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Operations Management: Sustainability And Supply Chain Management 13th Edition Jay Heizer; Barry Render; Chuck Munson - Solutions

• S11.3 Referring to Problem S11.2, Wellington Company re-estimated the probability of a “super-event” to 0.2% due to some heavy safety investment carried out in the Albuquerque plant. In addition, they replaced their second and third suppliers, for quality reasons, with two others, whose
• • S11.5 Kryoneri Perfume Company is considering two alternatives for the supply of vetiver oil (an essential oil used in high-end perfumes). Alternative 1 is to use two suppliers located in Haiti, where half of the world’s vetiver oil comes from. Each has a “unique-event” risk of 5% and
• S11.7 Over the past 5 weeks, demand for wine at Winston’s Winery has averaged 1,890 bottles, and the variance of demand has been 793,000 bottles. Winston has ordered an average of 1,900 bottles per week over that time period, with a variance of orders of 1,805,000 bottles.a) What is the
S11.8 A manufacturer produces a single product that is sold abroad to an industrial company through the following channela) Calculate the bullwhip effect for each stage of the supply chain.b) What kind of actions can the management take to smooth the bullwhip effect? VARIANCE OF VARIANCE OF DEMAND
• • • S11.9 Consider a three-firm supply chain consisting of a retailer, manufacturer, and supplier. The retailer’s demand over an 8-week period was 100 units each of the first 2 weeks, 200 units each of the second 2 weeks, 300 units each of the third 2 weeks, and 400 units each of the
• • S11.10 As purchasing agent for Eynan Enterprises in Richmond, Virginia, you ask your buyer to provide you with a ranking of“excellent,” “good,” “fair,” or “poor” for a variety of characteristics for two potential vendors. You suggest that the “Products” total be weighted
• • S11.11 Using the data in Problem S11.10, assume that both Donna, Inc. and Kay Corp. are able to move all their “poor” ratings to “fair.” How would you then rank the two firms? TABLE S11.2 Vendor Ratings for Problems $11.10 and $11.11 VENDOR RATING Company Excellent Good Fair Poor
• S11.12 The supply chain manager for Keskin Industries, Sean Willems, has developed the data shown in Table S11.3 for two vendors. Based on the weights and rankings shown, which is the preferred vendor? TABLE S11.3 Vendor Ratings for Problems $11.12, $11.13, and $11.14 VENDOR CRITERION WEIGHT
• • S11.13 Referring to Problem S11.12, Sean Willems, in additionto the two possible vendors evaluated in Table S11.3,has found a third possible vendor. He now wants to evaluate all three vendors using the weights in Table S11.3. He scores the third vendor, Fricker V-Tech, Ltd., as: Engineering
• • S11.14 Sean Willems has evaluated the vendors in TableS11.3 as well as Fricker V-Tech, the vendor in Problem S11.13, but the Quality Control Manager says that new data suggest that Siemsen Systems, Inc.’s quality has deteriorated, and Siemsen should now score a 2 in the Quality category.
• • S11.16 A company with a plant in Basel can be served by both rail and truck at a cost of €250 and €1,500 per load, respectively.The transit time for the train is 15 days while that for the truck is 5 days.a) If the daily cost of transit inventory is €100, which transportation mode is
• • S11.17 If you have a third option for the data in Problem S11.16 and it costs only $4,000 and also takes 20 days, what is your most economical plan?
