Questions and Answers of Principles Of Operations

The cost of holding an EX123 for one year is $500. Emergency shipments cost $250 per car over and above normal shipping costs.a. How many cars should Happy Henry’s be purchasing every three
Happy Henry’s car dealer sells an imported car called the EX123. Once every three months, a shipment of the cars is made to Happy Henry’s. Emergency shipments can be made between these
The Crestview Printing Company prints a particularly popular Christmas card once a year and distributes the cards to stationery and gift shops throughout the United States. It costs Crestview 50
Billy’s Bakery bakes fresh bagels each morning. The daily demand for bagels is a random variable with a distribution estimated from prior experience given by Number of Bagels Sold in One Day
Anewsvendor keeps careful records of the number of papers he sells each day and the various costs that are relevant to his decision regarding the optimal number of newspapers to purchase. For what
Under what circumstances might the major portion of the usage of the glue be predictable?b. If the demand were predictable, would you want to use a probability law to describe it? Under what
a. Consider the Oakdale Furniture Company described in Problem
Rather than keeping track of each demand observation, Betty Sucasas, a member of the marketing staff with a large company that produces a line of switches, has kept only grouped data. For switch
In Problem 3, what other probability distributions might accurately describe Oakdale’s weekly usage of glue?
Oakdale Furniture Company uses a special type of woodworking glue in the assembly of its furniture. During the past 36 weeks, the following amounts of glue (in gallons) were used by the company:25 38
What is the difference between deterministic and random variations in the pattern of demands? Provide an example of a real problem in which predictable variation would be important and an example in
Suppose that Mac only kept track of the number of magazines sold. Would this give an accurate representation of the demand for the Journal? Under what circumstances would the actual demand and the
Green’s Buttons of Rolla, Missouri, supplies all the New Jersey Fabrics stores with eight different styles of buttons for men’s dress shirts. The plastic injection molding machine can produce
The Kirei-Hana Japanese Steak House in San Francisco consumes 3,000 pounds of sirloin steak each month.Yama Hirai, the new restaurant manager, recently completed an MBA degree. He learned that the
Pies ‘R’Us bakes its own pies on the premises in a large oven that holds 100 pies. They sell the pies at a fairly steady rate of 86 per month. The pies cost $2 each to make. Prior to each baking,
Suppose that in Problem 41 the firm decides to account for the fact that the production rate of the cards is not infinite. Determine the optimal size of each production run assuming that cards are
A manufacturer of greeting cards must determine the size of production runs for a certain popular line of cards. The demand for these cards has been a fairly steady 2 million per year, and the
An import/export firm has leased 20,000 cubic feet of storage space to store six items that it imports from the Far East. The relevant data for the six items it plans to store in the warehouse are
Mike’s Garage, a local automotive service and repair shop, uses oil filters at a fairly steady rate of 2,400 per year. Mike estimates that the cost of his time to make and process an order is about
Harold Gwynne is considering starting a sandwich-making business from his dormitory room in order to earn some extra income. However, he has only a limited budget of $100 to make his initial
Consider the carload discount schedule pictured in Figure 4–13 (page 225). Suppose M 500 units, C $10 per unit, and a full carload of 500 units costs $3,000.a. Develop a graph of the average
The president of Value Filters became very enthusiastic about using EOQs to plan the sizes of her production runs, and instituted lot sizing based on EOQ values before she could properly estimate
A large producer of household products purchases a glyceride used in one of its deodorant soaps from outside of the company. It uses the glyceride at a fairly steady rate of 40 pounds per month, and
Berry Computer is considering moving some of its operations overseas in order to reduce labor costs. In the United States, its main circuit board costs Berry $75 per unit to produce, while overseas
Diskup produces a variety of personal computer products. High-density 3.5-inch disks are produced at a rate of 1,800 per day and are shipped out at a rate of 800 per day. The disks are produced in
A local supermarket sells a popular brand of shampoo at a fairly steady rate of 380 bottles per month. The cost of each bottle to the supermarket is 45 cents, and the cost of placing an order has
Peet’s Coffees in Menlo Park, California, sells Melitta Number 101 coffee filters at a fairly steady rate of about 60 boxes of filters monthly. The filters are ordered from a supplier in Trenton,
Tomlinson Furniture has a single lathe for turning the wood for various furniture pieces, including bedposts, rounded table legs, and other items. Four forms are turned on the lathe and produced in
A metal fabrication shop has a single punch press. There are currently three parts that the shop has agreed to produce that require the press, and it appears that they will be supplying these parts
Suppose that in Problem 26 the space consumed by each vegetable is not proportional to its cost. In particular, suppose that one pound of lettuce required 0.4 square foot of space and one pound of
Suppose that the vegetables discussed in Problem 26 are purchased at different times. In what way could that have an effect on the order policy that the stand owner should use?
