Northern Caribbean University Department of Professional and Continuing Education Module 4 Main Campus MGMT 475: Operations Management

Sectional 2 Facilitator: Phillip G. Williams ID#: 18075420 Student Name: Krystal Rose
SECTION A: MULTIPLE CHOICE. INSTRUCTION: Write the most appropriate response on the line provided to the right of each question.

1) The objective of layout strategy is to A) develop an efficient and effective system that meets competitive requirements B) minimize space used C) minimize cost D) minimize material handling costs E) maximize flexibility 2) The fixed-position layout would be most appropriate in which of the following settings? A) a casual dining restaurant B) a fast-food restaurant C) a doctor's office D) a cruise ship assembly facility E) none of the above 3) Because problems with fixed-position layouts are so difficult to solve well onsite, operations managers A) often complete as much of the project as possible off-site B) virtually never employ this layout strategy C) utilize this layout only for defense contractors D) utilize this approach only for construction projects such as bridges and office towers E) increase the size of the site 4) The type of layout which features departments or other functional groupings in which similar activities are performed is A) mass production B) product-oriented C) unit production D) process-oriented E) fixed-position 5) The major problem addressed by the process-oriented layout strategy is A) the provision of low-cost storage with low-cost material handling B) balancing product flow from one work station to the next C) requiring frequent contact close to one another D) the movement of material to the limited storage areas around the site E) minimizing difficulties caused by material flow varying with each product

1) ___A___

2) ___D___

3) _A_____

4) _D_____

5) __E___

6) Which type of layout is specifically designed to encourage employees to interact? A) job shop B) retail C) repetitive/continuous D) warehouse E) open office 7) E-procurement A) works best in long-term contract situations, and is not suited for auctions B) is the same thing as Internet purchasing C) is illegal in all states except Nevada and New Jersey D) represents only the auction and bidding components of Internet purchasing E) All of the above are true of e-procurement. 8) The three classic types of negotiation strategies are A) many suppliers, few suppliers, and keiretsu B) Theory X, Theory Y, and Theory Z C) cost-based price model, market-based price model, and competitive bidding D) vendor evaluation, vendor development, and vendor selection E) None of the above is correct. 9) Consider a firm with a 2007 net income of $20 million, revenue of $60 million and cost of goods sold of $25 million. If the balance sheet amounts show $2 million of inventory and $500,000 of property, plant & equipment, what is the inventory turnover? A) 10.00 B) 12.50 C) 42.00 D) 4.16 E) 20.00 10) The three stages of vendor selection, in order, are A) vendor development, vendor evaluation, and vendor acquisition B) vendor evaluation, vendor development, and negotiations C) EDI, ERP, and ASN D) vendor evaluation, negotiations, and vendor development E) introduction, growth, and maturity 11) Which one of the following distribution systems offers quickness and reliability when emergency supplies are needed overseas? A) trucking B) airfreight C) railroads D) pipelines E) waterways 12) With the growth of JIT, which of the following distribution systems has been the biggest loser? A) trucking B) waterways C) railroads D) pipelines E) airfreight 13) Which distribution system is the fastest growing mode of shipping? A) airfreight

6) __E____

7) ____B__

8) ___C___

9) ___B___

10) __B___

11) _B____

12) _C____

13) __A__

B) waterways C) pipelines D) railroads E) trucks 14) Which of the following devices represents an opportunity for technology to improve security of container shipments? A) devices that identify truck and container location B) devices that measure radiation or temperature C) devices that can communicate the breaking of a container lock or seal D) devices that sense motion E) all of the above 15) Which one of the following performance measures is not true of a world class firm? A) high percentage of accepted material B) short time placing an order C) large lead time D) high percentage of on-time deliveries E) low number of shortages per year 16) Consider a firm with a 2007 net income of $20 million, revenue of $60 million and cost of goods sold of $25 million. If the balance sheet amounts show $2 million of inventory and $500,000 of property, plant & equipment, how many weeks of supply does the firm hold? A) 4.16 B) 5.20 C) 2.60 D) 0.08 E) 12.50 17) Which layout's main objective is to equalize the task time for each station? A) fixed position B) process oriented C) job shop D) product oriented E) work cell 18) Deloitte & Touche solved the empty desk problem by A) assigning permanent desks B) no longer allowing employees to work from home C) implementing a "hoteling" program D) creating open offices E) none of the above 19) "A special arrangement of machinery and equipment to focus on production of a single product or group of related products" describes what layout type? A) warehouse layout B) intermittent production C) work cell D) fixed-position layout E) job shop 20) Retail layouts thrive on the notion that A) space used should be minimized B) handling costs should be minimized 14) ___E__

15) _C____

16) ___A_

17) __D__

18) _C____

19) ___D_

20) _C____

C) maximizing customer exposure rate maximizes sales and profit D) storage costs should be minimized E) average customer visit duration should be maximized

