Supply Chain Management Department Sprott School of Business, Carleton University. BUSI 2301 Operations Management. Winter 2013.

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1 Name: Student I: Section: / B / C Supply Chain Management epartment Sprott School of Business, Carleton University BUSI 2301 Operations Management Winter 2013 Midterm Exam March 2nd, 2013 Instructor: lan Cai, Sean McGrath Summary: 50 Multiple Choice questions, 1 mark each. 4 Critical Thinking / Numerical questions Total mark 100, which weighs 25% of final mark distribution. Instructions: Time: 180 minutes Closed book exam Leave your belongings at the front of the exam room Limit your answer to available space. No additional papers will be made available. Return the answer book including all of its pages. No exiting during the last 15 minutes of exam time Section 1. Multiple Choice Questions (Total Marks 50) Page 1

2 For each multiple-choice question, choose the best answer from the list given and mark your choice on the Scantron sheet. You may use scrap paper for your rough calculations, but only the final answer will be marked. Each question is worth [2] marks. 1. Operations management encompasses all of the following EXCEPT: ) forecasting capacity planning scheduling motivating employees preparing financial statements 2. The responsibilities of the operations manager are: ) planning, organizing, staffing, procuring, and reviewing planning, organizing, staffing, directing, and controlling forecasting, designing, planning, organizing, and controlling forecasting, designing, operating, procuring, and reviewing designing and operating 3. Which of the following is not a key factor of competitiveness? ) price product differentiation location after-sale service none of the choices are correct 4. Which of the following is not a step in creating a vision/mission? ) Identify stakeholders and their vision evelop a vision/mission in a participatory way evelop values that will guide the company Plan strategy and action programs that will determine the vision/mission. Page 2

3 5. Canvalves Company produces cast bronze valves on an assembly line. It currently produces 800 valves each 8-hour shift. If the production is increased to 1,200 valves each shift, the productivity increases by: ) 50% 33% 25% 67% none of the choices are correct 6. The manager of a carpet store is trying to determine the best installation crew size. He has tried various crew sizes with the results shown below. Based on productivity, what crew size do you recommend? Crew Size ) Yards Installed In operations, forecasts are the basis for all of the following EXCEPT: ) capacity planning location planning inventory levels planning production scheduling forecasts are the basis for all of the choices 8. Which of the following is not a step in the forecasting process? ) determine the purpose eliminate any assumptions establish a time horizon select a technique Page 3

4 monitor the forecast 9. isadvantages of naive forecasts include: I. time-consuming II. not very accurate III. does not smooth random variations ) I, II and III I and II I and III II and III none of the choices are disadvantages 10. Which is not a characteristic of simple moving averages applied to time series data? ) smoothes random variations in the data weights each historical value equally lags changes in the data has minimal data storage requirements smoothes real variations in the data 11. s compared to a simple moving average, the weighted moving average is: ) easier to compute more reflective of the recent changes smoother all of the choices are true none of the choices are true 12. Which of the following possible values of alpha would cause exponential smoothing to respond the most quickly to forecast errors? ) Page 4

5 13. Which technique is useful in computing seasonal relatives? ) double smoothing elphi technique MSE centered moving average exponential smoothing 14. Which of the following is not a typical source of ideas for new products/services? ) Warranty claims Marketing research Inventory records Reverse engineering ll of the choices are typical sources 15. Which of the following is an issue that designers must take into account in product and service design? ) legal, environmental and ethical issues reliability standardization range of operating conditions all of the choices must be taken into account 16. The term that pertains to incorporating customer ideas in product design is: ) TQM C QF robust design reverse engineering 17. The maximum possible output is: ) design capacity effective capacity Page 5

6 actual output efficiency utilization 18. Given the following information, the efficiency is: Effective capacity = 50 units per day esign capacity = 100 units per day ctual output = 30 units per day ) 40% 50% 60% 80% 90% 19. Which of the following are assumptions of the break-even model? I. II. III. ) Usually one product is involved. Everything that is produced can be sold. The revenue per unit will be the same regardless of volume. I only I and II only II only II and III only I, II and III 20. tabular presentation that shows the outcome for each decision alternative under the various possible states of nature is called: ) a payoff table a feasible region an isoquant table a decision tree a payback period matrix 21. decision tree is: ) an algebraic representation of alternatives Page 6

