SCM 345 001, 002
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Date Created: 07/30/13
Boise State University College of Business and Economics SCM 345 Principles of Operations Management Instructor Dr Regis Terpend 1 Chapter 3 Process Selection Class Problem Butch Porter Manufacturing intends to increase capacity by overcoming a bottleneck operation through addition of new equipment Two vendors have presented proposals The fixed cost for Proposal A are 50000 and for Proposal B 70000 The variable cost for A is 1200 and for B 1000 The revenue generated by each of these units is 2000 1 What is the break even point in units for Proposal A For Proposal B 2 What is the break even point in dollars for Proposal A For Proposal B 3 At what volume of output would the two alternatives yield the same profit 4 If the expected volume is 8500 units which alternative should be chosen What if volume is 15000 units A 300000 quot 200000 100000 L 0 5000 10000 15000 Volume Units Chapter 6 Process Capability Problem 1 Engineering asks you to purchase a piston ring diameter 12000mm USL 12005mm LSL 11995mm Assume that the supplier has performed a test run of the piston rings and gathered this information Supplier s SPC process charts indicate that the mean piston diameter is 120019mm with a standard deviation of 00125mm Compute Cp and Cpk USL Lsu m x p 6 Cpk C13 7 3 0 7 Problem 2 A machining process has a required dimension on a part of 575 i 007 inch Twenty fiVe parts were drawn in five samples see table below Calculate Cp and Cpk Is the process capability within acceptable limits 557 575 577 554 580 566 578 574 573 584 587 577 573 579 580 578 582 575 573 578 555 575 578 572 574 nu mu 2 nmmmm nu mn nx nn E3 min min nix Hn nix u nix 5 65 u E Ha Emwm x EmHm a mUmmm mUmmm am E E MmMnm 53 bi mm mmm mEmE 9 E 33 mmmmm EH9 mmmHm 53 m 3 m 5amp3 m E m ammmm armm mmm m J s mnmm Wm 3 E E m mmm 3 Emma mMm 55 E mmm mmm 3 P mmJwmm m mmm E mmm mmmm H mmmmm u mmm 3 3 Em Emma gag 4 gmU M m Hm mn mmmn 3 2 mE mgmm Ema mm nnm m mm ah Emmmm Mm Emm PF 53 ass 35 mm m rm 3 mam m mmnm H mm HmEm ELM mmmgE mmr I I E Mmn mmm H FEM Hm mmmmm H m Em mumm 5amp3 m mL mmmm 3 m amp m mn 3 rmm mm EH3 E mum P K wmuE H mmmm Ewmmm 3 PM amp m mam EH mmm Hma Tam H mmm Hmm mmmmm H m m m m nn 3 E amp E m mm HE Ema Em mm a H mm mEmm Hmm P mnmj mmm 3 E amp mE H mE E E mm amp mmm fHH mam E mwmg am 53 m mnm mm 3mm H E M muuE mam 5 Em Eg 3 3 Em amp amp Em amp mum mLmm 5 hm m mmm H amm Lm m mm 3 m amp amp E m amp 33 m mmm mma m mam SE gum Hmm mmmmm tmmm 3 E amp amp Em amp mM Z amm Fmmm mmmm gum m mm mmmmu 3 E amp Em amp Em amp Em 5 m mam mmm Ema m mmm E aaa aaaa amp mm amp mmm mam mmH mmmU amm a mm m 3 amp amp mm amp m amp Em mam gm Hmq egg 9 mmmm L EE 3 PM amp amp E amp E amp Mmm ma m Em is SE mm m 3 3 amp amp Mm amp m amp Em Em E armm F mmmm LE nMw 3 amp E amp 3 amp E mm Em m Emm Ewm 3 amp Pm amp E amp mm amp mm Hg amp E4 mwmu mE n 3 m amp H amp Em amp mm m mm amp EE a 3 amp i w mm amp amp mm m amp Mme Emm 3 EE mm Pm mm mm mm mm Em E mE Wmg 33 mw ampamp E E 3 E ampamp E Em Emm E uE amp L amp mm Z amp mm amp m 3 m amp 3 Em amp amp E amp mm Mm mm amp i 25 3 E 3 HM amp EE amp n E amp E amp 3 E amp mm amp Q 5IrLa Mme mm 3 Wm amp Em amp nE amp m amp mm mm amp mm mm gm 3 ma amp mmu amp mE amp E amp mm amp E amp E mm 3 mm amp mmamp amp m m um amp m amp m u mm amp Z amp mm 3 mm amp WmW amp n 3 amp mW amp m E amp mm amp mm mm 3 E amp mmm amp mm amp m amp p E amp E amp mm Em 3 3 an nuna m mW m Em m Hm m mm P E Hmm W i m m m mm mm m Y 4391 M gagm I 0 R Q h39quotlI E E E mmm aaqqqaaagaagggaaammaggggg EI39 IEIHal5 5 EQ E mm mm Q 3 3 i I m u E E3333 Z F l mEmm aii Eg mMu 5 m 4 m Chapter 6 SPC Charts Exercise 1 Thirty sample of size 3 were taken from a Wilmer Machine Shop machining process over a 15 hour period These data can be found in the following tables NumberofSamples 132333435E6E7E8E9E10 11 12E13 14 15 355 366 361 400 375 378 325 375 85 362 343 358 403 359 360 3 364 347 380 350 328 355 358 338 364 361 338 351 369 E 361 E 375 3 7ugtltua1 z 352 3 325 5 384 E 361 E 333 E 371 E 351 E 350 E 70 E 343 365 369 E 411 0 334 325 1aIIt1quot1quot N sample size 1 Compute 1 and 2 Calculate the control limits and plot the X chart and the Rchart Is the process in statistical control Why or why not What should be done