REVIEW QUESTION
1. Define POM.
Production and Operations Management is about the transformation of production and operational inputs into outputs that, when distributed, meet the needs of customers.
2. List the six major factors affecting POM today.
1. Global Competition
2. Quality, customer service and cost challenges
3. Rapid expansion of advanced technologies
4. Growth of service sector
5. Social Responsibility issues
6. Scarcity of capital, materials etc
3. To succeed in global competition, what must companies do?
Here are some ways to companies do
• Foster collaboration and communication within the team
• Focus on improving efficiency in the organization
• Develop an effective, detailed strategy for market entry
• Keep the team on track to eliminate wasted time
4. Describe the major components of a production system.
• Reservoir
• Wellbore
• Tubular goods and associated equipment
• Surface wellhead, flowlines, and processing equipment
• Artificial lift equipment
5. Describe the types of decisions made by operations managers.
PROGRAMMED DECISIONS:
Programmed decisions are routine and repetitive, and the organization typically develops specific ways to handle them. A programmed decision might involve determining how products will be arranged on the shelves of a supermarket. For this kind of routine, repetitive problem, standard arrangement decisions are typically made according to established management guidelines.
NON PROGRAMMED DECISIONS:
Non programmed decisions are typically one shot decisions that are usually less structured than programmed decision.
6. Describe the primary inputs, outputs and conversion subsystem (components and functions) in the following organizations:
Operation -- college library
Operation - hotel
Operation -- small manufacturing firm
• Describe what are the key factors that effecting the operation management for above mentioned organizations business.
• Present your answer.
The examples of a production system to small manufacturing firm are as follows:
Tangible goods: Consider an example of a manufacturing firm like a Sugar Industry. Here, sugarcane is first used as an input, then the juice of sugarcane is processed through a conversion process, finally to get an output known as a refined sugar (used for mass consumption).
Intangible goods: Consider an example from a service industry that of a software-development firm or company. Here, initially, written program codes are used as an inputs. These codes are then integrated in some database and are provided with a user-friendly interface through a conversion process. Finally, an output is made available in form of an executable application program.
Factors Affecting Operations Management
1. Global Competition
2. Quality, customer service and cost challenges
3. Rapid expansion of advanced technologies
4. Growth of service sector
5. Social Responsibility issues
6. Scarcity of capital, materials etc.
Evolution of Operations Management Following are the historical developments that impacted evolution of Operations Management
1. The Industrial Revolution
2. Scientific Management
3. he HR Movement
4. Decision Models and Management Science
5. Influence of Japanese Manufacturers
6. Trends in Business
7. Other Important Trends
OPERATION STRATEGIES CASE STUDY - OPERATION STRATEGY FOR GLOBALTEL IN ASIA
Global Tel Inc, is a U.S. telecommunications company that has developed a new type of low-cost cellular telephone system technology. The technology has the potential to provide widespread access to telephone ser5vice at a very reasonable cost to user. Global Tel is planning to design and engineer the telephone systems in United State, manufacture most of the components in Mexico and Taiwan, assemble the finished products in South Korea and initially sell the product in China and India. Global Tel plans to establish joint ventures with manufacturers in Mexico, Taiwan and South Korea and to contract with local distributors in China and India.
1.Write a list of elements that should be included in an operations strategy for Global Tel.
a. Designing of the production system
b. Facilities for production and services
c. Product or service design and development
d. Technology selection, development, and process development
e. Allocation of resources
f. Focus on facilities planning
2. Briefly list the information you would need to know before an operations strategy could be developed for GlobalTel.
a. Care Competencies Our unique strengths that can help us win in the market
b. Monitoring the business environment for market trends, threats, and opportunities
c. Mission Statement that defines What is our business; Who are our clients; and How our values define our business
d. Business Strategy Defines the long range plan for the company E
3. For each of the items of information included on your list in number 2 above, suggest ways that the information could be obtained.
a. Core Competencies. In order to formulate a longterm plan, the company's managers must know the competencies of their organization. Core competencies could include special skills of workers, such as expertise in providing customized services or knowledge of information technology.
b. Environmental Scanning includes trends in the market, in the economic and political environment, and in society. These trends must be analyzed to determine business opportunities and threats.