7 a behavioural representation of alternatives a matrix representation of alternatives a schematic representation of alternatives a horticultural representation of alternatives 22. sensitivity analysis graph: ) provides the exact values of probability for the optimal alternative. is useful for a maximum of three alternatives. is useful when the probabilities of payoffs are known. provides a visual indication of the range of probability for the best alternative ll of these are correct. 23. The substitution of machinery that has sensing and control devices for human labour is best described by the term: ) automation loss of jobs computer-aided manufacturing computer-integrated manufacturing flexible manufacturing system 24. Which term is most closely associated with manufacturing cells? ) part families assembly line robotics CIM IEF 25. The minimum possible cycle time in a product layout is determined by the: ) longest task time shortest task time average task time total task time Page 7

8 none of the choices are correct 26. In a stopwatch time study, the number of cycles that must be timed is a function of: ) the variability of observed times the desired accuracy for the estimated job time the desired confidence for the estimated job time all of the choices none of the choices 27. In a stopwatch time study, adjusting the observed time by the performance rating of the observed worker results in the: ) observed time normal time standard time allowance time performance rating time. 28. n approach to locational analysis that includes both qualitative and quantitative considerations is: ) break-even analysis factor rating transportation method expected value financial analysis 29. Logistics refers to: I) II) III) ) the movement of materials within a production facility incoming and outgoing deliveries the movement of information within a facility I II III I and II Page 8

9 I, II and III 30. Which of the following is least likely to be a factor in determining region for a location decisions? ) raw materials market taxes zoning labour 31. The benefits of establishing partnerships with suppliers include: I higher quality. II increased delivery speed. III lower inventories. ) I and II II only II and III I and III I, II and III 32. Efficiency is defined as the ratio of: ) actual output to effective capacity actual output to design capacity design capacity to effective capacity effective capacity to actual output design capacity to actual output 33. Which type of processing system tends to produce the most product variety? ) ssembly Job-Shop Batch Continuous Repetitive Page 9

10 Use the following to answer question 34: n operation analyst is forecasting this year's demand for one of his company's products based on the following historical data: YER Four years ago Three years ago Two years ago Last year QUNTITY SOL 10,000 12,000 18,000 20, What is this year's forecast using exponential smoothing with alpha =.2, if last year's forecast was 15,000? ) 20,000 19,000 17,500 16,000 15, Which term most closely relates to associative forecasting techniques? ) expert opinion linear relationships the elphi technique consumer survey explanatory variables 36. Which of the following is true? ) Corporate strategy is shaped by functional strategies. Corporate mission is shaped by corporate strategy. Functional strategies are shaped by corporate strategy. External conditions are shaped by corporate mission. Corporate mission is shaped by functional strategies. 37. t the break-even point: ) output equals capacity Page 10

11 total cost equals total revenue total cost equals profit variable cost equals fixed cost variable cost equals total revenue 38. The difference between expected payoff under certainty and expected payoff under risk is the: ) expected monetary value expected value of perfect information expected net present value expected rate of return none of the above 39. The mean absolute deviation (M is used to: ) estimate the trend line eliminate forecast errors measure forecast accuracy seasonally adjust the forecast all of the choices 40. manager uses the following equation to predict monthly receipts: Yt = 40, t. What is the forecast for July of this year if t = 0 in pril of this year? ) 40,450 40,600 42,100 42,250 42, ll but which of the following is used to measure forecast errors? ) M ME MPE Page 11

12 MSE all of the choices are used 42. job had an average observed time of 10 minutes, a performance rating of.90, and an allowance factor of 20 percent of job time. Twenty-five cycles were timed. Standard time for the job in minutes is: ) none of these 43. production line is to be designed for a job with three tasks. The task times are 0.3 minutes, 1.4 minutes, and 0.7 minutes. The minimum cycle time in minutes, is: ) none of these 44. Which of the following is not a stage in the life cycle of products and services? ) incubation growth adolescence saturation decline 45. Which of the following is not a key consideration when a company chooses a supplier? ) lead time and on-time delivery reputation and financial stability Job enlargement quality and quality assurance Page 12

