Name (print, please) ID Production Management 7-604 Fall 2007 Odette School of Business University of Windsor Midterm Exam 2 Solution Thursday, November 22, 5:0 6:50 pm Instructor: Mohammed Fazle Baki Aids Permitted: Calculator, straightedge, and a one-sided one-page note. Time available: 1 hour 20 minutes Instructions: This exam has 10 pages including this cover page and excluding a one-page table Please be sure to put your name and student ID number on each page. Show your work. Grading: Question Marks: 1 /10 2 /7 /8 4 /10 5 /10 6 /10 7 /10 Total: /65
Question 1: (10 points) Multiple Choice Questions 1.1 The costs of quality include which of the following? a. Appraisal costs b. Prevention costs c. Internal and external failure costs 1.2 (i) The objective of the Johnson s Rule for job sequencing is to minimize the length of time from the beginning of the first job until the finish of the last. (ii) Johnson s Rule is used only in production situations where we are dealing with one machine or one stage of production activity. 1. The Assignment Method is appropriate in solving scheduling problems that have which of the following characteristics? a. There are n things to be distributed to n destinations b. Each thing must be assigned to one and only one destination c. Only one criterion can be used 1.4 (i) One of the necessary inputs into the MRP system is Exception Reports. (ii) MRP is used in a variety of industries with a job-shop environment. 1.5 Which of the following statements hold true for Kanban Production Control Systems? a. The authority to produce or supply additional parts comes from upstream operations b. The cards or containers make up the Kanban Push System c. In a paperless control system, containers can be used instead of cards 2
1.6 (i) In a Two-Bin System for inventory you actually have to use four bins to make it work. (ii) IN a Two-Bin System for inventory items are used from one bin, and the second bin provides an amount large enough to ensure that the stock can be replenished. 1.7 (i) The Fixed-Order Quantity inventory model requires more time to maintain because every addition or withdrawal is logged. (ii) Safety stock is not necessary in any Fixed-Time Period model. 1.8 Which of the following assumptions are used in the Basic Fixed-Order Quantity inventory model? a. Lead time is averaged b. Ordering costs are variable c. Price per unit of product is constant d. None of the above 1.9 Holding Costs include which of the following? a. Breakage b. Order placing c. Typing up an order 1.10 The major functions of Shop-Floor Control are which of the following? a. Load labor into workstations b. Load machine hours into work stations c. Providing measurement of efficiency, utilization, and productivity of manpower and machines Question 2: (7 points) Jumbo s restaurant is trying to create a consecutive days off schedule that uses the fewest workers. Use the following information to create a consecutive days off schedule: Day M Tu W Th F S Su Requirements 2 4 2 2 4 or Worker 1 2 4 2 2 4 Worker 2 2 1 2 2 2 Worker 2 1 2 1 1 1 2 Worker 4 1 0 1 1 1 0 1 Worker 1 2 4 2 2 4 Worker 2 2 1 2 2 2 Worker 2 1 2 1 1 1 2 Worker 4 1 0 1 0 1 1 1
Days off: Worker 1: Thursday, Friday Worker 2: Monday, Tuesday Worker : Thursday, Friday Worker 4: Tuesday, Saturday or Worker 1: Thursday, Friday Worker 2: Monday, Tuesday Worker : Friday, Saturday Worker 4: Tuesday, Thursday Question : (8 points) Design specifications require that a key dimension on a product measure 120 ± 11 units. A process being considered for producing this product has a standard deviation of units. a. (4 points) Is the process capable? Justify your answer. C pk UTL X min σ X, LTL 11 120 120 109 min, () () min σ [ 1. 22, 1. 22] 1. 22 > 1, process capable. b. (4 points) Suppose that the process average shifts to 125. Redo part a C pk UTL X min σ X, LTL 11 125 125 109 min, () () min σ [ 0. 67, 1. 78] 0. 67 < 1, process not capable. Question 4: (10 points) Irwin sells a particular model of fan, with most of the sales being made in the summer months. Irwin makes a one-time purchase of the fans prior to each summer season at a cost of $40 each and sells each fan for $65. Any fans unsold at the end of summer season are marked down to $25 and sold in a special fall sale. a. (2 points) What is the marginal loss per unit? ML 40-25 15 b. (2 points) What is the marginal profit per unit? MP 65-40 25 c. (6 points) If the demand is uniformly distributed between 500 to 1700 units, find the optimal order quantity. ML 15 p 0. 75 ML + MP 15 + 25 ( b a) 1700 0 75( 1700 500) 1250 Q b p. units Question 5: (10 points) The annual demand for a product is 26,000 units. The weekly demand is 500 units with a standard deviation of 50 units. The cost to place an order is $52, and the time from ordering to receipt is four weeks. The annual inventory carrying cost is $1.6 per unit. a. (4 points) Compute the optimal order quantity. Q 2 ( 26000)( 52) 1. 6 100 units 4
b. (6 points) Compute the reorder point necessary to provide a 97 percent service probability. R µ L + Z σ L µ L + Z σ 500 4 + 1. 88 50 4 units () ( ) 2188 0. 0 0. 0 L Question 6: (10 points) Charlie s Pizza orders all of its pepperoni, olives, anchovies, and mozzarella cheese to be shipped directly from Italy. An American distributor stops by every three weeks to take orders. Because the orders are shipped directly from Italy, they take one week to arrive. Charlie s Pizza uses an average of 150 pounds of pepperoni each week, with a standard deviation of 25 pounds. Charlie s prides itself on offering only the best-quality ingredients and a high level of service, so it wants to ensure a 99 percent probability of not stocking out on pepperoni. Assume that the sales representative just walked in the door and there are currently 200 pounds of pepperoni in the walk-in cooler. How many pounds of pepperoni must be ordered? ( T + L) + Z σ µ ( T + L) + Z σ T + 150( + 1) + 2. ( 25) + 1 716. 5 M µ + L pounds Q M I 0. 01 T L 0. 01 716. 5 200 516. 5 pounds Question 7: (10 points) A single inventory item is ordered from an outside supplier. The anticipated demand for this item over the next 7 months is 14, 16, 15, 17, 11, 18, 9. Current inventory of this item is 2, and the ending inventory should be 4. Assume a holding cost of $2 per unit per month and a setup cost of $75. Assume a zero lead time. Determine the order policy for this item over the next 7 months. Use the least total cost heuristic. r 1 14 2 12, r7 9 + 4 1. So, r ( 12, 16, 15, 17, 1118,, 1). Months Q I1 I2 I I4 I5 I6 I7 Holding Order Difference cost cost 1-1 12 0 75 75 1-2 28 16 2 75 4 1-4 1 15 92 75 17 stop 4-4 17 0 75 75 4-5 28 11 22 75 5 4-6 46 29 18 94 75 19 stop 7-7 9 0 75 75 a. (6 points) Use the table above to show your computation and summarize your order policy here: Month Order 1 4 4 46 7 1 5
b. (4 points) Use the table below to show the ending inventory that results from your order policy at the end of each of the 7 months: Month 1 2 4 5 6 7 Gross Requirements 14 16 15 17 11 18 9 Beginning Inventory 2 1 15 0 29 18 0 Net Requirements 12 17 9 Time-phased Net Requirements 12 17 9 Planned order Release 4 46 1 Planned Deliveries 4 46 1 Ending Inventory 1 15 0 29 18 0 4 6