Final Exam Study Guide

1. Final Exam Study Guide MIS 373: Basic Operations Management

2. Ch 1: Introduction • Define the terms operations management and supply chain • Identify the three major functional areas of organizations and describe how they interrelated • Identify similarities and differences between production and service operations • Explain the key aspects of operations management decision making • Explain the need to manage the supply chain MIS 373: Basic Operations Management

3. CH2: Competitiveness, Strategy, and Productivity • List several ways that business organizations compete. • Discuss and compare organization strategy and operations strategy and explain why it is important to link the two. • Define the term productivity and explain why it is important to organizations and to countries. • Describe several factors that affect productivity. MIS 373: Basic Operations Management

4. CH2: Competitiveness, Strategy, and Productivity • PSA#1 Q1: multifactor productivity • Similar exercise: textbook problem 9 • A company offers ID theft protection using leads obtained from client banks. Three employees work 40 hours a week on the leads, at a pay rate of $25 per hour per employee. Each employee identifies an average of 3,000 potential leads a week from a list of 5,000. An average of 4 percent actually sign up for the service, paying a one-time fee of $70. Material costs are $1,000 per week, and overhead costs are $9,000 per week. Calculate the multifactor productivity for this operation in fees generated per dollar of input. MIS 373: Basic Operations Management

5. CH 5: Strategic Capacity Planning • Name the three key questions in capacity planning • Explain the importance of capacity planning • Describe ways of defining and measuring capacity • Name several determinants of effective capacity • Perform cost-volume analysis MIS 373: Basic Operations Management

6. CH 5: Strategic Capacity Planning • PSA#2 Q1: utilization and efficiency • Similar exercise: textbook problem 2 • In a job shop, effective capacity is only 50 percent of design capacity, and actual output is 80 percent of effective output. What design capacity would be needed to achieve an actual output of eight jobs per week? MIS 373: Basic Operations Management

7. CH 5: Strategic Capacity Planning • PSA#2 Q2: cost-volume analysis • Similar exercise: textbook problem 4 • A small firm intends to increase the capacity of a bottleneck operation by adding a new machine. Two alternatives, A and B, have been identified, and the associated costs and revenues have been estimated. Annual fixed costs would be $40,000 for A and $30,000 for B; variable costs per unit would be $10 for A and $11 for B; and revenue per unit would be $15. a. Determine each alternative's break-even point in units. b. At what volume of output would the two alternatives yield the same profit? c. If expected annual demand is 12,000 units, which alternative would yield the higher profit? MIS 373: Basic Operations Management

8. CH 6: Process Selection and Facility Layout • Compare the four basic processing types • Describe product layouts and their main advantages and disadvantages • Describe process layouts and their main advantages and disadvantages • Develop simple product layouts • Develop simple process layouts MIS 373: Basic Operations Management

9. CH 6: Process Selection and Facility Layout • PSA#1 Q2: product layout • Similar exercise: textbook problem 4 • A producer of inkjet printers is planning to add a new line of printers, and you have been asked to balance the process, given the following task times and precedence relationships. Assume that cycle time is to be the minimum possible. a. Do each of the following: (1) Draw the precedence diagram. (2) Assign tasks to stations in order of most following tasks. Tiebreaker: greatest positional weight. (3) Determine the percentage of idle time. (4) Compute the rate of output in printers per day that could be expected for this line assuming a 420-minute working day. b. Answer these questions: (1) What is the shortest cycle time that will permit use of only two workstations? Is this cycle time feasible? Identify the tasks you would assign to each station. (2) Determine the percentage of idle time that would result if two stations were used. (3) What is the daily output under this arrangement? (4) Determine the output rate that would be associated with the maximum cycle time. MIS 373: Basic Operations Management

10. CH 6: Process Selection and Facility Layout • PSA#1 Q3: process layout • Similar exercise: textbook problem 11 • Using the information in the following grid, determine if the department locations shown are appropriate. If not, modify the assignments so that the conditions are satisfied. MIS 373: Basic Operations Management

11. CH 9: Management of Quality • Define the term quality as it relates to products and as it relates to services. • Identify the determinants of quality. • Explain why quality is important and the consequences of poor quality. • Describe TQM. • Describe and use various quality tools. MIS 373: Basic Operations Management

12. CH 10: Quality Control • Explain the need for quality control. • List and briefly explain the elements of the control process. • Explain Type I and Type II errors • Explain how control charts are used to monitor a process and the concepts that underlie their use. MIS 373: Basic Operations Management

13. CH 10: Quality Control • PSA#3 Q1: statistical process control • Similar exercise: textbook problem 3 • The time to replace vehicle wiper blades at a service center was monitored using a mean and a range chart. Six samples of n = 20 observations were obtained and the sample means and ranges computed: a. Determine upper and lower limits for mean and range charts. b. Is the process in control? MIS 373: Basic Operations Management

14. CH 11: Aggregate Planning • Explain what aggregate planning is and how it is useful. • Identify the variables decision makers have to work with in aggregate planning. • Describe some of the graphical and quantitative techniques planners use. • Prepare aggregate plans and compute their costs. • Discuss aggregate planning in services. MIS 373: Basic Operations Management

