Questions and Answers of Principles Of Operations

The following data has been collected on the interarrival times of calls to a call center: 3.33, 4.21, 5.12, 1.24, 0.11, 10.23, 7.65, 1.23, 4.44, 2.89, 4.92, 3.87, 2.67, 3.51, and 5.90 minutes.
In Example 7.3 we saw that the probability of 10 arrivals in two hours is not double the probability of 5 arrivals in one hour; in fact, it is less than the probability of 5 arrivals in one hour.
Suppose that arrivals to an emergency room follow a Poisson process with mean two patients every 5 minutes. Calculate the probabilities of (a) no customers in 2 minutes; (b) exactly 2 customers in a
Suppose that arrivals to a coffee shop follow a Poisson process with average rate of one customer every 5 minutes. What are the probabilities of (a) no customers in 5 minutes; (b) exactly one
What does a utilization of greater than one mean in practice?
Does increasing the capacity of a resource ever increase the arrival rate to the resource group that follows it in the process flow? Explain your answer.
Consider the flow in Figure 7–1 but assume that no patients require follow-up appointments.All patients first check in with the single receptionist, which takes an average of 6 minutes. They are
Give an example of a service firm, outside the coffee shop industry, that has managed to compete in an industry with low entry barriers using brand loyalty.
Choose a service firm you are familiar with and describe how each of the five key types of variability from Table 7–2 apply in its setting (e.g., make concrete its source of arrival variability).
Choose a service firm you are familiar with and describe how it has made the four key decisions of: offering, funding mechanism, employee management system, and customer management system.
Choose five of the dimensions of service quality and for each of them name a service firm that you believe competes effectively on this dimension. Explain your answers.
What would a pure services economy look like? Do you think this is practical for a small country with little land area to consider? Why or why not?
The statement was made in this section that “more leisure time and/or wealth naturally lead to increased demand for services.” Explain why this is the case.
Give three examples of services you are familiar with that include all of the following:there is an intangible portion to the offering, it is time-perishable, and it involves the customer as
What is the downside to using currency option hedging?
What industries do you think are particularly likely to have onshore manufacturing operations in the next few years?
What difficulties for supply chain management are created by the growth of globalization?
As noted earlier in this chapter, the share of U.S. sales accounted for by multinational firms is increasing. What events might reverse this trend?
What do you see as the new emerging markets in the world in the next 20 years?For what reason has Africa been slow to develop as a new market and as a desirable location for manufacturing?
Why might the supplier be likely to overstock (relative to what is supply chain optimal)in a VMI arrangement if shelf-space restrictions or similar are not in place by the retailer?
What types of industries, beyond movie rentals, are likely to find revenue sharing agreements effective? When are they least likely to be practical?
What types of industries, beyond book publishing, are likely to find buy-back agreements effective?
Why might it not be practical for the supplier in Example 6.5 to simply tell the retailer to order 701 jackets and give the supplier a kick-back for the profit differential? Can you think of
How is double marginalization affected by the profit margin of the retailer (p 2 w)relative to the profit margin of the whole supply chain (p 2 c)? Is its effect greatest when most of the profit
What are the characteristics of items from which one derives the greatest benefit from centralized storage? the least benefit?
Why might a retailer want to consider developing a three-level multilevel system?(The three levels might be labeled National Distribution Center, Regional Distribution Center, and Store.)
What types of companies are best suited to using 4PL providers?
A 3PL provider may have only transport services or may also provide warehouse and inventory management services. What are the advantages and disadvantages to a firm in outsourcing its warehouse and
Many large companies that have their own manufacturing facilities and logistics organizations outsource a portion of their production (such as IBM) or their supply chain operations (such as Saturn).
Discuss why having too many suppliers can be troublesome. Can having too few suppliers also be a problem?
Many automobiles can be ordered in one of two engine sizes (examples are the Lincoln LS, the Lexus Coupe, and the Jaguar S Type) but are virtually identical in every other way. How might these
Describe the concept of postponement in supply chains. If you were planning a trip to a distant place, what decisions would you want to postpone as long as possible?
Cross training workers is one way to achieve capacity pooling in a manufacturing environment. What are the advantages and disadvantages to such cross-training?
Describe how inventory pooling works in a multiechelon inventory system. Under what circumstances does one derive the greatest benefit from pooling? The least benefit?
