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Operations Management For Competitive Advantage 11th Edition Richard B. Chase, F. Robert Jacobs - Solutions
11 A certain custom engraving shop has traditionally had orders for between 1 and 50 units of what- ever a customer orders. A large company has contacted this shop about engraving "reward" plaques (which are essentially identical to each other). It wants the shop to place a bid for this order. The
8 A firm is selling two products, chairs and bar stools, each at $50 per unit. Chairs have a vari- able cost of $25 and bar stools $20. Fixed cost for the firm is $20,000.a. If the sales mix is 1:1 (one chair sold for every bar stool sold), what is the break-even point in dollars of sales? In units
7 Aldo Redondo drives his own car on company business. His employer reimburses him for such travel at the rate of 36 cents per mile. Aldo estimates that his fixed costs per year such as taxes, insurance, and depreciation are $2,052. The direct or variable costs such as gas, oil, and mainte- nance
6 Assume a fixed cost of $900, a variable cost of $4.50, and a selling price of $5.50.a. What is the break-even point?b. How many units must be sold to make a profit of $500.00?c. How many units must be sold to average $0.25 profit per unit? $0.50 profit per unit? $1.50 profit per unit?
5 A manufacturing process has a fixed cost of $150,000 per month. Each unit of product being produced contains $25 worth of material and takes $45 of labor. How many units are needed to break even if each completed unit has a value of $90?
4 A book publisher has fixed costs of $300,000 and variable costs per book of $8.00. The book sells for $23.00 per copy.a. How many books must be sold to break even?b. If the fixed cost increased, would the new break-even point be higher or lower?c. If the variable cost per unit decreased, would
3 The Goodparts Company produces a component that is subsequently used in the aerospace industry. The component consists of three parts (A, B, and C) that are purchased from outside and cost 40, 35, and 15 cents per piece, respectively. Parts A and B are assembled first on assembly line 1, which
2 The purpose of this system design exercise is to gain experience in setting up a manufacturing process. (We suggest that this be done as a team project.) Assignment:a. Get one Ping-Pong paddle.b. Specify the type of equipment and raw materials you would need to manufacture that paddle, from the
1 Consider the construction of a simple 8" x 10" wood picture frame. The picture frame consists of four wood pieces that are cut from the wood molding, four staples to hold the frame together, a piece of glass, a backing board made of cardboard, six points to hold the glass and backing board to the
4 What is meant by a process? Describe its important features.
3 How does the production volume affect break-even analysis?
2 It has been noted that during World War II Gemany made a critical mistake by having its for- midable Tiger tanks produced by locomotive manufacturers, while the less formidable U.S. Sherman tank was produced by American car manufacturers. Use the product-process matrix to explain that mistake and
1 What does the product-process matrix tell us? Where would you place a Chinese restaurant on the matrix?
An automobile manufacturer is considering a change in an assembly line that should save money due to a reduction in labor and material cost. The change involves the installation of four new robots that will automatically install windshields. The cost of the four robots, including installation and
A company is considering adding a new feature that will increase unit sales by 6 percent and product cost by 10 percent. Profit is expected to increase by 16 percent of the increased sales. Initially the prod- uct cost incurred by the company was 63 percent of the sales price. Should the new
4 Do you think the need to move jeans production offshore was inevitable? Could Levi's have done anything to avert the problem of increasing labor costs? In an industry notorious for low wages and lousy working conditions, Levi's has prided itself on being a grand excep- tion. It offered generous
3 Devise a team incentive plan that you think might work, In an industry notorious for low wages and lousy working conditions, Levi's has prided itself on being a grand excep- tion. It offered generous pay plus plenty of charity support in factory towns all financed by the phenomenal profitability
