Operations Management

Instructions:

  • Please answer all questions.
  • You can answer the problem-solving questions by hand. Please number the answers appropriately, scan them, and attach them to the electronic file that you will email to me.
  • Please type the answers to the essay questions.

 

PROBLEM-SOLVING & ESSAY QUESTIONS

  1. Consider amazon.com, whose Web site enjoys millions of “hits” each day and puts customers in touch with millions of services and products. What are amazon.com’s competitive priorities and what should its operations strategy focus on?

 

  1. Choosing which processes are core to a firm’s competitive position is a key strategic decision. For example, Nike, a popular sports shoe company, focuses on the customer relationship, new product development, and supplier relationship processes and leaves the order fulfillment process to others. Allen Edmonds, a top-quality shoe company, considers all four processes to be core processes. What considerations would you make in determining which processes should be core to your manufacturing company?

 

  1. You are the manager of a project to improve a billing process at your firm. The following table contains the data you will need to conduct a cost analysis of the project. Indirect costs are $1,600 per week, and penalty costs are $1,200 per week after week 12.

 

  1. What is the minimum-cost schedule for this project?
  2. What is the difference in total project costs between the earliest completion time of the project using “normal” times and the minimum-cost schedule you derived in part (A)?

 

Activity Immediate

Predecessor(s)

Normal Time

(weeks)

Crash Time

(weeks)

Normal Cost

($)

Crash Cost

($)

A 4 1 5,000 8,000
B 5 3 8,000 10,000
C A 1 1 4,000 4,000
D B 6 3 6,000 12,000
E B, C 7 6 4,000 7,000
F D 7 6 4,000 7,000

 

 

  1. Explain how to determine the slack for each activity in a project. Why is it important for managers to know where the slack is in their projects?

 

  1. J.’s Wildlife Emporium manufactures two unique birdfeeders (Deluxe and Super Duper) that are manufactured and assembled in up to three different workstations (X, Y, Z) using a small batch process. Each of the products is produced according to the flowchart given below. Additionally, the flowchart indicates each product’s price, weekly demand, and processing times per unit. Batch setup times are negligible. A.J. can make and sell up to the limit of its weekly demand and there are no penalties for not being able to meet all of the demand. Each workstation is staffed by a worker who is dedicated to work on that workstation alone and is paid $16 per hour. The plant operates 40 hours per week, with no overtime. Overhead costs are $2,000 per week. Based on the information provided, as well as the information contained in the flowchart, answer the following questions.

 

  1. Using the traditional method, which bases decisions solely on a product’s contribution to profits and overhead, what is the optimal product mix and what is the overall profitability?
  2. Using the bottleneck-based method, what is the optimal product mix and what is the overall profitability?

 

 

  1. Kay and Michael Passe publish What’s Happening? – a biweekly newspaper to publicize local events. What’s Happening? has few subscribers; it typically is sold at checkout stands. Much of the revenue comes from advertisers of garage sales and supermarket specials. In an effort to reduce costs associated with printing too many papers or delivering them to the wrong location, Michael implemented a computerized system to collect sales data. Sales-counter scanners accurately record sales data for each location. Since the system was implemented, total sales volume has steadily declined. Selling advertising space and maintaining shelf space at supermarkets are getting more difficult.

 

Reduced revenue makes controlling costs all the more important. For each issue, Michael carefully makes a forecast based on sales data collected at each location. Then, he orders papers to be printed and distributed in quantities matching the forecast. Michael’s forecast reflects a downward trend, which is present in the sales data. Now only a few papers are left over at only a few locations. Although the sales forecast accurately predicts the actual sales at most locations, What’s Happening? is spiraling toward oblivion. Kay suspects that Michael is doing something wrong in preparing the forecast but can find no mathematical errors. Tell her what is happening.

 

 

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