Question 1

Theresa June is the operations manager at PV&Co, a manufacturer of Photovoltaic modules. The company is planning to launch a new product and needs to set up a production line with dedicated machines to manufacture this product. The production line includes two machines (1 and 2) that operate in sequence (i.e. each product first needs to go through machine 1 and then through machine 2 in this exact sequence). Due to the particular nature of the process, no work -in-progress inventory can be held between the two machines.

In order to purchase the required equipment for the new line, Theresa contacts David Roncame, a sales rep at MachineCo, PV&Co's historical supplier. David proposes two options to Theresa, based on two different technologies:

Option A: as a default option, David proposes two standard machines that adopt a well proven technology with high reliability records. Machines based on this technology can produce at a constant rate of 6 units / hour, regardless of the operators' skills and regardless of other external factors (i.e. the throughput of each of the two machines is always 6 units/hour)

Option B: well aware of PV&Co's productivity goals for their new product, David proposes a second option to Theresa. Both machines (1 and 2) are based on a new technology that guarantees a maximum theoretical throughput of 8 units/ hour for each of the machines. However, due to the relative novelty of the technology, these new machines are more difficult to operate and more sensitive to human errors. As a result, David predicts that 50% of the time each of the machines would be able to produce only 4 units/ hour.

Assuming the cost of both options is the same, which option should Theresa prefer (i.e. which option guarantees the highest expected throughput for the production line)? (8 points)

a. Option A

b. Option B

c. Both options have the same performance

d. Impossible to answer given the information available

Question 2

Eddie's bookstore currently buys books from a supplier using a simple wholesale price contract (i.e., Eddie pays a fixed pre-agreed price for each book he buys). Following the shift in industry practices, the supplier starts offering the bookstore an option to return books at a partial refund (70% of the wholesale price, which is higher than retailer's current salvage value) while keeping the wholesale price the same. Suppose shipping costs are negligible. What effect will this new contract have?

a. The bookstore's order quantity will increase.

b. The bookstore's order quantity will decrease.

c. It won't have an effect on the bookstore's order quantity

d. There is not enough information to answer this

Question 3

In which of the following environments is it particularly important to reduce set-up times?

a. An oil refinery utilized at 70%

b. An assembly plant producing mass customized products in large volumes

c. A custom job shop producing exclusive products in small volumes

d. None of the above. It is always important to reduce set-up times.

Question 4

Newsboy losses are a serious concern for many firms in the fashion industry. Which one between the two companies below is more likely to suffer from these losses?

a. Marks & Spencer

b. Zara

c. None of them

d. Both of them are equally exposed to those costs

Question 5

"An hour lost on a non-bottleneck is a mirage". What recommendation directly follows from this observation for the operation of non-bottleneck resources?

a. Shorter batches should be implemented.

b. Longer batches should be implemented.

c. Inventory should be maintained before a non-bottleneck resource to keep the resource busier.

d. Efforts should be made to increase their capacity.

Question 6

At Playitlouder&Co, a manufacturer of premium electric guitars, the sales office complains to the line manager, since sales repeatedly exceed the production quantities. The line is already running at capacity, but given that Playitlouder&Co is a small company, they simply do not have the funds to invest in further machinery. Among all machines, one machine used to paint the guitar frames is particularly under pressure and often causes delays. The line manager is considering whether there is a way to improve the capacity by changing the batch size. What would you advice?

a. Decrease the batch size everywhere

b. Decrease the batch size only at the painting machine

c. Increase the batch size only at the painting machine

d. The batch size has no effect on the productivity of the line.

Question 7

Junkfood Inc. operates a fast food service well known for the quality of its sandwiches. On a typical day customers arrive at the rate of two per hour, and sandwiches are prepared at an average rate of one every 10 minutes. However, NOT every sandwich takes exactly 10 minutes to be prepared (ie some take less than 10 minutes some take more). The clerks operate as a team on one customer at a time. After purchasing a new machine the team changes its operating procedures. With this new machine sandwiches are still prepared at an average rate of one every 10 minutes. However, every sandwich now takes exactly 10 minutes to be prepared. What would happen to the average waiting time of customers who are queueing to buy sandwiches?

a. It would decrease.

b. It would not change.

c. It would increase.

d. Not enough data to answer

Question 8

In class, we studied the operations of Shouldice and we discussed its competitive capabilities from an operational standpoint. In which one among the following competitive priorities does Shouldice perform worse than its competitors (i.e., general hospitals) do?

a. Cost

b. Quality

c. Delivery

d. Flexibility

Question 9

A company design sunglasses, but outsources the production of its sunglasses to a Chinese supplier for $100; all orders need to be made 3 months before the selling season starts, and leftover items are heavily discounted (sold for $50). The company just got an offer from an Irish firm, which is slightly more expensive ($120), but can make shipments throughout the selling season. If the company accepts the offer of the Irish firm, how do you expect the order from the Chinese supplier to change compared to the case when the company cannot use the Irish supplier?

a. It will decrease

b. It will increase

c. It will remain unchanged

d. The information provided is not sufficient to answer this question

Question 10

In the Benihana model, what are the operational benefits of adding a bar to restaurant?

a. It allows the restaurant to sell more drinks thereby contributing to increase revenue

b. It 'filters' the arrival of customers thereby reducing the variability of this process and allowing the restaurant to operate at higher utilization levels

c. There are no benefits. A bar takes up useful space that could be effectively used to increase capacity at the restaurant (i.e. by adding more tables)

d. None of the above

Question 11

Why does the fast-fashion retailer Zara outperforms traditional clothing retailers like M&S?

a. It offers a lot higher quality of clothing, including better material, knitting, fit, etc.

b. Its staff uses sophisticated forecasting methods and can therefore better predict future demand; (i.e., the same staff using these methods would do better also at classical retailers like M&S.)

c. Producing in low cost countries, its manufacturing costs are a lot lower.

d. None of the above.

Question 12

Zamatia is a producer of middle range sunglasses. The manufacturing cost of the sunglasses is $35. They sell these glasses at a wholesale price of $75 to Umbra Visage, a retailer who in turn would sell these to the final customer at a retail price of $115. Suppose the two firms become vertically integrated (e.g. a third party buys both). Assuming Newsvendor model is used the manage inventory at Umbra Visage, what happens to the stocking level of sunglasses at the retail store.

a. it increases

b. it decreases

c. doesn't change

d. we need to know the demand distribution to respond

Question 13

Which of the following manufacturing process models would be more appropriate to manufacture light bulbs?

a. A job shop

b. A fully automated assembly line

c. None of the above