27 Jun EMBA 638 Operations Management
Question
This exam is open book, open Blackboard and open notes. You may use Excel as needed or a calculator.
You are not allowed to use other persons help or material from Internet (with the exception of Blackboard)
in taking the exam.
You have until Sunday August 25th, 2013 midnight EST to finish this exam.
Show your work on the word document. This will allow you to obtain partial credit for your work even if
the final answer is not correct.
Your interpretation of a question, if any, is part of the exam. Only clarification questions will be answered.
Part
I
II
II
IV
V
Topic
Quality Control
Inventory Management
Process Analysis and Queuing
Short Answer Questions
Multiple Choice, T/F Questions
Total
Value
11
11
35
18
25
100
Grade
* 2 = ____/200
The Honor Pledge:
On my honor, I have neither given nor received unauthorized aid on this exam.
__________ _________________
Student Signature (type your name)
GOOD LUCK!
1
Part I Quality Control (11 points)
1. Southwest keeps gate time of its planes at a minimum in order to maximize the flying time, hence
capacity utilization of its planes. They want to achieve a turnaround time of 20 minutes on average with
a maximum of 25 minutes and a minimum of 15 minutes. (Although faster would be fine with them, the
FAA and passengers might think they are cutting corners and not doing everything correctly).
At the Baltimore airport (BWI), 3 gates a day were sampled over four days to determine how the
Southwest ground crew at BWI was doing on this standard. The average of the process was 20.5 minutes
and the standard deviation was 1.5 minutes.
a. (2 points) Fill in the following table.
X
USL
LSL
20 minutes
25 minutes
15 minutes
b. (5 points) Is the process centered and capable? Why or why not?
Yes, the process is centered and capable.
Why? Our Cpk value is 1.00. A Cpk of 1.00 is needed to make a process centered and capable.
Process capability Ratio Cp= (USL-LSL) / 6
Cp = (25-15)/(6*1.5)
= 1.1111
Process capability Index Cpk = Min [(x-LSL)/3, (USL-x)/3]
=Min [(20.5-15)/(3*1.5), (25-20.5)/(3*1.5)] =Min (1.2222, 1.0000)
=1.0000
2
c.(4 points) What is the probability that a plane will have a turnaround time of greater than 25
minutes?
P(x>25 minutes)=P(z>(25 minutes 20.5 minutes )/1.5 minutes )
=P(z>3)= 0.00135
3
Part II: Inventory Management (11 points)
2. Southside restaurant uses a fixed quantity (continuous replenishment) system. Daily demand for bags of coffee is
normally distributed with a mean of 36 and standard deviation of 8. The lead time is constant at 5 days. The
management wants to have a 92 percent service level and the restaurant is open 365 days per year. Holding costs are
$0.50 per year and the ordering costs are $2.5 per order. .
a.
(3 points) Determine the order quantity at which the total inventory costs would be minimized?
b.
(4 points) What is the reorder point and the time between orders?
c.
(4 points) Illustrate the order quantity, re-order point, safety stock and lead time on a diagram where the Yaxis represents the number of coffee bags and the x-axis represents the time? What is the maximum possible
inventory in the system at any point of time?
Part V Multiple Choice and True/False (25 points)
Multiple choice (16 points, 2 points each): Please highlight (in yellow) the correct answer.
1. Animal shelters tend to order Sodium Barbipentathol in large batches (e.g., enough to last 6 months or
more). Smaller quantities would be ordered (e.g., a couple of weeks worth) except government
regulations require extensive and detailed paperwork to be submitted with each order. This example is
most closely related to the following managerial insight:
a.
b.
the order quantity increases as the cost per order increases
c.
the order quantity increases as the shortage cost rate decreases
d.
2.
the order quantity increases as the holding cost rate decreases
the order quantity increases as the trade balance decreases
Which one of the following does not exemplify JIT/Lean used for competitive advantage?
a. Acme Foods decides to decrease the number of its suppliers to just a few.
b. Cajun Contractors has reduced the amount of space for inventory.
c. Cheramie Trucking trains workers to specialize and become very efficient in one job.
d. Ardoyne Builders has a scheduled preventive maintenance program.
e. Ajax, Inc. is proud to announce that incoming goods are delivered directly to the point of use.
3. A tennis ball manufacturer has identified several causes of variability in the bounce and has collected
data on the number of times those causes have led to high variability over the past month. They now
need to decide which causes to try to eliminate first. Which tool should they use?
a. 5S
b. Pareto diagram
c. ABC Analysis
d. R-chart
e. PDCA
4. Which of the following offers a potential for reducing inventory costs in a supply chain?
a. sharing POS data across the supply chain
b. sharing components across different products
c. having more warehouses
d. a and b
e. a and c
f. b and c
5. Another term for a postponement strategy is
a.
Speculation
b.
delayed differentiation
c.
mass customization
11
d.
decreased differentiation
e.
None of the above
6. Which of the following phrases describes the chart below about the reasons for unsatisfying hotel stays?
a. H is the most important problem
b. 80% of the reasons cause 20% of the dissatisfaction.
c. A is the most important problem
d. 20% of the reasons cause 60% of the dissatisfaction
e. None of the above.
7. Which of the following statements is not a characteristic of pull supply chains?
a. Inventory levels are typically low
b. Ordering decisions are based on long-term forecasts
c. Firms respond to specific customer orders
d. Allows faster response to changing markets
8. If a production process is in statistical control , which of the following statements is incorrect
a. There are no special causes of variation in the process
b. The process will always be capable of meeting the customer specifications
c. There are common causes of variation in the process
d. The range of the process is in statistical control
12
True/False (1 point each, 9 points)
1. ___True_____ Variation in production systems that is caused by factors that can be clearly identified
and possibly even managed is called assignable variation.
2. __False______ EOQ balances purchase cost and ordering cost.
The balance inventory order costs and carrying costs.
3. __True__ Your suppliers supplier is a third tier supplier.
4. ___False___ Under the assumptions of the Basic EOQ model, if one increases the order quantity, then
the length of the order cycle decreases (with demand and cost parameters remaining the same).
5. __False_ A high-end, customized furniture manufacturer, would most likely employ an assembly-line
type of process.
6.
___True_____ Productivity is the total value of outputs produced divided by the total value of all inputs to the
transformation process.
7. __False___ Under constant lead time, the key drivers of safety stock are lead time, standard deviation
of demand, and the safety factor (or service level).
8. ____False_____ The idea behind Pareto charts is that working with the majority of possible causes is
needed to significantly improve quality.
9. ___True__ Under the assumptions of EOQ model, if the total optimal cost (fixed ordering cost + holding
cost) is $10,000, then the holding cost part is $5,000.
Thats the end! You have now completed the challenge of learning many of the concepts, tools and techniques
that are employed in Operations Management; clearly a very important part of businesses today.
Congratulations!!!!!
I have enjoyed being your instructor over the summer and I wish you well in your professional careers. I hope
you will be able to apply some these techniques and concepts. Grades will be available on Blackboard. Please
email me with any questions or clarifications about the grading.
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