BAN 530 VES/VPM

Name May 15, 2008

EXAM IV Spring 2008

DIRECTIONS: Answer the multiple-choice questions directly on the exam by circling the BEST answer. You do NOT need to show your work for multiple choice questions. Your answers to the problems and short answers should start and be presented on separate pages for each problem. For problems, you MUST show your work. If you use a calculator, set up the problem on the exam sheet then show the answer you obtained from your calculator. If you use software, embed the output in your examination document. Return the exam with your results. Your work will be graded based on content and presentation. You must work on your own. No collaboration is allowed. You may use your notes, textbook, statistical packages, computer software, or other pre-printed material. The exam may be delivered to me at The University Center between 6:00 and 6:30 p.m. on 15 May. Exams may be given to Dr. Dina Flores at The University Center or delivered to my office on campus prior to that time. Exams may be emailed to me by 8:00 p.m. on Thursday, May 15, 2007. Acknowledge your understanding of the directions by signing below. You must turn in this page with your exam. If you e-mail your exam, you must include a signed copy of this page (you may FAX it separately or scan the page with your signature and include it with your e-mail).

I, , understand that I must complete this exam on my own. By signing below I am indicating that I did not seek help from anyone and the submitted work is solely my own.

Signature

Date

BAN 530 Spring 2008 Exam IV

Part A. [37 total points in this section] Multiple Choice (1 point each). Circle the BEST answer on the test sheet. 1. When defining reliability for a product or a system it is important to specify a. definition of a failure b. normal operating conditions c. d. e. 2.
T T B e a and b MTBF M F

The kanban in the JIT demonstration we conducted in class was a(n) a. b. c. card golf ball packing peanut d. e. red pen empty space between stations

3.

Department A A Department B X Department C O Department D Based on this Muther grid a. Department A must not be located close to Department D. b. Department A must not be located close to Department C. c. Department B must be located close to Department C. d. Location X is preferred over Location U e. Department C must not be located near Department D. U U X

4. It is important to have good preventive maintenance in an operation. With a good preventive maintenance program in place, there is no need for breakdown maintenance. a. True b. False

5.

The primary objective of both manufacturing and service layouts is always efficiency. a. True b. False

A $ B C

10

20

30

40 50 60 Units (1,000s)

70

80

6. Marketing has forecast potential sales for our new retail outlet to be 75,000 units. Based on the total cost curves shown above, what would be the best location for our new retail outlet? a. b. c. d. e. A B C Either A or C We are indifferent between these two locations. Either A or B We are indifferent between these two locations.

7.

Actual output for a process is 200 units per day. Design capacity is 300 units is day. Effective capacity is 260 units per day. The efficiency of this process is a. 66.7% d. 35.7% b. 76.9% e. 130% c. 86.7%

8.

Using the information in the previous problem, what is the utilization of this process? a. 66.7% d. 35.7% b. 76.9% e. 130% c. 86.7%

A company used the transportation model to evaluate location alternatives for a new factory. Answer the next two questions using these printouts from POM for Windows. A B C Las Vegas Total Cost = 320 Destination 1 30 10 Destination 2 20 30 20 Destination 3

A B C San Francisco 10 Total Cost = 270 9.

Destination 1 30

Destination 2 30

Destination 3 30

10

Based on these printouts the best location for a new factory would be a. A d. San Francisco b. B e. Las Vegas c. C This analysis method allows the company to select a location alternative that a. minimizes total costs. b. minimizes the cost of transporting product from factories to destinations. c. provides the best customer service. d. provides the most transportation mode alternatives. e. the best range of qualitative alternatives. Which of the following actions would likely reduce a companys need for decoupling inventory? a. Increasing the number of raw material suppliers. b. Determining whether customers would accept a smaller selection of merchandise. c. Implementing a preventative maintenance program. d. Reducing the incidence of shrinkage. e. Improving the quality of incoming raw materials.

10.

11.

12.

The inventory management system discussed in class where inventory is stored in two locations with the quantity in the second location equal to the demand during lead time is called a. safety stock system d. modified MRP b. hidden inventory system e. modified ROP c. two-bin system The inventory management system where we receive orders on a regular schedule but the quantity received varies is called a. EOQ/ROP d. Economic Lot Size b. Single Period Model e. Fixed-Period System c. Probabilistic Model An appropriate technique for studying non-repetitive jobs, such as those performed by secretaries and maintenance technicians, is a. work measurement b. Gantt charts c. stopwatch time study d. work sampling e. MTM

13.

14.

15.

