ISQS Test 1

Contribution to profit and overhead

((PB-VC) * DB) +((PC-VS) * DC)

johns house of pancakes uses a weighted moving average method to forecast pancake sales. It assigns a weight of 5 to the previous months demand, 3 to demand two months ago, and 1 to demand three months ago. If sales amounted to 1000 pancakes in may, 2200 pancakes in junes, and 3000 pancakes in July, what should be the forecast for August?

(3000*5+2200*3+1000*1)/(5+3+1)= 2511.11111

Hotel management effectiveness

(PB*DB)+ (PC*DC)/ (

Latin pants maker

(central america stayed at 15 percent because they competed on time by having a small embroidery assembly lines) new style went fast so they were able to stay in market

Group technology scheme

(groups parts by resources needed to manufacture into cells)

Random variation

(sometimes called noise) is the unexplained deviation of a time series from predictable pattern, such as a trend, seasonal, or cyclical pattern. Because of these random variations, forecasts are never 100 percent accurate.

Cyclical component

- Repeating up and down movements -Affected by business cycle, political, and economic factors -multiple years duration -often causal or associative relationships

Which of the following smoothing constants would make an exponential smoothing forecast equivalent to a naive forecast?

-1.0

Will a high alpha value in exponential smoothing yield a highly variable forecast

-High alpha values generate forecasts that respong quickly to recent data -if the demand is very volatile (up and down) and contains substantial random variability a small alpha is preferred -Use larger value of alpha when demand data has low variability or is going one direction

Competing/measuring quality

-High performance design: superior features, hihg durability and excellent customer service -Product and service consistency: error free delivery, close tolerance -Supports price premium

Competing/measuring flexibility

-Product flexibility: easily switch the production from one item to another and is easily customizable, able to easily customize output to meet specific customer requirements -Volume flexibility -rapidly increase or decrease the amount of product being produced to match demand

SW airlines

-Single passenger class -Fuel hedging -Single type of plane -Simple fare scheme -internet sales -employees working in multiple roles

Competing on innovation

-technologies -Ideas or service concepts -innovative products -R & D often core competency

What is the forecast for may using a four-month moving average?

40+42+48+46/4 =44

A naive forecast for September sales of a product would be equal to

Actual demand for august

Johnson and johnson

After bottle of tylenol were filled with cyanide jnj took all products off shelves and replaced them with childproof caps

What is a good way to measure level of innovation

Average length of time to develop new products and services

What is a core competency that enables Walmart to compete on cost?

Bulk purchases

How does china maintain such a low currency valuation?

By dumping currency into the economy

Walmart

Competes on all five different competencies

Competitive priorities

Cost: low production costs enables the company to price its product below competitiors Time: faster delivery or consisitent on time delivery can support a price premium Flexibility: highly customized products or volume flexibility can support a price premium Innovation: new ideas concepts or technologies put in to practical use can support a price premium Quality: higher performance or a more consistent product can support a price premium

A clinic has been set up to give flu shots to the elderly in a large city. The design capacity is 50 seniors per hours, and the effective capacity is 44 seniors per hour. Yesterday the clinic was open for ten hours and gave flu shots to 330 seniors. (A) what is the design utilization (B) what is the efficiency

Design Utilization = (330 seniors/10 hours) /50 =66% Efficiency= (330 seniors/ 10 hours) /44 = 75%

A clinic has been set up to give flu shots to the elderly in a large city. the design capacity is 50 seniors per hour, and the ffective capacity is 44 seniors per hour. yesterday the clinic was open for ten hours and gave flu shots to 330 seniors. (A) what is the design utilization (b) what is the efficiency

Design utilization(330 seniors/ 10 hours) / 50 = 66% Efficiency= (330 seniors/ 10 hours) / 44 = 75%

An auto repair shop does state inspections for autos. The design capacity is 20 per hour and the effective capacity is 8 per hour. Yesterday they worked 10 hours and did 50 inspections. After calculating the utilization and efficiency for the day the manager

Determines that workers should have side duties. utilization =

How much capacity is best?

Economies of scale: where the cost per unit of outpit drops as volume of output increases/spread the ficed costs of building and equioment over multiple units, allow bulk purchasing and handling of material Diseconomies of scale: where the cost per unit rises as volume increases/often caused by congestion (overwhelming the process with too much work in progress) and scheduling complexity ...too many cooks in the kitchen

The academic computing center has five trainers available in its computer labs to provide training sessions to student. Assume that the design capacity of the system is 1900 students per semester and that effective capacity equals 90% of design capacity. If the number of students who actually got their orientation session is 1500, what is the efficiency of the system?

Efficiency = Actual output/ effective capacity .90*1900=1710 Efficiency = 1500/1710=.877=87.7%

In the example I gave of the embroidery operation what was the symptom of the problem?

Employee utilization was low and labor costs were uncompetitive

Competitive advantage support by core organizational competencies

Enables to compete on 5 competitive priorities

formula for exponential smoothing

F(T+1) = (constant)(At) + (1-a)F1

If a company has very volatile demand what should be one of their competitive priorities? Would safety capacity be important to the company?

Flexibility

During 2007-08 SW airlines utilized what very unusual strategy to increase profit?

Fuel hedging

A good core competency for a company to compete on cost?

Good relationship with outside contractors

What 2 words describe what must be used to utilize the plan within a plant method?

