Final Exam Fall 2002

Name:______Section:______

Final Exam

BA 301

Fall 2002

S.K. Norman

Version 1

1 Final Exam Fall 2002

3 Points each

1. “We strive to lead in the creation, development, and manufacture of the most advanced information technologies.” This is an excerpt from IBM’s ______. a. total quality management plan b. mission statement c. competitive advantage d. strategies

2. An example of a product that is produced using a continuous-process strategy is a. cars b. washing machines c. petroleum d. cakes

3. Operations management is the a. management of processes or systems that create goods and/or services. b. system in which lower-skilled workers use specialized machines to produce high volumes of standardized goods. c. plan for achieving organizational goals d. philosophy that involves everyone in an organization in a continual effort to improve quality and achieve customer satisfaction.

4. A linear programming goal is called a (an) a. constraint b. inequality c. objective function d. function

5. A new video arcade is to be constructed in the mall next to the movie theater. A manager must decide on the size of the arcade. The manager has narrowed the choices to two: large or small. Two levels of demand are possible: low and high. Payoffs for all combinations of size choices and demand levels can be estimated. What is the best tool for this problem? a. Decision trees b. Simulation c. Linear programming d. Waiting-line analysis

6. Which of the following is used to measure forecast accuracy? a. expected value of perfect information b. mean absolute deviation c. pareto charts d. X-bar charts

7. A hair salon is an example of a. job-shop process strategy b. batch process strategy c. repetitive-focused strategy d. continuous process strategy

8. An ambulance firm in a large metropolitan area is concerned with its response time. For the last 20 days, they have randomly sampled 4 ambulance calls and measured the response time for each. The firm has decided to implement statistical process control to monitor average response time. What is the most appropriate chart(s)? a. c-chart b. p-chart c. x -chart and R chart d. z-chart

9. What is an advantage of outsourcing? a. Allows firms to focus on core competition b. Can be more cost effective c. Adds capacity without additional fixed costs and overhead d. All of the above

10. Which of the following is not part of the inventory cost structure? a. Ordering cost b. Setup cost c. Variable cost d. Holding cost

11. The R chart does which of the following: a. Calculates intervals of data b. Collects, organizes, and interprets data c. Shows sample ranges and monitors variability d. None of the above

12. The process of identifying other organizations that are best at some facet of your operations and then modeling them is: a. Copying b. Benchmarking c. Copycatting d. Continuous improvement

13. The EOQ model reflects the trade-off between a. Carrying costs and setup/ordering costs b. Stockout costs and carrying costs c. Penalty costs and ordering cost d. Quantity discounts and setup costs

14. An airline ticket counter, with several agents for one line of customers is an example of a a. single channel, single phase system b. single channel, multi-phase system c. multi-channel, single phase system d. multi-channel, multi-phase system

15. What combination of x and y will yield the optimum for this problem? NOTE: You do not need to use the graphical method to answer this question.

Maximize $3x + $15y subject to 2x + 4y < 12 5x + 2y < 10 x  0, y  0 a. x = 2, y = 0 b. x = 0, y = 3 c. x = 1, y = 1 d. x = 1, y = 5

16. Most inventory models attempt to minimize a. The likelihood of a stockout b. The number of items ordered c. The number of orders placed d. Total inventory based costs

17. The national competition designed to stimulate efforts to improve quality, to recognize quality achievements of U.S. companies, and to publicize successful programs is the a. Demming Award b. Baldrige Award c. Pareto Award d. National Benchmark Award

18. A repetitive production system in which the processing/movement of materials/goods occur just as they are needed and usually in small batches is a. Supply chain management b. Just-in-time system c. MRP system d. ERP system

19. An appliance manufacturer produces two models of microwave ovens. Both models require fabrication and assembly work. There are 600 fabrications hours available and 480 hours of assembly. One model has $40 profit, the other contributes $30 profit. The manufacturer wants to determine how much of each model to produce in order to maximize profits. The best tool to use for this problem is a. Decision trees b. Simulation c. Linear programming d. Waiting-line analysis

20. Which of the following describes a vertical integration strategy? a. having one of a few suppliers b. integration of activities that procure materials c. buying suppliers to obtain the ability to produce goods previously purchased d. none of the above

21. A successful TQM program incorporates all of the following except a. continuous improvement b. employee involvement c. benchmarking d. centralized decision-making

