Ops management and & Technology

1. Mark Price the marketing manager for Speakers needs to find which variable most affects the demand for a line of speakers. He is uncertain whether the price of speakers of the advertising expenditures drive the sale of speakers. He plans to use the regression analysis to determine the relative impact price an advertising. He used 12 years of data which is given below. The output from his regression analysis also give:

a. Interpret the output from the regression analysis given above – is this a good regression model to forecast sales

c. Write the regression equation showing the relationship between Sales versus Advertising and Price

d. Determine whether Price or Advertising has more impact on the forecast of Sales

e. Predict average yearly speaker sales the price was $300 per unit and Mark is planning to spend $900 thousand in Advertising.

2. Assume the network and data as follows:

a. Construct the network diagram

b. Indicate the critical path when normal activity times are used

c. Explain the procedure you would use to crash this project if you had a penalty cost per week above 15 weeks as well you had indirect costs per week

3. Ace Steel Mill estimates the Demand for steel in millions of tons per year as follows

a. If capacity is set at 18 Million tons what is the capacity cushion

b. What is the probability of Idle capacity

c. What is the average utilization of the plant at 18 million ton capacity

d. If it costs $8 million per ton of lost business and $80 million to build a million ton of capacity how much capacity should be built to minimize the total cost

4. Explain the reasons for

a. Carrying large levels of inventories

b. Carrying Small Levels of Inventories

5. We discussed in class how MRP (Materials Planning System) works we examined an example of the a Table with four legs and a leg assembly. We discussed the following charts.

Please explain how the Bill of Materials Explosion takes place in these charts

6.

7. Explain the following as discussed in class

a. Thompson’s annual fixed costs of the shipping operation are $1,650,000, which includes costs of the equipment and infrastructure for the operation. The estimated variable cost of shipping the scales with the in-house operation is $4.70 per ton-mile.

b. If Thompson outsourced the operation to Carter Trucking, the annual fixed costs of the infrastructure and management time needed to manage the contract would be $560,000. Carter would charge $8.50 per ton-mile.

c. Currently Thompson shipped 255,000 ton-miles this year and his shipments in the last five years have increased at the rate of 18,000 ton-miles a year.

What would you recommend Thompson to do and why?

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