• • S11.18 The Smoked Salmon, a seafood supplier in Egypt, has a new yearly contract to supply fresh seafood products to Saudi Arabia. The value of the contract is E£800,000 (Egyptian Pound)and the estimated holding cost is 20% annually. The Smoked Salmon is evaluating two possible
• • S11.22 The food items listed in the following table are stored on a cruise ship for a 7-day cruiseUsing the following figure, indicate the best storage location for each item to minimize average distance traveled ITEM TRIPS PER VOYAGE AREA NEEDED (BLOCKS) A 2 1 B 160 8 C 16 1 D 40 4 E 24 2
LO S11.1 Which of the following combinations would result in needing to utilize the largest number of suppliers?a) a high value of S and high value of Ub) a high value of S and low value of Uc) a low value of S and high value of Ud) a low value of S and low value of U
LO S11.2 Typically, the bullwhip effect is most pronounced at which level of the supply chain?a) consumersb) suppliersc) wholesalersd) retailers
LO S11.4 A more expensive shipper tends to provide:a) faster shipments and lower holding costsb) faster shipments and higher holding costsc) slower shipments and lower holding costsd) slower shipments and higher holding costs
LO S11.5 Which of the following items is most likely to be stored at the back of a warehouse, furthest away from the shipping dock?a) low number of trips and low number of storage blocksb) low number of trips and high number of storage blocksc) high number of trips and low number of storage
Five Flags over Florida, a U.S. chain of 10 family-oriented theme parks, has decided to expand overseas by opening its first park in Europe. It wishes to select between France and Denmark.APPROACH c The ratings sheet in Table 8.4 lists key success factors that management has decided are important;
Esmail Mohebbi, owner of European Ignitions Manufacturing, needs to expand his capacity. He is considering three locations—Athens, Brussels, and Lisbon—for a new plant. The company wishes to find the most economical location for an expected volume of 2,000 units per year.APPROACH c Mohebbi
CENTER OF GRAVITY Quain’s Discount Department Stores, a chain of four large Target-type outlets, has store locations in Chicago, Pittsburgh, New York, and Atlanta; they are currently being supplied out of an old and inadequate warehouse in Pittsburgh, the site of the chain’s first store. The
1. How is FedEx’s location a competitive advantage? Discuss.
4. What is clustering?
9. What factors affect region/community location decisions?
11. List factors, other than globalization, that affect the location decision.
13. What are the three steps to locational cost–volume analysis?
15. Why shouldn’t low wage rates alone be sufficient to select a location?
Just as cities and communities can be compared for location selection by the weighted approach model, as we saw earlier in this chapter, so can actual site decisions within those cities.Table 8.7 illustrates four factors of importance to Washington, DC, and the health officials charged with opening
• 8.4 Refer to Problem 8.3. If the final destination is New Delhi, India, and there is a 30% import tax, which firm should you choose?
• 8.6 Ken Gilbert owns the Knoxville Warriors, a minor league baseball team in Tennessee. He wishes to move the Warriors south, to either Mobile (Alabama) or Jackson (Mississippi). The following table gives the factors that Gilbert thinks are important, their weights, and the scores for Mobile
1. Visit the Web site for PSTYE 2003 (www.gemapping.com/downloads/targetpro_brochure.pdf). Describe the psychological profiling (PSYTE) clustering system. Select an industry, other than restaurants, and explain how the software can be used for that industry.From its first Red Lobster in 1968, the
2. What are the major differences in site location for a restaurant versus a retail store versus a manufacturing plant?From its first Red Lobster in 1968, the chain has grown to 705 locations, with over $2.6 billion in U.S. sales annually. The casual dining market may be crowded, with competitors
3. Red Lobster also defines its trade areas based on market size and population density. Here are its seven density classes:The majority (92%) of the Red Lobster restaurants fall into three of these classes. Which three classes do you think the chain has the most restaurants in? Why?From its first
1. From Munday’s Standard Market Report checklist, select any other four categories, such as population (A1), hotels (B2), orrestaurantsightclubs (D), and provide three subcategories that should be evaluated. (See item C1 [airport] for a guide.)Some people would say that Oliver Munday, Hard
2. Which is the highest rated of the four European cities under consideration, using the table?Some people would say that Oliver Munday, Hard Rock’s vice president for cafe development, has the best job in the world.Travel the world to pick a country for Hard Rock’s next cafe, select a city,
3. Why does Hard Rock put such serious effort into its location analysis?Some people would say that Oliver Munday, Hard Rock’s vice president for cafe development, has the best job in the world.Travel the world to pick a country for Hard Rock’s next cafe, select a city, and find the ideal site.
