A small neighborhood restaurant is staffed by a hostess, five wait staff and fou

Question

A small neighborhood restaurant is staffed by a hostess, five wait staff and four cooks. The hostess seats the guests and hands out the menu which takes 3 minutes. Then a waiter takes the orders and sends them to the kitchen which takes 5 minutes on average. It takes an average of 5 minutes before one of the cooks picks the order and starts preparing the meals. Once the cook starts the order, it takes an average of 15 minutes to prepare one customer order. When the meals are ready, the waiter brings the food to the table which takes 4 minutes. The waiter also brings the check and processes the payment which also takes 3 minutes.

a) What is the bottleneck activity and what is the capacity of the process?

b) What is the throughput time of a typical order?

c) If an average of 12 customers arrive at the restuarant per hour during the peak demand time (often in the evenings), how many customers will be in the restauarant on average during this time?

d) Suppose the hostess is paid $12/hour, the wait staff are paid $8/hour each, and the cooks are paid $15/hour each. In addition, it costs the restaurant about 30% of the hourly labor rate for overhead. What is the average cost of labor and overhead per order for the restaurant if average demand is 13 customers per hour?

e) Assuming the same pay rates as in (d) above, what will be the average cost of labor and overhead per order for the restaurant when it operates at full capacity?

Explanation / Answer

Bottleneck operation is the slowest operation with longest CT which limits the production or service time. Bottleneck operation determines the CT of entire service system. A bottleneck is defined as a resource which has a demand requirement greater than its capacity and which limits the output capacity of the complete system (planned utilization larger than 100% of capacity). A bottleneck, as the name implies, is the point of a system where the “space narrows” and the flow is constrained. If you think in term of highways, traffic problems typically occur when the number of lanes is reduced (changing the capacity) and thus becoming a bottleneck.

Here are some ways for you to increase capacity at the bottleneck:

Add resources at the bottleneck operation. You can increase the number of resources that are performing the operation without adding head count if you can assign an employee from another operation to help perform the bottleneck operation during unutilized time.

Always have a part for the bottleneck to process. Be sure to monitor the WIP in front of the bottleneck and that it always has a part to process. This involves managing the resources feeding the bottleneck to ensure that nothing is slowing them down, such as equipment failures. If scheduling overtime, you must also make sure that the bottleneck has enough parts to process during the overtime period.

Assure that the bottleneck works only on quality parts. Don’t waste the bottleneck’s time on bad parts. If you need quality checks in the process, place them before the bottleneck operation. This increases the thruput of the process.

Examine your production schedule. If a process is used to make several different products that use varying amounts of the bottleneck’s time, then an analysis of the production schedule can create a product mix that minimizes overall demand on the bottleneck.

Increase the time the operation is working. Keep the bottleneck resource working. Always have someone assigned to the operation, including during scheduled breaks and lunch periods, and use overtime if necessary. Though doing so won’t technically reduce the cycle time, it will allow the bottleneck to produce when other operations are idle. The more time the bottleneck works, the more parts the system produces.

Minimize downtime. Avoid scheduled and unscheduled downtime. If the bottleneck equipment suffers a breakdown during scheduled operations, dispatch repair personnel immediately to get the bottleneck up and running. This may involve keeping replacement parts on hand and performing preventive maintenance on equipment. In addition, do what you can to reduce changeover times from one product to the next, because this time takes away from actual production time.

Perform process improvement on the bottleneck resource. A good place to start is to document everything the resource does. Then eliminate all non-value-added activities and look for ways to reduce the time it takes to do value-added activities by getting rid of all the waste in the operation. This results in a shorter cycle time. Process improvement is almost always focused on eliminating waste.

Throughput time or manufacturing cycle time is an important measure of internal business process performance. Performance measures are found on the balanced scorecards of the companies. Examples of the some performance measures can be found on characteristics of balanced scorecard page. Most of the performance measures are self explanatory. However, three are not - delivery cycle time, throughput time, and manufacturing cycle efficiency (MCE). On this page, Throughput time or manufacturing cycle time is defined, explained and calculated.

Labor rates are employee-based expenses that include not just the weekly or hourly rate of pay, but also health benefits, vacation pay, pension and retirement payments made by the employer. To determine an employer's annual labor cost, add all of these payroll-based expenses together. To calculate the labor expense customers should be charged, divide this annual cost by the number of billable hours the employee works each year.

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