13 flexibility Use the following to answer question 46: location analysis has been narrowed down to three locations. The critical factors, their weights, and the ratings for each location are shown below: Factor Wt. Labour Cost Transp. Cost Market ccess Raw Mat'l. ccess Location B C What is the composite score for location B? ) MSE weighs errors according to and MPE weighs according to : ) squared values of errors; absolute values of errors absolute values of errors; relative error relative error; squared values of errors squared values of errors; relative absolute value of error none of the choices are correct Page 13

14 Use the following to answer question 48: Professor Z needs to allocate time among several tasks next week to include time for students' appointments. Thus, he needs to forecast the number of students who will seek appointments. He has gathered the following data: WEEK 6 weeks ago 5 weeks ago 4 weeks ago 3 weeks ago 2 weeks ago Last week # STUENTS What is this week's forecast using a three-week simple moving average? ) The utilization of a machine is 50%. The machine has a design capacity of 70 units per hour and an effective capacity of 60 units per hour. Find the efficiency of the machine. ) 58.33% 65% 50% 85.71% Use the following to answer question 50: n operation analyst is forecasting this year's demand for one of his company's products based on the following historical data: YER Four years ago Three years ago Two years ago Last year QUNTITY SOL 10,000 12,000 18,000 20,000 Page 14

15 50. What is this year's forecast using a two-year weighted moving average with weights of.7 and.3? ) 19,400 18,600 19,000 11,400 10,600 Short nswer Questions For each short answer question, write your answers. Show the formula (if you use any), and your calculations 51. manager has developed a payoff table that indicates the profits associated with a set of alternatives under two possible states of nature. nswer the following questions. You may use a graph if it helps you to understand and visualize your solution, but your answer should expressed through the use of algebraic equations (10 pts).. (i) etermine the expected value of perfect information if P(S2) =.40. (ii) etermine the range of P(S2) for which each alternative would be optimal. Page 15 lt. S1 1 S

16 52. BC manufacturing company needs to produce a custom aluminium casing for a special customer order. Currently, it does not have the equipment necessary to make the casing, and it decides to buy one new machine. If it buys a machine made by Supplier X, there is a fixed cost of $10,000 and a variable cost of $5 per unit. The machine made by Supplier Y has a fixed cost of $40,000 and a variable cost of $2 per unit. The machine made by Supplier Z has a fixed cost of $70,000 and a variable cost of $1 per unit. BC sells the casings that it makes to a metal fabricator for $10 per unit. nswer the following questions (15 pts): 1. Which of the potential suppliers should be selected to result in the highest Breakeven volume for BC? 2. etermine whether BC should manufacture the casing under each of the following circumstances (In each case, if your answer is yes, advise which machine they should choose): a) If the customer order is for 1,000 units. b) If the customer order is for 12,000units. 3. Which of the three suppliers would require the lowest volume of output to generate a profit of $50,000 for BC? 4. Which volume range will make Supplier X the best choice alternative to BC? (15 pts) Page 16

17 53. Cyclone ppliances has developed a new European-style convection oven that will be made on an assembly line. The schedule requires production of 80 ovens in an 8-hour day. The assembly includes 10 tasks. The table below indicates the performance time and the sequence requirements for each task. (10 pts) Task B C E F G H I J Task Performance Time (In Minutes) Sequence (Task must follow Task listed below), B C E, F, G H I a) What is the desired cycle time in seconds for this assembly operation? b) What is the theoretical minimum number of workstations? c) raw the precedence diagram. d) Group the tasks into the minimum number of workstations using the most followers heuristic to minimize idle time at each station (If a tie persists use a second heuristic of selecting the task with the longest time to break the tie), and calculate the idle time for each workstation. Show the steps of your assignment process in the table provided on next page. e) Calculate the efficiency of the production line Workstation ssignment Table Page 17