All-Weather Oil and Gas Company is planning delivery routes to six natural gas customers. The customer locations and gas requirements (in gallons) are given in the following table.Customer L ocation
Suppose that one wishes to schedule vehicles from a central depot to five customer locations. The cost of making trips between each pair of locations is given in the following matrix. (Assume that
Add the following customer locations and requirements to Example 6.3 and re-solve:Customer L ocation D aily Requirement 6 (12, 12) 78 7 (23, 3) 126
Re-solve Example 6.3 assuming that the distance between any two locations is the rectangular distance rather than the Euclidean distance. (See Section 10.7 for a definition of rectangular distance.)
Re-solve Example 6.3 assuming that the capacity of the vehicles is only 250 loaves of bread.
Reconsider Problem 6 assuming that the maximum amount that can be shipped from either New York or Baltimore through Pittsburgh is 2,000 units due to the size of the plane available for this route.
Reconsider Problem 6 if there is a drop in the demand for dolls to 3,000 at Chicago and 7,000 at Los Angeles. Find the optimal shipping pattern in this case.How much of the total decrease in demand
Toyco produces a line of Bonnie dolls and accessories at its plants in New York and Baltimore that must be shipped to distribution centers in Chicago and Los Angeles. The company uses Air Freight,
In order to be able to deal more effectively with unforeseen events (such as the road closing), Major Motors has established two transshipment points between the factories and the regional
Consider the problem of Major Motors described in Problem
Suppose that the cost of shipping 100 cars from each plant to each distribution center is given in the following matrix (in $1,000s):TO FPhoenix D avenport Columbia RFlint 12 8 17 OFresno 7 14 21
Major Motors produces its Trans National model in three plants located in Flint, Michigan;Fresno, California; and Monterrey, Mexico. Dealers receive cars from regional distribution centers located in
Resolve Pear’s transshipment problem assuming that an additional transshipment point is located at Oklahoma City. Assume that the unit costs of shipping from the three plants to Oklahoma City are
Resolve Pear’s transportation problem assuming that the following routes are eliminated: Sunnyvale to Teaneck, Dublin to Chicago, and Bangkok to Amarillo.What is the percentage increase in total
Consider Example 6.2 of the Pear Company assuming the following supplies and demands:Plant Production Warehouse Requirement Sunnyvale 60 Amarillo 100 Dublin 145 Teaneck 84 Bangkok 125 Chicago 77
Give three examples of revenue or cost benefits made possible by RFID tags when contrasted to barcodes.
What are the key benefits that the internet has provided in aiding efficiency or effectiveness in supply chain management?
Amazon.com is a purely e-commerce company, yet Barnes & Noble maintains both retail bookstores and a significant internet business. What are the advantages and disadvantages of Barnes and Noble’s
Discuss the four initiatives recommended for ameliorating the bullwhip effect in supply chains.
Do you think that eliminating intermediaries would always get rid of the bullwhip effect? Under what circumstances might it not work?
What is the bullwhip effect? What is the origin of the term?
What product characteristics would be necessary for a product to be able to have a supply chain that is simultaneously both efficient and responsive?
Name two products you are familiar with, that are not discussed in this chapter, one of which is best classed as functional and the other as innovative.
What difference do you see in the (Q, R) values as compared to those for the normal case?
Solve Problem 14 assuming that the lead time demand follows a Laplace distribution with mean and variance equal to the mean and variance of lead time demand you computed for Problem
What difference do you see in the (Q, R) values as compared to those for the normal case?
Solve Problem 13 assuming that the lead time demand follows a Laplace distribution with mean and variance equal to that which was computed in Problem
Solve Problem 12(b) assuming the demand for handbags over the selling season follows a Laplace distribution with mean 150 and standard deviation 20.
Solve Problem 11 assuming the demand for fans over the selling season follows a Laplace distribution with the same mean and variance as you computed in Problem 11(a).
The Laplace distribution is discussed in Appendix 5–D. As noted there, the Laplace distribution could be a good choice for describing demand for slow-moving items and for fast-moving items with
Suppose that sales of cards (in units of 50,000) follow a Poisson distribution with mean 6.3. Using Table A–3 in the back of the book or the Poisson distribution function built into Excel find the
Consider the Crestview Printing Company described in Problem
The Poisson distribution is discussed in Appendix 5–D at the end of this chapter.Assume that the distribution of bagels sold daily at Billy’s Bakery in Problem 8 follows a Poisson distribution
Assume a 20 percent annual interest rate for computing the holding cost.a. What value of Q and R is Hy Cassorla using to control the inventory of white dress shirts?b. What fill rate (Type 2 service
Cassorla’s Clothes sells a large number of white dress shirts. The shirts, which bear the store label, are shipped from a manufacturer in New York City. Hy Cassorla, the proprietor, says, “I want
The daily demand for a spare engine part is a random variable with a distribution, based on past experience, given by Number of Demands per Day Probability 0 .21 1 .38 2 .19 3 .14 4 .08 The part is
Consider the equation giving the expected average annual cost of the policy (Q, R) in a continuous-review inventory control system from Section 5.4:Design a spreadsheet to compute G(Q, R) for a range
Re-solve the problem faced by the department store mentioned in Problem 39, replacing the stock-out cost with a 96 percent Type 2 service level. What is the imputed shortage cost?
