Operations Final

At Nuvision Television Company, the yearly demand for the "football special" television is 6,375. Annual setup costs are $25,500 when the economic order quantity is 300 televisions. Find the monthly holding cost per unit.

$14.17 per unit per month

The Handy Hardware store manages its inventory of door knobs using a fixed-order quantity and buys the calculated optimum order quantity each time. Inventory data pertaining to this item is as follows: Total annual holding and ordering costs combined equal $540, annual demand equals 1,215 door knobs, and it costs $30 each time an order is placed. Given this information, what is the annual cost of carrying one door knob for one year?

$4 per knob per year.

With monthly demand of 400 units, setup costs of $300 each setup and holding costs of $2 per unit per quarter, determine the cost minimizing fixed order quantity.

600

. Jane Hathoway at Sippy Cola knows that daily demand is normally distributed with a mean of 60,000 cases and a standard deviation of 2,000 cases. She knows that the lead time is 4 days. Given that the reorder point is 250,000 cases, find the service level.

99.38%

A pure level strategy for aggregate production planning: A. Maintains a stable workforce working at a constant output rate. B. Varies the output by changing the number of hours worked through flexible work schedules or overtime C. Matches the production rate to monthly demand by hiring and laying off D. Uses a part-time workforce when the demand exceeds the production rate. E. Never uses inventory to buffer against the changes in demand.

A

At Q, what is TAC? A: 289395.83 B: 427.85 C: 1197.98 D: 1288.99

A

At Q, what is TAHC? A: 1197.98 B: 289395.53 C: 855.7 D: 1288.99

A

Central Hydraulic Supply The Central Hydraulic Supply Company is a distributor of hydraulic supplies in the Midwest. Central handles standard fittings, tubing, and similar items. Generally Central carries an entire product line for each manufacturer it represents providing local stock for rapid delivery to customers. The parts that Central stocks are mainly used in the maintenance of large construction equipment. The company operates 52 weeks per year. The company reviewed the cost of preparing and processing a requisition, preparing a purchase order, and making necessary record changes. This was estimated to be $50 per order. One part that Central stocks is a small hydraulic fitting. Central sells about 20,500 of these fittings per year (the fitting is purchases for $14 and sells for $19). The manufacturer from whom Central buys the fitting does not offer any quantity discount. The manufacturer is located about 1,500 miles away and the fittings are shipped to Central by truck. They all arrive at once. The annual per unit inventory holding cost is 20% of the item's value. What is the order quantity that minimizes total annual cost of inventory? A: 855.7 B: 825 C: 875 D: 853.9

A

Converting quarterly and annual business plans into broad output and labor requirements for the intermediate-term is known as: A. Aggregate planning. B. Master production scheduling. C. Rough-cut capacity planning. D. Materials requirements planning. E. Capacity requirements planning.

A

How many orders will there be per year at the FOQ? A: 23.96 B: 855.7 C: 1197.98 D: 27.75

A

In a saw tooth diagram, the peak of each inventory cycle represents? A: Q B: ROP C: SS D: DLT

A

Suppose a company is using pure chase strategy for its aggregate production planning. Which of the following policies would a manager use to deal with (or hedge against) the fluctuation in demand? A. Hire additional workers when demand increases and outplace them when demand decreases B. Stock up excessive inventory during periods of low demand. C. Purchase the shortages from subcontractors. D. Allow the employees to work overtime when the demand is low. E. All of the above

A

Suppose that the supplier of the fittings only has the capacity to deliver the fittings at the rate of 500 per week. What is the new optimum order quantity (Q)? A: 1860 B: 427.85 C: 1197.98 D: 1288.99

A

The manager of an assembly line took five samples, each with sixobservations, under ideal conditions to develop control limits for an X-barchart. The mean and range of each sample is shown in the table below: XXXX [Sample Number, Sample Mean, Sample Range] 1 2.18 0.33 2 2.12 0.38 3 1.86 0.40 4 1.98 0.38 5 2.02 0.35 The 3 standard deviations lower control limit should be: A: Between 1.60 and 1.90 B: Between 0.10 and 0.40 C: Between 9.10 and 9.40 D: Between 8.20 and 8.50 E: Between 0.50 and 0.80

A

Which aggregate planning strategy typically results in greater inventory carrying costs? A. Level strategy. B. Chase strategy. C. Subcontracting strategy. D. Material requirements production strategy E. It depends on other factors

A

Which of the following control charts is(are) most appropriate for detecting process failure with attribute measurements? A: p chart B: R chart C: X-bar chart D: Both Rchart and X-bar chart E: Both pchart and R chart

