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business
operations management 6th
Questions and Answers of
Operations Management 6th
Brazil’s fast-growing economy has been largely dependent on its freight transport capacity. A recent study has categorized the country’s containership sea port terminals into three distinct
Marilyn Helm Retailers is attempting to decide on a location for a new retail outlet. At the moment, the firm has three alternatives—stay where it is but enlarge the facility; locate along the main
A location analysis for Cook Controls, a small manufacturer of parts for high-technology cable systems, has been narrowed down to four locations. Cook will need to train assemblers, testers, and
Pan American Refineries, headquartered in Houston, must decide among three sites for the construction of a new oil-processing center. The firm has selected the six factors listed below as a basis for
A company is planning on expanding and building a new plant in one of three Southeast Asian countries. Chris Ellis, the manager charged with making the decision, has determined that five key success
Harden College is contemplating opening a European campus where students from the main campus could go to take courses for 1 of the 4 college years. At the moment, it is considering five countries:
Daniel Tracy, owner of Martin Manufacturing, must expand by building a new factory. The search for a location for this factory has been narrowed to four sites: A, B, C, or D. The following table
An American consulting firm is planning to expand globally by opening a new office in one of four countries:Germany, Italy, Spain, or Greece. The chief partner entrusted with the decision, L. Wayne
A British hospital chain wishes to make its first entry into the U.S. market by building a medical facility in the Midwest, a region with which its director, Doug Moodie, is comfortable because he
Peter Billington Stereo, Inc., supplies car radios to auto manufacturers and is going to open a new plant. The company is undecided between Detroit and Dallas as the site. The fixed costs in Dallas
Hyundai Motors is considering three sites—A, B, and C—at which to locate a factory to build its new-model automobile, the Hyundai Sport C150. The goal is to locate at a minimum-cost site, where
The following table gives the map coordinates and the shipping loads for a set of cities that we wish to connect through a central hub.CITY MAP COORDINATE (x, y) SHIPPING LOAD A (5, 10) 5 B (6, 8) 10
A chain of home health care firms in Louisiana needs to locate a central office from which to conduct internal audits and other periodic reviews of its facilities. These facilities are scattered
Todd’s Direct, a major TV sales chain headquartered in New Orleans, is about to open its first outlet in Mobile, Alabama, and wants to select a site that will place the new outlet in the center of
SEVEN convenience store, which opened its first store in New Delhi’s Lajpat Nagar in 2005, presently operates 38 round-the-clock stores in India’s capital region. Assume that the chain is
When placing a new medical clinic, the county health commissioner, Vicky Luo, wishes to consider three sites. The pertinent data are given in the following table. Which is the best site (assuming a
A Detroit seafood restaurant is considering opening a second facility in the suburb of West Bloomfield. The following table shows its ratings of five factors at each of four potential sites. Which
The fixed and variable costs (in U.S. dollars) for the new recycling plant that Eldon Yi is opening in Australia are computed as follows:COST VICTORIA PERTH Fixed $1,000,000 $800,000 Variable
The fixed and variable costs for four potential plant sites for Brent Snyder’s Ski Supplies are shown here:SITE FIXED COST PER YEAR VARIABLE COST PER UNIT Atlanta $125,000 $6 Burlington 75,000 5
Katie Reynolds owns two exclusive women’s clothing stores in Miami. In her plan to expand to a third location, she has narrowed her decision to three sites—one in a downtown office building, one
Xun Xu Health and Fitness has several production facilities scattered around the central and northern part of Iowa. It would be desirable to have a distribution center from which to send product to
The main post office in Tampa, Florida, is due to be replaced with a much larger, more modern facility that can handle the tremendous flow of mail that has followed the city’s growth since 1970.