22. One of the advantages of Just-In-Time is: a. Many suppliers b. Large lot sizes c. Low product cycle time d. Push system motivation

23. Which of the following is true regarding the use of simulation? a. It is always very easy to build a simulation model b. It is very inexpensive to use a simulation model c. It always yields optimum solutions d. It allows time-compression in testing major policy decisions

24. A regional airline is concerned about its record of on-time performance. The Memphis hub experiences 20 flights each day of the week. The on-time departures for the previous 10 days are: 17, 16, 18, 19, 16, 15, 20, 17, 18, 16. The airline is implementing statistical process control to monitor on-time performance. What is the most appropriate chart(s)? a. c-chart b. p-chart c. x -chart and R chart d. z-chart

25. For the two constraints given below, which point is in the feasible solution space of this maximization problem? (1) 14x + 6y < 42 (2) x - y < 3 (3) x  0, y  0 a. x = 1, y = 5 b. x = -1, y = 1 c. x = 4, y = 4 d. x = 2, y = 1

26. You are creating a forecast using time-series data for the next year for Nantucket Nectars. The Juice Guys (Nantucket Nectars) experience particularly high demand during April, May, June, and July. This type of demand behavior is a. trend b. seasonality c. cyclical d. random variations

27. Which of the following is an example of dependent demand? a. demand for burgers at a local McDonald’s restaurant b. demand for ski-lift passes at Snowbowl c. demand for tires at a Ford truck assembly plant d. demand for dog food at a Nestle-Purina production plant

28. Which of the following is NOT a characteristic of a dummy activity? a. maintain precedence in the CPM network b. consume time and resources c. are represented by a dashed line d. are used when two activities with identical starting and ending events are encountered.

29. Which of the following was not discussed as part of the psychology of waiting? a. The more valuable the service, the longer people will wait. b. The longer the wait, the more likely people will cut in line. c. Solo waiting feels longer than group waiting. d. Anxiety makes waiting feel longer.

30. What aggregate planning strategy produces the same amount of product every month? a. level b. chase c. service d. production

31. If the food service for the university operates a cafeteria with a single serving line, that system behaves most like a a. single channel, single phase system b. single channel, multi-phase system c. multi-channel, single phase system d. multi-channel, multi-phase system

32. The planning horizon for aggregate planning is a. 1-4 weeks b. 1-2 months c. 3-18 months d. 10-20 years

33. Which of the following is not a project scheduling technique? a. Gantt chart b. CPM c. MRP d. PERT

34. A firm has many options for influencing and absorbing the variation in demand. Which of the following is a method that attempts to manipulate product demand? a. inventories b. part-time workers c. subcontracting d. price cuts

35. A waiting line is also known as: a. channel b. phase c. queue d. arrival rate

36. Which of the following is NOT an advantage of level scheduling? a. stable employment b. lower absenteeism c. lower turnover d. matching production exactly with sales

37. What is the longest path through a CPM network called? a. the information superhighway b. the key path c. the critical path d. the waiting line

38. Which of these is not part of the few suppliers strategy? a. Little openness b. Partnership c. Long term relationship d. Frequent, small lots

39. In the 4-hour House video several techniques were used to crash the project. Which of the following was NOT a technique used to crash the 4-Hour House project? a. increase labor b. utilize high-technology processes c. purchase more materials than needed to allow for errors d. increase planning effort

40. In lot-for-lot ordering, you should order a. for the entire year b. for the week c. what is needed d. the EOQ

41. In the Juice Guys (Nantucket Nectars) video, a cross-disciplinary project team was created to a. implement a new inventory system b. implement an MRP system c. implement the Just-in-time approach d. implement an ERP system

42. Which of the following is NOT a type of inventory held by companies? a. Raw materials inventory b. Work-in-process (WIP) inventory c. Maintenance, repair and operating supplies (MRO) inventory d. Just-in-time (JIT) inventory

43. What is a benefit of CPM? a. mathematically complex b. uses graphical displays c. subjective time estimates d. all of the above

44. A company produces toy cars. Which part is the parent? a. axle b. wheels c. body d. toy car

Problems (4 points each) An office furniture company produces three types of desks. They have 153 labor hours of welder’s time and 280 labor hours of assembler time, and 100 hours of packaging time available per day. Hours required to produce a desk for Type I are 1.8 for welding, 1.9 for assembling and 1.2 for packaging. The corresponding figures for Type II are 2.7, 1.2, and 0.8; for Type III 2.5, 2.2, and 1.4. There is storage for 83 desks total. Each unit of Type I, Type II, and Type III desks produced result in a profit of $475, $575, $500, respectively. Use T1, T2, T3, to represent the number of Type I desks, Type II desks, and Type III desks, respectively.