4. Briefly describe a positioning strategy for GlobalTel. State any assumptions that you make about the company, its products, and its customers.
Positioning strategy based on Competitors
In this type of positioning strategies, an implicit or explicit frame of reference is one or more competitors. In some cases, reference competitors can be the dominant aspect of the positioning strategies of the firm, the firm either uses the same of similar positioning strategies as used by the competitors or the advertiser uses a new strategy taking the competitors' strategy as the base.
5. Discuss the importance of linking the product plans, competitive priorities, and operations strategy of GlobalTel.
Product plans serves as the basis for decisions about price, distribution and promotion. Product planning is the process of creating a product idea and following through on it until the product is introduced to the market. Additionally, a small company must have an exit strategy for its product in case the product does not sell. Product planning entails managing the product throughout its life using various marketing strategies, including product extensions or improvements, increased distribution, price changes and promotions.
6. Discuss the importance of linking the market plans of the local distributors and the positioning strategy of GlobalTel.
The local distributors and the positioning strategy of GlobalTel should consider doing both qualitative and quantitative marketing research for its new product. Focus groups are an example of qualitative information. Focus groups allow companies to ask their consumers about their likes and dislike of a product in small groups.
OPERATION STRATEGIES CASE STUDY - HOLIDAY CANDLE COMPANY
Bob Venture is the owner of Holiday Candle Company and would like to expand his company's operations. For the past two years, Bob has sold candles via internet, but sales have steadily grown beyond his ability to produce the candles alone from his garage workshop. Because future sales growth looks very promising, Bob has decided to open a small manufacturing plant to produce the candles. Sales have primarily been to customer in the United States with occasional orders from others countries. In addition to selling via internet, Bob would like to start selling his candles to specialty stores in the United States. With the new plant, he would also like to consider expanding the products he offers in the near future.
1) Discuss what you think should be Bob's competitive priorities.
2) Referring to the Elements of Operations Strategy in chapter 2, discuss different aspects of the operations strategy that you think Bob needs to develop.
OPERATION MANAGEMENT - CHAPTER FORECASTING PART 1
1. A small hospital is planning for future needs in its maternity wing. The data be¬low show the number of births in each of the past eight years.
|
Year
|
Births
|
Year
|
Births
|
|
1
|
565
|
5
|
615
|
|
2
|
590
|
6
|
611
|
|
3
|
583
|
7
|
610
|
|
4
|
597
|
8
|
623
|
a. Use simple linear regression to forecast the annual number of births for each of the next three years.
b. Determine the correlation coefficient for the data and interpret its meaning.
c. Find the coefficient of determination for the data and interpret its meaning.
2. Suregrip Calculator Company (SCC) needs to estimate its sales for next year. The most recent six years of revenue data for the company's popular line of calcula¬tors are given below:
|
|
Sales Revenues
|
|
Sales Revenues
|
|
Year
|
(millions of dollars)
|
Year
|
(millions of dollars)
|
|
1
|
46.7
|
4
|
77.9
|
|
2
|
59.3
|
5
|
85.1
|
|
3
|
74.2
|
6
|
98.0
|
a. Assuming that the sales data above are representative of sales expected next year, use time series regression analysis to forecast next year's (Year 7's) sales revenues.
b. Determine the correlation coefficient for the data and interpret its meaning.
c. Find the coefficient of determination for the data and interpret its meaning.
3 IPC's plant estimates weekly demand for its many materials held in inventory. One such part, the CTR 5922, is being studied. The most recent 12 weeks of demand for the CTR 5922 are:
|
|
Demand
|
|
Demand
|
|
Demand
|
|
Demand
|
|
Week
|
(units)
|
Week
|
(units)
|
Week
|
(units)
|
Week
|
(units)
|
|
1
|
169
|
4
|
171
|
7
|
213
|
10
|
158
|
|
2
|
227
|
5
|
163
|
8
|
175
|
11
|
188
|
|
3
|
176
|
6
|
157
|
9
|
178
|
12
|
169
|
Use the moving average method of short-range forecasting with an averaging pe¬riod of three weeks to develop a forecast of the demand for the CTR 5922 com¬ponent in Week 13.