A

Which of the following is not a type of inventory? A: reorder point stock B: pipeline stock C: safety stock D: cycle stock

A

A certain product costs $200 to order. The cost per unit is $25 and the cost to carry one unit in inventory for 1 year is 20% of the value of the product. Monthly demand is 1,000 units. The company operates 5 days a week, 4 weeks per month. What is the FOQ? A: 890 B: 980 C: 1014 D: 780

B

A process, when in control, produces an output that has these statistics: X-doublebar = 253; R-bar = 48; these statistics were calculated from 8 samples, each containing 15 observations. Using three standard deviation control limits, determine the LCL for the R chart and the UCL for the X-bar chart. [LCL for Range Chart, UCL for X-bar Chart] A: 46.7, 270.8 B: 16.8, 263.6 C: 6.7, 263.6 D: 0, 253.1 E: 14.5, 258.4

B

Mole Mfg. has asked you to develop a chase plan for the production of its earth moving equipment. Below is the beginning inventory, monthly demand, and relevant work force information. Determine the total hire/fire costs and the number of workers employed at the end of October. Note: The ending inventory for October should be 0. July Beginning Inventory 1200: Demand is July 3300; Aug 3000; Sept 2550; Oct 2400. Hiring costs $50 per worker; firing costs $100 per worker; production rate 15 units per month per worker; starting workforce 200 workers A. $6,000 and 160 workers B. $13,000 and 160 workers C. $6,000 and 170 workers D. $13,000 and 170 workers E. $19,000 and 170 workers

B

The degree to which the product or service design specifications are met during the transformation process is known as: A: Design quality B: Conformance quality C: Quality function deployment D: Fitness for use E: None of the above

B

Which one of the following lists best describes the four steps of the Deming Wheel? A: Purchase, Distribute, Coordinate, Account. B: Plan, Do, Check, Act. C: Plan, Direct, Critical, Align. D; Plan, Do, Critique, Articulate E: None of the above is an accurate description for the Deming Wheel method.

B

You have just used the Capability Index formulas to compute the two values "min[2, 2.5]." Which of the following is the interpretation of these numbers? A) The true Capability Index value is 2.5 B) The mean of the production process has shifted to the left of the design limits C) The mean of the production process has shifted to the right of the design limits D) The mean has not shifted at all E) None of the above

B

You want to determine the upper control line for a "p" chart for quality control purposes. You take several samples of a size of 100 items in your production process. From the samples you determine the fraction defective is 0.05 and the standard deviation is 0.01. If the desired confidence level is 99.7 percent, which of the following is the resulting UCL value for the line? A) 0.39 B) 0.08 C) 0.06 D) 0.05 E) None of the above

B

You want to develop a three-sigma "R" chart. You know the average range is 5 based on several samples of size 10. Which of the following is the resulting UCL? A) 20.9 B) 8.9 C) 7.02 D) 5 E) None of the above

B

A certain product costs $200 to order. The cost per unit is $25 and the cost to carry one unit in inventory for 1 year is 20% of the value of the product. Monthly demand is 1,000 units. The company operates 5 days a week, 4 weeks per month. Assume the company manufactures the unit instead of purchasing it, and so the replenishment is not immediate, but rather gradual over time. If the production rate is 750 units per day, what is the optimal order quantity? A: 890 B: 980 C: 1014 D: 780

C

Eight samples of ten parts each were taken from an ongoing process to establish a control chart for attributes. The number of defects in each sample are shown in the table below: Sample, n, # defects 1 10 1 2 10 0 3 10 0 4 10 2 5 10 0 6 10 1 7 10 0 8 10 2 Which is the appropriate uppercontrol limit for a control chart with a 97% confidence interval? A: 0.000 B: 0.007 C: 0.256 D: 0.750 E: 1.370

C

If there are 12 total number of defects from 10 samples, each of 10 individual items in a production process, which of the following is the Fraction Defective that can be used in a "p" chart for quality control purposes? A) 1.20 B) 0.10 C) 0.12 D) 0.08 E) None of the above

C

The BBC Company is forecasting demand to fluctuate over the next four periods. If the beginning inventory level is 120 units and the company wants a pure level output plan, what level of production is required to avoid back orders during any period and to keep ending inventory for period 4 at a minimum? The forecast is: Period 1-1900; Period 2-1930; Period 3-2260; Period 4-910. A. 1720 B. 1855 C. 1990 D. 2030 E. None of the above answers are correct.