4. Under what conditions do you think Hard Rock prefers to franchise a cafe?Some people would say that Oliver Munday, Hard Rock’s vice president for cafe development, has the best job in the world.Travel the world to pick a country for Hard Rock’s next cafe, select a city, and find the ideal
LO 8.1 The factors involved in location decisions includea) foreign exchange.b) attitudes.c) labor productivity.d) all of the above.
LO 8.2 If Fender Guitar pays $30 per day to a worker in its Ensenada, Mexico, plant, and the employee completes four instruments per 8-hour day, the labor cost/unit isa) $30.00.b) $3.75.c) $7.50.d) $4.00.e) $8.00.
LO 8.3 Evaluating location alternatives by comparing their composite(weighted-average) scores involvesa) factor-rating analysis.b) cost–volume analysis.c) transportation model analysis.d) linear regression analysis.e) crossover analysis.
LO S7.6 Net present value:a) is greater if cash receipts occur later rather than earlier.b) is greater if cash receipts occur earlier rather than later.c) is revenue minus fixed cost.d) is preferred over break-even analysis.e) is greater if $100 monthly payments are received in a lump sum ($1,200)
LO S7.5 Expected monetary value is most appropriate:a) when the payoffs are equal.b) when the probability of each decision alternative is known.c) when probabilities are the same.d) when both revenue and cost are known.e) when probabilities of each state of nature are known.
LO S7.4 The break-even point is:a) adding processes to meet the point of changing product demands.b) improving processes to increase throughput.c) the point in dollars or units at which cost equals revenue.d) adding or removing capacity to meet demand.e) the total cost of a process alternative.
LO S7.3 System capacity is based on:a) the bottleneck.b) throughput time.c) time of the fastest station.d) throughput time plus waiting time.e) none of the above.
LO S7.2 Effective capacity is:a) the capacity a firm expects to achieve, given the current operating constraints.b) the percentage of design capacity actually achieved.c) the percentage of capacity actually achieved.d) actual output.e) efficiency.
LO S7.1 Capacity decisions should be made on the basis of:a) building sustained competitive advantage.b) good financial returns.c) a coordinated plan.d) integration into the company’s strategy.e) all of the above.
2. What kind of major changes could take place in Arnold Palmer Hospital’s demand forecast that would leave the hospital with an underutilized facility (namely, what are the risks connected with this capacity decision)?Since opening day, Arnold Palmer Hospital has experienced an explosive growth
1. Given the capacity planning discussion in the text (see Figure S7.6), what approach is being taken by Arnold Palmer Hospital toward matching capacity to demand?Since opening day, Arnold Palmer Hospital has experienced an explosive growth in demand for its services. One of only six hospitals in
• • S7.45 Portland Savings and Loan is considering new computer software, which, because of installation and training cost, will have an unusual pattern of net receipts. The expected receipts are: $20,000 in year 1, nothing in the next year, $30,000 in year 3, and $50,000 in year 4. At an
• • S7.44 Cheryl Druehl needs to purchase a new milling machine. She is considering two different competing machines.Milling Machine A will cost $300,000 and will return $80,000 per year for 6 years, with no salvage value. Milling machine B will cost $220,000 and will return $60,000 for 5
• • S7.43 Justin Bateh is considering a new machine for his shop.The machine is expected to generate receipts as follows: $50,000 in year 1, $30,000 in year 2, nothing in the next year, and $20,000 in year 4. At an interest rate of 6%, what is the present value of these receipts?
• • S7.42 Tony and Steve are considering whether to purchase a new “bending brake.” This machine puts precise bends in a material used in their vinyl siding business. The machine will cost$70,000. Tony and Steve estimate that the machine will generate profits as follows: $20,000 in its
• • • • S7.39 Bold’s Gym, a health club chain, is considering expanding into a new location: the initial investment would be $1 million in equipment, renovation, and a 6-year lease, and its annual upkeep and expenses would be $75,000 (paid at the beginning of the year). Its planning
• S7.36 What is the present value of $5,600 when the interest rate is 8% and the return of $5,600 will not be received for 15 years?