A local outdoor vegetable stand has exactly 1,000 square feet of space to display three vegetables: tomatoes, lettuce, and zucchini. The appropriate data for these items are given in the following
A large communications firm expects to require these motherboards for the next 10 years at a rate of at least 140 per year. Order setup costs are $30 and holding costs are based on an 18 percent
Parasol Systems sells motherboards for personal computers. For quantities up through 25, the firm charges $350 per board; for quantities between 26 and 50, it charges $315 for each board purchased
Based on this information only, can you determine what the optimal order quantity is? Explain your answer.
The all-units discount schedule has breakpoints at 750 and
In the calculation of an optimal policy for an all-units discount schedule, you first compute the EOQ values for each of the three order costs, and you obtain: Q(0) 800, Q(1) 875, and Q(2)
Assume that two years have passed, and the purchasing agent mentioned in Problem 22 must recompute the optimal number of wafers to purchase and from which source to purchase them. Source B has
A purchasing agent for a particular type of silicon wafer used in the production of semiconductors must decide among three sources. Source A will sell the silicon wafers for $2.50 perwafer,
Your local grocery store stocks rolls of bathroom tissue in single packages and in more economical 12-packs. You are trying to decide which to buy. The single package costs 45 cents and the 12-pack
Filter Systems produces air filters for domestic and foreign cars. One filter, part number JJ39877, is supplied on an exclusive contract basis to Oil Changers at a constant 200 units monthly. Filter
HAL Ltd., discussed in Problem 9, can produce the disk drive housings in the Hamilton, Ontario, plant at a rate of 150 housings per month. The housings cost HAL$85 each to produce, and the setup cost
Determine the batch size that would result in Problem 17 if you assumed that the production rate was infinite. What is the additional average annual cost that would be incurred using this batch size
TheWod Chemical Company produces a chemical compound that is used as a lawn fertilizer. The compound can be produced at a rate of 10,000 pounds per day. Annual demand for the compound is 0.6 million
In view of the results derived in the section on sensitivity analysis, discuss the following quotation of an inventory control manager: “If my lot sizes are going to be off the mark, I’d rather
David’s Delicatessen flies in Hebrew National salamis regularly to satisfy a growing demand for the salamis in Silicon Valley. The owner, David Gold, estimates that the demand for the salamis is
Suppose that its setup cost for ordering was really only $15. Determine the error made in calculating the annual cost of holding and setup incurred as a result of its using the wrong value of K.(Note
Consider the coffeehouse discussed in Problem
A large automobile repair shop installs about 1,250 mufflers per year, 18 percent of which are for imported cars. All the imported-car mufflers are purchased from a single local supplier at a cost of
For the situation described in Problem 10, draw a graph of the amount of inventory on order. Using your graph, determine the average amount of inventory on order.Also compute the demand during the
A specialty coffeehouse sells Colombian coffee at a fairly steady rate of 280 pounds annually. The beans are purchased from a local supplier for $2.40 per pound. The coffeehouse estimates that it
HAL Ltd. produces a line of high-capacity disk drives for mainframe computers.The housings for the drives are produced in Hamilton, Ontario, and shipped to the main plant inToronto. HAL uses the
Penalty costs can be assessed only against the number of units of demand that cannot be satisfied, or against the number of units weighted by the amount of time that an order stays on the books.
Stationery Supplies orders plastic erasers from a company in Nürnberg, Germany.It takes six weeks to ship the erasers from Germany to Utah. Stationery Supplies maintains a standing order of 200
For Stationery Supplies, discussed in Problem 5, list and discuss all the uncertainties thatwould motivate the store to maintain inventories of its 1,400 items.
Stationery Supplies is considering installing an inventory control system in its store in Provo, Utah. The store carries about 1,400 different inventory items and has annual gross sales of about
I Carry rents trucks for moving and hauling. Each truck costs the company an average of $8,000, and the inventory of trucks varies monthly depending on the number that are rented out. During the
ABC, Inc., produces a line of touring bicycles. Specifically, what are the four types of inventories (raw materials, components, work-in-process, and finished goods)that would arise in the production
Discuss the cost penalties incurred by a firm that holds too much inventory and one that holds too little inventory.
What are the two questions that inventory control addresses?
A local canning company sells canned vegetables to a supermarket chain in the Minneapolis area. A typical case of canned vegetables requires an average of 0.2 day of labor to produce.The aggregate
How will that affect your solution to part (a)?d. Formulate the problem levels as a linear program. [You may ignore the conditions in parts (b) and (c).]e. Solve the resulting linear program. Round
The Yeasty Brewing Company produces a popular local beer known as Iron Stomach.Beer sales are somewhat seasonal, and Yeasty is planning its production and workforce levels on March 31 for the next
The Mr. Meadows Cookie Company can obtain accurate forecasts for 12 months based on firm orders. These forecasts and the number of workdays per month are as follows:Demand Forecast Month (in
Suppose that the plant has the capacity to employ a maximum of 370 workers. Suppose that regular-time employee costs are $12.50 per hour. Assume seven-hour days, five-day weeks, and four-week months.