C

The Bloomington Bicycle Bearing company wishes to use a level output plan to plan for the rest of the year. Here is the forecasted demand for all bearing types: Month Demand May 800 Jun 650 July 720 August 690 Sept 530 Oct 610 Nov 630 Dec 610 If the beginning inventory is 300 units and the desired ending inventory at the end of December is 500 units, how many units will be in inventory at the end of August? Assume that backorders are allowed. A. 140 B. 150 C. 160 D. 170 E. 180

C

The Shingo system relies on which of the following approaches? A: Introduction of numerically controlled machine tools into the process. B: Introduction of quality control checks at the end of the process. C: Introduction of quality controls within the process so feedback can occur immediately. D: Utilization of statistical quality control. E: You Answered the Utilization of fishbone or cause-and-effect diagrams.

C

Which of the following measures is most appropriately monitored by a p chart? A: The weight of a 3 month old baby. B: The diameter of a piston. C: The proportion of students absent from class each day. D: The weight of a bushel of wheat. E: The temperature of a class room

C

Which of the following statements best describe one a basic difference between the Malcolm Baldrige Award and ISO 9000 certification? A: One originated in Japan, the other in Europe B: There is essentially no difference between the two C: ISO 9000 is more important in international commerce D: One applies to only U.S. firms, one applies to only European firms E: ISO 9000 focuses on customer satisfaction, unlike the Baldrige Award

C

Which of the following statements is not true about the continuous improvement process? A: Results are usually accumulated as a series of small improvements. B: It utilizes tools such as the Deming Wheel, Pareto analysis, and Histograms C: It requires creative thinkers to come up with break-through innovations. D: It utilizes team and employee involvement E: It utilizes control charts.

C

You want to determine the control lines for a "p" chart for quality control purposes. If the total number of defects from all samples is 560, the number of samples is 70, and the sample size is 80, which of the following would be the standard deviation used in developing the control lines? A) roughly 0.90 B) roughly 0.45 C) roughly 0.03 D) roughly 0.012 E) roughly 0.0012

C

A X-bar control chart has an upper control limit of 0.65 inch and a lower control limit of 0.35 inch. The results of the next six samples are 0.60, 0.37, 0.45, 0.48, 0.53, and 0.62 inches. What should you do? A: Nothing, the process is in control B: Investigate because three observations are above the mean. C: Investigate because there is a run. D: Investigate because there is a trend. E: increase the sample size.

D

Comparing an organization's performance on critical business processes against the best performance on the same or similar processes in other organizations is known as: A: Root cause analysis. B: Value engineering. C: Quality function deployment. D: Benchmarking. E: Walking the cat backwards.

D

The Acme Catalogue Company resells a wide variety of products that they purchase from other companies. One of their best selling products has an average demand of 200 units per week and a standard deviation of demand equal to 50 units per week. The manufacturer of the product, CTI Incorporated, is very reliable with their shipments for Acme, but requires a 10 day lead time. If Acme wishes to achieve a 95% service level, what reorder point should they use? (Both Acme and CTI operate 7 days per week). A: 409 B: 519 C: 766 D: 384

D

What is one of the fundamental differences between the Malcom Baldridge Award and ISO9000 certification? A: One applies to manufacturing and the other applies to only purchasing. B: One is fairly simple to achieve and the other is extremely difficult. C: There is essentially no difference between the two. D: One applies to U.S. firms, while the other applies to companies anywhere in the world. E: One originated in Canada and the other in Europe.

D

Which of the following circumstances would provide an incentive for employing a level (vs. chase) plan? A. The product is perishable B. Warehouse space for finished goods is limited. C. Inventory carrying costs are very high. D. The production process requires highly trained labor. E. None of the above (i.e., all are incentives for a chase plan).

D

Which of the following is NOT a method used in aggregate planning to cope with fluctuations in demand? A. Backordering demand in peak periods B. Building inventory in advance of peak periods C. Hiring additional workers in peak periods D. Construction of a new plant and/or finished goods warehouse E. All of the above are methods used to cope with fluctuating demand in

D

You have just set up a customer satisfaction monitoring system for your new restaurant. Each week you ask 20 randomly selected customers to respond to a simple questionnaire. One question asks, "Are you satisfied with the quality of service in this restaurant?" You have been conducting this study for the last 10 weeks and calculate that 93% of the customers have responded "yes" to your question. Set up a p-chart with two standard deviation control limits so you can determine if there has been a change in the perceived quality of your service. What are the control limits for a chart that controls the "percentage of dissatisfied customers"? (Select the closest answer. Note that your answer may differ slightly due to rounding error.) [UCL, LCL] A: .24, -.10 B: .24, .0 C: .12, .01 D: .18, .0 E: .18, -.04

D

It is quite common in Statistical Process Control to track both the sample averageand the sample range. Which of the following statements are accurate with respect to why both measures are considered? A: Since the sample mean and range are independent measures, each must be tracked separately. B: The sample average must always be used when using the sample range since either usedseparately only convey part of the situation. C: For a given sample, the sample mean can be in control while the range can be out of control. D: It is necessary to control both the sample average and the sample variation in order to assure the process is in control. E: All of the above are correct.