2 What could Levi's have done differently to avert the problems? In an industry notorious for low wages and lousy working conditions, Levi's has prided itself on being a grand excep- tion. It offered generous pay plus plenty of charity support in factory towns all financed by the phenomenal
1 What went wrong with Levi's move to teams in their plants? In an industry notorious for low wages and lousy working conditions, Levi's has prided itself on being a grand excep- tion. It offered generous pay plus plenty of charity support in factory towns all financed by the phenomenal
9 Based on a manager's observations, a milling machine appears to be idle approximately 30 per- cent of the time. Develop a work-sampling plan to determine the percentage of idle time, accu- rate within a 3 percent error (3%) with a 95 percent confidence level. Use the random numbers from Appendix
7 In an attempt to increase productivity and reduce costs, Rho Sigma Corporation is planning to install an incentive pay plan in its manufacturing plant. In developing standards for one op- eration, time-study analysts observed a worker for 30 minutes. During that time the worker.com- pleted 42
5 The final result of the study in Problem 4 estimated working time at 91.0 percent. In a 480-minute shift, the best operator painted 1,000 horseshoes. The student's performance index was estimated to be 115 percent. Total allowances for fatigue, personal time, and so on are 10 percent. Calculate
4 The Bullington Company wants a time standard established on the painting operation of souvenir horseshoes for the local Pioneer Village. Work sampling is to be used. It is estimated that work- ing time averages 95 percent of total time (working time plus idle time). Aco-op student is avail- able
3 A time study was made of an existing job to develop new time standards. A worker was observed for 45 minutes. During that period, 30 units were produced. The analyst rated the worker as per- forming at a 90 percent performance rate. Allowances in the firm for rest and personal time are 12
2 Examine the process chart in Exhibit TN5.5. Can you recommend some improvements to cut down on delays and transportation? (Hint: The research laboratory can suggest changes in the requisition form.)
7 Organizationwide financial incentive plans cover all the workers. Some units or individuals may have contributed more to corporate profits than others. Does this detract from the effectiveness of the incentive plan system? How would your incentive scheme for a small software development firm
6 Comment on the following:a. "Work measurement is old hat. We have automated our office, and now we run every bill through our computer (after our 25 clerks have typed the data into our computer database)."b. "It's best that our workers don't know that they are being time studied. That way, they
5 You have timed your friend, Lefty, assembling widgets. His time averaged 12 minutes for the two cycles you timed. He was working very hard, and you believe that none of the nine other operators doing the same job can beat his time. Are you ready to put forth this time as the stan- dard for making
4 Match the following techniques to their most appropriate application: Worker-machine chart Process chart Work sampling Washing clothes at laundromat Tracing your steps in getting a parking permit Faculty office hours kept
3 Is there an inconsistency when a company requires precise time standards and encourages job enlargement?
2 Professors commonly complain to their families that book writing is hard work and that they should be excused from helping out with the housework so that they can rest. Which exhibit in this technical note should they never let their families see?
1 Why might practicing managers and industrial engineers be skeptical about job enrichment and sociotechnical approaches to job design?
There has been a long-standing argument that a large amount of nurses' hospital time is spent on nonnursing activities. This, the argument goes, creates an apparent shortage of well-trained nursing per- sonnel, wastes talent, hinders efficiency, and increases hospital costs because nurses' wages
Exhibit TN5.9 shows a time study of 10 cycles of a four-element job. For each element, there is a space for the watch readings that are recorded in 100ths of a minute. Space also is provided for summarizing the data and applying a performance rating.
