7,5 ECTS. Industrial Business Economics II IBE2. The exam is given to: Name: (Filled by student) Personal number: (Filled by student)

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1 Industrial Business Economics II 7,5 ECTS Ladokcode: The exam is given to: 41T10B IBE2 Name: (Filled by student) Personal number: (Filled by student) Date of exam: Thursday, 31 of May, 2012 Time: Means of assistance: Calculator Total amount of point on exam: 50 Requirements for grading: Pass/E = 20, D=26, C=32, B=38, A=45 Additional information: Write only on one side of the paper. Only one question per sheet. State the number of the question clearly on every sheet. Write your name and social security number on every paper. The results are posted no longer than three weeks after the exam Important! Do not forget to write your name on each paper you hand in. Good Luck! Examiner: Bo Månsson / Mats Nilhag Phone number: Mats: /

2 1 (5 Marks) Georgia Products offers the following discount schedule for its 4- by 8-foot sheets of goodquality plywood: ORDER UNIT COST ($) 199 sheets or less to 399 sheets More than 399 sheets Your company orders plywood from Georgia Products. Your company has an ordering cost of $25. The carrying cost is 20%, and the annual demand is 1600 sheets. Calculate and choose the alternative with lowest cost. Purchasing in larger quantities can substantially reduce the cost of products. However, there are also some disadvantages. Exemplify and explain drawbacks of buying in larger quantities. 2 (5 Marks) MSA Computer Corporation manufactures two models of PC, Alpha 4 and Beta 5. The firm employs five technician, working 160 hours each per month, on its assembly line. Management insists that full employment (i.e. ALL 160 hours of time) be maintained for each worker during the next month s operations. It requires 20 labor hours to assembly each Alpha 4 computer and 25 labor hours to assemble each Beta 5 model. MSA wants to see at least 10 Alpha 4s and at least 15 Beta 5s produced during the production period. Alpha 4 generates $1,100 profit per unit and Beta 5s yield $1,900 each. Use the graphical method to determine the most profitable number of each model of PCs to produce during the coming month. 3 (5 Marks) Your task is to forecast next years sales for a company producing bread on an industrial scale. What data is available that can be used for the forecast and what has to be considered in order to get an accurate forecast for next years sales? 4 (5 Marks) The marginal loss on California Greens, a brand of apples, is $45 per case. The marginal profit is $20 per case. During the past year, the mean sales of California Greens in cases was cases, and the standard deviation was 4.5. How many cases should be brought to the market? Assume that sales follow a normal distribution. 5 (5 Marks) When discussing aggregated planning two extreme strategies are mentioned, chase and level. a) Describe what each of them means. b) Explain positive and negative parts for both of them. c) Give examples of products or industries that according to your opinion can benefit of the different strategies. 2

3 6 (5 Marks) High Quality Tools (HQT) manufactures vertical drilling machines in factories located in City A and City B. These are shipped to regional business centers in City C and City D, where they are delivered to the supply houses in City E, City F, City G and City H. HQT would like to minimize the transportation costs associated with shipping sufficient drilling machines to meet the demands at the four destinations while not exceeding the supply at each factory. Anything from the manufacturing units must have been shipped into any business center before reaching the final destination. Your task is to formulate the LP model including a verbal statement of the problem. Available supplies, required demands and shipping costs are shown in the table below To City From City C D E F G H Supply A $8 $ B $4 $ C - - $5 $6 $4 $3 - D - - $8 $4 $4 $5 - Demand (5 Marks) In integer programming binary variables are commonly used to limit the number of alternatives selected and/of define dependent selections. Variables A, B, C, D, E and F represent the 6 choices. For each of the following situations, write a constraint that would be used. a) Select exactly one of the variables (A-F) b) If A is selected, then B must also be selected. However, if A is not selected it is still possible to select B c) At least 50 % of the variables must be selected d) F can t be selected unless both C and D are also selected 8 (5 Marks) One mechanic services 5 drilling machines for a steel plate manufacturer. Machines break down on an average of once every 6 working days, and breakdowns tend to follow a Poisson distribution. The mechanic can handle an average of one repair job per day. Repairs follow an exponential distribution. a) How many machines are waiting for service, on average? b) How many are in the system, on average? c) How many drills are in running order, on average? d) What is the average waiting time in the queue? e) What is the average wait in the system? 9 (5 Marks) What is MRP? Input, output, benefits, drawbacks. 3

4 10 (5 Marks) Below you find a LP-model and the corresponding LINDO-report. Explain the meaning of the information in the report (sensitivity analyses) MODEL Max 3x1 + 8x2 subject to 2x1 + 4x2 <= 1900 x2 <= 400 3x1 + x2 <= 1200! Profit.! x1=standard cars; x2 = turbo cars! Working hours (h/week)! Turbo chargers (units/week)! Machine time (h/week) REPORT LP OPTIMUM FOUND AT STEP 2 OBJECTIVE FUNCTION VALUE 1) VARIABLE VALUE REDUCED COST X X ROW SLACK OR SURPLUS DUAL PRICES 2) ) ) NO. ITERATIONS= 2 RANGES IN WHICH THE BASIS IS UNCHANGED: OBJ COEFFICIENT RANGES VARIABLE CURRENT ALLOWABLE ALLOWABLE COEF INCREASE DECREASE X X INFINITY RIGHTHAND SIDE RANGES ROW CURRENT ALLOWABLE ALLOWABLE RHS INCREASE DECREASE INFINITY

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