Productions and Operations Management

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test 1

Suppose that you are using the simple mean to make a forecast. This period’s forecast was equal to 200 units, and it was based on 5 periods of demand. This period’s actual demand was 300 units. What is your forecast for next period?
5*200+300
1300
simple mean = 1300/6= 216.7	217 rounded answer
The school’s cafeteria has three service lines (pizza, salads, and sandwiches). The pizza line has one server and serves 90 pizzas per hour. The salad line has two servers and they handle 140 customers in 70 minutes. The sandwich line has three servers and they supply 360 sandwiches in 90 minutes. Which service line has the highest hourly productivity?
Your answer should just note down one of the three lines pizza, salads, or sandwich? For instance, if you conclude that the salads line has the highest productivity you will just write salads in your answer.
Pizza P P= O/I	Salad P=O/I	sandwich P=O/I
90/1	140/(70/60)*2	360/(90/60)*3
90 pizzas per hour	140/2.33	360/4.5
60 salads per hour	80 slalads per hour
pizza is the highest
Suppose that you want to set up a 3-month weighted moving average forecasting system. You want the weights to be percentages (that add to 100%). Furthermore, you want weights for the most recent two months to be equal but you want each of those weights to be twice as large as the weight for the oldest month. What should the weight be for the oldest month?
x=2y
so, x+x+y = 100%
or 2y +2y + y =100%
y=20%
Which of the following would not be considered a core competency that a company might have:
insuffcient distribution center
The definition of quality that involves the product functioning as expected without failure is:
realiability
Cover Me, Inc. sells umbrellas in three cities. Management assumes that annual rainfall is the primary determinant of umbrella sales, and it wants to generate a linear regression equation to estimate potential sales in other cities. Given the data below, what is the forecast for 20 in. of rain? (Round your answer to the nearest whole number)
Rainfall Sales
X Y	b=3(152400)-(78)(5100)/3(2340)-(78)^2
City A 36 in. 2300	b=63.5
City B 30 in. 2000
City C 12 in. 800	y=63.5+50x
Suppose that a product has two parts, both of which must be working in order for the product to function. The reliability of the first part is .85, and the reliability of the second part is .82. In addition, the second part comes with a backup that is 50% reliable. What is the overall reliability of the product? Please answer as a percentage to the second decimal place (so your answer should be of the form xx.xx%)
0.82+0.5(1-0.82)=0.91
(0.85)(0.91)=(0.7735)
Which of the following forecasting methods would be most accurate if demand were rapidly decreasing?
3 month moving average

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test 2

Eight samples of n = 50 were taken by an operator at a workstation in a production process. The number of defective items in each sample was recorded as follows.
Sample Number of Defects
1 10
2 0
3 12
4 8
5 10
6 16
7 14
8 10
1. What is the upper control limit (round to 4 decimals)? [1]
2. What is the lower control limit (round to 4 decimals)? [2]
3. Is the process in control? [3]
question 2	Johnson Enterprises sells no-spill syrup in bottles. The specification limits 11.95 and 12.05 ounces. Management is evaluating four different machines with standard deviations of each machine provided in the options below. Check all the machines that are statistically "capable."
question 3	Consider a p-chart measuring the percentage of defective light bulbs. If the LCL is .04 and a sample has 1% defects, what is the implication?
question 4	The best operating level is the volume of output that results in the ____________________.
question 5	A firm must choose between remaining where it is, with current capacity, and building a new facility with 50% more capacity. The probability of high demand is estimated to be 75%. The current facility would provide $100,000 profit if there is high demand or $50,000 profit if there is low demand. The replacement facility would provide $160,000,000 profit if there is high demand but would only break even if there is low demand.
What is the expected value of remaining where it is? [1] (answer in the format $xxxxxxx, so $ sign and then numbers without "," as separator, so if the answer is 50,000 it should be types as $50000)
What is the expected value of of building a new or replacement facility? [2] (answer in the format $xxxxxxx, so $ sign and then numbers without "," as separator, so if the answer is 50,000 it should be types as $50000)
question 6	One limitation with quantitative forecasting models is:
they are linited on a quality of avaviable data
question 7	A company used to produce 300 units every day, but 20% of the units were defective. After installing a new process, the defect rate has been reduced to 5%, while output has remained the same. What is the percent increase in productivity due to installing the new process? (Answer should be rounded to 2 decimals in the format xx.xx%)
Which of the following is not a factor in capacity planning?
labor hours consumed proximity to suppliers