Using the above description, answer the next two questions. 45. The objective function to maximize profits for desks is: a. Max 153T1 + 280T2 + 100T3 b. Max 475T1 + 575T2 + 500T3 c. 475T1 + 575T2 + 500T3  Profit d. 153T1 + 280T2 + 100 T3  553

46. Select the appropriate assembly time constraint for desks. a. 2.7T1 + 1.2T2 + 0.8T3  280 b. 2.5T1 + 2.2T2 + 1.4T3  280 c. 1.9T1 + 1.2T2 + 2.2T3  280 d. Max 1.9T1 + 1.2T2 + 2.2T3

47. Schips Department Store operates a dock for supplier deliveries and customer deliveries. The trucks arrive at random times throughout the day at the store’s dock to be loaded with new deliveries or to have incoming shipments from the regional warehouse unloaded. The mean arrival rate per truck is 0.25 trucks per hour. The mean service rate is 4 trucks per hour. Use the Excel OM output below, to determine the hourly cost of operations if the cost is $50/hour for waiting trucks and $30/hour for the dock.

Waiting Lines M/M/1 (Single Server Model) Data Results Arrival rate () 0.25 Average server utilization() 0.0625

Service rate () 4 Average number of customers in the queue(Lq) 0.0042 Average number of customers in the system(L) 0.0667

Average waiting time in the queue(Wq) 0.0167 Average time in the system(W) 0.2667

Probability (% of time) system is empty (P0) 0.9375 a. $30.21 b. $30.89 c. $33.33 d. $43.33

Mark Koslow is the operations manager for the New England Shirt Company. In this capacity he is required to develop an aggregate plan for the next six months with the goal of meeting demand during this period. He has gathered the following data to determine the costs of the plan.

Inventory carrying costs $1.50 per shirt per month Demand Stockout costs $3.00 per shirt Jan 2400 Hiring cost $200 per employee Feb 1200 Firing cost $300 per employee Mar 2800 Labor per shirt 2 hours Apr 3600 Hourly wage $8.00 per hour May 3200 Beginning employment level 30 employees Jun 3600 Beginning inventory level 0 shirts Hours per employee per day 8 hours Work days per month 20 days

Using the above information answer the next three questions.

48. If Mark decides to use a level production strategy, how much will be produced in February? a. 1200 b. 2400 c. 2800 d. 3600

49. If Mark decides to use a chase production strategy, how much will be produced in February? a. 1200 b. 2400 c. 2800 d. 3600

50. Mark is developing a chase production strategy. The hiring/firing cost for February is: a. $0 hiring, $0 firing b. $0 hiring, $4500 firing c. $0 hiring, $3000 firing d. $3000 hiring, $0 firing

51. The reference desk at a university library receives requests for assistance. Assume that an average rate of 10 requests per hour arrive at the reference desk. The average service time per request is 5 minutes. What is the average number of requests waiting for assistance? a. 2.0 b. 4.0 c. 4.2 d. 5.0

The Outdoor Furniture Company manufactures two products, benches and picnic tables. The firm has two main resources: its carpenters (labor force) and a supply of redwood. During the next production cycle, 1,200 hours of labor are available under a union agreement. The firm also has a stock of 3,500 board feet of quality redwood. Each bench requires 4 labor-hours and 10 board-feet of redwood; each picnic table takes 6 labor-hours and 35 board-feet. Completed benches will yield a profit of $9 each, and tables will result in a profit of $20 each. Formulate an LP to determine the number of tables and benches to produce in order to optimize profit. Answer the following questions regarding the LP formulation. Let B represent the number of benches and T represent the number of tables.