Consider the problem of Paris Paint presented in Problem
Determine the cost of the new plan.c. Formulate this as a linear program. Assume that stock-outs are not allowed.d. Solve the linear program. Round the variables and determine the cost of the
The Paris Paint Company is in the process of planning labor force requirements and production levels for the next four quarters. The marketing department has provided production with the following
A local firm manufactures children’s toys. The projected demand over the next four months for one particular model of toy robot is Forecasted Demand Month Workdays (in aggregate units)July 23 3,825
An aggregate planning model is being considered for the following applications.Suggest an aggregate measure of production and discuss the difficulties of applying aggregate planning in each case.a.
Leather-All produces a line of handmade leather products. At the present time, the company is producing only belts, handbags, and attaché cases. The predicted demand for these three types of items
Suppose that the cost of hiring workers each period is $100 for each worker until 20 workers are hired, $400 for each worker when between 21 and 50 workers are hired, and $700 for each worker hired
Consider Mr. Meadows Cookie Company, described in Problem
A local semiconductor firm, Superchip, is planning its workforce and production levels over the next year. The firm makes a variety of microprocessors and uses sales dollars as its aggregate
Harold Grey owns a small farm in the Salinas Valley that grows apricots. The apricots are dried on the premises and sold to a number of large supermarket chains.Based on past experience and committed
There are currently 100 workers employed, and there is no starting inventory of cookies.a. What is the minimum constant workforce required to meet demand over the next four months?b. Assume that cI 5
Mr. Meadows Cookie Company makes a variety of chocolate chip cookies in the plant in Albion, Michigan. Based on orders received and forecasts of buying habits, it is estimated that the demand for the
Is a chase or level strategy more appropriate for aggregate planning in an air conditioning manufacturing plant where demand is highly seasonal and the workforce is relatively skilled? Explain your
Give an example of an environment where a chase strategy would be highly disruptive.Now give one where a level strategy would be highly disruptive.
St. Clair County Hospital is attempting to assess its needs for nurses over the coming four months (January to April). The need for nurses depends on both the numbers and the types of patients in the
Discuss the following statement: “Since we use a rolling production schedule, I really don’t need to know the demand beyond next month.”
Describe the following costs and discuss the difficulties that arise in attempting to measure them in a real operating environment.a. Smoothing costsb. Holding costsc. Payroll costs
A large manufacturer of household consumer goods is considering integrating an aggregate planning model into its manufacturing strategy. Two of the company vice presidents disagree strongly as to the
A local machine shop employs 60 workers who have a variety of skills. The shop accepts one-time orders and also maintains a number of regular clients. Discuss some of the difficulties with using the
Give an example of chaos, either from your own experience or from others, within the educational domain.
List two examples each of variation, foreseen uncertainty, and unforeseen uncertainty that you have personally experienced in your studies.
Classify the following risks into variation, foreseen uncertainty, unforeseen uncertainty, and chaos:a. A hurricane on the U.S. East Coast floods a regional warehouse destroying a large amount of
Why does the S&OP process typically not explicitly recognize variation even though it is a fact of life for both operations and sales divisions?
Why do you think that the KPIs proposed by Goldratt and Cox (1992) have not been very widely implemented?
Do you think efficiency-related KPIs or effectiveness-related KPIs will be easier for employees to “game” in practice? Explain your answer.
Evaluate the following metrics along the three dimensions of importance, ease, and actionablity: DIFOT, ROI, machine utilization, and number of customer complaints.
What types of organizations are likely to face the largest challenges in achieving alignment between operational KPIs and strategic priorities?
Give two efficiency-related KPIs and two effectiveness-related KPIs that you believe Wal-Mart is likely to use to evaluate its suppliers? Its in-store managers?
In some S&OP processes all divisions are measured by the same set of KPIs. What are the advantages and disadvantages to this approach?
What are the trade-offs between using revenue dollars versus sales quantities as the units in the aggregate S&OP plan.
What are the trade-offs between having long fixed or frozen periods versus short fixed or frozen periods as outputs of the S&OP process?
Why is S&OP described as an iterative process?
Describe the likely key tensions between the sales and operations divisions of a small manufacturer that mostly produces to the local market. Now describe them for a global organization that sells in
Why do you think it is important that the CFO attends the S&OP meeting?
Why don’t the head of sales or the head of operations chair the S&OP meeting?

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