Group technology

Why did productivity go up in 2008-2009

Housing Bubble

Takeaway from alphas

Low varaiability use a high alpha High variability use a low alpha

Why did employment numbers drop after ww2

Many quantitative techniques were perfected in the war

The theory of constraints strives to reduce the effect of constraints by

Offloading work from constrained workstations and increasing constrained workstation capability.

Why do we US import so much Canadian oil?

Our currency is higher in valuation than the Canadian dollar

Christopher crankshaft uses a machine that can produce 100 crankshafts per hour. The firm operates 12 hours per day, five days per week. Due to regularly scheduled preventive maintenance, the firm expects the machine to be running during approximately 95% of the available time. Based on experience with other products, the firm expects to achieve an efficiency level for the crankshafts of 85%. What is the expected weekly output of crankshaft for this company?

Production per hour =100 crank Production per day = 12*100=1200 crank Production per week= 5*1200=6000 Maintenance adjusted output= .95*6000 = 5700 Efficiency adjusted: Actual output = .85*5700= 4845

Blaster radio company is trying to decide whether or not to introduce a new model. If they introduce it, there will be additional fixed costs of 400,000 per year. The variable costs have been estimated to be 20 per radio. If blaster sells the new radio model for 30 per radio, how many must they sell to break even?

Q= 400,000/30-20 Q=40,000

qualitative and quantitative

Qualitative: essentially an expert opinion Quantitative: is data from the past

How important is quality if compete on cost? Do cost and quality go together?

Quality and cost go together, if a product is too cheap with too low quality no one will buy it

Understanding capacity

Safety capacity: an amount of capacity reserved for unanticipated events such as demand surges, materials shortages, and equipment breakdowns Average safety capacity % = 100% minus average resource utilization%

What happens when improvement is made to efficiency and productivity on assembly line processes that are not the bottleneck?

Some workers seem to be working slower

Consider a production line with five stations. Station 1 can produce a unit in 9 minutes. Station 2 can produce a unit in 10 minutes. Station 3 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.) station 4 can produce a unit in 5 minutes. Station 5 can produce a unit in 8 minutes. Which station is the bottleneck station?

Station 1: 60/9 = 6.7 per hour Station 2 60/10 = 6 per hour Station 3 (60min/12min)* 2 = 10 per hour Station 4 60min/5 = 12 per hour Station 5 60/8 = 7.5 per hour Capacity of station 2 is the minimum ( 6 per hour). Therefore bottleneck is station 2.

Five step process for recognizing and managing limitations

Step 1: identify the constraint/bottleneck Step2: Develop a plan for overcoming the constraints/bottlenecks Step 3: Focus resources on accomplishing step2 Step 4: Reduce the effects of constraints/bottlenecks by offloading work or expanding capability Step 5: Once overcome, go back to step 1 an d find new constraints/bottlenecks

What is TOC (Theory of constraint)

The core idea in the theory of constaints is that every real system such as a profit making enterprise must have at least one constraint

Product life cycle

The stage a product is in has a significant effect on its forecasting

Break even analysis

Total cost: TC= F+(VC)Q Revenue: R=(SP)Q Breakeven is where Total costs= Revenue

Forecasts may be influenced by a products position in its life cycle

True

walmart trailer

Weighs about two tons less allowing for alot less weight to be hauled overall

What would be a good core competency to compete on flexibility?

Workers that have many skills

Efficiency

actual output rate/effective capacity

Seasonal patterns

are characterized by repeatable periods of ups and downs over short periods of time

Complaints

can be useful if used productively

urban cowboy

caused for a spike in cowboy hat sales

ERP

enterprise resource planning ERP is a software that links supply chain together

effective capacity * efficiency equals

expected output

If a company has very volatile demand what should be one of their priorities?

flexibility

Reno

had an order winner

Bobcat

has sales people that go around and ask if customer needs specific attachment measured and sent out in two weeks

Lightning wizards

hotel manager had contracted again for the wizards to come even though last year it was destroyed, this year they required a security deposit

Irregular variation

is a one time variation that is explainable. for example a hurricane can cause a surge in demand for building materials, food , and water.

TOC theory of constraint

is a set of principles that focuses on increasing total process through by maximizing the utilzation of all bottle neck work activites and workstations

Weighted Moving Average

last month is 50% two months ago 33% three months ago 17%

naive forecast

means that your previous years actual demand is the current years forecasted demand

Utilization

measures how much of the maximum design capacity is actually being used Actual output rate/design capacity

Mission Statement

mission statement can or cannot be indicative of the company

consider a production line with five stations. Station 1 can produce a unit 9 minutes. Station 2 can produce a unit in 10 minutes. Station 3 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. Station 4 can produce a unit 5 minutes. Station 5 can produce a unit in 8 minutes. Which station is the bottleneck station.

station 1: 60/9 = 6.6667 Station 2: 60/10 = 6 Station 3: 60/12*2 = 10 Station 4:60/5 = 12 Station 5:60/6 = 10

moving average method

take the average of the past four months

capacity

the max amount you can handle

Break even analysis

total costs= fixed costs + variable costs(quanity) Revenue = selling price * Quantity Breakeven= total costs = revenue

stiches per hour method

were inaccurate and took too long

if a tracking signal is negative

you are overforecasted

if a tracking signal is above 4

you are under forecasted