6 Are there any changes you can make in your production plans that will allow you to make better cookies or more cookies in less time or at lower cost? For example, is there a bottleneck operation in your production process that you can expand cheaply? What is the effect of adding another oven? How
5 How many food processors and baking trays will you need?KRISTEN'S COOKIE COMPANY (A) You and your roommate are preparing to start Kristen's Cookie Company in your on-campus apartment. The com- pany will provide fresh cookies to starving students late at night. You need to evaluate the preliminary
4 Because your baking trays can hold exactly one dozen cookies, you will produce and sell cookies by the dozen. Should you give any discount for people who order two dozen cook- ies, three dozen cookies, or more? If so, how much? Will it take you any longer to fill a two-dozen cookie order than a
3 How much of your own and your roommate's valuable time will it take to fill each order?KRISTEN'S COOKIE COMPANY (A) You and your roommate are preparing to start Kristen's Cookie Company in your on-campus apartment. The com- pany will provide fresh cookies to starving students late at night. You
2 How many orders can you fill in a night, assuming you are open four hours each night?KRISTEN'S COOKIE COMPANY (A) You and your roommate are preparing to start Kristen's Cookie Company in your on-campus apartment. The com- pany will provide fresh cookies to starving students late at night. You
1 How long will it take you to fill a rush order?KRISTEN'S COOKIE COMPANY (A) You and your roommate are preparing to start Kristen's Cookie Company in your on-campus apartment. The com- pany will provide fresh cookies to starving students late at night. You need to evaluate the preliminary design
5 Your product must be made to order because each order is potentially unique. If you decide to sell standard cookies instead, how should you change the production system? The order-taking process?KRISTEN'S COOKIE COMPANY (A) You and your roommate are preparing to start Kristen's Cookie Company in
4 What other factors should you consider at this stage of planning your business?KRISTEN'S COOKIE COMPANY (A) You and your roommate are preparing to start Kristen's Cookie Company in your on-campus apartment. The com- pany will provide fresh cookies to starving students late at night. You need to
3 When should you promise delivery? How can you look quickly at your order board (list of pending orders) and tell a caller when his or her order will be ready? How much of a safety margin for timing should you allow? KRISTEN'S COOKIE COMPANY (A)You and your roommate are preparing to start
2 Should you offer special rates for rush orders? Suppose you have just put a tray of cookies into the oven and someone calls up with a "crash priority" order for a dozen cookies of a different flavor. Can you fill the priority order while still fulfilling the order for the cookies that are already
1 What happens if you are trying to do this by yourself with- out a roommate?KRISTEN'S COOKIE COMPANY (A)You and your roommate are preparing to start Kristen's Cookie Company in your on-campus apartment. The com- pany will provide fresh cookies to starving students late at night. You need to
3 The casino is considering the purchase of a second coin- wrapping machine. What impact would this have on the hard count process? Is this the most desirable machine to purchase? Retrieving money from a slot machine is referred to as the drop process. The drop process begins with a security offi-
2 Draw a diagram of the hard count process. How long should this process take to complete for 300 silver dollar slot machines? Assume that each slot machine has an average of 750 silver dollars when it is emptied. Retrieving money from a slot machine is referred to as the drop process. The drop
1 Draw a diagram of the drop process. How long should it take to empty 300 silver dollar slot machines?Retrieving money from a slot machine is referred to as the drop process. The drop process begins with a security offi- cer and the slot drop team leader obtaining the slot cabinet keys from the
9 Remember Mr. Rockness in Problem 2? He now retrains college professors. It is a much more challenging task but still involves five steps. He has worked hard to balance the line; however, there is a lot of variability. Each stage in the process now handles between one and six faculty members per
4 A local market research firm has just won a contract for several thousand small projects involv- ing data gathering and statistical analysis. In the past the firm has assigned each project to a sin- gle member of its highly trained professional staff. This person would both gather and analyze the
3 The bathtub theory of operations management is being promoted as the next breakthrough for global competitiveness. The factory is a bathtub with 50 gallons of capacity. The drain is the out- let to the market and can output three gallons per hour when wide open. The faucet is the raw material
1 An enterprising student has set up an internship clearinghouse for business students. Each stu- dent that uses the service fills out a form and lists up to 10 companies that he or she would like to have contacted. The clearinghouse has a choice of two methods to use for processing the forms. The
4 Recently some operations management experts have begun insisting that simply minimizing process velocity, which actually means minimizing the time that it takes to process something through the system, is the single most important measure for improving a process. Can you think of a situation in
3 Explain how having more work-in-process inventory can improve the efficiency of a process. How can this be bad?
2 State in your own words what Little's Law means. Describe an example that you have observed where Little's Law applies.