Adjustable Cells Final Reduced Objective Allowable Allowable Cell Name Value Cost Coefficient Increase Decrease $B$7 Number to build Bench 262 0 9 4.3 3.3 $C$7 Number to build Table 25 0 20 11.5 6.5

Constraints Final Shadow Constraint Allowable Allowable Cell Name Value Price R.H. Side Increase Decrease $D$2 Labor 1198 1.4375 1198 200 598.9 $D$3 Redwood 3495 0.325 3495 3493.3 500

Using the above description and the Solver Sensitivity Report, answer the next three questions.

52. The manager has additional budget to invest in additional Labor (overtime) or additional redwood. How should this budget be used in order to optimize profits? a. Invest in additional labor. b. Invest in additional redwood. c. Invest in both labor and redwood. d. Cannot be determined.

53. The additional redwood is available as a special order. It would cost $0.35 per board-foot to acquire this redwood. What is your recommendation to the manager regarding this purchase? a. Purchase up to 3493.3 board-feet with an additional profit of $20 per board-foot. b. Do not purchase the redwood. The additional profit per board-foot is only $0.325. c. Purchase up to 3493.3 board-feet with an additional profit of $0.325 per board- foot. d. Cannot be determined.

54. What is the optimal solution? a. B = 1198, T = 3495 b. B = 9, T = 20 c. B = 1.4375, T = 0.325 d. B = 262, T = 25

Use the bill-of-materials for Product J (given below) to answer the next 3 questions.

J LT = 2

K (2) L (4) M (1) LT = 1 LT = 2 LT = 1

N (2) O (1) LT = 2 LT = 1

55. If a time-phased structure is drawn, how many weeks are required to produce Product J? a. 3 b. 4 c. 5 d. 9

56. If 50 units of Product J have been ordered, how many units of N are required to fill the order? a. 2 b. 4 c. 100 d. 200

57. Using the gross requirements plan below, determine which week to release the order for N. Gross Requirements Plan Week 1 2 3 4 5 6 7 8 J Required Date 50 Order release data K Required Date Order release data L Required Date Order release data M Required Date Order release data N Required Date

Order release data a. Week 2 b. Week 3 c. Week 4 d. Week 5

Below is an unfinished net requirements plan for Product X. EOQ = 120 is the lot-sizing technique used. Answer the next 2 questions using this information.

Net Requirements Plan Week 1 2 3 4 5 6 7 8 9 10 Product X Gross requirements 100 100 100 Scheduled receipts 50 Lead Time Projected on-hand | 60 = 2 weeks Planned order receipts Planned order releases

58. Using the EOQ = 120 lot-sizing technique, what is the amount of the planned order release in Week 4? a. 0 b. 70 c. 100 d. 120

59. Using the EOQ = 120 lot-sizing technique, what is the projected on-hand inventory in Week 10? a. 0 b. 10 c. 30 d. 50

60. A crew of mechanics at the Highway Department garage repair vehicles that break down at an average of  = 8 vehicles per day (approximately Poisson in nature). The mechanic crew can service an average of  = 10 vehicles per day with a repair time distribution that approximates an exponential distribution. What is the average time before the facility can return a breakdown to service? a. 0.40 hours b. 0.40 days c. 0.50 hours d. 0.50 days

Below is the output from Excel OM for a project consisting of 10 activities and the completion time in days. Answer the next 2 questions using this information. Data Time Precedence 1Precedence 2 A 3 B 5A C 10 D 3B C E 5B C F 10E G 8C H 3G I 2D H J 3F I

Results Late Task Early StartEarly Finish Late Start Finish Slack A 0 3 2 5 2 B 3 8 5 10 2 C 0 10 0 10 0 D 10 13 20 23 10 E 10 15 10 15 0 F 15 25 15 25 0 G 10 18 12 20 2 H 18 21 20 23 2 I 21 23 23 25 2 J 25 28 25 28 0 Project 28

61. Activity A takes 1 day more than expected. What affect does this have on the length of the entire project? a. The entire project takes 1 more day. b. The entire project takes 2 more days. c. No effect on the length of the entire project. d. Cannot be determined.

62. Determine the critical path. a. A-B-D-G-H-I-J b. A-B-C-D-E-F-G-H-I-J c. C-E-F-J d. A-C-E-F-J

HAPPY HOLIDAYS!

Formula Sheet

M/M/1  L  s   

2 L  q   

1 W  s   

 W  q   

     P  1 0 

k 1    Pnk      

TC = CwLs + Csk