Solstice Travel: Orders Are Piling Up
Operations
medium35 min0 submissionsMcKinsey
Scenario
Solstice Travel is a online travel operation in Southeast Asia. Demand is 1,444 units per day and rising, but the site is not shipping it. Work-in-progress is accumulating and the plant manager is asking for capital.
The line has four stages, each with its own maximum rate:
| Stage | Capacity |
|---|---|
| Intake | 2,594 units/day |
| Processing | 715 units/day |
| Quality check | 1,665 units/day |
| Dispatch | 1,885 units/day |
Other facts:
- The plant manager has requested $5 M to upgrade the Dispatch stage, because that is where the visible backlog sits
- Each additional unit shipped contributes $588
- Overtime is available at any stage, at a premium
The site director wants to know whether to approve the request.
Supporting data
proposal
- cost
- 5
- stage
- Dispatch
economics
- contribution per unit
- 588
derived hints
- bottleneck stage
- Processing
- system throughput
- 715
- unmet demand per day
- 729
demand units per day1444
stage capacity units per day
- intake
- 2594
- dispatch
- 1885
- processing
- 715
- quality check
- 1665
Your task
Advise the site director. Your answer should provide:
- Analysis — what the site's actual throughput is and where the constraint sits, computed.
- Risks — what your answer depends on.
- Recommendation — where to spend, and the throughput it should buy.
State any assumptions you make.
Ready to move forward? Up next: Tessellate: Orders Are Piling UpNext question
How you'll be graded
100 points, 60% to pass.
- root cause25
- recommendation20
- problem structuring25
- quantitative analysis30
Hint
Reveal suggested structure
Stage capacities; theory of constraints; value of relieving the bottleneck; re-check the next constraint