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test 3

practice questions
Howard University Hospital has a current layout as follows (please assume each department resides in its own block even if the borders are not showing in the diagram and B and A are in adjacent blocks. Similarly E and F are in adjacent blocks and so on and so forth):
B	A	C
D	E	F
The movement between departments is as follows:
Table 10-11: From-To Matrix for Howard University Hospital
Trips between Departments
Department	A	B	C	D	E	F
A	-	5	20	5	-	8
B	-	-	30	10	10
C	-	20	15	5
D	-	-	-
E	-	17
F	-
What is the ld-score of the current layout? [1]
If Howard University Hospital decides to swap departments A and C (that is department A is moved to where department C is and vice-versa), what would be the new ld-score? [2]
Note: ld-score is the total score used for evaluation of which layout is considered to a better layout
Ten samples of n = 200 were taken by an operator at a workstation in a production process. The number of defective items in each sample was recorded as follows:
Sample	Number of Defects
1	12
2	25
3	10
4	15
5	16
6	30
7	28
8	12
9	11
10	14
To assess if the process is in control:
What is the UCL? [1] (format of answer should be rounded to four decimals)
What is the LCL? [2] (format of answer should be rounded to four decimals)
Is the process in control? [3] (answer should be yes or no)
Howard University Hospital has a current layout as follows (please assume each department resides in its own block even if the borders are not showing in the diagram and B and A are in adjacent blocks. Similarly E and F are in adjacent blocks and so on and so forth):
B	A	C
D	E	F
The movement between departments is as follows:
Table 10-11: From-To Matrix for Howard University Hospital
Trips between Departments
Department	A	B	C	D	E	F
A	-	5	20	5	-	8
B	-	-	30	10	10
C	-	20	15	5
D	-	-	-
E	-	17
F	-
What is the ld-score of the current layout? [1]
If Howard University Hospital decides to swap departments A and C (that is department A is moved to where department C is and vice-versa), what would be the new ld-score? [2]
Note: ld-score is the total score used for evaluation of which layout is considered to a better layout.
You have your own "Dunkin" manufacturing company that makes packaged mini-donut box for sale. You operate 50 weeks in a year and the total demand is 50,000 boxes. The setup costs are $21 and the holding cost per box on an annual basis is $1. You can make 1500 boxes in a week.
How many mini-donut boxes should you plan to produce each cycle? [1] (round your answer to the nearest whole number)
If Dunkin produces in batches of 1900, what is the penalty cost? [2] (note your answer to the nearest whole number without the $ sign)
Investments in building or purchasing long-term production facilities are inherently risky due to __________.
You have a system with a component reliability of 97.2%. If you can add a backup component, what should be the reliability of the backup component [1] to achieve a system reliability of 99.1%? (your answer should be rounded to 1 decimal and in the formal xx.x%)

test 4

Question #2
Location	Fixed Costs	Variable Costs	A=B	B=C	C=D
A	$ 85,000.00	2	6000	6666.6666666667	7500
B	$ 55,000.00	7
C	$ 35,000.00	10
D	$ 65,000.00	6
Question #3
average weekly demand	50	units
standard deviation	8	units
95%	1.645
Safety Stock	13	units (the correct answer is 26 you have to multiply by 2)
therefore target inventory level= lead time demand +safety stock
lead time	2	weeks
lead time demand	100
target inventory level=	113	answer should be 226 again you have to multiply by 2
so correct answer safety stock = 26 units and target inventory level = 226
Question 1
An auto-mechanic charges $60 per job. Labor costs average $15 per job, materials costs are $20 per job, and overhead costs are averaged at $20 per job.
a. What is the multifactor productivity ratio for the mechanic? What does your finding mean?
b. If the auto-mechanic reduces his overhead costs by 25% all else remaining the same, what will be the percentage change in productivity?
problem and solution are correct	MFP	1.0909090909
1.2
Question #4	change	10.0917431193
Using the information provided in the table below, find the probability of completing the project in 44 weeks?
probablilty	0.71
problem and solution correct keep same process
Question 5
Given the following data, use exponential smoothing with α = 0.2 and 2-period moving average to generate forecasts for periods 2 through 4. Calculate MAD to determine the better forecasting method. (In your answer, note the MAD for both methods and then make a determination as to which one is a better forecasting method).
Period	Actual	Forecast	Sigma	moving average
1	15	17	0.2	2	-2	2
2	18	7.5	10.5	10.5
3	20	16.5	3.5	3.5
4	16	19	-3	3
19
Period	Actual	Forecast	MAD	4.75
1	15	17	-2	2
2	18	16.6	1.4	1.4
3	20	16.88	3.12	3.12
4	16	17.504	-1.504	1.504
8.024
MAD	2.006

chapters 3+4 (for test 5)

chapter 4
Analysis will look at the expected sales levels and cost of internal operations vs. cost of purchasing the product or service
Total Cost of Outsourcing :
T C B u y = F C B u y + (V C B u y ´ Q ) Total Cost of Insourcing:
T C M a k e = F C M a k e + (V C M a k e ´ Q ) Indifference Point :
F C B u y + (V C B u y ´ Q ) = F C M a k e + (V C M a k e ´ Q )
example
Mary and Sue decide to open a bagel shop. Their first decision is whether they should make the bagels on- site or buy the bagels from a local bakery. If they buy from the local bakery they will need airtight containers at a fixed cost of $1000 annually. They can buy the bagels for $0.40 each. If they make the bagels in-house they will need a small kitchen at a fixed cost of $15,000 annually. It will cost them $0.15 per bagel to make. They believe they will sell 60,000 bagels.	Mary and Sue wants to know if they should make or buy the bagels?
⚫ FCBuy + (VCBuy x Q) = FCMake + (VCMake x Q)
⚫ $1,000 + ($0.40 x Q) = $15,000 + ($0.15 x Q)
Q = 56,000 bagels
next steps	total costs for 60000 buy
1000+0.4*60000
25000
25000>24000
total costs for 60000 make	better option would be to make
15000 + 0.15*60000
24000
chapter 3
A company is planning to establish a chain of movie theaters. It estimates that each new theater will cost approximately $1 Million. The theaters will hold 500 people and will have 4 showings each day with average ticket prices at $8. They estimate that concession sales will average $2 per patron. The variable costs in labor and material are estimated to be $6 per patron. They will be open 300 days each year.	Break-Even Point
What must average occupancy be to break-even?	Total revenues = Total costs @ break-even point Q Selling priceQ = Fixed cost + variable costQ
($8+$2)Q= $1,000,000 + $6*Q
Q = 250,000 patrons (42% occupancy)
⚫ What is the gross profit if they sell 300,000 tickets
Profit = Total Revenue – Total Costs
P = $10300,000 – (1,000,000 + $6300,000) P = $200,000
⚫ If concessions only average $.50/patron, what is break-even Q now? (sensitivity analysis)
($8.50)Q = 1,000,000 - $6*Q
Q = 400,000 patrons (67% occupancy)