if it is not in control What should be done if it is not in control u omAAA4 025 quotmA mania d mm 363 uumnu a 3 mng a NHm m an n Em M 50 u pm mnwm M RuwJ Ma1m EDP u mgm m wok n ma Comm n mi M wn n mumm 3 E 3 3 mmf H aw mu 1 3 am an n Am 12 E Q Ed aw m 39 nmi w a Ewnmw W m RHnmw M E E w wmvwmm O0 HOH numuw AM m m mg mmww SGEWWH O mww SGEWWH WQHW bmgm HOQQQ g QUWHWWHOD AUHODWMMV m mnwmwnmnwo HHBHWM O m m a Swn w m mwd m 5W am Bmmmg m Nm o mm mwm m Aw 0 6 lt5 mS m mmm M Wmbmm W ZOWWW m m HQ e HM 5 Hg em Hm HZ Hm Q6 3 m mm 3 3 mm Averages Ranges Chapter 8 Forecasting Example Dua er Actual Ja39I39xa Moving Avg E3to Smoothing 5 Exp Smoothing 1 Foraoaat Aa Dav Foraoaat Aa Dav Foraoaat Aa Dav Foraoaat Aloa Dar 1 1ED EiDD 1EIDD 2 15E 3 159 3 ITS 5 ED E EDS 7 1ED 3 IE2 MAD MAD MAD MAD MSE MSE MSE MSE MAF39E MAF39E MAF39E MAF39E Chapter 9 Decision Tree Example 1 Southern Hospital Supplies a company that makes hospital gowns is considering capacity expansion Its major alternatives are to do nothing build a small plant build a medium plant or build a large plant The new facility would produce a new type of gown and currently the potential or marketability for this product is un known If a large plant is built and a favorable market exists a profit of 100000 could be realized An unfavorable market would yield a 90000 loss However a medium plant would earn a 60000 profit with a favorable market A 10000 loss would result from an unfavorable market A small plant on the other hand would return 40000 with favorable market conditions and lose only 5000 in an unfavorable market Of course there is always the option of doing nothing Recent market research indicates that there is a 4 probability of a favorable market which means that there is also a 6 probability of an unfavorable market a With this information which alternative would you choose b Imagine Southern Hospital Supply is investigating another possibility In case a small plant is selected and demand is high it would be possible to expand capacity even more by building a second adjacent small plant in which case the earnings would be 60000 On the other hand if they chose not to further expand the small plant the expected earnings would remain the same as in question a at 40000 Based on this new information which option should you choose 10 Chapter 9 Decision Tree Example 2 Suppose Ellison Seafood is considering 3 different transportation options to carry its fresh seafood catch for the year X number of shipments year Option 1 Common carrier not contract Cost 750X Option 2 Contract with local carrier Cost 5000 300X Option 3 Leasing Cost 21000 50X Suppose Ellison is investigating 3 demand scenarios regarding in the number of shipments high demand 80 shipments medium demand 50 shipments and low demand 30 shipments Ellison evaluated the likelihood of high demand at 15 medium demand at 60 and low demand at 25 Question Build a decision tree to determine which transportation option should be adopted 11 Chapter 10 Facility Layout Walter Company management Wants to arrange the six departments of its factory in a Way that will minimize interdepartment distance Number of loads per week Department Assembly Painting Machine Receiving Shipping Testing 1 4 5 6 2 Shop 3 Room 1 Room 2 Room 3 quot quot 1 Assembly 1 Assembly Machine Shop Department Department Painting 2 1 3 Machine Shop 3 40 Receiving Receiving 4 Department Shipping 5 V Room 4 Room 5 Room 6 Testmg 6 6039 1 Determine the loaddistance score of the present layout 2 Using a trial and error method identify the best layout What is the best loaddistance model you come up With 12 Chapter 10 Line Balancing Example 3 We Want to balance the assembly line for a photocopier that requires a total assembly time of 66 minutes total task time 1 Develop and draw a precedence diagram based on the precedence data provided 2 This firm has determined that there are 480 productive minutes of Work per day and requires 40 units to be produced every day Balance this assembly line 13 Chapter 10 Line Balancing Example 4 An assembly line comprises the following activities The daily demand is 120 units and the company works on two shifts of 8 hours Draw the precedence diagram and find the minimum possible number of workstations Then balance the production line and compute