E

Which of the following are the characteristics of a Baldridge Award winner or a company that emphasizes on customer satisfaction and business results? A: The company formulates a vision of what quality is and how to achieve it. B: Senior management is actively involved C: The company carefully plans and organizes its quality effort. D: The company vigorously controls the overall process. E: All of the above.

E

Which of the following costs are NOT considered in developing an aggregate production plan? A. Inventory holding costs. B. Basic production costs (fixed and variable). C. Hiring and training costs. D. Layoff and firing expenses E. Depreciation costs.

E

Which of the following is not a cost associated with cost of quality ? A: Scrap cost B: Test equipment cost C: Inspection cost D: Warranty cost E: None of the above, all are a cost of quality.

E

Demand for the P401 Study Guide is 300 copies each month. It costs the bookstore $50 to place an order and $12 each year to hold a copy of the study guide. Currently, the bookstore pays the publisher $35 per copy. Based on the basic FOQ model, how many copies of P401 Study Guide should the bookstore order each time and what is the time between orders in weeks?

173.2 units, 2.502 weeks between orders.

The Ours Toy Company had a demand of 48,000 toy bears per year. The firm manufactures its bears at a rate of 800 per day. Carrying cost is $1 per bear per year. Setup cost for a production run of bears is $45. The firm operates 240 days per year. Given this information, what is the optimal production run size of toy bears?

2,400

The average daily demand for a product is 100 units with a lead time interval of 4 days. If the standard deviation of the demand during lead time is 48 units, what is the standard deviation of daily demand?

24

The Bloomington Zoo, in order to raise money, has started selling birdfeeders. These feeders cost $60 per unit and the cost of placing an order is $45. Annual carrying cost is 25% of the birdfeeder's value. Sales of these feeders are 18 units per week and the zoo is open all 52 weeks of the year. Management would like to know what the time between orders (TBO) is. Assume the Zoo uses an FOQ ordering policy.

4.16 weeks between orders.

A metal fabricator produces connecting rods with an outer diameter that has a 1 ± .01 inch specification. 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 capability ratio for this example.

min{1.333, 0.899} Answer is 0.899

Which of the following are characteristic of the companies who have won the Malcolm Baldrige National Quality Award?I. A strategic vision for the organization was developed.II. Senior management was actively involved in improvement efforts.III. They produced highly profitable, high technology products.IV. Quality control and improvement efforts were carefully planned and implemented. I only I, II, and III I, III, and IV I, II, and IV I, II, III and IV

I, II, and IV

Mark Hamler was stirring his coffee as he was reading over the forecasts for the Greasex line. He accidentally spilled coffee on the May forecast. Knowing that there were 600 cases in beginning inventory before January and that Greasex used a level planning strategy of 800 cases produced per month, what would the May forecast be so that there would be 400 cases in ending inventory after June? Month Jan. Feb. Mar. Apr. May Jun. Demand 1,000 800 700 900 ??? 600

May = 1,000

Centipede has asked you to develop a chase plan for production of its earth moving equipment. Below is the beginning inventory, forecasted monthly demand, and relevant work information. Determine the total hire/fire costs and the number of workers employed at the end of October. The ending inventory for October should be zero. Month July August September October Demand 3,300 3,000 2,550 2,400 Beginning inventory 1,200 Hire Cost $50 per worker Fire Cost $100 per worker Production Rate 15 units per month per worker Starting work force 200 workers

We fire 60 employees in July, hire 60 in August, fire 30 in September, and fire 10 in October. The total cost of this hiring and firing is $13,000

It should be clear that companies use different plans (level, chase, stable workforce) because of differing business conditions. What conditions would lead a business to employ one type of plan over another? For each of the following business conditions, indicate what type of plan(s) it favors. a. Inventory storage is inexpensive and easily achieved. b. Employees are highly skilled and in much demand. c. Employees require a large amount of on-the-job training, and, upon hire, are typically less productive than experienced employees. d. Temporary workers are paid on a different (lower) scale than full-time workers. e. Raw material deliveries must be determined well in advance of delivery

a. favors level b. disfavors chase c. disfavors chase d. favors chase e. favors level