Re-solve the problem faced by the department store mentioned in Problem 39, replacing the stock-out cost with a 96 percent Type 1 service level.
The home appliance department of a large department store is using a lot size–reorder point system to control the replenishment of a particular model of FM table radio. The store sells an average
Crazy Charlie’s, a discount stereo shop, uses simple exponential smoothing with a smoothing constant of .2 to track the mean and the MAD of monthly item demand.One particular item, a stereo
A large national producer of canned foods plans to purchase 100 combines that are to be customized for its needs. One of the parts used in the combine is a replaceable blade for harvesting corn.
Comment on the effect that the variance in demand has on the sensitivity of y* to p.
By what percentage does y* increase if p increases from 10 to 20? from 50 to 100?b. Repeat part (a) with
Graph y* as a function of p, the penalty cost, for p 10, 15, . . . ,
Design a spreadsheet to calculate the optimal order-up-to point for a newsvendor problem with normally distributed demands. In order to avoid table look-ups, use the approximation formula Z
Extend the spreadsheet from Problem 34 to 1,000 rows or more and compute the average cost per period. If the cost changes substantially as you recalculate the spreadsheet, you need to add additional
Using the simulator for optimization. You will be able to do this problem only if the program you are using does not restrict the size of the spreadsheet. Assume the parameters given in Problem 34
In order to solve this problem, your spreadsheet programwill need to have a function that produces random numbers [@RAND in Lotus 1–2–3 and RAND ( ) in Excel]. The purpose of this exercise is to
Semicon is a start-up company that produces semiconductors for a variety of applications. The process of burning in the circuits requires large amounts of nitric acid, which has a shelf life of only
What policy do you now obtain?
One of the products stocked at Weiss’s paint store, mentioned in Problem 14, is a certain type of highly volatile paint thinner that, due to chemical changes in the product, has a shelf life of
Answer the following true or false.a. The lead time is always less than the cycle time.b. The optimal lot size for a Type 1 service objective of X percent is always less than the optimal lot size for
Consider the problem of satisfying the demand for number 2 pencils faced by the campus store mentioned in Problem 29.a. Re-solve the problem, substituting a Type 1 service level criterion of 95
The store purchases the pencils for 6 cents each and sells them for 20 cents each. There is a two-month lead time from the initiation to the receipt of an order. The store accountant estimates that
Annual demand for number 2 pencils at the campus store is normally distributed with mean 1,000 and standard deviation
An artist’s supply shop stocks a variety of different items to satisfy the needs of both amateur and professional artists. In each case described, what is the appropriate inventory control model
Suppose that the average costs of these item categories are Item Cost Greeting cards $ 0.50 T-shirts 3.00 Men’s jewelry 8.00 Novelty gifts 12.50 Children’s clothes 8.80 Chocolate cookies 0.40
Consider the eight stock items listed in Problem
From management’s point of view, what is the primary value of an exchange curve?Discuss both the exchange curve for replenishment frequency and inventory value and the exchange curve for expected
Consider the following list of retail items sold in a small neighborhood gift shop.Average Profit Item Annual Volume per Item Greeting cards 3,870 $ 0.40 T-shirts 1,550 1.25 Men’s jewelry 875 4.50
Describe the ABC classification system. What is the purpose of classifying items in this fashion? What would be the primary value of ABC analysis to a retailer? To a manufacturer?
Bobbi’s Restaurant in Boise, Idaho, is a popular place for weekend brunch. The restaurant serves real maple syrup with french toast and pancakes. Bobbi buys the maple syrup from a company in Maine
What is the reorder point that it should be using in this case?b. When DDL renegotiates its contract with the supplier, what lot size should it write into the agreement?c. How much of a penalty in
An automotive warehouse stocks a variety of parts that are sold at neighborhood stores. One particular part, a popular brand of oil filter, is purchased by the warehouse for $1.50 each. It is
The buyer for Needless Markup, a famous “high end” department store, must decide on the quantity of a high-priced woman’s handbag to procure in Italy for the following Christmas season. The

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