Due tomorrow afternoon!!! A+++ 100% Original!!!

Read the Case Study before working any of the bike problems

Bike Problem 1 Forecast

	Bike Sales
Jan-X0	80	Jan-X1	86	Jan-X2	78
Feb-X0	76	Feb-X1	80	Feb-X2	92
Mar-X0	300	Mar-X1	310	Mar-X2	316
Apr-X0	320	Apr-X1	326	Apr-X2	340
May-X0	380	May-X1	394	May-X2	400
Jun-X0	400	Jun-X1	410	Jun-X2	412
Jul-X0	350	Jul-X1	356	Jul-X2	358
Aug-X0	330	Aug-X1	342	Aug-X2	346
Sep-X0	280	Sep-X1	294
Oct-X0	286	Oct-X1	304
Nov-X0	380	Nov-X1	376
Dec-X0	500	Dec-X1	494

Bike 1 : Using the sales data for CYX0 through CYX2 (through August X2) forecast anticipated bike sales for September X2 through December X2 using the following method: Modified Naïve methodology (you will need to adjust for seasonal and yearly trend).

Bike Problem 2 –Breakeven Point - Insure all Fix Cost and Variable Costs are in CYX3 economic.

Fixed Cost Data BASE

YEAR CYX3$

· Utilities CYX1 $12,000 x 1.025^2 = $12608

· Advertisement CYX1 $10,000 x 1.025^2 = $10,506

· Supplies and other expenses CYX1 $15,000 x 1.025^2 = $15,759

· Production Misc. Material CYX1 $13,000 x 1.025^2 = $13,658

· Offline Storage cost (for excess inventory) CYX1 $18,000 x 1.025^2 = $18,911

· Rent CYX2 $96,000 x 1.025 = $98,400

· Store Clerk Salaries and taxes * + CYX2 $42,000 x 1.025 = $43,050

· Profession Services CYX2 $40,000 x 1.025 = $41,000

· Health Insurance CYX2 $65,000 x 1.025 = $66,625

· Other Insurance CYX2 $20,000 x 1.025 = $20,500

· Store Manager Salary and taxes * CYX2 $70,000 x 1.025 = $71,750

· Production Worker vacation & holiday pay CYX2$ 4,200 x 1.025 = $ 4,305

· Production Worker non productive activities CYX2 $ 6,750 x 1.025 = $ 6,919

· Total Fix Cost for CYX3 $423,991

+ Excludes overtime pay to store clerk.

* Includes vacation pay

CYX2$ CYX3$

CYX2 Variable Cost per Bike $340 x 1.025 = $348.50

Includes production worker straight time salary

Excludes any overtime pay and part- time worker pay

Excludes any additional storage or inventory cost.

· Inflation data

Inflation rate from CYX1 to CYX2: 2.5% or 1.025

Inflation rate from CYX2 to CYX3: 2.5% or 1.025

Bike 2: Calculate the breakeven point (in CYX3 Economics) based on the case study fixed and variable cost data (VC = $348.50). Use CYX2 sale price of $450 x 1.025 escalation = CYX3 dollars of $461.25 per bike and Breakeven Point Equation: Fix Cost/[Sales Price – Unit Variable Cost].

Bike Problem 3 Quality Function Deployment

Develop a Quality Function Deployment (QFD) for a bicycle. (see Figure 4-4)

Require a minimum of 4 technical requirements and 4 customer requirements.

Bike Problem 4 - Layout

Bike 5a : Improve the current layout using the OM tools and techniques (chapter 6).

Bike 5b : Also develop a new floor layout assuming expansion. Assume that the expansion is to the right.

The show area must differentiate between bike product and other product line. Storage must also differentiate between receiving, part inventory and final inventory

Current Building Size

Front 40 Feet

Your Layout could have an impact on Bike Problem 6 Decision Tree.

1. The location of the doors and bathrooms are fixed and can not be moved.

2. You need to have at minimum a walk way of 7 feet by 6 feet at a cost of $4,000.

3. Additional cost beside the walk way

	Total Cost
Walk way only (baseline)	$ 4,000
Walk way + 1 additional section of wall	$ 7,000
Walk way + 2 additional section of wall	$12,000
Walk way + 3 additional section of wall	$18,000

a. Moving the office, result in an additional cost of $4,000.

b. Storage Racks $25 per linear foot.

