prepaid mail envelope and return it. All videos arrive in a sorting facility located in the Midwest where envelopes with the videos are opened, checked, (right video with the right sleeve, no scratches, no cracks, no dirt on the videos), and made ready to be sent out again. As the manager of this facility, your goal is to have the returned videos processed and ready for another rental in 6 hours (a shift is 8 hours long). You have the following information:

    Average Inventory: 450,000 videos Average Throughput: 325,000 videos per shift

    1. Calculate the expected average flow time in hours.

    2. To meet the goal of processing a returned video within 6 hours, how many videos

      per shift does the facility need to process?

    3. What changes would you recommend to meet the 6 hour turn-around goal?



Demand Forecast (pies/year)


Processing Time (minutes/pie)

Lot Size (# of pies)


Setup Time (minutes/setup)

























5. Cooper’s Copy Shop is considering two different processes for completing copying jobs brought in by customers. Process A uses one person to setup the job and do the copying. If this approach is used, one experienced person can complete an average of 20 jobs per day. Process B uses two people. One person does the setup and the second person does the actual copying. Setup on one job can be done while copying is being completed on another but copying must be completed on a job before the copying machine can start copying the next. After some practice, process B can be completed with a standard time of 10 minutes for setup and 15 minutes for actual copying. In either case, assume an 8- hour work day, 5 days per week, 250 days per year.

  1. Assuming ideal conditions (and that the initial 10 min setup can be completed the previous night), what is the maximum daily capacity of process B?

  2. How many weeks would it take to process 350 jobs using process A (assume only one worker and one machine)?

  3. How many weeks would it take to process 350 jobs using process B (assume only one “production line with one machine”)?

  4. If Cooper’s owner is primarily interested in providing low cost to customers, which process should he put in place? Why?

  5. If Cooper’s owner is primarily interested in providing quick service to customers, which process should he put in place? Why? 

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