Giving a worker a larger portion of the total task by horizontal loading is called a. specialization. d. job enrichment b. ergonomics e. job enlargement c. job design Incorporation of human factors in the design of the workplace is called a. specialization. d. job enrichment b. ergonomics e. job enlargement c. job design One premise of supply chain management is a. long-term relationships with fewer suppliers. b. encouraging more suppliers to provide leverage during negotiations. c. focusing negotiations on initial price of purchased products. d. limiting information sharing to protect trade secrets. e. all are premises of supply chain management. Which of the following is NOT a component of holding cost? a. purchase price d. risk of obsolescence b. insurance e. inventory shrinkage c. cycle count costs There are methods available to adjust the basic EOQ/ROP model for such things as quantity discounts, variation in lead time, and variation in demand. a. True b. False

16.

17.

18.

19.

20.

It is okay to round the EOQ because of such things as standard package sizes because a. the EOQ is just an estimate. b. you should never round the EOQ. c. the TC curve is relatively flat near the EOQ. d. the TC curve slopes sharply up near the EOQ. e. Deming said it is okay. The EOQ/ROP inventory management system is best suited for a. irregular demand items. d. near-constant demand items. b. items such as Easter candy e. dependent demand items. c. decoupling inventory. Aggregate planning is a. short-term planning b. level scheduling c. intermediate-term planning d. e. chase strategy long-term planning

21.

22.

23.

The tool my secretary used to justify hiring a receptionist to answer my phone is a. time study d. Pareto analysis b. ROI e. work sampling c. methods analysis An alternative to time studies that divides the job into small basic elements sometimes called Therbligs that have widely accepted times is called a. methods analysis d. work sampling b. ergonomics e. job analysis c. predetermined time standards __________________________ should always be done before doing a time study. a. b. c. Methods analysis Job enlargement study Focus groups d. e. Ergonomic study. Training

24.

25.

26.

Time study should be conducted on a subject who is a. the best worker d. the worst worker b. an average trained worker e. all workers c. a randomly selected worker Which of the following is used to help set prices and set quotas for workers? a. Average observed time d. Normal time b. Adjusted time e. Standard time c. Greenwich meridian time

27.

28.

Based on our class discussion, ______________________ are the most important asset of an organization. a. b. c. Workers Quality processes Most costly equipment d. e. Cash balance Total assets

29.

The following data have been collected using stopwatch time study. Observation in minutes 1 2 3 4 8 10 9 15 PR 5 9 d. e. 51 11.22 110

Element A

Average observed time in minutes is a. 9 b. 10.2 c. 1,122 30.

The in-class demonstration of JIT vs traditional manufacturing, showed that changing from a push system to a pull system a. reduced the production rate of the line b. decreased the idle time at all stations c. reduced inventory without reducing output d. required increased attention by the supervisor e. none of these Which do you get when you disaggregate the aggregate plan? a. subcontract list d. inventory level plan b. master schedule e. staffing plan c. backorder list In aggregate planning, we develop a plan for matching capacity with demand on an individual item-by-item basis. a. True b. False

31.

32.

33.

Computer-based information system that translates master schedule requirements for end items into time-phased requirements for sub-assemblies, components, and raw materials is the definition of a. ERP d. EOQ b. MRP e. SAP c. ROP

34.

In the demonstration of JIT we moved from a. MRP to JIT d. b. EOQ to JIT e. c. a push to a pull system

SPC to JIT L-4-L to EOQ

35.

The model which evaluates a location decision based exclusively upon an economic comparison of total production costs is: a. b. c. d. e. center-of-gravity method locational break-even (or cost-volume) analysis. factor-rating method. transportation model. geographic information systems model.

36. Work sampling revealed the following data for maintenance technicians working from a centralized maintenance shop? Your maintenance technicians are very highly paid. Walking to the job site to repair a machine Working on machine Filling out repair tickets 253 325 225

An appropriate action to consider as a result of this analysis could be a. b. c. d. e. 37. decentralize the maintenance operation computerize the repair ticket process have a lower paid clerk fill out the repair ticket provide golf carts to travel to repair locations from centralized shop all might be considered.

The location analysis technique that allows for the inclusion of both quantitative and qualitative inputs is a. b. c. d. e. Locational Cost-Profit-Volume (Breakeven) Analysis Factor Rating Transportation Model Center of Gravity Model Delphi Analysis

Part B [36 total points in this section] Multiple Choice (3 points each). Circle the BEST answer on the test sheet. 38. A location analysis has been narrowed down to these locations. The critical factors, their weights, and the ratings for each location are shown below. If the selection criterion is to select the location with the greatest composite (weighted) score, which location would you recommend? Location Factor Labor Cost Transport. Cost Quality of Schools Market Access Utility Cost a. b. c. Wt. Never-Never Land .4 .3 .1 .1 .1 60 70 90 50 80
Whoville North Pole

90 80 70 70 70

70 90 70 90 80

Whoville North Pole Never-Never Land

d. North Pole, but do sensitivity analysis e. Whoville, but do sensitivity analysis

39.