1 Compare McDonald's old and new processes for making hamburgers. How valid is McDonald's claim that the new process will produce fresher hamburgers for the customer? Comparing McDonald's new process to the processes used by Burger King and Wendy's, which process would appear to produce the
2 Are there other alternatives that Pepe should consider?Pepe began to produce and sell denim jeans in the early 1970s in the United Kingdom and has achieved enomous growth. Pepe's success was the result of a unique approach in a product market dominated by strong brands and limited variety. Pepe
1 Acting as an outside consultant, what would you recommend that Pepe do? Given the data in the case, perform a financial analysis to evaluate the alternatives that you have identified. (Assume that the new inventory could be valued at six weeks' worth of the yearly cost of sales. Use a 30 percent
2 You are at work in your New York City office and need to send a repair part to a Los Angeles manufacturing plant. The part is a small computer control module weighing only one pound and is valued at about $25. The machine that needs the part is not operating, and it has been estimated that for
1 Using the United Parcel Service Web site at http://www.ups.com and the Federal Express site at http://www.fedex.com, compare rates for shipping a three-pound package, that you will wrap yourself, from New York City to Los Angeles, Califomia. This is a wedding anniver- sary gift for your parents
3 The McDonald's fast-food restaurant on campus sells an average of 4,000 quarter-pound ham- burgers each week, Hamburger patties are resupplied twice a week, and on average the store has 350 pounds of hamburger in stock. Assume that the hamburger costs $1.00 a pound. What is the inventory turnover
2 Using the data from the Dell Computer annual report given in Example 10.1, determine how Dell calculated the six days' supply of raw materials. Do you think six days' supply is a valid repre- sentation of the amount of raw material Dell has on hand at the end of the year?
10 What are the basic building blocks of an effective mass customization program? What kind of companywide cooperation is required for a successful mass customization program?
9 What is so different about Li & Fung's approach to working with their customers? Would this approach work with functional products like toothpaste and basketballs?
8 Describe how outsourcing works. Why would a fimm want to outsource?
7 What are the advantages of using the postponement strategy?
6 For the value density problem in Example 10.2, what would the effect be if a competing firm offers you a similar service for 10 percent less than Federal Express's rates?
5 As a supplier, which factors about a buyer (your potential customer) would you consider to be important in setting up a long-term relationship?
4 What are characteristics of efficient, responsive, risk-hedging, and agile supply chains? Can a supply chain be both efficient and responsive? Risk-hedging and agile? Why or why not?
3 Describe the differences between functional and innovative products.
2 With so much productive capacity and room for expansion in the United States, why would a company based in the United States choose to purchase items from a foreign fim? Discuss the pros and cons.
1 What recent changes have caused supply chain management to gain importance?
14 Design specifications require that a key dimension on a product measure 100 10 units. A process being considered for producing this product has a standard deviation of four units.a. What can you say (quantitatively) regarding the process capability?b. Suppose the process average shifts to 92.
13 C-Spec, Inc., is attempting to determine whether an existing machine is capable of milling an engine part that has a key specification of 4+.003 inches. After a trial run on this machine, C-Spec has determined that the machine has a sample mean of 4.001 inches with a standard deviation of .002
9 Large-scale integrated (LSI) circuit chips are made in one department of an electronics firm. These chips are incorporated into analog devices that are then encased in epoxy. The yield is not particularly good for LSI manufacture, so the AQL specified by that department is 0.15 while the LTPD
7 In the past, Alpha Corporation has not performed incoming quality control inspections but has taken the word of its vendors. However, Alpha has been having some unsatisfactory experience recently with the quality of purchased items and wants to set up sampling plans for the receiv- ing department
5 There is a 3 percent error rate at a specific point in a production process. If an inspector is placed at this point, all the errors can be detected and eliminated. However, the inspector is paid $8 per hour and can inspect units in the process at the rate of 30 per hour. If no inspector is used
4 Output from a process contains 0.02 defective units. Defective units that go undetected into final assemblies cost $25 each to replace. An inspection process, which would detect and remove all defectives, can be established to test these units. However, the inspector, who can test 20 units per
2 Ametal fabricator produces connecting rods with an outer diameter that has a 1.01 inch spec- ification. A machine operator takes several sample measurements over time and determines the sample mean outer diameter to be 1.002 inches with a standard deviation of .003 inch. a Calculate the process
1 A company currently using an inspection process in its material receiving department is try- ing to install an overall cost reduction program. One possible reduction is the elimination of one inspection position. This position tests material that has a defective content on the aver- age of 0.04.
