Calculations: Answer all the following questions:
1. A company is deciding where to assign its summer intern. The manager estimates that the
intern can save $10,000 in the supply chain or increase sales (revenue) by $25,000. If
sales (revenue) is divided into the three categories shown in the table, where should the
manager assign the intern to maximize profits?
(2 marks)
Supply Chain Costs
Profits
35
% of current sales
(revenue)
Production Costs
25
40
2. A product is currently made in a process-focused shop, where fixed costs are $8,000 per
year and variable cost is $40 per unit. The firm currently sells 200 units of the product at
$200 per unit. A manager is considering a repetitive focus to lower costs (and lower
prices, thus raising demand). The costs of this proposed shop are fixed costs = $24,000
per year and variable costs = $10 per unit. If a price of $80 will allow 400 units to be
sold. (10 marks)
a. What profit (or loss) can this proposed new process expect? (2.5 marks)
b. Do you anticipate that the manager will want to change the process? Explain.(3.5
marks)
c. Draw the graph and find the point at which the cost will be same in either of the
choice. (4 marks)
3. A manufacturer of stamped metal auto parts has four parts factories in one city at the
location coordinate shown below. Each coordinate unit represents a city block (roughly
100 meters). The yearly demand at each factory is also given. (Write the formula)
Factories
Demand
Rayburn Industrial Park
Port of Zavalla
Henderson Mfg. Center
Wax Mills Site
19,000
3,000
5,000
6,000
XCoord.
20
60
70
90
Y-Coord.
130
40
100
30
Management has decided to build a new sheet metal mill, to supply these factories, at a
location central to these plants. What should be the map coordinates of the new plant and also
plot the coordinates in a graph?
(8 marks)
(Note: formula – 1 mark; finding the map coordinates 5.5 marks; graph 1.5 marks)
4. A company is designing a product layout for a new product. It plans to use this
production line eight hours a day in order to meet a schedule of 400 units per day. The
tasks necessary to produce this product are detailed in the table below. (7 marks)
Task
A
Predecessor
–
Time (seconds)
50
B
C
D
E
F
A
B, D
C, E
36
26
22
70
30
a. Draw the network described in the table. (1.25 marks)
b. Without regard to a production schedule, what is the minimum possible cycle time (in
seconds) for this situation; what is the maximum? (0.75 marks)
c. What is the required cycle time (in seconds) in order to meet the schedule? (2 marks)
d. What is the minimum number of workstations needed to meet the schedule? (1.25 marks)
e. What is the efficiency? (1.75 marks)
5. The results of a time study to perform a quality control test are shown in the following
table. On the basis of these observations, determine the normal and standard time for the
test, assuming a 13% allowance factor.
(13 marks)
Observation (minutes)
Performanc
Element
e
Rating
1
2
3
4
5
6
(%)
Typing letter
2.5 2.4
2.8
2.1
2.6
2.3
90
a
Typing envelope 0.8 0.8
0.6
0.8
2.1
0.7
110
a
Stuffing envelope 0.4 0.5
1.5
0.3
0.6
0.5
100
Sealing, sorting
1.0 2.7b
0.9
1.0
4.5b
0.9
95
a – Disregard-secretary stopped to answer the phone.
b – Disregard-interruption by supervisor.