A manufacturer of tables has collected the following data: Fixed cost for the operation is $10,000; variable cost per table is $85; the tables sell for $250 each. The breakeven point for this manufacturer is a. 117.6 tables d. 60.6 tables b. 40 tables e. $60.6 c. $40 A service garage uses 204 boxes of cleaning cloths a year. The boxes cost $12 each. The cost to place one order is $15, and the cost to hold one box in inventory for a year is $2.40. The EOQ is a. 40.4 boxes d. 626.7 boxes b. 174.9 boxes e. 50.5 boxes c. 156.5 boxes Using the information in the previous question, what is our total holding and ordering cost if we currently order 12 boxes at a time? a. $ 14.40 d. $ 130.80 b. $269.40 e. $2,448.00 c. $255.00

40.

41.

42.

If the owner of the service garage in the previous question orders the EOQ, instead of 12 boxes at a time, how much will he save? a. $121.20 d. $ 14.40 b. $ 60.60 e. $148.20 c. $269.40 A company sells an average of 35 tires per day. Lead time for an order of tires is 15 days. The supplier has never been late in delivering an order of tires. What should the reorder point (ROP) be for tires? a. 15 d. 150 b. 10 e. 25 c. 1.5 A job has an average observed cycle time of 4 minutes, a performance rating of 120 percent, and an allowance factor of 30 percent. Normal time for the job in minutes is: a. 4.8 b. 6.25 c. 5.76 d. 16.0 e. none of these

43.

44.

45.

In the preceding question a. The worker is working at a normal pace. b. The worker is working faster than a normal pace. c. The worker is working slower than a normal pace. d. The worker is becoming fatigued e. The time study analyst has made a mistake. A job has a normal time of 5 minutes, a performance rating of 130 percent, and total allowances of 20 percent. Standard time for the job in minutes is: a. 4.8 b. 6.25 c. 3.85 d. 25.0 e. none of these

46.

A 47.

The reliabilities of the three components in this system are: A = .99 B = .95 C = .90 System reliability is a. b. c. 0.85 0.95 0.99 d. e. 2.84 0.90

48.

In the previous problem, if an identical parallel backup component is provided for component C, the new system reliability would be a. b. c. 0.89 0.94 0.99 d. e. 0.93 None of the above

49.

Using ABC analysis, which of these should be classified as A items? ITEM F-101 F-106 F-112 F-115 F-119 F-122 F-125 F-130 a. b. c. UNIT COST 1.50 200.00 100.00 2.00 8.00 19.00 3.00 10.00 ANNUAL USAGE OTHER 100,000 50,000 200 Only 1 source (in Tibet) 10,000 500 Will be replaced with new part in 2 months 1,000 60,000 1,000 d. e. F-106, F112, F-119 F-101

F-106 F-106, F-112 F-101, F-125, F-106

Part C [27 total points in this section] Problems (Points as shown). Answer on test sheet. See cover page for more complete instructions. You MUST show your work and include any computer printouts if applicable in order to receive full credit for your answer. 50. (10 points) You are scheduling production for an order of 60 garage door openers due to be shipped in week 7. Assume lot-for-lot ordering. Below is information about the openers. Item Lead Time On Hand Components Opener 2 30 A(1), B(2), C(3) A 1 10 D(2), F(3) B 1 0 E(1), F(4) C 2 20 D 1 30 E 2 5 F 3 5 Develop a product structure bill of materials.

a)

b)

Develop a net materials plan for E. 1 2 3 4 5 6 7

Gross Req. Sch. Receipts Pr. on hand Net Require. Pl. O.Receipt Pl. O. Release

1
Gross Req. Sch. Receipts Pr. on hand Net Require. Pl. O.Receipt Pl. O. Release

1
Gross Req. Sch. Receipts Pr. on hand Net Require. Pl. O.Receipt Pl. O. Release

51.

(10 points) Sower and Sons, Inc. wants to determine the best way to distribute products from its 3 factories to its 4 distribution warehouses (DW) in order to minimize transportation costs. It has collected the following data: DW W DW X $116 $230 $173 120 DW Y $250 $180 $196 200 DW Z $110 $178 $164 230 Supply 220 300 435

Factory A Factory B Factory C Demand

$132 $220 $152 160

Use POM for Windows and completely interpret your printout including the implications of the Dummy.

52.

(7 points) Discuss why I said in class that you should first update your resume if your boss tells you to implement an MRP system by the end of next month.

What are some of the things that you would have to do before implementing an MRP system to be sure that your organization is ready for MRP? Be specific!