15. CH 12: MRP and ERP • Describe the inputs, outputs, and nature of MRP processing. • Explain bill of materials • Explain time-phased product structure • Describe differences between MRP and ERP MIS 373: Basic Operations Management

16. CH 12: MRP and ERP • PSA#2 Q3: bill of materials • Similar exercise: textbook problem 3 • The following table lists the components needed to assemble an end item, lead times (in weeks), and quantities on hand. a. If 40 units of the end item are to be assembled, how many additional units of B are needed? (Hint: You don't need to develop an MRP plan.) b. An order for the end item is scheduled to be shipped at the start of week 8. What is the latest week that the order can be started and still be ready to ship on time? (Hint: You don't need to develop an MRP plan.) MIS 373: Basic Operations Management

17. CH 13: Inventory Management • Define the term inventory • List the different types of inventory • Describe the main functions of inventory • Discuss the main requirements for effective inventory management • Describe the A-B-C approach and explain how it is useful • Describe the basic EOQ model and its assumptions and solve typical problems. • Describe reorder point models and solve typical problems. • Describe situations in which the fixed-order interval model is appropriate, and solve typical problems. • Describe service level and risk of stockout and use Z table to identify the z value for a service level or a risk of stockout MIS 373: Basic Operations Management

18. CH 13: Inventory Management • PSA#4 Q1: EOQ • Similar exercise: textbook problem 4 • A large law firm uses an average of 40 boxes of copier paper a day. The firm operates 260 days a year. Storage and handling costs for the paper are $30 a year per box, and it costs approximately $60 to order and receive a shipment of paper. a. What order size would minimize the sum of annual ordering and carrying costs? b. Compute the total annual cost using your order size from part a. c. Except for rounding, are annual ordering and carrying costs always equal at the EOQ? d. The office manager is currently using an order size of 200 boxes. The partners of the firm expect the office to be managed “in a cost-efficient manner.” Would you recommend that the office manager use the optimal order size instead of 200 boxes? Justify your answer. MIS 373: Basic Operations Management

19. CH 13: Inventory Management • PSA#4 Q2: ROP • Similar exercise: textbook problem 20 • Given this information: Lead-time demand = 600 pounds Standard deviation of lead time demand = 52 pounds (Assume normality.) Acceptable stockout risk during lead time = 4 percent a. What amount of safety stock is appropriate? b. When should this item be reordered? c. What risk of stockout would result from a decision not to have any safety stock? MIS 373: Basic Operations Management

20. CH 13: Inventory Management • PSA#4 Q3: fixed-interval model • Similar exercise: textbook problem 32 • A manager must set up inventory ordering systems for two new production items, P34 and P35. P34 can be ordered at any time, but P35 can be ordered only once every four weeks. The company operates 50 weeks a year, and the weekly usage rates for both items are normally distributed. The manager has gathered the following information about the items: a. When should the manager reorder each item? b. Compute the order quantity for P34. c. Compute the order quantity for P35 if 110 units are on hand at the time the order is placed. MIS 373: Basic Operations Management

21. CH 14: JIT & Lean Operations • Explain the terms lean operations and JIT. • Describe the main characteristics of lean systems. • List some of the benefits and some of the risks of lean operation. • List the three goals of a lean system and explain the importance of each. MIS 373: Basic Operations Management

22. CH 15: Supply Chain Management • Explain the terms supply chain and logistics • Discuss the importance of supply chain management • Describe what bullwhip effect is • Explain the causes and remedies for the bullwhip effect MIS 373: Basic Operations Management

23. CH 17: Project Management • Describe the project management constraints • Describe the project life cycle • Give a general description of the critical path method • Construct simple network diagrams • Describe the time-cost trade-offs • Explain “crashing” activities • Use the “crashing” procedure to shorten activity duration MIS 373: Basic Operations Management

24. CH 17: Project Management • PSA#3 Q2: network diagrams and critical path • Similar exercise: textbook problem 2 • Chris received new word processing software for her birthday. She also received a check, with which she intends to purchase a new computer. Chris's college instructor assigned a paper due next week. Chris decided that she will prepare the paper on the new computer. She made a list of the activities she will need to do and their estimated times. a. Arrange the activities into two logical sequences. b. Construct an AOA and an AON network diagram. c. Determine the critical path and the expected duration time. d. What are some possible reasons for the project to take longer than the expected duration? MIS 373: Basic Operations Management

25. CH 17: Project Management • PSA#3 Q4: crashing • Similar exercise: textbook problem 16 • Chuck's Custom Boats (CCB) builds luxury yachts to customer order. CCB has landed a contract with a mysterious New York lawyer (Mr. T). Relevant data are shown on the next page. The complication is that Mr. T wants delivery in 32 weeks or he will impose a penalty of $375 for each week his yacht is late. Note: No activity can be crashed more than two weeks. Develop a crashing schedule. MIS 373: Basic Operations Management