efficiency Task Time k Minutes Predecessors None H 39 U2 EQ39rJr11UOUUDgt ll gtdOUgtULJ1 mp1nnwougt T1 14 Chapter 12 Inventory Management ABC Classi cation Alpha Products Inc is having a problem trying to control inventory There is insufficient time to devote to all of its items equally Here is a sample of some items being stocked along with the annual demand and the cost per unit Can you suggest a system for allocating control time Which items should receive priority In each order Annual Annual Unit Cost Annual Dollar Dollar Dollar Cumulative Item Volume Volume Item Volume Volume A 200 3500 B 100 1000 C 700 2000 D 050 4000 E 300 8000 F 1700000 4 G 100 17000 H 090 1000 I 340 500 J 230 1000 K 250 32000 L 020 2000 M 220 550 N 1000 3000 O 010 19000 P 050 1600 Q 200 45000 R 400 3000 S 060 5000 T 2000 1600 15 Chapter 12 Inventory Management EOQ Model Clarissa Seager is the purchasing agent for Central Valve Company which sells industrial valves and uid control devices One of its most popular valves is the Western which has an annual demand of 4000 units The cost of each valve is 9000 and the inventory carrying cost is estimated to be 10 of the cost of each valve Clarissa has made a study of the costs involved in placing an order for any of the valves that Central Valve stocks and she has concluded that the average ordering cost is 2500 per order Furthermore it takes about 8 work days for an order to arrive from the supplier During this time the demand per week 5 work days for Central39s valves is approximately 80 Assume there are 250 work days per year a What is the economic order quantity b What is the minimum total annual inventory cost carrying cost ordering cost c What is the reorder point d What is the optimal number of orders per year c What is the optimal number of days between any two orders assuming there are 250 working days per year Formulas 2DS EOQ quantity formula Qgt1lt Total Cost p X S 8 X H 16 Chapter 12 EOQ Model with Quantity Discount Class Example Quantity Discount Example Collin s Sport store is considering going to a different hat supplier The present supplier charges 10 each and requires minimum quantities of 300 hats The annual demand is 12000 hats the ordering cost is 20 and the inventory carrying cost is 20 of the hat cost a new supplier is offering hats at 9 in lots of 4000 Who should he buy from 17 Chapter 12 EOQ Model with Quantity Discount Class Exercise Determine the optimal number to order D 5000 units per year S 49 per order H 20 of cost per unit Discount Discount Number Discount Quantity Discount o Price P 1 0 to 999 no discount 500 2 1000 to 1999 4 480 3 2000 and over 5 475 Formulas Steps for quantity discount EOQ model 1 Calculate the EOQ at the lowest price 2 Determine whether the EOQ is feasible at that price Will the Vendor sell that quantity at that price If yes stop if no continue Check the feasibility of EOQ at the next higher price Continue until you identify a feasible EOQ Calculate the total costs including total item cost for the feasible EOQ model Calculate the total costs of buying at the minimum quantity required for each of the cheaper unit prices Compare the total cost of each option amp choose the lowest cost alternative Any other issues to consider gt9 18 Chapter 14 MRP Example 1 Speakers Kits Inc packages high fidelity components for mail orders Components for the top of the line speaker kit Awesome A include 2 standard 12inch speakers kits Bs and 3 speaker kits with ampbooster Cs Here is the bill of material for the Awesome speaker kit Level Product structure for Awesome A O A I I Std 12quot Speaker kit 1 m m Speaker kit 3 w arnpbOOSter 2 E E F Std 12quot Speaker 2 3 239 2 lt2 booster assembly P k b d 3 De instjifatlirdei kiixotariivire G De bolts and screws Ampbooster 12quot Speaker 12quot Speaker The total for each Awesome kit is 4 standard 12inch speakers and twelve 12inch speakers with the amp booster Most purchaser require hearing aids within two years and at least one court case is pending because of structural damage to a men s dormitory Speaker Kits Inc has received an order for 50 Awesome speaker kits for week 8 Using this information construct the gross material requirement plan for this order using the following table Part A Lead Time 1 week B Lead Time 2 weeks Lead Time 1 