Question

For each statement below, argue for or against it.

(a) The standard deviation and the coefficient of variation measure exactly the same thing. Hence, it does not make a difference if we use the standard deviation or the coefficient of variation to compare two experiments in terms of variability.

(b) Working at 100% utilization in the presence of variability is a good idea, because we aqre making the best out of our resources. [Hint: What happens to waiting times when utilization is 100%]

(c) Resource pooling is always a good idea

Answer 1

(a) No. Standard deviation and coefficient of variation are not the same thing and they don't measure the same thing. Coefficient of variation = Standard Deviation/Mean, which provides useful information with the mean in context. For example, two experiments can both have a standard deviation of 100, but mean of 1st is 10,000 and mean of 2nd is 100,000 which shows a clearly different story. 2nd data is having much less standard deviation w.r.t. and is thus a more stable data than 1st set of data.

(b) No.100% utlization for each resource is not required since all resources are not required to be at 100% utilization. Since, there are multiple processes and the capacity of each resource would be different, only the bottleneck and CCR (Capacity Constrained Resource) need to be 100% utilized and then only it would be a good idea. Also, presence of variability within the process leads to waiting times at different resources, especially the bottleneck and CCRs. Piling up of WIP (Work-In-Progress) inventory happens due to variability and it is not a good idea to run every resource at 100% utilization. Infact, we should account for the variability with appropriate Z value and run the machine/resource at that utilization level.

(c) No, resource pooling may not always be a good idea! Especially for those products where setup times are high, we cannot pool the resources since setup changeover time will lead to lot of time getting non-productive or idle and hence leading to less production. One more example can be paint company (Asian Paints), where certain machines may not be pooled due to complete cleaning requirement which may lead to lot of setup time wastage.