North South University School of Business MG314 Operations Management Assignment # 2 Total Marks : 40 Assigning Date: June 13,

2012 Due Date and Time: July 05, 2012 Note: You may discuss the assignment with your friend(s) but you need to submit your own unique copy of solution in the assignment page. The assignment will be marked zero for the student who makes copy or who is providing his solution for copying. Please write your name, and assignment # at every page. You may ask your friend about his final result and/or some explanation about your confusion, but you should not ask him to provide computation steps for any part or total problem. You will also not write computation steps for your friends. Explain your answers for descriptive type of questions. Write your assumptions (if any) and show detailed calculations at each step for arriving at the answers to the computational type of questions. You will not get any point for only writing the answers to the computational type of problems. We have the answers in the Text book. Questions from Chapter 4 and supplement to chapter 4: Question 1. a. ( Points 2) What is mass customization? b. ( Points 4) Explain what quality function deployment is and how it can be useful. c. (Points 4) Explain the term robust design, design for manufacturing and modular design. Questions from Chapter 5 Question 2. a. ( Points 10) A small firm intends to increase the capacity of bottleneck operation by adding a new machine. Two alternatives A and B have been identified , the associated costs and revenues have estimated. Annual fixed costs for A : $40000, and for B: $30000; Variables costs per unit are : A: $10 , and B: $11. Revenue per unit would be $15. i) Determine each alternatives breakeven point in units. ii) At what volume of output would the two alternatives yield the same profit? iii) Expected annual demand is 12000 units, which alternative would yield the higher profit? b. (Points 10 )The following diagram shows a 4-step process that begins with operation 1 and ends with operation 4. The rates shown in each box represent effective capacity of that operation. i) Determine the capacity of this process. ii) Which action would yield the greatest increase in process capacity? (1) increase the capacity of operation 1 by 15%; (2) increase the capacity of operation 2 by 10%;increase the capacity of operation 3 by 10%.

Explain the reasons for selecting the answer in part ii). Your explanation should be supported by computation to establish the reasons.

Question from Chapter 8 ( Points10) A company that produces pleasure boats has decided to expand one of its lines. Current facilities are insufficient to handle the increased workload, so the company is considering three alternatives, A ( new location), B( subcontract), and C( expand existing facilities) . Alternative A would involve substantial fixed costs but relatively low variable costs: fixed cost would be $250000 per year, and the variable cost would be $500 per boat. Subcontracting would involve a cost per boat of $2500; expansion would involve an annual fixed cost of $50000 and a variable cost of $1000 per boat. a) Find the range of output for each alternative that would yield the lowest total cost b) Which alternative would yield the lowest total cost for an expected annual volume of 150 boats? c) What other factors might be considered in selecting between sub-contracting and expansion