5 Discuss the trade-off between achieving a zero AQL (acceptable quality level) and a positive AQL (such as an AQL of 2 percent).
4 In the situation described in Question 3, what would be the effect on the cost of quality to the supplier?
3 In an agreement between a supplier and a customer, the supplier must ensure that all parts are within tolerance before shipment to the customer. What is the effect on the cost of quality to the customer?
2 Discuss the purposes of and differences between p charts and X and R charts.
1 The capability index allows for some drifting of the process mean. Discuss what this means in terms of product quality output.
Management is trying to decide whether Part A, which is produced with a consistent 3 percent defective rate, should be inspected. If it is not inspected, the 3 percent defectives will go through a product assembly phase and have to be replaced later. If all Part A's are inspected, one-third of the
Total (100 percent) inspection is justified when the cost of a loss incurred by not inspecting is greater than the cost of inspection. For example, suppose a faulty item results in a $10 loss and the average per- centage defective of items in the lot is 3 percent.
An insurance company wants to design a control chart to monitor whether insurance claim forms are being completed correctly. The company intends to use the chart to see if improvements in the design of the form are effective. To start the process, the company collected data on the number of
The quality assurance manager is assessing the capability of a process that puts pressurized grease in an aerosol can. The design specifications call for an average of 60 pounds per square inch (psi) of pressure in each can with an upper tolerance limit of 65 psi and a lower tolerance limit of 55
3 What are some of the limitations of the Six-Sigma approach when there is subjectivity in the metrics used? THE GENERAL SITUATION A number of merchants that accept American Express cards fail to place point-of-purchase materials (e.g., decals) that notify cus- tomers that they can use these cards
2 In the case, American Express uncovered the two primary causes of the uncallable rate by "shadowing" the vendor. What Six-Sigma/continuous improvement tools might the vendor have used to uncover the same information and revise the process? THE GENERAL SITUATION A number of merchants that accept
1 In terms of "design quality" and "conformance quality," explain how using the Six-Sigma approach helped American Express. THE GENERAL SITUATION A number of merchants that accept American Express cards fail to place point-of-purchase materials (e.g., decals) that notify cus- tomers that they can
2 What general steps should Hank follow in setting up a con- tinuous improvement program for the company? What prob- lems will he have to overcome to make it work?Hank Kolb was whistling as he walked toward his office, still feeling a bit like a stranger since he had been hired four weeks before as
1 What are the causes of the quality problems on the Greasex line? Display your answer on a fishbone diagram.Hank Kolb was whistling as he walked toward his office, still feeling a bit like a stranger since he had been hired four weeks before as director of quality assurance. All that week he had
1 Visit the Baldrige Award Web site and see who won this year. What quality ideas did the winner demonstrate? What did the winner do that was particularly creative? 2 Visit the Six Sigma Web site to see how companies are applying the concept.1 Visit the Baldrige Award Web site and see who won this
8 Prepare an opportunity flow diagram for the same process of boarding a commercial flight.
7 Prepare a SIPOC flowchart of the major steps in the process of boarding a commercial flight. Start the process with the passenger arriving curbside at your local airport.
6 Evaluate the service quality of your bank's Web site using the Dimensions of Perceived e-SQ given in Exhibit 8.13.
5 Evaluate the service quality of your bank using the perceptions of performance portion of the SERVQUAL questionnaire contained on the student DVD-ROM. Compute the score for each of the five SERVQUAL dimensions. On which dimensions does your bank score the highest? Lowest?
4 Consider a simple repair job that you performed that did not tum out particularly well. Analyze the mistakes or defects you made using the Sources of Defects table presented in Exhibit 8.9. Which errors were your fault?
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