Section B

#1 Using the factor ratings shown below, determine which location alternative should be chosen on the basis of maximum composite score. (10 pts) Location Factor Easy access Parking facilities Display area Shopper (walking) traffic Neighborhood wealth Neighborhood safety Totals Weight 0.15 0.20 0.18 0.21 0.16 0.10 1.00 A 86 72 86 94 99 96 B 72 77 90 86 89 85 C 90 91 90 80 81 75 A (0.15) (86) = 12.9 (0.20) (72) = 14.4 (0.18) (86) = 15.48 (0.21) (94) = 19.74 (0.16) (99) = 15.84 (0.10) (96) = 9.6 87.96 B (0.15) (72) = 10.8 (0.20) (77) = 15.4 (0.18) (90) = 16.2 (0.21) (86) = 18.06 (0.16) (89) = 14.24 (0.10) (85) = 8.5 83.20 C (0.15) (90) = 13.5 (0.20) (91) = 18.2 (0.18) (90) = 16.2 (0.21) (80) = 16.8 (0.16) (81) = 12.96 (0.10) (75) = 7.5 85.16

Location A would be the preferable location which is 87.96

#2 College A B C D E F G Map Coordinate (x, y) (2,10) (6,8) (4,9) (9,5) (8,1) (3,2) (2,6) Load 3 2 4 1 3 2 1 16 X- Coordinate of the center of gravity: (2) (3) + (6) (2) + (4) (4) + (9) (1) + (8) (3) + (3) (2) + (2) (1) 3+2+4+1+3+2+1 = 75 16 = 4.69 X- coordinate 2 6 4 9 8 3 2 10 8 9 5 1 2 6 Y- coordinate

Y- Coordinate of the center of gravity: (10) (3) + (8) (2) + (9) (4) + (5) (1) + (1) (3) + (2) (2) + (6) (1) 3+2+4+1+3+2+1 = 100 = 6.25 16

The studio should be located at (4.69, 6.25)

y-axis

10 9 8 7 6 5 4 3 2 1

A (2,10) B(4,9) C(6,8)

G(2,6)

(4.69,6.35) Center of

gravity D (9,5)

F(3,2) E (8,1)

10

x-axis

#3 Holstein Computing manufactures an inexpensive audio card (Audio Max) for assembly into several models of its microcomputers. The annual demand for this part is 100,000 units. The annual inventory carrying cost is $5 per unit and the cost of preparing an order and making production setup for the order is $750. The company operates 250 days per year. The machine used to manufacture this part has a production rate of 2000 units per day. a. Calculate the optimum lot size. (5 pts) b. How many lots are produced in a year? (5 pts) c. What is the average inventory for Audio Max? (5 pts) d. What is the annual cost of preparing the orders and making the setups for Audio Max? (5 pts)

a.

Calculate the optimum lot size. (5 pts)

Annual demand = 100,000 units Setup cost = $750 Carrying cost= $ 5 per unit Daily demand rate = 2000/5 = 400 units daily Daily production rate = 2000 Q* = 2DS H (1-d/p)

2 x 100,000 x 750 5 (1- 400/2000

150,000,000 5 (0.8)

37,500,000

= 6,123.7 or 6124 units Therefore the optimal lot size would be 6124 units b. How many lots are produced in a year? (5 pts) N = Demand / Order quantity N = 100,000/ 6124 = 16.33 lots per year Therefore 16.33 lots size are produced in a year

c. What is the average inventory for Audio Max? (5 pts) The maximum inventory = Q (1-d/p) 6124 x (1- 400/2000) = 4899 units Annual inventory level = maximum inventory level / 2 average inventory = 4899/2 = 2,449.5 units Therefore the average inventory for Audio Max is 2,499.5 units d. What is the annual cost of preparing the orders and making the setups for Audio Max? (5 pts) Annual cost = D/Q x S + average inventory x H = 100,000/6124 x 750 + 2,449.5 x 5 = $12,247 + $12,248 = $24,495 Therefore the annual cost of preparing the orders and making the setups for Audio Max is $24,495

#4 A toy manufacturer makes stuffed kittens and puppies which have relatively lifelike motions. There are three different mechanisms which can be installed in these "pets." These toys will sell for the same price regardless of the mechanism installed, but each mechanism has its own variable cost and setup cost. Profit, therefore, is dependent upon the choice of mechanism and upon the level of demand. The manufacturer has in hand a forecast of demand that suggests a 0.2 probability of light demand, a 0.45 probability of moderate demand, and a probability of 0.35 of heavy demand. Payoffs for each mechanism-demand combination appear in the table below. Demand Light Moderate Heavy Wind-up action Pneumatic action Electronic action $250,000 $90,000 -$100,000 400,000 440,000 400,000 650,000 740,000 780,000

Light demand (0.2) Wind-up

1

$250,000 $400,000 $650,000

Moderate demand (0.45) Heavy demand (0.35)

EMV = $457,500

Light demand (0.2) 2 Pneumatic

2

$90,000 $440,000 $740,000

Moderate demand (0.45) Heavy demand (0.35)

EMV = $475,000

Light demand (0.2) Electronic

3

$-100,000 $400,000 $780,000

Moderate demand (0.45) Heavy demand (0.35)

EMV = $433,000

1. Wind-up action = 0.2 x 250,000 + 0.45 x 400,000 + 0.35 x 650,000 = $457,500 2. Pneumatic action = 0.2 x 90,000 + 0.45 x 440,000 + 0.35 x 740,000= $475,000 3. Electronic action = 0.2 x -100,000 + 0.45 x 400,000 +0.35 x 780,000= $433,000 Therefore the optimal decision for the manufacturer would be the pneumatic which is $475,000