4. Finley Heaters Inc. is a mid-sized manufacturer of residential water heaters. Sales have grown during the last several years, and the company's production capacity needs to be increased. The company's management wonders if national housing starts might be a good indicator of the company's sales:
|
|
National
|
Finley Heaters'
|
|
|
|
Housing Starts
|
Annual Sales
|
|
|
Year
|
(millions)
|
(millions of dollars)
|
|
|
I
|
6.2
|
57
|
|
|
2
|
5.1
|
59
|
|
|
|
3
|
6.5
|
65
|
|
|
4
|
7.9
|
78
|
|
|
5
|
6.3
|
72
|
|
|
6
|
7.4
|
80
|
|
|
7
|
7.0
|
86
|
a. Develop a simple linear regression analysis between Finley Heaters' sales and national housing starts. Forecast Finley Heaters' sales for the next two years. The National Home Builders Association estimates that national housing starts will be 7.1 million and 8.0 million for the next two years.
b. What percentage of variation in Finley Heaters' sales is explained by national housing starts?
c. Would you recommend that Finley Heaters management use the forecast from Part a to plan facility expansion? Why or why not? What could be done to improve the forecast?
5. The number of Texas tax auditors needed by the Internal Revenue Service varies from quarter to quarter. The past 12 quarters of data are shown below:
|
Year
|
Quarter
|
Auditors
|
|
1
|
1
|
132
|
|
|
2
|
139
|
|
|
3
|
136
|
|
|
4
|
140
|
|
2
|
1
|
134
|
|
|
2
|
142
|
|
|
3
|
140
|
|
|
4
|
139
|
|
3
|
1
|
135
|
|
|
2
|
137
|
|
|
3
|
139
|
|
|
4
|
141
|
a. Use moving averages to forecast the number of auditors needed next quarter if AP = 2, AP = 4, and AP = 6.
b. Which of these forecasts exhibits the best forecast accuracy over the past six quarters of historical data based on mean absolute deviation?
OPERATION MANAGEMENT CHAPTER FORECASTING PART 2
1. A computer manufacturer wants to develop next year's quarterly forecast of sales revenues for its line of personal computer. The company believes that the most recent eight quarters of sales should be representative of next year's sales:
|
Year
|
Quarter
|
Sales (mil)
|
|
1
|
1
|
9.2
|
|
1
|
2
|
5.4
|
|
1
|
3
|
4.3
|
|
1
|
4
|
14.1
|
|
2
|
1
|
10.3
|
|
2
|
2
|
6.4
|
|
2
|
3
|
5.4
|
|
2
|
4
|
16.0
|
Use seasonalized time series regression analysis to develop a forecast of next year's quarterly sales revenues for the line of personal computer.
2. A toy company buys large quantities of plastic pellets for use in the manufacture of its products. Production manager wants to develop a forecasting system for plastic pellet prices. The price perpound of plastic pellets has varied as shown:
|
Month
|
Plastic pellets price/pound
|
Month
|
Plastic pellets price/pound
|
|
1
|
0.39
|
9
|
0.35
|
|
2
|
0.41
|
10
|
0.38
|
|
3
|
0.45
|
11
|
0.39
|
|
4
|
0.44
|
12
|
0.43
|
|
5
|
0.40
|
13
|
0.37
|
|
6
|
0.41
|
14
|
0.38
|
|
7
|
0.38
|
15
|
0.36
|
|
8
|
0.36
|
16
|
0.39
|
a) Use exponential smoothing to forecast monthly plastic pellet prices. Compute what the forecasts would have been for all the months of historical data for ?= 0.1, 0.3, 0.5 if the assumed forecast for all ?'s in the first month is 0.39.
b) Which alpha value result in the least mean absolute deviation for Months 7-16?
c) Use the best alpha value from (b) to compute the forecasted plastic pellets price for month 17.