Exemption from county and municipal taxes for 5 years? Lop9
Free water and sewage services? Lop9
Construction of a second loading dock—free of cost—at the industrial site? Lop9
An agreement to issue $500,000 in industrial bonds for future expansion? Lop9
Public-financed training of workers in a local industrial trade school? Lop9
Evaluate the inducements offered Southern Recreational Vehicle Company by community leaders in Ridgecrest, Mississippi. Lop9
What problems would a company experience in relocating its executives from a heavily populated industrialized area to a small rural town? Lop9
Evaluate the reasons cited by O’Brian for relocation. Are they justifiable? Lop9
What legal and ethical responsibilities does a firm have to its employees when a decision to cease operations is made? Lop9
Visit the Web site for PSTYE 2003 (www.gemapping.com/downloads/targetpro_brochure.pdf). Describe the psychological profiling (PSYTE) clustering system. Select an industry, other than restaurants, and
What are the major differences in site location for a restaurant versus a retail store versus a manufacturing plant? Lop9
Red Lobster also defines its trade areas based on market size and population density. Here are its seven density classes:DENSITY CLASS DESCRIPTION HOUSEHOLDS PER SQ. MILE 1 Super Urban 8,000+2 Urban
From Munday’s Standard Market Report checklist, select any other four categories, such as population (A1), hotels (B2), or restaurants/nightclubs (D), and provide three subcategories that should be
Which is the highest rated of the four European cities under consideration, using the table? Lop9
Why does Hard Rock put such serious effort into its location analysis? Lop9
Under what conditions do you think Hard Rock prefers to franchise a cafe? Lop9
The factors involved in location decisions includea) foreign exchange.b) attitudes.c) labor productivity.d) all of the above. Lop9
Evaluating location alternatives by comparing their composite(weighted-average) scores involvesa) factor-rating analysis.b) cost–volume analysis.c) transportation model analysis.d) linear
Define capacity 340
Determine design capacity, effective capacity, and utilization 341
Perform bottleneck analysis 347
Compute break-even 350
Determine expected monetary value of a capacity decision 354
Compute net present value 355
Distinguish between design capacity and effective capacity. lop25
What is effective capacity? lop25
What is efficiency? lop25
Distinguish between effective capacity and actual output. lop25
Explain why doubling the capacity of a bottleneck may not double the system capacity. lop25
Distinguish between bottleneck time and throughput time. lop25
What is the theory of constraints? lop25
What are the assumptions of break-even analysis? lop25
What keeps plotted revenue data from falling on a straight line in a break-even analysis? lop25
Under what conditions would a firm want its capacity to lag demand? to lead demand? lop25
Explain how net present value is an appropriate tool for comparing investments. lop25
Describe the five-step process that serves as the basis of the theory of constraints. lop25
What are the techniques available to operations managers to deal with a bottleneck operation? Which of these does not decrease throughput time? lop25
Amy Xia’s plant was designed to produce 7,000 hammers per day but is limited to making 6,000 hammers per day because of the time needed to change equipment between styles of hammers. What is the
For the past month, the plant in Problem S7.1, which has an effective capacity of 6,500, has made only 4,500 hammers per day because of material delay, employee absences, and other problems. What is
If a plant has an effective capacity of 6,500 and an efficiency of 88%, what is the actual (planned) output? lop25
A plant has an effective capacity of 900 units per day and produces 800 units per day with its product mix; what is its efficiency? lop25
Material delays have routinely limited production of household sinks to 400 units per day. If the plant efficiency is 80%, what is the effective capacity? lop25
The effective capacity and efficiency for the next quarter at MMU Mfg. in Waco, Texas, for each of three departments are shown:DEPARTMENT EFFECTIVE CAPACITY RECENT EFFICIENCY Design 93,600 .95
Under ideal conditions, a service bay at a Fast Lube can serve 6 cars per hour. The effective capacity and efficiency of a Fast Lube service bay are known to be 5.5 and 0.880, respectively.What is
A work cell at Chris Ellis Commercial Laundry has a workstation with two machines, and each unit produced at the station needs to be processed by both of the machines. (The same unit cannot be worked
The Pullman Mfg., Inc., three-station work cell illustrated in Figure S7.8 has two machines at station 1 in parallel.(The product needs to go through only one of the two machines before proceeding to
A production process at Kenneth Day Manufacturing is shown in Figure S7.9. The drilling operation occurs separately from, and simultaneously with, sawing and sanding, which are independent and
Smithson Cutting is opening a new line of scissors for supermarket distribution. It estimates its fixed cost to be $500.00 and its variable cost to be $0.50 per unit. Selling price is expected to
