OPERATIONS MANAGEMENT EXAM HELP

Project management (PERT and CPM)

Forecasting

Capacity bottleneck analysis, theory of constraints, reducing risk and incremental EMV

Decision making tools-decision trees

Waiting line models

Linear programming-Simplex Method of Linear Programming

Sample questions

Page 1

1. (TCO 8) What are the three parts of a wait-line system? (Points : 15)

2. (TCO 9) What is the objective function of LP? (Points : 15)

3. (TCO 11 & 12) What are two of the steps in a simplex maximization problem?

(Points : 15)

4. (TCO 10) What will happen if the right-hand side of a constraint is changed? (Points : 15)

5. (TCO 15 & 16) What are three of the basic steps that both PERT and CPM follow? (Points : 15)

6. (TCO 16) What is a “dummy activity?” (Points : 15)

7. (TCO 3, 4, & 5) What is the formula for linear regression? Define each part. (Points : 15)

8. (TCO 1) What are the four qualitative forecasting approaches that are available to us? (Points : 15)

9. (TCO 6) Describe the “revenue junction.” (Points : 15)

10. (TCO 8) What are the three parts of a typical queuing system? (Points : 15)

11. (TCO 8) When designing a waiting line system, what “qualitative” concerns

need to be considered? (Points : 15)

12. (TCO 8) What is the expected value with perfect information? (Points : 15)

Page 2

1. (TCO 1 &2) What is the forecast for Aug based on a weighted moving average

applied to the following past demand data and using the weights: 5, 3, 1.5?

(largest weight is for most recent data)

Feb. Mar. Apr. May Jun. Jul.

30 35 22 27 33 40 (Points : 30)

2. (TCO 3, 4, and 5) The XYZ Paint Shop owns and operates a dozen shops in

southern Iowa. Their signature paint is black epoxy. Sales (X, in millions of

dollars) is related to Profits (Y, in hundreds of thousands of dollars) by the

regression equation Y = 6.321 + 0.65X. What is your forecast of profit for a store with sales of $25 million? $65 million? (Points : 30)

3. (TCO 6 and 7) A product is currently made in a job shop, where fixed costs are

$4,500 per year and variable cost is $10 per unit. The firm sells the product for

$70 per unit. What is the break-even point for this operation? What is the profit (or loss) on a demand of 220 units per year? (Points : 30)

4. (TCO 13, 14) XYZ coating company has reviewed four new processes for

improving their coating line. The four processes, labeled A, B, C, and D use

different technology and have different capacities. All the processes have the

same level of production and the lifetime.

The four states of nature represent four levels of consumer acceptance of the

firm’s products. Values in the table are net present value of future profits in

millions of dollars.

Forecasts indicate that there is a 0.4 probability of acceptance level 1, 0.3 chance

of acceptance level 2, 0.6 chance of acceptance level 3, and 0.5 change of

acceptance level 4.

Consumer Acceptance Level (states of nature)

1 2 3 4

Alternative A 35 55 85 165

Alternative B -105 -5 155 225

Alternative c 75 85 75 65 Alternative D 55 55 75 65

Using the criterion of expected monetary value, which production alternative

should be chosen? (Points : 30)