Consider a process that consists of three steps 1, 2 and 3. The required processing times and set-up times at each of the steps are listed below. There is unlimited space for buffer inventory between these steps, and there is no shortage of ram material.

Process step 1 2 3
Set up time 50 min 120 min 0
Activity time 2 min/unit 1 min/unit 5 min/unit

Assume that the current production batch size is 100 units for all three steps. The demand is 10 units per hour. Which of the following statements are true for the current setting?

I. Step 1 is the bottleneck.
II. Flow rate is limited by demand.
III. We could reduce inventory in the system without decreasing flow rate.
a. I only
b. II only
c. III only
d. I and II
e. I and III
f. II and III
g. All of the above
h. None of the above