Using the data in Problem S7.17:a) What is the break-even point in dollars for proposal A if you add $10,000 installation to the fixed cost?b) What is the break-even point in dollars for proposal B
Given the data in Problem S7.17, at what volume(units) of output would the two alternatives yield the same profit? lop25
Given the following data, calculatea) BEPx;b) BEP$;andc) the profit at 100,000 units:P = +8>unit V = +4>unit F = +50,000 lop25
You are considering opening a copy service in the student union. You estimate your fixed cost at $15,000 and the variable cost of each copy sold at $.01. You expect the selling price to average
As manager of the St. Cloud Theatre Company, you have decided that concession sales will support themselves.The following table provides the information you have been able to put together thus
You are given the data in Problem S7.28:a) What is the break-even point in dollars for proposal X?b) What is the break-even point in dollars for proposal Y? lop25
Given the data in Problem S7.28, at what volume (units)of output would the two alternatives yield the same profit (loss)? lop25
Use the same data in Problem S7.28:a) If the expected volume is 28,500 units, which alternative should be chosen?b) If the expected volume is 15,000 units, which alternative should be chosen? lop25
James Lawson’s Bed and Breakfast, in a small historic Mississippi town, must decide how to subdivide (remodel) the large old home that will become its inn. There are three alternatives:Option A
What is the net present value of an investment that costs $75,000 and has a salvage value of $45,000? The annual profit from the investment is $15,000 each year for 5 years. The cost of capital at
The initial cost of an investment is $65,000 and the cost of capital is 10%. The return is $16,000 per year for 8 years.What is the net present value? lop25
What is the present value of $5,600 when the interest rate is 8% and the return of $5,600 will not be received for 15 years? lop25
Tim Smunt has been asked to evaluate two machines.After some investigation, he determines that they have the costs shown in the following table. He is told to assume that:1. The life of each machine
Your boss has told you to evaluate two ovens for Tink-the-Tinkers, a gourmet sandwich shop. After some questioning of vendors and receipt of specifications, you are assured that the ovens have the
Bold’s Gym, a health club chain, is considering expanding into a new location: the initial investment would be $1 million in equipment, renovation, and a 6-year lease, and its annual upkeep and
Kurt Hozak, VP of Operations at McClain Manufacturing, has to make a decision between two investment alternatives. Investment A has an initial cost of $61,000, and investment B has an initial cost of
Evaluate the following capital investments according to net present value. Each alternative requires an initial investment of $20,000. Assume a 10% cost of capital. Which is the preferred
Justin Bateh is considering a new machine for his shop.The machine is expected to generate receipts as follows: $50,000 in year 1, $30,000 in year 2, nothing in the next year, and $20,000 in year 4.
Cheryl Druehl needs to purchase a new milling machine. She is considering two different competing machines.Milling Machine A will cost $300,000 and will return $80,000 per year for 6 years, with no
Portland Savings and Loan is considering new computer software, which, because of installation and training cost, will have an unusual pattern of net receipts. The expected receipts are: $20,000 in
Given the capacity planning discussion in the text (see Figure S7.6), what approach is being taken by Arnold Palmer Hospital toward matching capacity to demand? lop25
What kind of major changes could take place in Arnold Palmer Hospital’s demand forecast that would leave the hospital with an underutilized facility (namely, what are the risks connected with this
Use regression analysis to forecast the point at which Swanson needs to “build out” the top two floors of the new building, namely, when demand will exceed 16,000 births. lop25 TABLE 57.4 Births
Capacity decisions should be made on the basis of:a) building sustained competitive advantage.b) good financial returns.c) a coordinated plan.d) integration into the company’s strategy.e) all of
Effective capacity is:a) the capacity a firm expects to achieve, given the current operating constraints.b) the percentage of design capacity actually achieved.c) the percentage of capacity actually
System capacity is based on:a) the bottleneck.b) throughput time.c) time of the fastest station.d) throughput time plus waiting time.e) none of the above. lop25
The break-even point is:a) adding processes to meet the point of changing product demands.b) improving processes to increase throughput.c) the point in dollars or units at which cost equals
Expected monetary value is most appropriate:a) when the payoffs are equal.b) when the probability of each decision alternative is known.c) when probabilities are the same.d) when both revenue and
Net present value:a) is greater if cash receipts occur later rather than earlier.b) is greater if cash receipts occur earlier rather than later.c) is revenue minus fixed cost.d) is preferred over
Define the project and prepare the work breakdown structure. lop5
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