• S7.35 The initial cost of an investment is $65,000 and the cost of capital is 10%. The return is $16,000 per year for 8 years.What is the net present value?
• • S7.34 What is the net present value of an investment that costs $75,000 and has a salvage value of $45,000? The annual profit from the investment is $15,000 each year for 5 years. The cost of capital at this risk level is 12%.
• • • • S7.33 As operations manager of Holz Furniture, you must make a decision about adding a line of rustic furniture. In discussing the possibilities with your sales manager, Steve Gilbert, you decide that there will definitely be a market and that your firm should enter that market.
• • S7.31 Use the same data in Problem S7.28:a) If the expected volume is 28,500 units, which alternative should be chosen?b) If the expected volume is 15,000 units, which alternative should be chosen?
• • S7.30 Given the data in Problem S7.28, at what volume (units)of output would the two alternatives yield the same profit (loss)?
• • S7.29 You are given the data in Problem S7.28:a) What is the break-even point in dollars for proposal X?b) What is the break-even point in dollars for proposal Y?
• • S7.28 Wolfgang Kersten Mfg. intends to increase capacity through the addition of new equipment. Two vendors have presented proposals. The fixed costs for proposal X are $150,000, and for proposal Y, $170,000. The variable cost for X is $120.00, and for Y, $100.00. The revenue generated by
• • • • S7.26 As a prospective owner of a club known as the Red Rose, you are interested in determining the volume of sales dollars necessary for the coming year to reach the break-even point. You have decided to break down the sales for the club into four categories, the first category
• • • • S7.25 Zan Azlett and Angela Zesiger have joined forces to start A&Z Lettuce Products, a processor of packaged shredded lettuce for institutional use. Zan has years of food-processing experience, and Angela has extensive commercial food- preparation experience. The process will
• • S7.24 The electronics firm in Problem S7.23 is now considering the new equipment and increasing the selling price to$1.10 per unit. With the higher-quality product, the new volume is expected to be 45,000 units. Under these circumstances, should the company purchase the new equipment and
• • S7.23 An electronics firm is currently manufacturing an item that has a variable cost of $.50 per unit and a selling price of $1.00 per unit. Fixed costs are $14,000. Current volume is 30,000 units. The firm can substantially improve the product quality by adding a new piece of equipment at
• • S7.22 You are considering opening a copy service in the student union. You estimate your fixed cost at $15,000 and the variable cost of each copy sold at $.01. You expect the selling price to average $.05.a) What is the break-even point in dollars?b) What is the break-even point in units?
• • S7.21 Given the following data, calculatea) BEPx;b) BEP$;andc) the profit at 100,000 units:P = +8>unit V = +4>unit F = +50,000
• S7.19 Given the data in Problem S7.17, at what volume(units) of output would the two alternatives yield the same profit?
• S7.18 Using the data in Problem S7.17:a) What is the break-even point in dollars for proposal A if you add $10,000 installation to the fixed cost?b) What is the break-even point in dollars for proposal B if you add $10,000 installation to the fixed cost?