18 54. We have following demands at each season for year Table 1 Year Season Spring Summer Fall Winter Spring Summer Fall Winter Spring emand In addition, we already know the value of seasonal index (demand/cm (CM is centered moving average) )for the following seasons Table 2 Year Spring Summer Fall 0.98 Winter 1.35 a. Calculate the value of demand/cm between fall 2007 to fall 2008, and then calculate adjusted seasonal relatives for each of the season, by using the number in table 2 and the demand/cm that you just calculated. b. The linear trend equation for this problem is y= 2.3x+16. ssuming that Spring 2007 was period 1, use this equation and the seasonal relative that you just calculated to forecast the demand for summer 2009 (15 pts). Seasonal Index Year Season emand (emand/cm) 2007 Spring 18 Summer 12 Fall 23 Winter Spring 21 Summer 17 Fall 34 Winter Spring 34 Year verage Spring Summer Fall 0.98 djusted Seasonal Relative Page 18 Winter 1.35

19 nswer Key E B E E B B E C E C C E B B E B E C B B C B B C C C Page 19

20 (i) Under certainty, the max. payoff is.6(10) +.4(8) = 9.2 (1 pt) (ii) EMV for lt. 1 is:.60 (10) +.40 (2) = 6.8 (0.5pt) EMV for lt. 2 is:.60 (-2) +.40 (8) = 2 (0.5pt) EMVfor lt. 3 is:.60 (8) +.40 (5) = 6.8(0.5pt) Therefore, EVPI =10*0.6+8* = 2.4. (1.5pt) (ii) Refer to the diagram, above. (three lines in the diagram, 0.5 pt each) Equations: 1: 10-8P 2: P 3: 8-3P (Here P could be expressed as P(S2). Three equations are 0.5 each) Ranges: #1 is opt. from P(S2) = 0 to <.40. (1 pt) #3 is opt. from >.77 to 1.00 (1 pt) #2 is opt. from >.40 to <.77(1 pt) Page 20

21 52. Solution Supplier X Supplier Y Supplier Z $10,000 $40,000 $70,000 Variable Cost per unit (v) $5 $2 $1 Revenue per unit (r) $10 $10 $10 Fixed Cost (F Supplier X Supplier Y Supplier Z (Each of the Qbep is worth 1.5 point). Thus, supplier Z has highest break even volume (0.5 point) 2. a. Since 1,000 units is lower than any of the break-even points, BC should not manufacture the aluminium casing at all. (1 point) b. For a volume of 10,000 units the profits for the three suppliers are as follows: Supplier X Supplier Y (each of the profit is 1 point each) Y is the best (0.5 point) Page 21 Supplier Z

22 3. Supplier X Supplier Y (the three volume is 1 point each) Page 22 Supplier Z

23 Thus, supplier Y provides BC with the lowest volume to make a profit of $50,000. (0.5 pts) 4.emand is between ,000 units. ( 2 pts) 53. a. 360 seconds (0.5pt) b. sum of the task time/cycle time =30/6=5 or student may answer that the real number of station is 6. either answer is right (0.5pt) c. for each node, if in right place with right arrow, it will be 0.3 pts. d. Station Time left (minutes) eligible 6, B 3B 1C 6C 2 0E,F,G 6E,F,G 2E, F 0E 6E 3h 6H 0I 6I 4J 1 (the bold font is 0.3 pt each) E. percentage of idle time: (1+3+2)/(6*6)=0.166 (0.6pt) efficiency = =0.833 or 83.3% (0.6pt) Page 23 will fit, B b ssigned Task (3) B (2) C C(4) (2) E,F,G F G(4) F(2) E E(3) h h(6) i J I(2) J(2)

24 54. a. M Spring Summer Fall Winter 2008Spring Summer Fall Winter 2009Spring Spring verage adjust seasonal relative Summer Fall M Winter demand/m total (1 point each for the bold font. ) b. for summer 2009, it is period 10(considering spring 2007 as period 1), thus, y=2.3*10+16=39. seasonalized demand is 39*0.57=22.23 (1 pt) OR it is period 14(considering spring 2006 as period 1), thus, y=2.3*14+16=48.2. seasonalized demand is 48.2*0.57=27.47(1pt) Page 24

BA3352 : Midterm on 8 October 2001

BA3352 : Midterm on 8 October 2001 This is a closed textbook and lecture notes exam. You may not use a calculator so leave quantities as fractions, additions or products. Do not forget to define any variables