PRODUCTION AND OPERATION MANAGEMENT TOPIC :PRACTICE PROBLEM
Case Study 1
The General Dating Service Corporation has decided to use the relative aggregate scores approach to aid the company in finding new locations. Below is information regarding four potential locations:
Location
Factors Weight A B C D
Labor cost/hour 0.60 $5.10 6.80 5.75 6.45
Labor availability 0.30 0.60 0.80 0.50 0.40
Government reg. 0.05 0.70 0.90 0.50 0.60
Transportation 0.05 0.50 0.60 0.60 0.70
i. Refer to Case Study 1, what is the total relative aggregate score for Site A?
ii. Refer to Case Study 1,what is the total relative aggregate score for Site B?
iii. Refer to Case Study 1,what is the total relative aggregate score for Site C?
iv. Refer to Case Study 1,what is the total relative aggregate score for Site D?
v. Based on the answer 1 to 4, determine the best new location for the operation.
2. East Texas Seasonings is preparing to build one processing center to serve its four sources of seasonings. The four source locations are at coordinates shown below. Also, the volume from each source is provided. What is the center of gravity?
|
|
X-coordinate
|
Y-coordinate
|
Volume
|
|
Athens, Texas
|
30
|
30
|
150
|
|
Beaumont, Texas
|
20
|
10
|
350
|
|
Carthage, Texas
|
10
|
70
|
100
|
|
Denton, Texas
|
50
|
50
|
200
|
3. A county wants to build one centrally-located processing facility to serve the county's four recycling drop-off locations. The four drop-offs have characteristics as given in the table below. What is the approximate center of gravity of these four locations?
|
Location
|
X-coordinate
|
Y-coordinate
|
Tonnage
|
|
Drop-off point A
|
1
|
8
|
10
|
|
Drop-off point B
|
6
|
7
|
35
|
|
Drop-off point C
|
6
|
2
|
25
|
|
Drop-off point D
|
4
|
7
|
50
|
PRODUCTION AND OPERATION MANAGEMENT - TOPIC REVIEW QUESTION
Case Study 1
A small electronics company assembles power supplies for use in computers, printers and FAX machines. They want to set up an assembly line to make their operation more efficient and plan to use line balancing with the incremental utilization heuristic. The demand for power supplies is 200 per hour, and the productive time per hour is 52 minutes. The following table provides details on their operation (with time in minutes):
Tasks that must Time to
Task immediately precede perform task
A --- 0.56
B A 0.34
C A 0.11
D A 0.09
E B,C 0.43
F D 0.22
G E 0.62
H F,G 0.35
I H 0.21
J H 0.57
K I,J 0.33
1. Measure is the cycle time.
2. Measure is the theoretical minimum number of workstations.
3. Prepare line balancing with the incremental utilization heuristic solution
4. Determine the numbers of workstations are needed for the entire line.
5. Measure the utilization of the production line.
Case Study 2
A company is setting up an assembly line to produce cellular telephones. They intend to use line balancing with the longest task time heuristic. They know the demand per hour is 40 phones and the productive time per hour is 54 minutes. Displayed below is the data they have collected regarding task precedence and times (in minutes):
Tasks that must Time to
Task immediately precede perform task
A - - - 0.40
B A 1.20
C A 0.90
D B 0.70
E B 0.60
F C 0.35
G D,E 1.00
H F,G 0.80
I H 0.50
6. Measure is the cycle time.
7. Measure is the theoretical minimum number of workstations.
8. Prepare line balancing with the longest task time heuristic solution
9. Determine the numbers of workstations are needed for the entire line.
10. Measure the utilization of the production line.
TOPIC 6: TOPIC REVIEW PROBLEM
1. A bank has cashiers who work eight hours per day from Monday to Saturday. The number of daily shifts required for cashiers is:
|
|
Mon
|
Tues
|
Wed
|
Thurs
|
Fri
|
Sat
|
Total
|
|
Cashiers work shifts
|
10
|
8
|
6
|
7
|
8
|
10
|
49
|
All of the cashiers are full-time employees and according to company policy must be provided four consecutive days of work and two consecutive days off each week.
a) What is the minimum number of cashiers required?
b) Use the work-shift heuristic procedure to develop weekly work shift schedules for the cashiers.
c) How many cashier work shifts of slack per week are present in your proposed schedule? How could this slack be avoided? Is your schedule optimal?
