MGMT 360 - Final Exam (Sample Problems) 1. Klassen Toy Company, Inc., assembles two parts (parts 1 and 2): Part 1 is first processed at workstation A for 15 minutes per unit and then processed at workstation B for 10 minutes per unit. Part 2 is processed at workstation C for 20 minutes per unit and could be processed independent of part 1. Work stations B and C feed the parts to an assembler at workstation D, where the two parts are assembled. The time at workstation O is 15 minutes. The number of workers at A, B, C and D are 3, 2, 3 and 2 respectively. a] Which operation is the bottleneck? (S points) b| What is the throughput time of the overall system? (2 points) c) If the firm operates & hours per day. 20 days per month, what is the monthly capacity of the manufacturing process? [3 points] 2. An electronics firm is currently manufacturing an item that has a variable cost of $0.50 per unit and a selling price of $1.00 per unit. Fixed costs are $14,000. It is currently running at maximum capacity at a volume of 30,000 units. The firm can substantially improve the product quality and its capacity by adding a new piece of equipment at an additional fixed cost of $6,000 (over and above $14,000). Variable cost would increase to $.60, but the capacity will jump to 50,000 units due to a higher quality product. The company is not sure how much it can sell [that is it's demand). Should the company buy the new equipment? (10 points) 3. Race One Motors is an Indonesian car manufacturer. At its largest manufacturing facility, in Jakarta, the company uses subcomponents at a rate of 12,500 per month. The subcomponent costs $100 each and holding costs are 20% of the product cost per item per year, and ordering costs are $30 per order. a] What is the economic order quantity? (3 points) b| How many orders per year will be made? (1 point) c) What is the annual cost of ordering and holding inventory? (3 points) dj There is some uncertainty over the actual setup costs and it could be as high as $60 per order. Show how the EOQ calculated in part a can be quite robust when it comes to total cost. [4 points] el should they accept a discount of 5%% from the supplier who demands a minimum order of 1000? Use setup costs as $30 per order. (4 points) 4. University of Florida football programs are printed 1 week prior to each home game. Attendance averages 90,000 screaming and loyal Gators fans, and two thirds of them usually buy the program for $4 each. The attendance follows a normal distribution. Unsold programs are sent to a recycling center that pays 10 cents per program. The cost to print each program is $ 1. al What is the cost of underestimating demand for each program? (3 points) b) What is the overage cost per program? [3 points) c) What should be the optimal stockout risk for this scenario? (4 points) 5. The specification for a plastic handle calls for a length of 6.0 inches + .2 inches. The process is known to operate at a mean thickness of 6.1 inches and standard deviation of 0.05 inches. What is the Cox for this process? Is this process capable of producing the desired part? (10 points) 6. Similar to a question on the Sample midterm problems