week Lead Time 1 week Lead Time 2 weeks Lead Time 3 weeks Lead Time 2 weeks 19 Chapter 13 Aggregate Planning Example Cost Data Capacity data Regular time cost per hour 1000 Beginning workforce employees 100 Overtime cost per hour 1500 Beginning Inventory units 0 Subcontracting cost per unit 10000 Process time per unit hours 8 Back order cost per unit per period 2500 Production hours per day 8 Inventory holding cost per unit per period 1000 Production hours per period 160 Hiring cost per employee 80000 Max Overtime per period 40 Firing cost per employee 50000 Plan A Level Plan using Inventories and Backorders Period 1 2 3 4 5 6 Total Demand Units 2200 2500 1500 1300 2100 2400 12000 Cumulative Demand Units Period Production Units Cumulative Production Units Ending inventory Units Backorders Units Plan B Level Plan using Inventories but no Backorders Period 1 2 3 4 5 6 Total Demand Units 2200 2500 1500 1300 2100 2400 12000 Cumulative Demand Units Cumulative Demand Periods Period Production Units Cumulative Production Units Ending inventory Units Backorders Units Plan C Chase Plan Period 1 2 3 4 5 6 Total Demand Units 2200 2500 1500 1300 2100 2400 12000 Period Production Units Employees needed in period Number to Hire Number to Fire Cost calculations Units e 39 Number to hire Number to fire Re Labor cost Overtime labor cost Inve cost Back order cost cost 20 Chapter 14 MRP Example 2 Given the product structure tree for A and the lead time and demand information below provide a materials requirements plan that defines the number of units of each component and when they will be needed A Demand l I l Day 10 50A 34 C2 Day 8 20B Spare parts ljmi lmjl Day 6 15D Spare parts 1 Construct the gross material requirement plan for this order using the following table Part ired date Order ired date Order ired date Order ired date Order ired date Order ired date Order LT 1 day LT 2 days LT 1 day LT 3 days LT 4 day LT 1 day 2 Imagine that maximum capacity for part D and E are respectively 200 and 150 per day How Would that affect the schedule Part ired date Order ired date Order ired date Order ired date Order ired date Order ired date Order 21 Chapter 16 Project Management Example CPM Chart The following activities are part of a project to be scheduled using CPM Activity Immediate Time predecessor Weeks A 6 B A 3 C A 7 D C 2 E B D 4 F D 3 G E F 7 a Draw the network b What is the critical path c How many Weeks will it take to complete the project d How much slack does activity B have 22 Chapter 16 Problem 1 CPM Chart Schedule the following activities are part of a project to be scheduled using CPM Activity Immediate Time predecessor Weeks A 1 B A 4 C A 3 D B 2 E C D 5 F D 2 G F 2 H E G 3 a Draw the network b What is the critical path c How many weeks will it take to complete the project d Which activities have slack and how much 23 Chapter 16 Problem 3 PERT Chart A project has been defined to contain the following activities along with their time estimates for completion Time Estimates Days Most Expected Activities Predecessors Optimistic Pessimistic Variance likely Time A 1 3 5 B 1 2 3 C A 1 2 3 D A 2 3 4 E B 3 4 11 F CD 3 4 5 G DE 1 4 7 H FG 2 4 6 a Draw the network b What is the critical path c What is the expected project completion time d What is the probability of completing this project within 16 days 24 Chapter 16 Problem 4 Crashing a Project Development of a new deluxe version of a particular software product is being considered by Acme Soft Inc The activities necessary for the completion of this project are listed in the following table Time days Total Cost Activities Predecessors Normal Crash Normal Crash A 4 3 2000 2600 B 2 1 2200 2800 C 3 3 500 500 D A 8 4 2300 2600 E B 6 3 900 1200 F C 3 2 3000 4200 G DE 4 2 1400 2000 a Draw the network diagram Show the early start early finish late start late finish and slack times for each activity b Identify the critical path What is the expected completion date c What is the total cost required to complete the project on normal time d If you wish to reduce the time required to complete the project by 1 day which activity should be crashed How much will this increase the total cost What is the minimum completion time How much would costs increase 25
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