• S7.17 Sroufe Manufacturing intends to increase capacity by overcoming a bottleneck operation by adding new equipment.Two vendors have presented proposals. The fixed costs for proposal A are $50,000, and for proposal B, $70,000. The variable cost for A is $12.00, and for B, $10.00. The revenue
• S7.16 Smithson Cutting is opening a new line of scissors for supermarket distribution. It estimates its fixed cost to be $500.00 and its variable cost to be $0.50 per unit. Selling price is expected to average $0.75 per unit.a) What is Smithson’s break-even point in units?b) What is the
• S7.14 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 simultaneously processed at workstation C for 20 minutes per unit. Workstations B and C
• • S7.13 The Pullman Mfg., Inc., three-station work cell illustrated in Figure S7.8 has two machines at station 1 in parallel.(The product needs to go through only one of the two machines before proceeding to station 2.) The manager, Ms. Hartley, has asked you to evaluate the system if she
• • S7.10 A work cell at Chris Ellis Commercial Laundry has a workstation with two machines, and each unit produced at the station needs to be processed by both of the machines. (The same unit cannot be worked on by both machines simultaneously.)Each machine has a production capacity of 4 units
• S7.9 A production line at V. J. Sugumaran’s machine shop has three stations. The first station can process a unit in 10 minutes.The second station has two identical machines, each of which can process a unit in 12 minutes. (Each unit only needs to be processed on one of the two machines.) The
• • S7.8 Under ideal conditions, a service bay at a Fast Lube can serve 6 cars per hour. The effective capacity and efficiency of a Fast Lube service bay are known to be 5.5 and 0.880, respectively.What is the minimum number of service bays Fast Lube needs to achieve an anticipated servicing of
• • S7.7 Southeastern Oklahoma State University’s business program has the facilities and faculty to handle an enrollment of 2,000 new students per semester. However, in an effort to limit class sizes to a “reasonable” level (under 200, generally), Southeastern’s dean, Holly Lutze,
• S7.5 Material delays have routinely limited production of household sinks to 400 units per day. If the plant efficiency is 80%, what is the effective capacity?
• S7.4 A plant has an effective capacity of 900 units per day and produces 800 units per day with its product mix; what is its efficiency?
• • S7.3 If a plant has an effective capacity of 6,500 and an efficiency of 88%, what is the actual (planned) output?
• S7.2 For the past month, the plant in Problem S7.1, which has an effective capacity of 6,500, has made only 4,500 hammers per day because of material delay, employee absences, and other problems. What is its efficiency?
• S7.1 Amy Xia’s plant was designed to produce 7,000 hammers per day but is limited to making 6,000 hammers per day because of the time needed to change equipment between styles of hammers. What is the utilization?
13. What are the techniques available to operations managers to deal with a bottleneck operation? Which of these does not decrease throughput time?
12. Describe the five-step process that serves as the basis of the theory of constraints.
11. Explain how net present value is an appropriate tool for comparing investments.
10. Under what conditions would a firm want its capacity to lag demand? to lead demand?
9. What keeps plotted revenue data from falling on a straight line in a break-even analysis?
8. What are the assumptions of break-even analysis?
7. What is the theory of constraints?
6. Distinguish between bottleneck time and throughput time.
5. Explain why doubling the capacity of a bottleneck may not double the system capacity.
4. Distinguish between effective capacity and actual output.
3. What is efficiency?
2. What is effective capacity?
1. Distinguish between design capacity and effective capacity.
River Road Medical Clinic is thinking of investing in a sophisticated new piece of medical equipment. It will generate $7,000 per year in receipts for 5 years.APPROACH c Determine the present value of this cash flow; assume an interest rate of 6%.
Southern Hospital Supplies, a company that makes hospital gowns, is considering capacity expansion.APPROACH: c Southern’s major alternatives are to do nothing, build a small plant, build a medium plant, or build a large plant. The new facility would produce a new type of gown, and currently the
Le Bistro also wants to know the break-even for the number of sandwiches that must be sold every day.APPROACH c Using the data in Example S6, we take the forecast sandwich sales of 62.1% times the daily break-even of $245.50 divided by the selling price of each sandwich ($5.00).
Stephens, Inc., wants to determine the minimum dollar volume and unit volume needed at its new facility to break even.APPROACH c The firm first determines that it has fixed costs of $10,000 this period. Direct labor is$1.50 per unit, and material is $.75 per unit. The selling price is $4.00 per unit
The manager of Sara James Bakery (see Example S1) now needs to increase production of the increasingly popular Deluxe roll. To meet this demand, she will be adding a second production line. The second line has the same design capacity (201,600) and effective capacity (175,000) as the first line;

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