Bike Problem 5 – Decision Tree Your calculation will be in CYX3economics and based on net profit for each branch.

Case A. Branch 1 Do not expand

Case B. Branch 2 Expansion with no additional advertisement

Case C. Branch 3 Expansion with additional advertisement

· Assume:

· 3840 Bikes sold in CYX2,

· Inflation Rate 2.5%

· For the decision tree calculation use a CYX3 sale price of $450 plus inflation

· Fix Cost for year CYX3 are $423,991 (without expansion). There is one fix cost in CYX2 that is not applicable with expansion, this will impact your estimated fix cost for CYX3 with expansion.

· Use a Variable Cost in CYX3 dollar of $348.50 x improvement curve factor against labor cost. For this exercise use a value of $345.68.

CYX2 Sales Growth Factor Projected

CYX3 Sales

3840 x 1.01 = 3878

3840 x 1.03= 3955

3840 x 1.05= Calculate

3840 x 1.07= Calculate

3840 x 1.12= Calculate

3840 x 1.18= Calculate

Hint: You will need to find the net revenue for given quantity of bike (each opinion)

Branch 1 Do not expand (no additional fix cost)

· For CYX3 there is a 50% probability of a 1 percent growth in the sales of bike over CYX2 baseline.

· For CYX3 there is a 50% probability of a 3 percent growth in the sales of bike over CYX2 baseline.

Result in approximate composite 2% growth

Branch 2 Expansion with no additional advertisement with an additional fixed cost of $115,000 (CYX3 $) ($98,400 rent + $12,600 utility + a minimal cost of $4,000 for a 7’ x 6’ door– see Bike Problem 5) (Depending on your layout from Bike Problem 5 there may be some additional fix cost.)

· For CYX3 there is a 45% probability of a 1 percent growth in the sales of bike over CYX2 baseline.

· For CYX3 there is a 45% probability of a 3 percent growth in the sales of bike over CYX2 baseline.

· For CYX3 there is a 10% probability of a 5 percent growth in the sales of bike over CYX2 baseline

Result in approximate composite 2.3% growth

Branch 3 Expansion with additional advertisement and a total fixed cost of $155,00 (CYX3 $) ($98,400 rent + $12,600 utility+ 40,000 for advertisement + a minimal cost $4,000 for a 7’ x 6’ door

– see Bike Problem 5) (Depending on your layout from Bike Problem 5 there may be some additional fix cost.)

· For CYX3 there is a 50% probability of a 7 percent growth in the sales over CYX2 baseline.

· For CYX3 there is a 35% probability of a 12 percent growth in the sales over CYX2 baseline.

· For CYX3 there is a 15% probability of an 18 percent growth in the sales over CYX2 baseline.

Result in approximate composite 10.4% growth

See Case Study for additional information (last page) New Business assumptions: (Applicable to Expansion Options only)

New Business assumptions: (Applicable to Expansion Options only)

Assumptions:

a. Net Revenue (Sales Revenue – Variable Cost) = $35,000 in Cyx3 dollars with additional advertisement

b. Net Revenue (Sales Revenue – Variable Cost) = $15,000 in Cyx3 dollars with no additional advertisement

c. No additional fix cost is required except for one time fix cost of $10,000 in CYX3 dollars

d. The supplemental business can complementally the bike business and must offset bike business off seasonal business.

e. The store owner repair activity is reduced by 50%. The bike assembler will assume this effort. This means that only 87.5% of the assembler time is spent building bikes.

f. Space requirement must not exceed 750 sq. feet.

Additional case Study requirements:

a. Develop a floor layout assuming expansion (see bike problem #5b)

Bike Problem 6 – Follow

Using the data below (Flow Process Chart Figure 7-4 with addition of the operation times) develop a more efficient workflow. How will any productivity improvement affect your variable cost and what is the impact? Make sure not to combine the different operations such as operations, movement, inspection, delay and storage. Also separate the various assemblies in your Flow Process Chart.