2. The Required number of work shifts for clerks at a food retailer is:
|
|
Mon
|
Tues
|
Wed
|
Thur
|
Fri
|
Sat
|
Sun
|
Total
|
|
Day Shift
|
8
|
6
|
5
|
6
|
9
|
12
|
7
|
53
|
|
Evening Shift
|
6
|
5
|
4
|
5
|
7
|
8
|
5
|
40
|
The shifts are scheduled independently, the clerks' union contract calls for weekly schedules based on five consecutive days and eight hours per day and only full time clerks are employed.
a. What is the minimum number of clerks required on both the day and the evening shifts?
b. Use the work shift heuristic procedure to develop work shift schedules for the clerks for both the day and evening shift.
c. How many clerks work shift of slack per week are present in your day and evening shift schedule? How could this slack be avoided? Is your solution optimal?
3. Given : Model 1, λ = 7 per hour μ = per hour.
a) Measure the average queue length.
b) Measure the average number of customers in the service system.
c) Measure the average time that customer wait.
d) Measure the average time that customer are in the system.
e) Measure the probability that one or more customer are in the system.
4. If customer arrive at a single drive in window at a local bank one every four minutes on the average, and if you can serve customers in three minutes on the average:
a. How long should customers expect to be at the bank facility on the average?
b. How many cars would we expect to be in the drive in facility on the average?
c. What is the probability that four or more cars will be in the drive in facility?
5. A recreational vehicle (RV) center is planning to install a recreational vehicle wash. Because an average RV is 20 feet long, no more than four can fit in the 85 foot driveway that feeds into the automatic washer. The washing personnel can handle an average of four per hour (Poisson distributed) and they expect an average of three cars per hour to show up.
a) What will be the average length of the line of vehicles?
b) What is the probability that there will be no vehicles in the car wash?
6. A local bank has two drive-thru teller windows with an essentially unlimited queue length. They estimate that the arrival rate during their most busy time will average about 40 cars per hour. They also estimate they can serve an average of 50 cars per hour. Management wants to make sure that the system is operating efficiently.
a) What is the probability that there will be no cars in the system?
b) On average, how many cars are in the system?
c) How long would a car be waiting (in seconds) in the driveway, on average?
TOPIC: INVENTORY MANAGEMENT - REVIEW PROBLEM
1. Identify the different types of inventory (raw materials, WIP and finished goods) carried in the following organization: gas station, hamburger stand, clothing store and machine shop. What functions (purpose) do these inventories perform?
2. Why can the item cost be dropped from the simple EOQ formula? Are item costs important when quantity discounts are given? Why?
3. What is the difference between a requirements philosophy and a replenishment philosophy of inventory management? Why is this difference important?
4. Compare and contrast the management of finished-goods inventory in a manufacturing company with that in a retail or wholesale firm.
5. For a given service level. Why will a P system require a large inventory investment than a Q system? What factors affect the magnitude of the difference?
3. A manager was heard to complain," I have some item that have a two weeks review internal, and it takes four weeks for re-supply. Every two weeks, I place orders based on the on-hand quantity in stock. Now I seem to have too much inventory." What went wrong?
4. A student was overheard saying," The EOQ-model assumptions are so restrictive that the model would be hard to use in practice." Is it necessary to have a different model for each variation in assumptions? Why or why not?
Topic - Inventory Management - Group Enrichment Problem
1. The Speedy Grocery Store Carries a particular brand of coffee that has the following characteristic:
Sales= 10 cases per week
Ordering cost=10 per order
Carrying cost = 30% per year
Item cost = 80 per case
a. How many cases should be ordered at a time?
b. How often will coffee be ordered?
c. What is the annual cost of ordering and carrying coffee?
d. What factors might cause the company to order a large or smaller amount that the EOQ?
2. The local Toyota dealer has to decide how many spare shock absorbers of a particular type to order for repairing Toyota automobiles. This shock absorber has a demand of four units per month and they cost $20 each. The carrying charge is 20 percent per year and the ordering cost is $10 per order.
a. What is the EOQ for this item?
b. How often will the dealer reorder this part?
c. What is the annua1.cosf of carrying this part?
3. The local Toyota dealer from problem 2 is considering installing either a Q or P system for inventory control. The past standard deviation of demand has been 2.5 units per month, and the replenishment lead time is two month. A 95 percent service level is desired.
a. If a continuous review system is used, what is the value of Q and R that should be used?
b. If a periodic review system is used, what is the value of P and T that would be applicable?
c. What are the pros and cons of using the P system compared to using the Q system for this
part?
