Chapter 9 Problems Solve all three (3) of these problems below for a possible total of 10 points. 1. Joe's Tasty Burger has determined that its production facility has a design capacity of 650 hamburgers per day. The effective capacity, however, is 600 hamburgers per day. Lately Joe has noticed that output has been 525 hamburgers per day. Compute both design and effective capacity utilization measures. What can you conclude? Solution: Design Capacity Effective Capacity Design Utilization Effective Utilization 2. Beth's Bakery can comfortably produce 125 brownies in one day. If Beth takes some unusual measures, such as hiring her two aunts to help in the kitchen and work overtime, she can produce up to 175 brownies in one day. a) What are the design and effective capacities for Beth's Bakery? b) If Beth is currently producing 125 brownies, compute the capacity utilization for both measures. What can you conclude? Solution: a) Design Capacity Effective Capacity b) Design Utilization Effective Utilization 3. The Steiner-Wallace Corporation has determined that it needs to expand in order to accommodate growing demand for its laptop computers. The decision has come down to either expanding now with a large facility, incurring additional costs and taking the risk that the demand will not materialize, or expanding small, knowing that in three years management will need to reconsider the question. Management has estimated the following chances for demand: The likelihood of demand being high is 0.80. The likelihood of demand being low is 0.20. Profits for each alternative have been estimated as follows: Large expansion has an estimated profitability of either $104,079 or $60,807, depending on whether demand turns out to be high or low. Small expansion has a profitability of $50,314, assuming that demand is low. Small expansion with an occurrence of high demand would require considering whether to expand further. If the company expands at that point, the profitability is expected to be $70,517. If it does not expand further, the profitability is expected to be $48,679. The decision tree showing the decisions, chance events, and their probabilities, as well as the profitability of outcomes is drawn below. a) Solve the decision tree. b) What should Steiner-Wallace do? Low Dem and (0.2 0) $60,807 $104,079 and D em Low (0.2 0) High Demand (0.80) $50,314 $70,517 d pan Ex Do n 't Ex Solution: a) Probability Expected Profits Large Expansion, Low Demand Large Expansion, High Demand Small Expansion, Low Demand Small Expansion, High Demand What is EV Large Expansion? What is EV Small Expansion? b) Which would you recommend and why? pand $48,679 Chapter 10 Problems Solve both (2) of these problems below for a possible total of 16 points. 1. Fresh Foods Grocery is considering redoing its facility layout. The from-to matrix showing daily customer trips between departments is shown in the table below, and their current layout is shown in the figure below. Fresh Foods is considering exchanging the locations of the dry groceries department (A) and the health and beauty aids department (F). Compute the ld score for Fresh Foods current and proposed layouts. Which is better? Department A. Dry groceries B. Bread C. Frozen foods D. Meats E. Vegetables F. Health and beauty aids Table 10-10: From-To Matrix for Fresh Foods Trips between Departments A B C 21 35 26 - D 22 13 37 - E 11 24 17 44 F 38 30 22 12 29 - Figure 10-12: Current layout for Fresh Foods Exchanging the locations of D and F Proposed layout: A F B E C D Solution: Fill in the highlighted part of the table and answer the question. Current Layout Departments AB AC AD AE AF BC BD BE BF CD CE CF DE DF EF Total Proposed Layout Load LoadDistance Distance Distance No. of Trips (l)No. of Distance (d)Distance (ld)Load (d)Distan (ld)LoadTrips (l) (d) Distance ce (d) Distance (ld) (ld) 21 35 22 11 38 26 13 24 30 37 17 22 44 12 29 Which layout is preferred and why: 2. An assembly line must be designed to produce 50 packages per hour. The table below contains the necessary information. Task A B C D E F Task Information Immediate Predecessor None A B B B C, D, E Sum of task times = C Task Time (seconds) 25 40 22 35 15 59 B A E 196 a) Compute the cycle time (in seconds) to achieve the desired output rate. b) What is the theoretical minimum number of stations? c) Which work element should be assigned to which workstation? d) What is the resulting efficiency percentage? d) What is the resulting balance delay percentage? Solution: a) Cycle time = b) Theoretical minimum number of stations = or stations (round up) c) Fill in the table below (highlighted areas) Workstation 1 2 3 4 d) Efficiency = e) Balance Delay % = Eligible Task D Task Selected Task Time Idle Time F Chapter 12 Problems Solve all three (3) of these problems below for a possible total of 19 points. 1. Joe, the owner of Genuine Reproductions (GR), a company that manufactures reproduction furniture, is interested in measuring inventory effectiveness. Last year the cost of goods sold at GR was $2,500,000. The average inventory in dollars was $375,000. a) Calculate the inventory turnover for GR. b) Calculate the weeks of supply. Assume 52 weeks per year. c) Calculate the days of supply. Assume that GR operates 5 days per week. Solution: a) Inventory Turnover b) Weeks of Supply c) Days of Supply 2. Custom Computers, Inc. assembles custom home computer systems. The heat sinks needed are bought for $14 each and are ordered in quantities of 2600 units. Annual demand is 9600 heat sinks, the annual inventory holding cost rate is $4.50 per unit, and the cost to place an order is estimated to be $59. Calculate the following: a) Average inventory level b) The number of orders placed per year c) The total annual inventory holding cost d) The total annual ordering cost e) The total annual cost, not including the cost of the heat sinks f) The total annual cost including the cost of the heat sinks Solution: a) Average Inventory Level b) Number of orders placed per year c) Total annual inventory holding cost d) Total annual ordering cost e) Total annual cost without heat sink cost f) Total annual cost including heat sink cost 3. The local Office of Tourism sells souvenir calendars. Sue, the head of the office, needs to order these calendars in advance of the main tourist season. Based on past seasons, Sue has determined the probability of selling different quantities of the calendars for a particular tourist season. Probability of Demand 0.2 0.28 0.1 0.12 0.3 Demand for Calendars 79,000 82,000 89,000 94,000 97,000 The Office of Tourism sells the calendars for $16.25 each. The calendars cost Sue $7.75 each. The salvage value is estimated to be $1.25 per unsold calendar. Determine how many calendars Sue should order to maximize expected profits. Solution: Fill in the payoff table highlighted below to answer this question. Selling Price per calendar Calendar Cost Salvage Value Profit per sale Loss per unsold calendar $16.25 $7.75 $1.25 $8.50 $6.50 Demand 79,000 Order Amount How many should she order to maximize profits? 79,000 82,000 89,000 94,000 97,000 82,000 89,000 94,000 97,000 Expected Profit Points Distribution Chapter 9 Problem 1, effective utilization Problem 1, design utilization Problem 2, effective utilization Problem 2, design utilization Problem 3, Part a Problem 3, Part b 1 1 1 1 5 1 10 Problem 1 Problem 2, part a Problem 2, part b Problem 2, part c Problem 2, part d Problem 2, part e 4 1 1 8 1 1 16 Problem 1, part a Problem 1, part b Problem 1, part c Problem 2, part a Problem 2, part b Problem 2, part c Problem 2, part d Problem 2, part e Problem 2, part f Problem 3 Sheet Total: 1 1 1 1 1 1 1 1 1 10 19 Assignment Total: 45 Sheet Total: Chapter 10 Sheet Total: Chapter 12