Steps or Tasks	Time (min.)	Operation	Movement	Inspection and Test	Delay/Idle	Storage
Symbols
Initial Set-up (obtain tools)	1.00
Obtain Pedal assy hardware & Frame	1.00
Assembly Pedal Assy to frame	2.00
Obtain Steering System Hardware	1.00
Assemble Steering System	4.00
Obtain Front & Rear Brake	1.00
Assemble Front & Rear Brake	9.00
Obtain Gear Hardware	1.00
Assemble Gear System	9.00
Obtain Wheels hardware (front & back)	1.00
Assemble Wheel subassembly and install (front & back)	9.00
Obtain Chain, water bottle, decals and Seat Assy	1.00
Install Chain, water bottle, decals and Seat Assy	7.00
Inspect and Test	2.00
Storage	1.00
Cleanup	1.50
S. Total	51.50
PF&D (Personal, Fatigue and Delay) 16.5% of Subtotal **	8.50
Total	60.00

No operation task can be reduced by more than 10%.

** Equates to 68 minutes per day (8.5 minutes per bike x 8 bikes per day)

68 minutes = 16.5% GIVEN FACTOR TO USE

(480 – 68) minutes

60 minutes/hour x 8 hours/day = 480 minutes/day (excludes lunch)

Part B: Calculate the new variable cost in CYX3 Dollars. Assume the Material Variable Cost is $315 in CYX2 Economics and CYX2 labor rate is $25.00. Be sure to factor in the improvement factor from part A. Show all your calculations/work.

Bike Problem 7 – Manufacturing Schedule

Based on your forecast from bike problem 1, the information in your case study (schedule and inventory data), and the current schedule file explain why the potential schedule solution file is a better scheduling solution.

SEE CASE Study for more details

Session 6 Homework assignment Due date - the next to last session

Problems 27 through 29 Chapter 17

DATA

TASK	Prior Task	Time (in weeks)
A	NONE	6
B	A	20
C	B	4
D	NONE	20
E	D	10
F	E	8
G	F & C	30
H	G	5
I	H	2

Problem 27 Draw Activity on the Arrow (AOA) diagram (Figure 17-4) and determine critical path and calculate the expected time.

Problem 28 Draw a Grantt Chart (Figure 17-3) Helpful if you do Problem 33 first. (Would you expect that the completion date would be same in both problem 33 and 35?)

Problem 29 If the actual time for Task A and Task B were 10 week and 30 weeks respectfully,

how would this effect the expected time and update the above Grantt Chart accordingly? (see Power Point File)

Capacity Problem

A grocery store has five regular checkout lines and one express line (12 items or less). Based on a sampling study, it takes 11 minutes on the average for a customer to go through the regular line and 4 minutes to go through the express line. The store is open from 9 a.m. to 9 p.m. daily.

a. What is the store’s maximum capacity for the week for the express line and regular checkout line?

b. What is capacity for the week, if the regular checkout line operates according to the schedule in the table below? (The express line is always open.). Capacity for both regular and express check line.

Hours/DayMonTuesWedThurFriSatSun

9-1231111352

12-442222354

4-623333532

6-934444531

Forecast Analysis:

Based on the following production data:

a. Forecast the production demand for calendar year 2009 (using regression analysis)

CY 2003 8290

CY 2004 8550

CY 2005 8890

CY 2006 9010

CY 2007 9254

b. In problem 5.4 (charter 5 problem 4) the new machine will be online in December 2008. So based on your forecast in this problem which alternatives in problem 5.4 would you recommend and why ?

c. Alternative you select in part b will not be replace until 2013, which alternative would you choose now between problem 5.4 alternatives A and B, and why ?

Bath Room

40 ft.

54 ft.

16’

24’

Office

8’ x 8’

Not to scale

Door

Back Door

Portable wall

Counter

Show Room

Storage Area

Storage Area

Assembly Area

Door

Back Door

Bath Room

40 ft.

54 ft.

The Bath rooms are fixed.

Inter walls are removable at a cost.

Parking Lot of Strip Mall

Strip Mall Alley

Receiving area is in the rear

For Symbols

You can use:

O = operation

M = movement

I = Insp. & Test

D = Delays

S = Storage

Don’t forget to connect the symbols

Start-up

5 minutes

Breaks

2 @15 minutes ea

Restroom Breaks

2 @ 4 minutes ea

Fatigue/Delays

20 minutes

Clean-up

5 minutes

Total

68 minutes