4. The Harvard Coop orders sweatshirts with the Harvard University Emblem on them for sale at $50 each. During a typical month, 1000 sweatshirts are sold (this includes all styles and sizes ordered from a particular supplier). It costs $25 to place an order (for multiple sizes and style) and 25 percent to carry sweatshirts in inventory for a year.
a. How many sweatshirts should the Coop order at one time?
b. The supplier would like to deliver sweatshirts once a week in larger lot sizes than the optimal order size. How much will this cost the Coop per year? Under what conditions would you agree to the supplier's proposal?
c. Suppose that sales increase to 1500 sweatshirts per month, but you decide to keep the lot size the same as in part a. How much will this decision cost the Coop per year?
5 The Coop in problem 4 has discovered that it should establish a safety stock for its sweatshirts. It wants to use a reorder point system with a two¬ week lead time. The demand over a two-week interval can be assumed to have an average of 500 units and a standard deviation of 250 units.
a. What reorder point should the Coop establish to ensure a 95 percent service level for each
order placed?
b. What reorder point should be established to ensure that no more than one stock out occurs
in the course of a year?
c. How much average inventory will the Coop carry for part b? Include both cycle inventory
and safety stock in your answer.
d. How often will the Coop turn over its inventory using the results from part c?
6. An appliance store carries a certain brand of TV that has the following characteristics:
Average annual sales= 200units
Ordering cost = $25 per order
Carrying cost = 25 percent per year
Item cost = $400 per unit
Lead time = 4 days
Standard deviation of daily demand= 0.1unit
Working days per year = 250
a. Determine the EOQ.
b. Calculate the reorder point for a 95 percent service level, assuming normal demand.
c. State the Q rule for this item.
d. Study the effect on reorder point of changes in lead time or in standard deviation.
Assignment 8 dan 9
Case Study A
An electronics company wants to develop an MRP schedule for one of its key components, a specialized chip. The lot size is 600, the lead time is 2 weeks, they have 900 units on hand with 300 of those as safety stock and 500 already allocated. They have gross requirements for 2000 units in week 3 and 1500 units in week 5. They have 600 units scheduled to be received in week 1.
1. Refer to Case Study A, What is the number of units available in week 3?
2. Refer to Case study A, What is the planned order receipt for week 5?
Case Study B
A company that makes inkjet printers is trying to determine a MRP schedule for the print cartridges it needs in its newest model of printer. They have gross requirements of 1000 units in week 2 and 900 units in week 4. The minimum lot size is 500 units and the lead time is 1 week. They currently have 300 units on hand that includes a safety stock of 150 and another 100 units already allocated. They have 500 units scheduled for receipt in week 1.
3. Refer to Case study B, What is the number of units available in week 1?
4. Refer to Case study B, What is the planned order release in week 3?
Case Study C
A company is using Kanban containers. There are two adjacent work centers, a downstream (using) and an upstream (producing) one. The using work center has a production rate of 200 parts per hour and each container holds 20 parts. It takes .5 hour for a container to make the entire cycle from the time it leaves the upstream center until it is returned, filled with production, and leaves again. The efficiency rating of the operation is .2. The company is interested in reducing the number of containers.
1. Refer to Case Study C, what is the number of containers currently in use?
2. Refer to Case Study C, if the number of parts a container holds is increased to 24 parts, how many containers are needed?
3. Refer to Case Study C, if the company wants the number of containers to be 5, what must the efficiency rating become?
Case Study D
A company is using a Kanban system with 2 containers, each holding 50 parts, between a downstream (using) and an upstream (producing) work center. The using work center can handle 250 jobs per hour. The average elapsed time for the entire cycle is currently .25 hour. The company is concerned with the efficiency of the operation and the size of the containers.
4. Refer to Case Study D, what is the efficiency rating of the current operation?
5. Refer to Case Study D, if the company decides to use only one container, how many parts must it hold?
6. Refer to Case Study D, if the efficiency is changed to .12 and there are still 2 containers, how many parts must each container now hold?